Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Document and Entity Information: | ||
Entity Registrant Name | VAPOR HUB INTERNATIONAL INC. | |
Document Type | 10-K | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Entity Central Index Key | 1,515,718 | |
Current Fiscal Year End Date | --06-30 | |
Entity Common Stock, Shares Outstanding | 72,455,606 | |
Entity Public Float | $ 42,395,606 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | FY | |
Trading Symbol | vhub |
Vapor Hub International Inc. -
Vapor Hub International Inc. - Consolidated Balance Sheets - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 | |
Current Assets: | |||
Cash | $ 351,081 | $ 307,567 | |
Accounts receivable | 9,511 | ||
Inventory | 323,784 | 196,163 | |
Prepaid expenses and other current assets | 61,269 | 152,081 | |
Deferred finance costs | 39,258 | ||
Other current assets | 9,474 | 12,162 | |
Total Current Assets | 794,377 | 667,973 | |
Fixed assets, net | 159,546 | 104,731 | |
Long term assets | 6,895 | ||
Total Assets | 960,818 | 772,704 | |
Current Liabilities: | |||
Accounts payable and accrued expenses | 509,617 | 213,154 | |
Deferred income | 82,499 | 307,135 | |
Income taxes payable | 6,702 | ||
Notes payable, net of unamortized debt discount | 384,769 | ||
Convertible notes payable, net of unamortized debt discount | 192,091 | 560,000 | |
Loans from related parties | 96,312 | 101,378 | |
Derivative liabilities | 68,584 | ||
Total Current Liabilities | 1,333,873 | 1,188,369 | |
Long Term Liabilities: | |||
Equipment leases payable | 5,440 | 9,212 | |
Notes payable | 29,189 | ||
Long term liabilities | 34,629 | 9,212 | |
TOTAL LIABILITIES | $ 1,368,502 | $ 1,197,581 | |
Stockholders' deficit | |||
Preferred stock | [1] | ||
Common stock | [2] | $ 72,456 | $ 68,060 |
Additional paid-in capital | [3] | 557,463 | (69,331) |
Accumulated deficit | (1,037,603) | (423,606) | |
Total Stockholders Deficit | (407,684) | (424,877) | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 960,818 | $ 772,704 | |
[1] | $0.001 par value, 10,000,000 authorized, 0 issued and outstanding as of June 30, 2015 and June 30, 2014 | ||
[2] | $0.001 par value, 1,010,000,000 and 140,000,000 shares authorized, 72,455,606 and 68,060,001 issued, 72,455,606 and 68,060,001 outstanding as of June 30, 2015 and June 30, 2014, respectively (Note 4) | ||
[3] | The capital accounts of the Company have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the exchange transaction in determining the basic and diluted weighted average shares. |
Statement of Financial Position
Statement of Financial Position - Parenthetical - $ / shares | Jun. 30, 2015 | Jun. 30, 2014 |
Statement of Financial Position | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 1,010,000,000 | 140,000,000 |
Common Stock, Shares Issued | 72,455,606 | 68,060,001 |
Common Stock, Shares Outstanding | 72,455,606 | 68,060,001 |
Vapor Hub International Inc. -4
Vapor Hub International Inc. - Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Income Statement | |||
Revenue | $ 5,296,342 | $ 1,202,663 | |
Cost of revenue | 3,202,067 | 647,287 | |
Gross profit | 2,094,275 | 555,376 | |
General and administrative expenses | 2,510,360 | 984,776 | |
Net loss from operations | (416,085) | (429,400) | |
Other income (expense) | |||
Other income | 23,839 | ||
Interest expense | (163,016) | (10,966) | |
Finance fees | (6,762) | ||
Interest expense- debt discount | (6,125) | ||
Change in derivative liability | (19,609) | 6,762 | |
Total other income (expense) | (195,512) | 12,873 | |
Loss before taxes | (611,597) | (416,527) | |
Income tax provision | 2,400 | (7,079) | |
Net income (loss) | $ (613,997) | $ (423,606) | |
Net loss per share: | |||
Net loss per share, basic | $ (0.01) | $ (0.01) | |
Net loss per share, diluted | $ (0.01) | $ (0.01) | |
Weighted average shares outstanding: | |||
Weighted average shares outstanding, basic | [1] | 68,164,099 | 68,060,001 |
Weighted average shares outstanding, diluted | [1] | 68,164,099 | 68,060,001 |
[1] | All common share amounts and per share amounts in these consolidated financial statements reflect the one-for-nine forward stock split by way of a stock dividend of issued and outstanding shares of common stock of the Company, effective January 19, 2014, including retroactive adjustment of common share amounts. |
Vapor Hub International Inc. -5
Vapor Hub International Inc. - Consolidated Statement of Changes in Stockholders' Equity (Deficit) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance, Value at Jul. 11, 2013 | $ 38,000 | $ (38,000) | ||
Balance, Shares at Jul. 11, 2013 | 38,000,001 | |||
Recapitalization Adjustment, Value | $ 80,989 | (82,260) | $ (1,271) | |
Recapitalization Adjustment, Shares | 80,988,984 | |||
Cancellation of Shares, Value | $ (50,929) | 50,929 | ||
Cancellation of Shares, Shares | (50,928,984) | |||
Net income (loss) | $ (423,606) | (423,606) | ||
Balance, Value at Jun. 30, 2014 | $ 68,060 | (69,331) | (423,606) | (424,877) |
Balance, Shares at Jun. 30, 2014 | 68,060,001 | |||
Net income (loss) | (613,997) | (613,997) | ||
Stock issued for services, Value | $ 300 | 5,700 | 6,000 | |
Stock issued for services, Shares | 300,000 | |||
Stock options granted | 10,850 | 10,850 | ||
Gotama Note Conversion, Value | $ 4,096 | 610,244 | 614,340 | |
Gotama Note Conversion, Shares | 4,095,605 | |||
Balance, Value at Jun. 30, 2015 | $ 72,456 | $ 557,463 | $ (1,037,603) | $ (407,684) |
Balance, Shares at Jun. 30, 2015 | 72,455,606 | 310,000 |
Vapor Hub International Inc. -6
Vapor Hub International Inc. - Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
OPERATING ACTIVITIES: | |||
Net income (loss) | $ (613,997) | $ (423,606) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 22,051 | 7,443 | |
Amortization of debt discount on convertible note | 3,226 | ||
Amortization of debt discount on short term loan | 5,902 | ||
Amortization of deferred finance costs | 6,762 | ||
Amortization of derivative debt discount | 6,125 | ||
Change in derivative liability | 19,609 | ||
Non cash finance fees | 11,875 | ||
Non cash cost of revenue | 48,786 | ||
Non cash interest for conversion of notes payable | 54,341 | ||
Share based compensation for services- common stock | 6,000 | ||
Share based compensation- options | 10,850 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable, increase decrease | (9,511) | ||
Inventory, increase decrease | (127,621) | (196,163) | |
Prepaid expenses and other current assets, increase decrease | 96,638 | (152,081) | |
Security deposit, increase decrease | 5,267 | ||
Deferred income, increase decrease | (224,636) | 307,135 | |
Accounts payable and accrued expenses, increase decrease | 289,760 | 201,375 | |
Net cash used in operating activities | (437,359) | (207,111) | |
INVESTING ACTIVITIES: | |||
Leasehold security deposit | (12,162) | ||
Purchase of property and equipment | (39,890) | (118,522) | |
Net cash used in investing activities | (39,890) | (130,684) | |
FINANCING ACTIVITIES: | |||
Payments on leased property loans | (3,772) | ||
Proceeds from related party loans | 80,543 | 101,378 | |
Payments on related party loans | (85,608) | ||
Net proceeds from convertible notes payable | 272,008 | 534,881 | |
Payments on convertible notes payable | (70,313) | ||
Net proceeds from short term notes payable | 483,071 | ||
Payments on short term notes payable | (152,291) | ||
Payments on auto loan payable | (2,875) | ||
Stock issued upon reverse acquisition | 9,103 | ||
Net cash provided by financing activities | 520,763 | 645,362 | |
Net change in cash | 43,514 | 307,567 | |
Cash, beginning of period | 307,567 | ||
Cash, end of period | 351,081 | 307,567 | |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 106,738 | $ 1,948 | |
Cash paid for income taxes | 2,400 | ||
Non-cash transactions: | |||
Insurance premium financing | 13,001 | ||
Non cash assumption of vehicle note payable | [1] | 39,275 | |
Common stock issued for convertible note payable | 614,342 | ||
Non cash repayment and borrowings on short term note payable | 69,054 | ||
Original issue discount on notes payable | 60,000 | ||
Fixed assets under capital leases | $ 9,212 | ||
Inventories contributed by related party | $ 48,786 | ||
Derivative liability | $ 48,975 | ||
[1] | $36,976 vehicle cost and $2,299 prepaid warranty |
Note 1- Incorporation, Nature o
Note 1- Incorporation, Nature of Operations and Acquisition | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 1- Incorporation, Nature of Operations and Acquisition | NOTE 1- INCORPORATION, NATURE OF OPERATIONS AND ACQUISITION Vapor Hub International Inc. (formerly DogInn, Inc.) (hereinafter known as “the Company”) was incorporated in the State of Nevada on July 15, 2010. On February 14, 2014, the Company entered into a Share Exchange Agreement with Vapor Hub Inc., a California corporation (“Vapor”), Delite Products, Inc., a California corporation (“Delite”) and the shareholders of both companies (the “Exchange Agreement”). Pursuant to the terms of Exchange Agreement, the Company agreed to acquire all 30,000 of the issued and outstanding shares of Vapor’s common stock, as well as all 30,000 of the issued and outstanding shares of Delite’s common stock in exchange for the issuance by the Company of 38,000,001 shares of common stock to the shareholders of both companies. On March 14, 2014, the Company completed the acquisition of Vapor and issued all of the 38,000,001 shares of its stock to the shareholders of Vapor, who are also the shareholders of Delite. On March 26, 2014, the Company completed the acquisition of Delite. As a result of the closing of the transactions contemplated by the Exchange Agreement, Vapor and Delite became the Company’s wholly owned subsidiaries and the Company now carries on the business of developing, producing, marketing and selling the next generation of electronic cigarettes, known as vaping devices, and related accessories, including e-liquids, batteries and atomizers. The transaction with Vapor was accounted for as a reverse acquisition (recapitalization) whereby Vapor was deemed to be the accounting acquirer (see Note 2), and the Company the legal acquirer. Prior to the Company’s acquisition of Vapor, the Company existed as a “shell company” with nominal assets whose sole business was to identify, evaluate and investigate various companies to acquire or with which to merge. The transaction with Delite was accounted for as a business acquisition and the Company assumed the assets and liabilities of Delite as of March 26, 2014 and the activity of Delite was included from that date forward. Upon the Company’s acquisition of Vapor, Robin Looban resigned as the Company’s sole director, president, secretary, treasurer, Chief Financial Officer and Chairman of the Board of Directors and management members from Vapor were appointed to serve as directors and officers of the Company. As a condition of the closing of the acquisition of Vapor, the Company cancelled 50,928,984 outstanding common shares and retired them in treasury. Business Overview Product Description Vaping devices (as well as electronic cigarettes, also known as e-cigarettes) are battery-powered products that allow users to inhale water vapor instead of the smoke, ash, tar and carbon monoxide associated with traditional cigarettes. In contrast to e-cigarettes, vaping devices are often precision manufactured from metallic materials and do not look like traditional cigarettes. Vaping devices, as compared to e-cigarettes, also offer a unique user experience as a result of greater vapor production, enriched taste, and an ability to highly customize a device with different mechanical components and fashionable accessories, including different colors and finishes. Sourcing The Company uses third party contract manufacturers to produce and finish its vaping devices from facilities primarily located in Southern California. The Company’s vaping devices (or Mods), which are made from a metallic material