Document and Entity Information
Document and Entity Information | 3 Months Ended |
Sep. 30, 2015shares | |
Document and Entity Information: | |
Entity Registrant Name | VAPOR HUB INTERNATIONAL INC. |
Document Type | 10-Q |
Document Period End Date | Sep. 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 Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q1 |
Trading Symbol | vhub |
Vapor Hub International Inc. -
Vapor Hub International Inc. - Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Jun. 30, 2015 | |
Current Assets: | |||
Cash | $ 159,111 | $ 351,081 | |
Accounts Receivable | 9,330 | 9,511 | |
Inventory | 500,008 | 323,784 | |
Prepaid expenses | 200,015 | 61,269 | |
Deferred finance costs | 46,993 | 39,258 | |
Other current assets | 11,054 | 9,474 | |
Total Current Assets | 926,511 | 794,377 | |
Fixed assets, net | 157,516 | 159,546 | |
Deposits | 14,341 | 6,895 | |
Total Assets | 1,098,368 | 960,818 | |
Current Liabilities: | |||
Accounts payable and accrued expenses | 574,143 | 509,618 | |
Deferred income | 52,831 | 82,499 | |
Notes payable- short term | 656,347 | 384,769 | |
Loans from related parties | 60,124 | 96,312 | |
Equipment leases payable | 4,369 | 5,440 | |
Convertible notes payable, net of unamortized debt discount | 90,625 | 192,091 | |
Derivative liabilities | 114,067 | 68,584 | |
Total Current Liabilities | 1,552,506 | 1,339,313 | |
Long Term Liabilities: | |||
Notes payable- long term | 27,698 | 29,189 | |
Long term liabilities | 27,698 | 29,189 | |
TOTAL LIABILITIES | $ 1,580,204 | $ 1,368,502 | |
Stockholders' Deficit | |||
Preferred stock | [1] | ||
Common stock | [2] | $ 72,456 | $ 72,456 |
Additional paid-in capital | 557,463 | 557,463 | |
Accumulated deficit | (1,111,755) | (1,037,603) | |
Total Stockholders Deficit | (481,836) | (407,684) | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 1,098,368 | $ 960,818 | |
[1] | $0.001 par value, 10,000,000 authorized, 0 issued and outstanding as of March 31, 2015 and June 30, 2014 | ||
[2] | $0.001 par value, 1,010,000,000 shares authorized, 72,455,606 issued and outstanding as of September 30, 2015 and June 30, 2015, respectively. |
Statement of Financial Position
Statement of Financial Position - Parenthetical - $ / shares | Sep. 30, 2015 | Jun. 30, 2015 |
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 | 1,010,000,000 |
Common Stock, Shares Issued | 72,455,606 | 72,455,606 |
Common Stock, Shares Outstanding | 72,455,606 | 72,455,606 |
Vapor Hub International Inc. -4
Vapor Hub International Inc. - Unaudited Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement | ||
Revenue | $ 1,962,345 | $ 1,371,550 |
Cost of revenue | 1,203,842 | 743,323 |
Gross Profit | 758,503 | 628,227 |
General and administrative expenses | 701,741 | 563,283 |
Net income (loss) from operations | 56,762 | 64,944 |
Other income (expense): | ||
Interest expense | (32,686) | (19,657) |
Finance fees | (9,765) | 0 |
Interest expense- amortization of debt discount | (42,181) | |
Change in derivative liabilities | (45,483) | |
Other income expense | (130,115) | (19,657) |
Income (loss) before taxes | (73,353) | 45,287 |
Income tax provision | 800 | 800 |
Net income (loss) | $ (74,153) | $ 44,487 |
Net income (loss) per share: | ||
Net income per share, basic | $ 0 | $ 0 |
Net income per share, diluted | $ 0 | $ 0 |
Weighted average shares outstanding: | ||
Weighted average shares outstanding, basic | 72,455,606 | 68,060,001 |
Weighted average shares outstanding, diluted | 72,455,606 | 68,060,001 |
Vapor Hub International Inc. -5
Vapor Hub International Inc. - Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES: | ||
Net income (loss) | $ (74,153) | $ 44,487 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation | 7,764 | 4,360 |
Amortization of debt discount on convertible note | 1,165 | |
Amortization of debt discount on short term note | 38,179 | |
Amortization of deferred finance costs | 14,765 | |
Amortization of derivative debt discount | 2,837 | |
Change in derivative liability | 45,483 | |
Changes in operating assets and liabilities: | ||
Accounts receivable, increase decrease | 181 | |
Inventory, increase decrease | (176,224) | (107,672) |
Prepaid expenses and other current long term assets, increase decrease | 6,582 | (108,884) |
Security deposit, increase decrease | (7,446) | 4,633 |