such as steel, brass or copper, are custom machined to meet the Company’s design specifications. Once machined, unfinished products are delivered to the Company’s location in Simi Valley or to a third party service provider to be buffed, polished and to add various treatments and embellishments, such as paint and dog tags. Finished products are then held in inventory for distribution and sale. In the fiscal year ended June 30, 2015, the Company relied on one manufacturer to machine all of its Mods. Although the Company relied on one manufacturer to machine its Mods during the Company’s last fiscal year, the Company believes manufacturing capacity is readily available to meet its current and planned needs. The Company does not currently have any long term agreements in place for the manufacture of its Mods. With respect to the Company’s vaping accessories, the Company purchases batteries from suppliers in China and atomizers from suppliers in the United States, Austria, the Philippines and China. The Company believes that suppliers for accessories are readily available to meet the Company’s current and planned needs. The Company sources its proprietary E-liquids from an ISO Class 7 certified manufacturer in the USA, which helps ensure their purity and quality. In addition to sourcing its own e-liquids, the Company also purchases e-liquid from other reputable American suppliers for resale through its distribution channels. Distribution to Retail Stores The Company markets and sells its vaping devices and related products to end customers through its websites www.vapor-hub.com www.smokelessdelite.com Operation of Retail Stores The Company also sells its products and those of third parties to end consumers directly through its two retail locations located in Southern California. The Company’s first retail location in Simi Valley, CA was 725 square feet and was the first vapor lounge in Simi Valley. On April 1, 2015, the Company moved its Simi Valley retail location to a larger 1,500 square foot facility. The Company’s second location is located in Chatsworth, CA and measures 1,200 square feet. Through its retail locations, the Company sells and markets vaping devices as well as e-liquid, accessories, and supplies relating to vaping devices to both novice users as well as consumers who demand high end technical devices. The Company opened its retail locations in order to create brand recognition for its products and also to enable the Company to gather information about user preferences in the rapidly evolving vaping industry. By learning about user preferences, the Company believes it is better able to design and source products to meet market demand. Currently, the Company does not have any plans to open additional stores. |
Note 2 - Reverse Acquisition Ac
Note 2 - Reverse Acquisition Accounting | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 2 - Reverse Acquisition Accounting | NOTE 2 – REVERSE ACQUISITION ACCOUNTING Since former Vapor security holders owned, after the acquisition, the majority of the Company’s shares of common stock, and as a result of certain other factors, including that all members of the Company’s executive management are from Vapor, Vapor is deemed to be the acquiring company for accounting purposes and the acquisition of Vapor was accounted for as a reverse acquisition and a recapitalization in accordance with generally accepted accounting principles in the United States (“US GAAP”). These audited consolidated financial statements reflect the historical results of Vapor prior to the exchange transaction and that of the combined company following the exchange transaction, and do not include the historical financial results of Vapor Hub International prior to the completion of the exchange transaction. Common stock and the corresponding capital amounts of the Company pre-exchange transaction have been retroactively restated as capital stock shares reflecting the exchange ratio in the exchange transaction. |
Note 3 - Summary of Significant
Note 3 - Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 3 - Summary of Significant Accounting Policies | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to GAAP and have been consistently applied in the preparation of the consolidated financial statements. Basis of Presentation – Consolidation The accompanying consolidated financial statements include the accounts of the Company and subsidiary. Intercompany accounts and transactions have been eliminated. The consolidated financial statements of the Company and the accompanying notes included in this Annual Report on Form 10-K are audited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The consolidated financial statements, and the accompanying notes, are prepared in accordance with US GAAP and pursuant to the instructions to Form 10-K of the Securities and Exchange Commission. The Company’s fiscal year end is June 30. The Company operates in one segment in accordance with accounting guidance Financial Accounting Standards Board (“FASB”) ASC Topic 280, Segment Reporting. The Company’s Chief Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280. Fiscal Year End Following the exchange transaction, the Company elected to adopt the June 30 year end of Vapor, the accounting acquirer. As such, the Company has presented activity since the inception of Vapor (July 12, 2013) and has presented the activity of Delite since its acquisition on March 26, 2014. Going Concern The Company’s consolidated financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company’s cash balance as of June 30, 2015 along with continued loss from operations and negative cash flow from operations, raise substantial doubt about its ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. The Company continues to face liquidity and capital resources constraints and does not believe that the proceeds from its debt facilities (see Note 10) along with its operating cash flows will be sufficient to meet its financing needs for the next twelve months. The extent of the Company’s future capital requirements will depend on many factors, including the Company’s results from operations and the growth rate of the Company’s business. The Company’s near term objective is to raise debt or equity capital to fund its immediate cash needs and to finance its longer term growth. The Company is also pursuing various means to increase revenues, reduce operating costs and to improve overall cash flow. The Company presently does not have any arrangements for additional financing. However, the Company continues to evaluate various financing strategies to support its current operations and fund its future growth. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates significant estimates and assumptions related to its accounts receivable allowance, accounts payable, deferred income tax asset valuation allowances, fair value of derivative liability, fair value of stock options, useful life of fixed assets, inventory reserves, estimates of sales return and accrual for potential liabilities. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. At June 30, 2015, the Company had no cash equivalents. Concentration of Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company relied on one manufacturer to make all of the Company’s Mods during the year ended June 30, 2015. Stock-Based Compensation The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to nonemployees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Issuances of the Company’s common stock for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. However, situations may arise in which counter performance may be required over a period of time but the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instrument is fully vested on the date of agreement, the Company determines such date to be the measurement date and will record the estimated fair market value of the instrument granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates. For purposes of determining the variables used in the calculation of stock compensation expense under the provisions of FASB ASC Topic 505, “Equity” and FASB ASC Topic 718, “Compensation — Stock Compensation,” the Company performs an analysis of current market data and historical Company data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, the Company uses these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in the Company’s consolidated statements of operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on the Company’s financial statements. For the period from inception (July 12, 2013) to June 30, 2014 and the year ended June 30, 2015, the Company had $ 0 and $ 10,850 , respectively, of stock based compensation to employees. Financial Instruments and Fair Value Measurement Pursuant to ASC 820, Fair Value Measurements and Disclosures Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and amounts due to related parties, and derivative liabilities and convertible notes payable. Pursuant to ASC 820, the fair value of the Company’s cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Pursuant to ASC 820, the fair value of the Company’s derivative liability is determined based on “Level 3” inputs, which consist of unobservable inputs. The Company believes that the recorded values of all of its other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. Revenue Recognition The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable. For retail transactions, revenue is recognized at the point of sale. For wholesale and online transactions, revenue is recognized at the time goods are shipped. Deferred Income The Company accrues deferred income when customer payments are received, but product has not yet shipped. As of June 30, 2014 and 2015, the Company had recorded $ 307,135 and $ 82,499 , respectively for deferred income as a result of prepayments for product made by customers. Those prepayments are recognized into revenue at the point those prepaid products have subsequently shipped. The Company recognized the $307,135 into revenue during the year ended June 30, 2015. The Company expects to recognize the $82,499 into revenue during the following fiscal year. Inventories Inventories consist primarily of vaping devices, electronic cigarettes, e-liquid and related supplies and accessories and are stated at the lower of cost (first-in, first-out) or market value. Property and Equipment Property and equipment consists of computer equipment, furniture, facility equipment, and leasehold improvements which are carried at historical cost and are depreciated over the estimated useful lives of the related assets. Estimated useful lives are from 3 to 10 years. Much of the Company’s property and equipment was contributed by shareholders of the Company. Expenditures for maintenance and repairs are charged against operations. The modified accelerated cost recovery system (straight line) is used for federal income tax purposes and also for financial reporting as the difference between the two does not appear to be material. Advertising Expense Advertising costs are expensed as incurred. Advertising expense for the period from inception (July 12, 2013) to June 30, 2014 and the year ended June 30, 2015 was $ 59,822 and $ 140,771 , respectively and are included in general and administrative expenses. Accounting for Derivatives Liabilities The Company evaluates contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity Deferred Financing Costs, Net Costs with respect to the issuance of common stock, warrants, stock options or debt instruments by the Company are initially deferred and ultimately offset against the proceeds from such equity transactions or amortized to interest expense over the term of any debt funding, if successful, or expensed if the proposed equity or debt transaction is unsuccessful. Basic and Diluted Net Income per Share The Company computes net income per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants or debentures. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2014 and 2015, there were no dilutive securities. Income Taxes The Company accounts for income taxes under the provisions of ASC Topic 740-10, Income Taxes 109,000 and $ 463,000 , respectively, which will begin to expire in 2030 unless utilized in earlier years. When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The tax years subject to examination by major tax jurisdictions include the 2014 Fiscal Period and forward by the U.S. Internal Revenue Service, and the 2014 Fiscal Period and forward for various states. Non-Cash Equity Transactions Shares of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered, or at the value of the stock given, considered in reference to current market price. Recent Accounting Pronouncements On August 27, 2014, the FASB issued ASU 2014-15 Presentation of Financial Statements-Going Concern. The amendments in this Update provide guidance in GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is evaluating the effect, if any, on its consolidated financial statements of the amendment. On April 7, 2015, the FASB issued ASU 2015-03 Interest – Imputations of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs, to simplify presentation of debt issuance costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The Company is evaluating the effect, if any, on its consolidated financial statements of the amendment. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurements of Inventory.” This ASU requires management to evaluate inventory at the lower of cost and net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Earlier application is permitted by all entities as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, on its consolidated financial statements. The Company has reviewed all other recent accounting pronouncements issued to date of the issuance of these consolidated financial statements, and does not believe any of those pronouncements will have a material impact on the Company’s consolidated financial statements. |
Note 4 - Capital Stock
Note 4 - Capital Stock | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 4 - Capital Stock | NOTE 4 – CAPITAL STOCK The Company is authorized to issue 1,010,000,000 shares of common stock and had 68,060,001 and 72,455,606 shares of common stock issued and outstanding as of June 30, 2014 and 2015, respectively. On February 2, 2015, the Board of Directors of the Company approved an Amended and Restated Articles of Incorporation of the Company (the “Amended and Restated Articles”) and the Amended and Restated Articles were filed by the Company with the Secretary of State of the State of Nevada on February 5, 2015. The Amended and Restated Articles increase the authorized number of shares of common stock, par value $0.001, of the Company from 140,000,000 shares to 1,010,000,000. The Company is also authorized to issue 10,000,000 shares of preferred stock and had no shares of preferred stock issued and outstanding as of June 30, 2015. On February 2, 2015, the Company filed a Certificate of Withdrawal of Certificate of Designation (“Certificate of Withdrawal”) with the Secretary of State of the state of Nevada. The certificate withdraws the Certificate of Designation filed by the Company on January 9, 2014, which designated all of the Company’s preferred stock as “Series A Preferred Stock.” Following the filing of the Certificate of Withdrawal, the Company has 10,000,000 shares of undesignated preferred stock, par value $0.001, available for future designation by the Company’s Board of Directors. On January 9, 2014, the Company authorized an increase of its share capital from 65,000,000 common shares to 140,000,000 common shares. Furthermore, the Company approved a forward stock split of its issued and outstanding common shares by way of a stock dividend, on a basis of 1:9, pursuant to which, the Company’s stockholders as at January 17, 2014 received eight (8) shares of common stock for each one (1) share of common stock currently held. The pay-out date as approved by the Company’s board of directors and Financial Industry Regulatory Authority was January 17, 2014. The effects of the forward split increased the Company’s issued and outstanding common shares from 8,998,776 common shares to 80,988,984 common shares on such date. The effects of the forward split have been applied on a retroactive basis. On February 14, 2014, the Company entered into the Exchange Agreement whereby the Company acquired all of the issued and outstanding shares of Vapor and Delite in exchange for 38,000,001 common shares of the Company, which are the founders’ shares. The transaction was completed in two stages – with the acquisition of Vapor closing on March 14, 2014 and the acquisition of Delite closing on March 26, 2014. In connection with the acquisition of Vapor on March 14, 2014, the Company canceled 50,928,984 common shares and issued a convertible debenture of approximately $ 185,000 (see Note 10). Vapor was treated as the accounting acquirer and the equity accounts were retroactively recapitalized to the date of Vapor’s inception at July 12, 2013. In connection with this transaction the Company recorded the outstanding equity of the legal acquirer of 80,988,984 common shares and the concurrent cancelation of the 50,928,984 common shares. On March 10, 2015 the Company entered into an independent contractor agreement with a service provider. Pursuant to the terms of the agreement, the Company agreed to grant the service provider 300,000 non-forfeitable, fully vested shares of its common stock, valued at $6,000 (based on the estimated fair market value of the shares on March 10, 2015, the date of grant) as partial consideration for the services provided to the Company pursuant to the terms of the agreement. The 300,000 shares were subsequently issued on May 11, 2015. On June 30, 2015, the Company converted the Gotama Capital S.A. convertible promissory notes with an aggregate balance of $614,341 at a price of $0.15 per share, representing the entire principal amount and all accrued interest of the three convertible promissory notes issued to Gotama Capital S.A., into an aggregate of 4,095,605 shares of the Company’s common stock, par value $0.001 per share (the “Conversion Shares”). Stock-Option Plans On February 2, 2015, the Board of Directors of the Company and holders of 55.8% of the Company’s outstanding common stock (or 38,000,001 shares of 68,060,001 issued and outstanding shares) acting by written consent approved the adoption of the Company’s 2015 Omnibus Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of stock options (both incentive stock options and non-qualified stock options), restricted stock, restricted stock units, stock appreciation rights, performance-based awards, dividend equivalents, stock payments and deferred stock units to eligible participants. Eligible participants include officers, employees, non-employee directors and certain consultants and advisers. The aggregate number of shares of the Company’s common stock authorized for issuance under the 2015 Plan is 20,400,000, subject to adjustment as described in the 2015 Plan. The outstanding options (each of which were granted on June 30, 2015) each have an exercise price of $0.0419 per share of Common Stock. The Company estimates the fair value of each option on the grant date using the Black-Scholes model. The following assumptions were made in estimating the fair value: 2015 Annual dividend yield - Expected life (years) 5.0 Risk-free interest rate 1.63% Expected volatility 121.10% Fair value of options granted 0.035% The expected volatility was estimated by calculating the standard deviation of daily price changes in the Company’s stock from the date of inception to the date of the grant and the five year constant maturity treasury rate on the date of the grant was used for the risk free rate. Stock-based compensation expense is recognized over the employees’ or service provider’s requisite service period, generally the vesting period of the award. Stock-based compensation expense included in the accompanying statements of operations for the period from inception (July 12, 2013) to June 30, 2014 and for the year ended June 30, 2015 is $0 and $10,850, respectively. Stock option awards vested immediately on the date of grant, as a result there is no unrecognized compensation as of June 30, 2015. A summary of stock option activity is as follows: Number of Shares Weighted Average Exercise Price Outstanding at June 30, 2014 - $ - Granted 310,000 0.0419 Exercised - - Forfeited - - Outstanding at June 30, 2015 310,000 $ 0.0419 All the 310,000 options outstanding at June 30, 2015 were fully vested on the grant date, have an exercise price of $0.0419, weighted average contractual life of 10 years, weighted average exercise price of $0.0419, a weighted average remaining life of 10 years, and an aggregate intrinsic value at $0.0419 price per share at June 30, 2015. |
Note 5 - Officers' Loans Payabl
Note 5 - Officers' Loans Payable | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 5 - Officers' Loans Payable | NOTE 5 – OFFICERS’ LOANS PAYABLE As of June 30, 2014 and 2015, the Company had a balance of $ 101,378 and $ 96,312 , respectively, outstanding as related party loans from Kyle Winther, the Company’s CEO, Lori Winther, the Company’s CFO and Winther & Company, CPAs (an entity owned by Lori Winther, and her husband, Niels Winther, CPA, who is a director of the Company), as well as Chase Bank Line of Credit (which was extended to the Company, though owed personally by Niels & Lori Winther). The outstanding balances are unsecured, non-interest bearing and repayable upon demand. |
Note 6 - Inventories
Note 6 - Inventories | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 6 - Inventories | NOTE 6 – INVENTORIES As of June 30, 2014 and 2015, the Company had a balance of $ 196,163 and $ 323,784 , respectively, as inventories which consist of vaping devices, electronic cigarettes, e-liquid, related supplies, and accessories. There is no reserve for inventory obsolescence as of June 30, 2014 and 2015. |
Note 7 - Lease Commitments
Note 7 - Lease Commitments | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 7 - Lease Commitments | NOTE 7 – LEASE COMMITMENTS The Company entered into a lease agreement with S. J. Real Estate Group, LLC to lease a retail space in Chatsworth, California, effective September 13, 2013. The lease term is for two years with a monthly lease payment of $ 2,214 . The Company has a remaining commitment under this lease of $ 4,428 through August 30, 2015. The Company extended this lease for an additional two years effective October 1, 2015. The Company also had a month-to-month rental agreement with Madera Development for a retail space in Simi Valley for $825, which was terminated in April 2015. On February 28, 2015, the Company entered into a lease agreement with landlord Samantha Carrington to provide retail space for its Simi Valley retail location and on April 1, 2015, the Simi Valley retail location opened at the new premises. The lease term extends through March 31, 2017 with a monthly lease payment of $3,190. The Company has a commitment under this lease of $66,990 and a security deposit of $6,380 was paid to the landlord in relation to this lease. The Company entered into a lease agreement with S.B.P.W., LLC to lease warehouse and office space in Simi Valley, California effective August 5, 2013 which agreement was subsequently amended on February 20, 2014. The lease term extended through April 30, 2015 with a monthly lease payment of $ 2,035 which increased to $ 4,070 effective July 1, 2014. The Company terminated this lease in September 2015 (See Note 16). Rent expense for the period from inception (July 12, 2013) to June 30, 2014 and for the year ended June 30, 2015 was $ 39,847 and $ 92,185 , respectively. |
Note 8- Other Income
Note 8- Other Income | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 8- Other Income | NOTE 8– OTHER INCOME The Company received a fee of $ 30,000 in exchange for the right of an unaffiliated third party to share in 10% of the net profits derived from operations of the Chatsworth Vapor Hub lounge. The Company recognized the $30,000 as other income for the period from inception (July 12, 2013) to June 30, 2014. At June 30, 2014 and 2015, no amounts have been earned and no obligation is due under this profit sharing agreement. |
Note 9 - Related Parties
Note 9 - Related Parties | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 9 - Related Parties | NOTE 9 – RELATED PARTIES The Company entered into a Management Agreement with Kyle Winther and Gary “Jake” Perlingos who are each shareholders and officers of the Company related to operational supervision of the Vapor Hub Lounges in Simi Valley and Chatsworth. Each of them was to receive 2.5% each (for a total of 5%) of the monthly revenue generated from each respective lounge. The Agreement commenced September 1, 2013 and was scheduled to continue until terminated by agreement of the parties. Effective February 1, 2014, the parties agreed to terminate the Management Agreement. Prior to the termination of the agreement, each of Mr. Winther and Mr. Perlingos received approximately $6,400 pursuant to the terms of the Management Agreement. An additional Management Agreement was entered into between Delite and Vapor, which relates to the provision of administrative support to Vapor. Pursuant to the agreement, Delite received a fee of $ 10,000 per month from Vapor. The Agreement commenced October 1, 2013 and was scheduled to continue until terminated by agreement of the parties. Effective March 1, 2014, the parties agreed to terminate the Management Agreement. Prior to the acquisition of Delite, Vapor purchased substantially all of its inventory, which is sold at its retail locations, from Delite. As of March 26, 2014, Delite became a wholly-owned subsidiary of the Company. As a result of the acquisition, all intercompany transactions subsequent to March 26, 2014 have been eliminated. From time to time the Company will engage the services of Winther & Company an accounting firm owned by the husband of the Company’s CFO. Winther & Company provides bookkeeping, accounting and tax services to the Company. For the period from inception (July 12, 2013) to June 30, 2014 and for the year ended June 30, 2015 the Company incurred approximately $ 18,000 and $ 82,000 , respectively in fees with Winther & Co. As of June 30, 2014 and 2015, the Company had Accounts Payable outstanding to related parties of $232 and $12,369, respectively. |
Note 10 - Convertible Notes Pay
Note 10 - Convertible Notes Payable | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 10 - Convertible Notes Payable | NOTE 10 – CONVERTIBLE NOTES PAYABLE Note Holder Balance 6/30/2015 Unamortized Original Derivative Discount Unamortized Original Issue Discount Balance of Debt Discount Balance, net of Discount 6/30/2015 Typenex Co-Investment, LLC $ 163,131 $ (27,718) $ (14,594) $ (42,313) $ 120,819 Typenex Co-Investment, LLC 89,056 (15,132) (2,652) (17,784) 71,273 Total Convertible Notes Payable $ 252,188 $ (42,850) $ (17,246) $ (60,096) $ 192,091 Notes Issued to Gotama Capital S.A. On March 14, 2014, the Company closed the first of three tranches of a financing transaction pursuant to the terms of the Exchange Agreement. At the closing, the Company issued a convertible promissory note in the principal amount of $ 185,000 to Gotama Capital S.A. in exchange for cash proceeds of $ 185,000 . The note bears interest at a rate of 8 % per annum, with interest being payable on May 15 th 200,000 to the same investor in exchange for cash proceeds of $ 200,000 . The note has the same terms as the note described above, except that unless earlier converted or repaid, the principal amount of the note is due and payable on April 10, 2017. On May 19, 2014, the Company closed the third tranche of the financing contemplated pursuant to the terms of the Exchange Agreement. At the closing, the Company issued a convertible promissory note in the principal amount of $ 175,000 to the same investor in exchange for cash proceeds of $ 149,881 and $25,000 of expenses paid on behalf of the Company, which the Company immediately recorded as its own expense. The note has the same terms as the notes described above, except that unless earlier converted or repaid, the principal amount of the note is due and payable on May 19, 2017. The Company may prepay the principal amount of the notes at any time, in whole or in part, without the prior written consent of the holder. On June 30, 2015, the Company converted $614,341 at a price of $0.15 per share, representing the entire principal amount and all accrued interest of the three convertible promissory notes issued to Gotama Capital S.A., into an aggregate of 4,095,605 shares of the Company’s common stock, par value $0.001 per share (the “Conversion Shares”). As a result of the conversion, the three notes issued to Gotama Capital are no longer outstanding. Note Issued to Typenex Co-Investment, LLC. On November 4, 2014, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Typenex Co-Investment, LLC, a Utah limited liability company (the “Investor”), pursuant to which the Company concurrently issued to Investor a Secured Convertible Promissory Note in a principal amount of $ 1,687,500 (the “Company Note”). The principal amount includes an original issue discount of $80,000 plus an additional $7,500 to cover Investor's due diligence and legal fees in connection with the transaction. In consideration for the Company Note, Investor issued a series of promissory notes aggregating to the sum of $1,600,000 (the “Purchase Price”), consisting of an initial cash disbursement of $200,000 and the issuance to the Company of ten promissory notes, the first two promissory notes in a principal amount of $100,000 each and the remaining eight promissory notes in a principal amount of $150,000 (each an “Investor Note” and collectively, the “Investor Notes”). The Company Note and the Investor Notes each bear interest at the rate of 10% per annum and mature on April 4, 2019 and the Company’s obligations under the Company Note are secured by liens on the Investor Notes pursuant to the terms of a Security Agreement entered into by the Company in favor of the Investor. Subject to certain conditions, the Company may prepay the Company Note by making a payment equal to 125% of the then outstanding balance (including interest and other fees and amounts due). Each of the Investor Notes may be prepaid (and the Company may receive additional funds under the facility in excess of the initial $200,000 cash proceeds) only upon the mutual agreement of the parties. On January 16, 2015, upon the mutual agreement of the parties, the Investor paid to the Company the sum of $ 102,028 as a prepayment of all of its obligations owed to the Company under the first Investor Note in the original principal amount of $ 100,000 dated November 4, 2014, issued by the Investor in favor of the Company. The first two tranches were issued with an original issue discount of $ 20,472 , of which $ 3,226 has been amortized to interest expense for the twelve months ended June 30, 2015, resulting in an unamortized balance of $ 17,246 . The Company recognized an additional debt discount of $ 48,975 on the first two tranches for the original fair value recognition of the derivative liability (discussed further below), of which $6,125 has been amortized to interest expense for the fiscal year ended June 30, 2015, resulting in an unamortized balance of $42,850. Beginning on May 4, 2015, the Company is required to repay the outstanding balance on the Company Note in monthly installments of approximately $35,000 per month plus all unpaid interest and other costs, fees or charges under the Company Note. Payment may be made in cash or, subject to certain conditions, in shares of the Company’s common stock or any combination of cash and shares. If payments are made in shares (each, an “Installment Conversion”), such installments or portions thereof are, subject to certain conditions, convertible into shares of the Company’s common stock at the lesser of (i) a conversion price of $0.10, subject to adjustment or (ii) a price that is equal to 70% of the average of the three lowest closing bid prices of the Company’s common stock in the twenty trading days immediately preceding such conversion, subject to a floor of $0.01. In addition, on the date that is twenty trading days from the date the Company delivers installment shares to Investor, there is a true-up where the Company is required to deliver additional shares if the installment conversion price as of the true-up date is less than the installment conversion price used to deliver the initial shares. Beginning on May 4, 2015, all or any amount of a conversion eligible tranche (as described below) under the Company Note is convertible, at the option of the Investor (each, a “Lender Conversion”), into shares of the Company’s common stock at a conversion price of $0.10 per share, subject to customary anti-dilution adjustments and other adjustments described in the Company Note (the “Conversion Price”). The Company Note is convertible into shares of the Company’s common stock by Investor in eleven tranches consisting of an initial tranche of $217,500 plus interest and other amounts due which may be converted into shares of the Company’s common stock at the Conversion Price at any time on or after May 4, 2015 and ten additional tranches (each a “Subsequent Tranche”), two of which are in the amount of $105,000 plus interest and other amounts due and eight of which are in the amount of $157,500 plus interest and other amounts due. Each Subsequent Tranche may not be converted into shares of the Company’s common stock unless the Investor has paid in full the Investor Note corresponding to such tranche, which payment requires the Company’s consent. On January 16, 2015, the Investor paid to the Company the sum of $102,028 as a prepayment of all of its obligations owed to the Company under the first Investor Note and consequently the first Subsequent Tranche of $105,000 plus interest and other amounts due may be converted into shares of the Company’s common stock at the Conversion Price at the option of the Investor at any time on or after May 4, 2015. Subject to certain conditions based on the trading volume and trading price of the Company’s common stock, the Company may also elect to convert the entire outstanding balance under the Company Note into shares of the Company’s common stock at the Conversion Price. If the Company fails to repay the Company Note when due, or if the Company is otherwise in default under the Company Note, at the option of Investor a default interest rate of 22% per annum will apply on all conversion eligible portions of the Company Note while the default continues. In the event the Company is in default under the Company Note, the Investor also has the option to accelerate the note with the outstanding balance becoming immediately due and payable or increase the outstanding balance of the note by an amount of 5% or 15% depending on the particular default. In addition, if the Company fails to issue stock to the Investor within three trading days of receipt of a notice of conversion, the Company must pay a penalty equal to the greater of (i) $500 per day; or (ii) 2% of the product of (A) the number of shares to which Investor was entitled that were not issued on a timely basis; and (B) the closing sale price of the common stock on the trading day immediately preceding the last day for us to timely issue the shares. The Company Note provides that the Investor maintains a right of offset that, under certain circumstances, permits the Investor to deduct amounts owed by the Company under the Company Note from amounts otherwise owed by Investor under the Investor Notes. In addition, the Company is permitted at any time to deduct and offset any amount owing by the Investor under the Investor Notes from any amount owed by the Company under the Company Note. Since the Company Note and the Investor Notes may be offset against each other, they are recorded on a net basis in the Consolidated Balance Sheet. On June 30, 2015 pursuant to the terms of the Company Note, the Company elected to deduct and offset the principal amount of $1,300,000 and all accrued interest thereon owing by the Investor under the remaining nine Investor Notes from the amount owed by the Company under the Company Note, leaving an outstanding balance of $252,188 under the Company Note as of June 30, 2015 and total unamortized debt discount of $60,096. The Company Note provides that Investor may not convert the Company Note in an amount which would cause Investor to own more than 4.99%, or if the Company’s market capitalization (as defined in the Company Note) is less than $10,000,000, more than 9.99%, of the Company’s outstanding common stock. The Company paid Pyrenees Investments $20,000 as a finder’s fee (equal to 10% of the gross proceeds) in connection with the first closing, $10,020 in connection with the second closing, and $16,000 as discussed in Note 11. The total finder’s fee of $46,020 was capitalized as deferred issuance costs and amortized over the term of the respective notes. As of June 30, 2015 unamortized deferred issuance costs were $39,258. Finance fees for the fiscal year ended June 30, 2015 were $6,762. The Company evaluated the Company Note under the requirements of ASC 480 “Distinguishing Liabilities from Equity” and concluded that the note does not fall within the scope of ASC 480. The Company then evaluated the Company Note under the requirements of ASC 815 “Derivatives and Hedging”. Due to the existence of the anti-dilution provision which reduces the Lender Conversion Price in the event of subsequent dilutive issuances by the Company, the Company determined that the Lender Conversion feature does not meet the definition of “indexed to” the Company’s stock, and the scope exception to ASC 815’s derivative accounting provisions does not apply. The Company also determined that the Lender Conversion feature of the Company Note meets the definition of an embedded derivative that should be separated from the Company Note and accounted for as a derivative liability. The Company recorded an original valuation of $48,975 for the derivative liability. As of June 30, 2015, the Company had a derivative liability of $68,584 and reflected a change in derivative liability of $19,609 for the twelve month period ended June 30, 2015. The Company further concluded that because of the conversion floor of $0.01 on Installment Conversions and because the Company has the right at any time to offset the Investor Notes from the Company Note, the following features of the Company Note do not meet the definition of an embedded derivative that should be separated from the Company Note and accounted for as a derivative liability: the Installment Conversion feature of the Company Note, the default and remedy provisions of the Company Note, the Company’s option to settle a Lender Conversion in cash in the event the Investor elects to convert subsequent to the occurrence of an event of default under the Company Note and the Company’s prepayment option under the Company Note. Derivative Liabilities The convertible notes discussed above contain conversion features that result in an embedded derivative. The Company has recorded the fair value of each derivative as described above as a current liability in the consolidated balance sheet as of June 30, 2015. The change in fair value was recorded as other expense in the consolidated statement of operations for the year ended June 30, 2015. In arriving at fair-value estimates, the Company utilizes the most observable inputs available for the valuation technique employed. If a fair-value measurement reflects inputs at multiple levels within the fair value hierarchy, the fair-value measurement is characterized based upon the lowest level input. For the Company, recurring fair-value measurements are performed for the derivative liability. The derivative liability is recognized in the consolidated balance sheet at fair value. Changes in the fair value of the derivative liability are reported in the consolidated statement of operations. The Company does not have any liabilities that reduce risk associated with hedging exposure and has not designated the derivative liability as a hedge instrument. The Company did not have any derivatives valued using Level 1 and Level 2 inputs as of June 30, 2015. The Company categorized the derivative liability as Level 3 with a fair value of $68,584 as of June 30, 2015 using the Black-Scholes pricing model. The Company used the following input ranges: stock price $0.0099-$0.029; expected term 3.9-4.4 years; risk-free rate 0.26%-1.63%; and volatility 107.5%-245.7%. Unobservable inputs were the prevailing interest rates, the Company’s stock volatility and the expected term. There have been no transfers between Level 1, Level 2, or Level 3 categories. Level 3 as of June 30, 2014 was $0; Level 3 additions for the twelve months ended June 30, 2015 were $48,975 for the initial recognition with $19,609 valuation adjustment at June 30, 2015; Level 3 at June 30, 2015 was $68,584. |
Note 11 - Notes Payable
Note 11 - Notes Payable | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 11 - Notes Payable | NOTE 11 – NOTES PAYABLE Note Holder Balance 6/30/2015 Unamortized Original Issue Discount Balance, net of Discount 6/30/2015 Typenex Unsecured Short Term $ 245,000 $ (34,098) $ 210,902 B of I Bank 153,655 - 153,655 The Hartford 13,001 - 13,001 Bank of the West - short term portion 7,211 - 7,211 Total Short Term Notes Payable $ 418,867 $ (34,098) $ 384,769 Bank of the West - long term portion $ 29,189 $ - $ 29,189 Total Long Term Notes Payable $ 29,189 $ - $ 29,189 Bank of the West On December 29, 2014, Kyle Winther, the Company’s CEO, entered into a vehicle financing agreement with the Bank of the West. Pursuant to the agreement, the amount financed was $39,275, payable in 48 monthly payments plus accrued interest at a rate of 3.9%. In January 2015, the Company agreed to assume the payments on this loan and capitalized the vehicle (see Note 15). As of June 30, 2015 the outstanding balance was $36,400, with $7,211 and $29,189 classified as short term and long term, respectively. Facilities with B of I Federal Bank On January 2, 2015, the Company entered into a Business Loan and Security Agreement with B of I Federal Bank (the “Bank”). Pursuant to the agreement, the Company borrowed $ 200,000 from the Bank and received net proceeds of $ 195,000 USD after deducting an origination fee of $ 5,000 . The loan was payable in 147 payments of $ 1,728 due each business day beginning on and after January 5, 2015, with the initial total repayment amount (subject to certain exceptions) being equal to $254,000. On June 2, 2015, the Company entered into a new Business Loan and Security Agreement with the Bank. Pursuant to the agreement, the Company borrowed $ 175,000 from the Bank and received net proceeds of $ 104,071 after deducting an origination fee of $ 1,875 and the repayment of $69,054 in full satisfaction of the Company’s remaining obligations under that certain Business Loan and Security Agreement entered into with the Bank on January 2, 2015. The new loan is payable in 126 payments of $ 1,708.33 due each business day beginning on June 3, 2015, with the total repayment amount (subject to certain exceptions) being equal to $215,249.58 (the “Total Repayment Amount”). As of June 30, 2015 the outstanding balance was $153,655. The new loan may be prepaid in whole by the Company at any time by paying the Bank an amount equal to the Total Repayment Amount (subject to certain fees) less (i) the amount of any loan payments made prior to such prepayment and (ii) the product of 0.25 and the aggregate amount of unpaid interest remaining on the loan as of the prepayment date. The new loan is secured by all personal property of the Company and is also personally guaranteed by Lori Winther, the Company’s Chief Financial Officer and a director of the Company, Kyle Winther, the Company’s Chief Executive Officer and a director of the Company, and Gary Perlingos, the Company’s President and a director of the Company. If an event of default occurs under the agreement, all obligations owing by the Company to the Bank under the agreement will, at the Bank’s election, become immediately due and payable and the Bank may exercise its rights as a secured creditor. Typenex Co-Investment Note On June 4, 2015, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with Typenex Co-Investment, LLC, a Utah limited liability company, pursuant to which the Company concurrently issued to the investor an unsecured non-convertible Promissory Note in a principal amount of $ 245,000 (the “June Note”). The principal amount includes an original issue discount of $40,000 plus an additional $5,000 to cover the investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the transaction. The original issue discount was recorded as debt discount and amortized to interest expense over the life of the note. In consideration for the June Note, the investor paid an aggregate cash purchase price of $200,000, computed as follows: $245,000 original principal balance, less the original issue discount of $40,000, and less the transaction costs. The June Note matures on December 4, 2015. The Company may prepay all or a portion of the amount owed earlier than it is due without penalty. As of June 30, 2015 the outstanding balance was $245,000. Interest does not accrue on the unpaid principal balance of the June Note unless an event of default occurs. Upon the occurrence of an event of default, the outstanding balance of the June Note will bear interest at the lesser of the rate of 18% per annum or the maximum rate permitted by applicable law. In addition, if an event of default occurs under the June Note, the investor may declare all unpaid principal, plus all accrued interest and other amounts due under the June Note to be immediately due and payable at an amount equal to 115% of the outstanding balance of the June Note as of the date of the applicable event of default, plus all interest, fees and charges that may accrue on such outstanding balance thereafter. The Company paid MSC-BD, LLC $16,000 as a finder’s fee (equal to 8% of the net proceeds) in connection with financing from the investor. Other short term facilities Effective May 29, 2015, the Company entered into an Agreement to finance its annual Workers Compensation insurance coverage. The insurance coverage is provided through The Hartford. The amount of the policy is $18,871 with $ 18,871 being financed at 2.2% over 12 months with an initial payment of $4,425 and 10 monthly payments of $1,444. At June 30, 2015, the premium obligation due under the Agreement was $ 13,001 . Effective July 10, 2014, the Company entered into an Agreement to finance its annual General Liability insurance coverage. The insurance coverage is provided through Lloyds of London. The amount of the policy is $52,359 with $ 43,953 being financed at 11% over 10 months with a monthly payment of $4,619.93. At June 30, 2015, the remaining premium obligation due under the Agreement was $ 0 . Effective August 22, 2014, the Company entered into an Agreement to finance its annual Director’s and Officer’s insurance coverage. The insurance coverage is provided through Lloyds of London. The amount of the policy is $129,062.50 with $ 112,500 being financed at 5.35% over 9 months with a monthly payment of $12,780.30. At June 30, 2015, the remaining premium obligation due under the Agreement was $ 0 . |
Note 12 - Delite Acquisition
Note 12 - Delite Acquisition | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 12 - Delite Acquisition | NOTE 12 – DELITE ACQUISITION As described in Note 4, the Company acquired Delite as part of the transactions contemplated by the Exchange Agreement on March 26, 2014. This transaction was a share exchange and was treated as a business acquisition. The balance sheet of Delite has been consolidated with the Company as of June 30, 2014 and the activity subsequent to acquisition has been consolidated with the Company’s operations. As June 30, 2014, Delite had total assets of $ 120,992 , total liabilities of $ 303,837 and total equity of $ (182,845) . Delite balances were carried over at historical cost. Below is a summarized presentation of unaudited pro-form results of operations with Delite for the period from inception (July 12, 2013) to June 30, 2014: Delite Vapor Company Elimination Pro-Forma Revenue $ 1,446,749 $ 513,811 $ - $ (346,077) $ 1,614,483 Cost of revenue 858,128 280,181 - (280,181) 858,128 Gross profit 588,621 233,630 - (65,895) 756,355 General and administrative expense 992,090 259,558 25,149 (65,895) 1,210,902 Other income - 29,999 9,019 - 39,018 Income tax provision 1,963 6,702 - - 8,665 Net income (loss) $ (405,432) $ (2,631) $ (16,130) - $ (424,194) |
Note 13 - Income Tax
Note 13 - Income Tax | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 13 - Income Tax | NOTE 13 – INCOME TAX The provision for income taxes was determined by applying the statutory federal income tax rate to net income before income taxes and is as follows for the period from inception (July 12, 2013) to June 30, 2014 and for the year ended June 30, 2015: 2014 2015 Federal tax $ 3,751 $ - State tax $ 3,328 $ 2,400 The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes were as follows: 2014 2015 Statutory federal income tax rate (34) % (34) % State taxes, net of federal benefit 10 % (3) % Other 22 % (2) % (2)% (39)% |
Note 14 - Loss Per Common Share
Note 14 - Loss Per Common Share | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 14 - Loss Per Common Share | NOTE 14 – LOSS PER COMMON SHARE A summary of the net loss and shares used to compute net loss per share for the period from inception (July 12, 2013) to June 30, 2014 and for the year ended June 30, 2015 is as follows: 2014 2015 Net loss for computation of basic and dilutive net (loss) per share $ (423,606) $ (613,997) Basic and dilutive net (loss) per share $ (0.01) $ (0.01) Basic and dilutive weighted average shares outstanding $ 68,060,001 $ 68,164,099 |
Note 15 - Property and Equipmen
Note 15 - Property and Equipment | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 15 - Property and Equipment | NOTE 15 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following as of: June 30, 2014 June 30, 2015 Automobile $ - $ 36,976 Computer 12,895 16,756 Furniture and equipment 97,300 106,568 Leasehold improvements 17,539 44,300 Accumulated depreciation (23,003) (45,054) Property and equipment, net $ 104,731 $ 159,546 |
Note 16 - Subsequent Events
Note 16 - Subsequent Events | 12 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note 16 - Subsequent Events | NOTE 16 – SUBSEQUENT EVENTS Note Payable On August 12, 2015, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with Iliad Research and Trading, L.P., a Utah limited partnership (the “Investor”), pursuant to which the Company concurrently issued to the Investor a Promissory Note in a principal amount of $ 245,000 (the “Note”). The principal amount includes an original issue discount of $40,000 plus an additional $5,000 to cover the Investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the transaction (the “Transaction Costs”). In consideration for the Note, the Investor paid an aggregate cash purchase price of $200,000, computed as follows: $245,000 original principal balance, less the original issue discount of $40,000, and less the Transaction Costs. The Note matures on February 12, 2016. The Company may prepay all or a portion of the amount owed earlier than it is due without penalty and if the Company prepays $225,000 on or before November 9, 2015, the Note will be deemed paid in full. Interest does not accrue on the unpaid principal balance of the Note unless an event of default occurs. Upon the occurrence of an event of default, the outstanding balance of the Note will bear interest at the lesser of the rate of 18% per annum or the maximum rate permitted by applicable law. In addition, if an event of default occurs under the Note, the Investor may declare all unpaid principal, plus all accrued interest and other amounts due under the Note to be immediately due and payable at an amount equal to 115% of the outstanding balance of the Note as of the date of the applicable event of default, plus all interest, fees and charges that may accrue on such outstanding balance thereafter. Iliad Research and Trading, L.P. is an affiliate of Typenex Co-Investment, LLC, a Utah limited liability company. The Company is party to debt facilities with Typenex Co-Investment, LLC which were entered into on November 4, 2014 and June 4, 2015, respectively. Lease Commitments On September 1, 2015, the Company entered into a Commercial Lease Agreement with the Winther Family Trust, pursuant to which the Company will lease the property located at 1871 Tapo Street, Simi Valley, CA 93065 (the “Premises”), for a term of 60 months commencing on September 1, 2015. The Company will pay a base rent of $ 5,650 per month for the duration of the term. The Premises is replacing the Company’s prior facility located at 67 W. Easy Street, Unit 115, Simi Valley, CA 93065 and will serve as the Company’s primary office location. In addition to providing office space, the approximately 5,000 square foot facility will also be used for warehousing and shipping. The lessor of the Premises, the Winther Family Trust, is controlled by Niels Winther and Lori Winther. Both Niels Winther and Lori Winther are Directors of the Company, and Lori Winther also serves as the Company’s Chief Financial Officer and Secretary. |
Note 3 - Summary of Significa23
Note 3 - Summary of Significant Accounting Policies: Basis of Presentation - Consolidation (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Basis of Presentation - Consolidation | Basis of Presentation – Consolidation The accompanying consolidated financial statements include the accounts of the Company and subsidiary. Intercompany accounts and transactions have been eliminated. The consolidated financial statements of the Company and the accompanying notes included in this Annual Report on Form 10-K are audited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The consolidated financial statements, and the accompanying notes, are prepared in accordance with US GAAP and pursuant to the instructions to Form 10-K of the Securities and Exchange Commission. The Company’s fiscal year end is June 30. The Company operates in one segment in accordance with accounting guidance Financial Accounting Standards Board (“FASB”) ASC Topic 280, Segment Reporting. The Company’s Chief Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280. |
Note 3 - Summary of Significa24
Note 3 - Summary of Significant Accounting Policies: Fiscal Year End (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Fiscal Year End | Fiscal Year End Following the exchange transaction, the Company elected to adopt the June 30 year end of Vapor, the accounting acquirer. As such, the Company has presented activity since the inception of Vapor (July 12, 2013) and has presented the activity of Delite since its acquisition on March 26, 2014. |
Note 3 - Summary of Significa25
Note 3 - Summary of Significant Accounting Policies: Going Concern (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Going Concern | Going Concern The CompanyÂ’s consolidated financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The CompanyÂ’s cash balance as of June 30, 2015 along with continued loss from operations and negative cash flow from operations, raise substantial doubt about its ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. The Company continues to face liquidity and capital resources constraints and does not believe that the proceeds from its debt facilities (see Note 10) along with its operating cash flows will be sufficient to meet its financing needs for the next twelve months. The extent of the CompanyÂ’s future capital requirements will depend on many factors, including the CompanyÂ’s results from operations and the growth rate of the CompanyÂ’s business. The CompanyÂ’s near term objective is to raise debt or equity capital to fund its immediate cash needs and to finance its longer term growth. The Company is also pursuing various means to increase revenues, reduce operating costs and to improve overall cash flow. The Company presently does not have any arrangements for additional financing. However, the Company continues to evaluate various financing strategies to support its current operations and fund its future growth. |
Note 3 - Summary of Significa26
Note 3 - Summary of Significant Accounting Policies: Use of Estimates (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates significant estimates and assumptions related to its accounts receivable allowance, accounts payable, deferred income tax asset valuation allowances, fair value of derivative liability, fair value of stock options, useful life of fixed assets, inventory reserves, estimates of sales return and accrual for potential liabilities. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the CompanyÂ’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Note 3 - Summary of Significa27
Note 3 - Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. At June 30, 2015, the Company had no cash equivalents. |
Note 3 - Summary of Significa28
Note 3 - Summary of Significant Accounting Policies: Concentration of Risk (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Concentration of Risk | Concentration of Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company relied on one manufacturer to make all of the CompanyÂ’s Mods during the year ended June 30, 2015. |
Note 3 - Summary of Significa29
Note 3 - Summary of Significant Accounting Policies: Stock-based Compensation (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Stock-based Compensation | Stock-Based Compensation The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to nonemployees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Issuances of the Company’s common stock for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. However, situations may arise in which counter performance may be required over a period of time but the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instrument is fully vested on the date of agreement, the Company determines such date to be the measurement date and will record the estimated fair market value of the instrument granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates. For purposes of determining the variables used in the calculation of stock compensation expense under the provisions of FASB ASC Topic 505, “Equity” and FASB ASC Topic 718, “Compensation — Stock Compensation,” the Company performs an analysis of current market data and historical Company data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, the Company uses these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in the Company’s consolidated statements of operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on the Company’s financial statements. For the period from inception (July 12, 2013) to June 30, 2014 and the year ended June 30, 2015, the Company had $ 0 and $ 10,850 , respectively, of stock based compensation to employees. |
Note 3 - Summary of Significa30
Note 3 - Summary of Significant Accounting Policies: Financial Instruments and Fair Value Measurement (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Financial Instruments and Fair Value Measurement | Financial Instruments and Fair Value Measurement Pursuant to ASC 820, Fair Value Measurements and Disclosures Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and amounts due to related parties, and derivative liabilities and convertible notes payable. Pursuant to ASC 820, the fair value of the Company’s cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Pursuant to ASC 820, the fair value of the Company’s derivative liability is determined based on “Level 3” inputs, which consist of unobservable inputs. The Company believes that the recorded values of all of its other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. |
Note 3 - Summary of Significa31
Note 3 - Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Revenue Recognition | Revenue Recognition The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable. For retail transactions, revenue is recognized at the point of sale. For wholesale and online transactions, revenue is recognized at the time goods are shipped. |
Note 3 - Summary of Significa32
Note 3 - Summary of Significant Accounting Policies: Deferred Income (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Deferred Income | Deferred Income The Company accrues deferred income when customer payments are received, but product has not yet shipped. As of June 30, 2014 and 2015, the Company had recorded $ 307,135 and $ 82,499 , respectively for deferred income as a result of prepayments for product made by customers. Those prepayments are recognized into revenue at the point those prepaid products have subsequently shipped. The Company recognized the $307,135 into revenue during the year ended June 30, 2015. The Company expects to recognize the $82,499 into revenue during the following fiscal year. |
Note 3 - Summary of Significa33
Note 3 - Summary of Significant Accounting Policies: Inventories (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Inventories | Inventories Inventories consist primarily of vaping devices, electronic cigarettes, e-liquid and related supplies and accessories and are stated at the lower of cost (first-in, first-out) or market value. |
Note 3 - Summary of Significa34
Note 3 - Summary of Significant Accounting Policies: Property and Equipment (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Property and Equipment | Property and Equipment Property and equipment consists of computer equipment, furniture, facility equipment, and leasehold improvements which are carried at historical cost and are depreciated over the estimated useful lives of the related assets. Estimated useful lives are from 3 to 10 years. Much of the CompanyÂ’s property and equipment was contributed by shareholders of the Company. Expenditures for maintenance and repairs are charged against operations. The modified accelerated cost recovery system (straight line) is used for federal income tax purposes and also for financial reporting as the difference between the two does not appear to be material. |
Note 3 - Summary of Significa35
Note 3 - Summary of Significant Accounting Policies: Advertising Expense (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Advertising Expense | Advertising Expense Advertising costs are expensed as incurred. Advertising expense for the period from inception (July 12, 2013) to June 30, 2014 and the year ended June 30, 2015 was $ 59,822 and $ 140,771 , respectively and are included in general and administrative expenses. |
Note 3 - Summary of Significa36
Note 3 - Summary of Significant Accounting Policies: Accounting For Derivatives Liabilities (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Accounting For Derivatives Liabilities | Accounting for Derivatives Liabilities The Company evaluates contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in EntityÂ’s Own Equity |
Note 3 - Summary of Significa37
Note 3 - Summary of Significant Accounting Policies: Deferred Financing Costs, Net (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Deferred Financing Costs, Net | Deferred Financing Costs, Net Costs with respect to the issuance of common stock, warrants, stock options or debt instruments by the Company are initially deferred and ultimately offset against the proceeds from such equity transactions or amortized to interest expense over the term of any debt funding, if successful, or expensed if the proposed equity or debt transaction is unsuccessful. |
Note 3 - Summary of Significa38
Note 3 - Summary of Significant Accounting Policies: Basic and Diluted Net Income Per Share (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Basic and Diluted Net Income Per Share | Basic and Diluted Net Income per Share The Company computes net income per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants or debentures. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2014 and 2015, there were no dilutive securities. |
Note 3 - Summary of Significa39
Note 3 - Summary of Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Income Taxes | Income Taxes The Company accounts for income taxes under the provisions of ASC Topic 740-10, Income Taxes 109,000 and $ 463,000 , respectively, which will begin to expire in 2030 unless utilized in earlier years. When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The tax years subject to examination by major tax jurisdictions include the 2014 Fiscal Period and forward by the U.S. Internal Revenue Service, and the 2014 Fiscal Period and forward for various states. |
Note 3 - Summary of Significa40
Note 3 - Summary of Significant Accounting Policies: Non-cash Equity Transactions (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Non-cash Equity Transactions | Non-Cash Equity Transactions Shares of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered, or at the value of the stock given, considered in reference to current market price. |
Note 3 - Summary of Significa41
Note 3 - Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On August 27, 2014, the FASB issued ASU 2014-15 Presentation of Financial Statements-Going Concern. The amendments in this Update provide guidance in GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is evaluating the effect, if any, on its consolidated financial statements of the amendment. On April 7, 2015, the FASB issued ASU 2015-03 Interest – Imputations of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs, to simplify presentation of debt issuance costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The Company is evaluating the effect, if any, on its consolidated financial statements of the amendment. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurements of Inventory.” This ASU requires management to evaluate inventory at the lower of cost and net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Earlier application is permitted by all entities as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, on its consolidated financial statements. The Company has reviewed all other recent accounting pronouncements issued to date of the issuance of these consolidated financial statements, and does not believe any of those pronouncements will have a material impact on the Company’s consolidated financial statements. |
Note 4 - Capital Stock_ Schedul
Note 4 - Capital Stock: Schedule of Stockholders Equity (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Stockholders Equity | 2015 Annual dividend yield - Expected life (years) 5.0 Risk-free interest rate 1.63% Expected volatility 121.10% Fair value of options granted 0.035% |
Note 4 - Capital Stock_ Sched43
Note 4 - Capital Stock: Schedule of Share-based Compensation, Stock Options, Activity (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Share-based Compensation, Stock Options, Activity | Number of Shares Weighted Average Exercise Price Outstanding at June 30, 2014 - $ - Granted 310,000 0.0419 Exercised - - Forfeited - - Outstanding at June 30, 2015 310,000 $ 0.0419 |
Note 10 - Convertible Notes P44
Note 10 - Convertible Notes Payable: Schedule of Convertible Notes Payable Text Block (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Convertible Notes Payable Text Block | Note Holder Balance 6/30/2015 Unamortized Original Derivative Discount Unamortized Original Issue Discount Balance of Debt Discount Balance, net of Discount 6/30/2015 Typenex Co-Investment, LLC $ 163,131 $ (27,718) $ (14,594) $ (42,313) $ 120,819 Typenex Co-Investment, LLC 89,056 (15,132) (2,652) (17,784) 71,273 Total Convertible Notes Payable $ 252,188 $ (42,850) $ (17,246) $ (60,096) $ 192,091 |
Note 11 - Notes Payable_ Schedu
Note 11 - Notes Payable: Schedule of Notes Payable Text Block (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Notes Payable Text Block | Note Holder Balance 6/30/2015 Unamortized Original Issue Discount Balance, net of Discount 6/30/2015 Typenex Unsecured Short Term $ 245,000 $ (34,098) $ 210,902 B of I Bank 153,655 - 153,655 The Hartford 13,001 - 13,001 Bank of the West - short term portion 7,211 - 7,211 Total Short Term Notes Payable $ 418,867 $ (34,098) $ 384,769 Bank of the West - long term portion $ 29,189 $ - $ 29,189 Total Long Term Notes Payable $ 29,189 $ - $ 29,189 |
Note 12 - Delite Acquisition_ S
Note 12 - Delite Acquisition: Schedule of Business Acquisitions, by Acquisition (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Business Acquisitions, by Acquisition | Delite Vapor Company Elimination Pro-Forma Revenue $ 1,446,749 $ 513,811 $ - $ (346,077) $ 1,614,483 Cost of revenue 858,128 280,181 - (280,181) 858,128 Gross profit 588,621 233,630 - (65,895) 756,355 General and administrative expense 992,090 259,558 25,149 (65,895) 1,210,902 Other income - 29,999 9,019 - 39,018 Income tax provision 1,963 6,702 - - 8,665 Net income (loss) $ (405,432) $ (2,631) $ (16,130) - $ (424,194) |
Note 13 - Income Tax_ Schedule
Note 13 - Income Tax: Schedule of Components of Income Tax Expense (Benefit) (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Components of Income Tax Expense (Benefit) | 2014 2015 Federal tax $ 3,751 $ - State tax $ 3,328 $ 2,400 |
Note 13 - Income Tax_ Schedul48
Note 13 - Income Tax: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Effective Income Tax Rate Reconciliation | 2014 2015 Statutory federal income tax rate (34) % (34) % State taxes, net of federal benefit 10 % (3) % Other 22 % (2) % (2)% (39)% |
Note 14 - Loss Per Common Sha49
Note 14 - Loss Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Earnings Per Share, Basic and Diluted | 2014 2015 Net loss for computation of basic and dilutive net (loss) per share $ (423,606) $ (613,997) Basic and dilutive net (loss) per share $ (0.01) $ (0.01) Basic and dilutive weighted average shares outstanding $ 68,060,001 $ 68,164,099 |
Note 15 - Property and Equipm50
Note 15 - Property and Equipment: Note 14 - Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Note 14 - Property and Equipment | June 30, 2014 June 30, 2015 Automobile $ - $ 36,976 Computer 12,895 16,756 Furniture and equipment 97,300 106,568 Leasehold improvements 17,539 44,300 Accumulated depreciation (23,003) (45,054) Property and equipment, net $ 104,731 $ 159,546 |
Note 1- Incorporation, Nature51
Note 1- Incorporation, Nature of Operations and Acquisition (Details) - shares | 12 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Mar. 14, 2014 | Feb. 14, 2014 | Jan. 09, 2014 | |
Common Stock, Shares Issued | 72,455,606 | 68,060,001 | 140,000,000 | ||
Delite | |||||
Common Stock, Other Shares, Outstanding | 30,000 | ||||
Common Stock, Shares Issued | 38,000,001 | ||||
Treasury Stock, Shares, Retired | 50,928,984 |
Note 3 - Summary of Significa52
Note 3 - Summary of Significant Accounting Policies: Stock-based Compensation (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Details | ||
Stock or Unit Option Plan Expense | $ 10,850 | $ 0 |
Note 3 - Summary of Significa53
Note 3 - Summary of Significant Accounting Policies: Deferred Income (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Details | ||
Deferred Revenue | $ 82,499 | $ 307,135 |
Note 3 - Summary of Significa54
Note 3 - Summary of Significant Accounting Policies: Advertising Expense (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Details | ||
Advertising Expense | $ 140,771 | $ 59,822 |
Note 3 - Summary of Significa55
Note 3 - Summary of Significant Accounting Policies: Income Taxes (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Details | ||
Operating Loss Carryforwards | $ 463,000 | $ 109,000 |
Note 4 - Capital Stock (Details
Note 4 - Capital Stock (Details) - USD ($) | Jan. 17, 2014 | Mar. 14, 2014 | Jun. 30, 2015 | Mar. 10, 2015 | Jun. 30, 2014 | Feb. 14, 2014 | Jan. 09, 2014 |
Common Stock, Shares Issued | 72,455,606 | 68,060,001 | 140,000,000 | ||||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | |||||
Stock Issued During Period, Shares, Stock Splits | 80,988,984 | ||||||
Common Stock, Shares Outstanding | 72,455,606 | 68,060,001 | |||||
Exchange Agreement | |||||||
Common Stock, Shares Outstanding | 38,000,001 | ||||||
Treasury Stock, Shares, Retired | 50,928,984 | ||||||
Convertible Debt | $ 185,000 | ||||||
Service Provider | |||||||
Common Stock, Shares Issued | 300,000 | ||||||
Gotama Capital S.A. | |||||||
Common Stock, Shares Issued | 4,095,605 |
Note 4 - Capital Stock_ Sched57
Note 4 - Capital Stock: Schedule of Stockholders Equity (Details) | 12 Months Ended |
Jun. 30, 2015 | |
Details | |
Fair Value Assumptions, Expected Term | 5 years |
Fair Value Assumptions, Risk Free Interest Rate | 1.63% |
Fair Value Assumptions, Expected Volatility Rate | 121.10% |
Note 4 - Capital Stock_ Sched58
Note 4 - Capital Stock: Schedule of Share-based Compensation, Stock Options, Activity (Details) | 12 Months Ended |
Jun. 30, 2015$ / sharesshares | |
Details | |
Balance, Shares | shares | 310,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 0.0419 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | shares | 310,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 0.0419 |
Note 5 - Officers' Loans Paya59
Note 5 - Officers' Loans Payable (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Details | ||
Related Party Loan Outstanding | $ 96,312 | $ 101,378 |
Note 6 - Inventories (Details)
Note 6 - Inventories (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Details | ||
Inventory | $ 323,784 | $ 196,163 |
Note 7 - Lease Commitments (Det
Note 7 - Lease Commitments (Details) - USD ($) | 10 Months Ended | 11 Months Ended | 12 Months Ended | 25 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Aug. 30, 2015 | |
S.J. Real Estate Group, LLC | |||||
Operating Leases, Rent Expense | $ 2,214 | $ 4,428 | |||
S.B.P.W., LLC | |||||
Operating Leases, Rent Expense | $ 4,070 | $ 2,035 | |||
Total | |||||
Operating Leases, Rent Expense | $ 92,185 | $ 39,847 |
Note 8- Other Income (Details)
Note 8- Other Income (Details) | 12 Months Ended |
Jun. 30, 2015USD ($) | |
Details | |
Other Operating Income | $ 30,000 |
Note 9 - Related Parties (Detai
Note 9 - Related Parties (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Oct. 01, 2013 | |
Professional Fees | $ 82,000 | $ 18,000 | |
Management Agreement | |||
Due to Related Parties, Current | $ 10,000 |
Note 10 - Convertible Notes P64
Note 10 - Convertible Notes Payable: Schedule of Convertible Notes Payable Text Block (Details) | Jun. 30, 2015USD ($) |
Typenex Co- Investment, LLC | Balance 6/30/2015 | |
Convertible Notes Payable, Current | $ 163,131 |
Typenex Co- Investment, LLC | Unamortized Original Derivative Discount | |
Convertible Notes Payable, Current | (27,718) |
Typenex Co- Investment, LLC | Unamortized Original Issue Discount | |
Convertible Notes Payable, Current | (14,594) |
Typenex Co- Investment, LLC | Balance of Debt Discount | |
Convertible Notes Payable, Current | (42,313) |
Typenex Co- Investment, LLC | Balance, net of Discount 6/30/2015 | |
Convertible Notes Payable, Current | 120,819 |
Typenex Co | Balance 6/30/2015 | |
Convertible Notes Payable, Current | 89,056 |
Typenex Co | Unamortized Original Derivative Discount | |
Convertible Notes Payable, Current | (15,132) |
Typenex Co | Unamortized Original Issue Discount | |
Convertible Notes Payable, Current | (2,652) |
Typenex Co | Balance of Debt Discount | |
Convertible Notes Payable, Current | (17,784) |
Typenex Co | Balance, net of Discount 6/30/2015 | |
Convertible Notes Payable, Current | 71,273 |
Total Convertible Notes Payable | Balance 6/30/2015 | |
Convertible Notes Payable, Current | 252,188 |
Total Convertible Notes Payable | Unamortized Original Derivative Discount | |
Convertible Notes Payable, Current | (42,850) |
Total Convertible Notes Payable | Unamortized Original Issue Discount | |
Convertible Notes Payable, Current | (17,246) |
Total Convertible Notes Payable | Balance of Debt Discount | |
Convertible Notes Payable, Current | (60,096) |
Total Convertible Notes Payable | Balance, net of Discount 6/30/2015 | |
Convertible Notes Payable, Current | $ 192,091 |
Note 10 - Convertible Notes P65
Note 10 - Convertible Notes Payable (Details) - USD ($) | May. 15, 2014 | Apr. 10, 2014 | Mar. 14, 2014 | Jun. 30, 2015 | Jan. 16, 2015 | Nov. 04, 2014 |
Amortization of Other Deferred Charges | $ 20,472 | |||||
Interest Expense, Other | 3,226 | |||||
Unamortized Debt | 17,246 | |||||
Amortization of Financing Costs and Discounts | $ 48,975 | |||||
Gotama Capital S.A. | ||||||
Convertible Notes Payable | $ 175,000 | $ 200,000 | $ 185,000 | |||
Proceeds from Convertible Debt | $ 149,881 | $ 200,000 | $ 185,000 | |||
Short-term Debt, Percentage Bearing Fixed Interest Rate | 8.00% | |||||
Typenex Co- Investment, LLC | ||||||
Convertible Notes Payable | $ 1,687,500 | |||||
Prepayment of Note Obligation | $ 102,028 | |||||
Principal Amount of Note | $ 100,000 |
Note 11 - Notes Payable_ Sche66
Note 11 - Notes Payable: Schedule of Notes Payable Text Block (Details) | Jun. 30, 2015USD ($) |
Typenex Unsecured Short Term | Balance 6/30/2015 | |
Other Notes Payable | $ 245,000 |
Typenex Unsecured Short Term | Unamortized Original Issue Discount | |
Other Notes Payable | (34,098) |
Typenex Unsecured Short Term | Balance, net of Discount 6/30/2015 | |
Other Notes Payable | 210,902 |
B of I Bank | Balance 6/30/2015 | |
Other Notes Payable | 153,655 |
B of I Bank | Balance, net of Discount 6/30/2015 | |
Other Notes Payable | 153,655 |
The Hartford | Balance 6/30/2015 | |
Other Notes Payable | 13,001 |
The Hartford | Balance, net of Discount 6/30/2015 | |
Other Notes Payable | 13,001 |
Bank of the West- short term portion | Balance 6/30/2015 | |
Other Notes Payable | 7,211 |
Bank of the West- short term portion | Balance, net of Discount 6/30/2015 | |
Other Notes Payable | 7,211 |
Total Short Term Notes Payable | Balance 6/30/2015 | |
Other Notes Payable | 418,867 |
Total Short Term Notes Payable | Unamortized Original Issue Discount | |
Other Notes Payable | (34,098) |
Total Short Term Notes Payable | Balance, net of Discount 6/30/2015 | |
Other Notes Payable | 384,769 |
Bank of the West- long term portion | Balance 6/30/2015 | |
Other Notes Payable, Noncurrent | 29,189 |
Bank of the West- long term portion | Balance, net of Discount 6/30/2015 | |
Other Notes Payable, Noncurrent | 29,189 |
Total Long Term Notes Payable | Balance 6/30/2015 | |
Other Notes Payable, Noncurrent | 29,189 |
Total Long Term Notes Payable | Balance, net of Discount 6/30/2015 | |
Other Notes Payable, Noncurrent | $ 29,189 |
Note 11 - Notes Payable (Detail
Note 11 - Notes Payable (Details) - USD ($) | Jun. 30, 2015 | Jun. 02, 2015 | May. 29, 2015 | Jan. 02, 2015 | Aug. 22, 2014 | Jul. 10, 2014 |
Workers' Compensation Liability, Current | $ 13,001 | $ 18,871 | ||||
General Liability Insurance | 0 | $ 43,953 | ||||
General Liability Insurance Coverage | $ 0 | $ 112,500 | ||||
B of I Federal Bank- Loan 1 | ||||||
Other Short-term Borrowings | $ 200,000 | |||||
Net Proceeds | 195,000 | |||||
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums | 5,000 | |||||
Short-term Bank Loans and Notes Payable | $ 1,728 | |||||
B of I Federal Bank- Loan 2 | ||||||
Other Short-term Borrowings | $ 175,000 | |||||
Net Proceeds | 104,071 | |||||
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums | 1,875 | |||||
Short-term Bank Loans and Notes Payable | 1,708.33 | |||||
Typenex Co- Investment Note | ||||||
Other Short-term Borrowings | $ 245,000 |
Note 12 - Delite Acquisition (D
Note 12 - Delite Acquisition (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Total Current Assets | $ 794,377 | $ 667,973 |
TOTAL LIABILITIES | 1,368,502 | 1,197,581 |
Total Stockholders Deficit | $ (407,684) | (424,877) |
Delite | ||
Total Current Assets | 120,992 | |
TOTAL LIABILITIES | 303,837 | |
Total Stockholders Deficit | $ (182,845) |
Note 12 - Delite Acquisition_69
Note 12 - Delite Acquisition: Schedule of Business Acquisitions, by Acquisition (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue | $ 5,296,342 | $ 1,202,663 |
Cost of revenue | 3,202,067 | 647,287 |
Gross profit | 2,094,275 | 555,376 |
General and administrative expenses | 2,510,360 | 984,776 |
Other income | 23,839 | |
Income tax provision | 2,400 | (7,079) |
Net income (loss) | $ (613,997) | (423,606) |
Delite | ||
Revenue | 1,446,749 | |
Cost of revenue | 858,128 | |
Gross profit | 588,621 | |
General and administrative expenses | 992,090 | |
Income tax provision | 1,963 | |
Net income (loss) | (405,432) | |
Vapor | ||
Revenue | 513,811 | |
Cost of revenue | 280,181 | |
Gross profit | 233,630 | |
General and administrative expenses | 259,558 | |
Other income | 29,999 | |
Income tax provision | 6,702 | |
Net income (loss) | (2,631) | |
Company | ||
General and administrative expenses | 25,149 | |
Other income | 9,019 | |
Net income (loss) | (16,130) | |
Elimination | ||
Revenue | (346,077) | |
Cost of revenue | (280,181) | |
Gross profit | (65,895) | |
General and administrative expenses | (65,895) | |
Pro-Forma | ||
Revenue | 1,614,483 | |
Cost of revenue | 858,128 | |
Gross profit | 756,355 | |
General and administrative expenses | 1,210,902 | |
Other income | 39,018 | |
Income tax provision | 8,665 | |
Net income (loss) | $ (424,194) |
Note 13 - Income Tax_ Schedul70
Note 13 - Income Tax: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Federal Tax | ||
Income Taxes Receivable | $ 3,751 | |
State Tax | ||
Income Taxes Receivable | $ 2,400 | $ 3,328 |
Note 13 - Income Tax_ Schedul71
Note 13 - Income Tax: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) | 12 Months Ended | 60 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | Sep. 01, 2020 | |
Details | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | (34.00%) | (34.00%) | |
Effective Income Tax Rate Reconciliation, Tax Contingency, State and Local, Amount | $ (3) | $ 10 | |
Effective Income Tax Rate Reconciliation, Deduction, Other, Amount | $ (2) | $ 22 | $ 5,650 |
Note 14 - Loss Per Common Sha72
Note 14 - Loss Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Details | ||
Net loss for computation of basic and dilutive net (loss) per share | $ (613,997) | $ (423,606) |
Earnings Per Share, Basic and Diluted | $ (0.01) | $ (0.01) |
Weighted Average Number of Shares Outstanding, Basic and Diluted | 68,164,099 | 68,060,001 |
Note 15 - Property and Equipm73
Note 15 - Property and Equipment: Note 14 - Property and Equipment (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Details | ||
Property, Plant and Equipment, Other, Net | $ 36,976 | |
Property, Plant and Equipment, Other, Gross | 16,756 | $ 12,895 |
Furniture and Fixtures, Gross | 106,568 | 97,300 |
Leasehold Improvements, Gross | 44,300 | 17,539 |
Property, Plant and Equipment, Other, Accumulated Depreciation | (45,054) | (23,003) |
Property, Plant and Equipment, Net | $ 159,546 | $ 104,731 |
Note 16 - Subsequent Events (De
Note 16 - Subsequent Events (Details) - USD ($) | 12 Months Ended | 60 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Sep. 01, 2020 | Aug. 12, 2015 | |
Effective Income Tax Rate Reconciliation, Deduction, Other, Amount | $ (2) | $ 22 | $ 5,650 | |
Iliad Research and Trading, L.P | ||||
Promissory Note | $ 245,000 |