Deferred income, increase decrease | (29,669) | (220,735) |
Accounts payable and accrued expenses, increase decrease | 64,529 | 242,746 |
Net Cash used in Operating Activities | (106,007) | (141,066) |
INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (5,734) | |
Net cash used in investing activities | (5,734) | |
FINANCING ACTIVITIES: | ||
Payment on leased property loans | (1,071) | (862) |
Payments on finances of insurance premiums | (32,507) | |
Proceeds from affiliate loans | (36,188) | (13,108) |
Payments on convertible notes payable | (105,469) | |
Proceeds from short term notes payable | 200,000 | |
Payments on short term notes payable | (86,003) | |
Payments for deferred finance costs | (17,500) | |
Payments on auto loan payable | (1,491) | |
Net cash provided by financing activities | (80,229) | (13,970) |
Net change in cash | (191,970) | (155,036) |
Cash, beginning of period | 351,081 | 307,567 |
Cash, end of period | 159,111 | $ 152,531 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 33,886 | |
Cash paid for income taxes | 800 | |
Non-cash transactions: | ||
Insurance premium financing | $ 146,908 |
Note 1- Incorporation, Nature o
Note 1- Incorporation, Nature of Operations and Acquisition | 3 Months Ended |
Sep. 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 Vapors common stock, as well as all 30,000 of the issued and outstanding shares of Delites 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 Companys 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, and the Company the legal acquirer. Prior to the Companys 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 Companys acquisition of Vapor, Robin Looban resigned as the Companys 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. |
Note 2 -summary of Significant
Note 2 -summary of Significant Accounting Policies | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 2 -summary of Significant Accounting Policies | NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying (a) condensed consolidated balance sheet at June 30, 2015 has been derived from audited statements and (b) the condensed consolidated unaudited financial statements as of September 30, 2015 and 2014, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Companys Annual Report on Form 10-K for the year ended June 30, 2015 (the 2015 Annual Report), filed with the Securities and Exchange Commission (the SEC) on October 13, 2015. It is managements opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three months ended September 30, 2015 are not necessarily indicative of the results of operations expected for the year ending June 30, 2016. This summary of significant accounting policies of the Company is presented to assist in understanding the Companys unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity. These accounting policies conform to US GAAP and have been consistently applied in the preparation of the unaudited condensed consolidated financial statements. Basis of Presentation Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. The Condensed Consolidated Financial Statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with US GAAP and do not contain certain information and footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2015. The interim Condensed Consolidated Financial Statements should be read in conjunction with the Companys Annual Report on Form 10-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. The Company operates in one segment in accordance with accounting guidance Financial Accounting Standards Board (FASB) ASC Topic 280, Segment Reporting. The Companys Chief Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280. Going Concern The Companys unaudited condensed 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 Companys cash balance as of September 30, 2015 along with its net loss and negative cash flow from operations, raise substantial doubt about its ability to continue as a going concern. The accompanying unaudited condensed 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 7) along with its operating cash flows will be sufficient to meet its financing needs for the next twelve months. The extent of the Companys future capital requirements will depend on many factors, including the Companys results from operations and the growth rate of the Companys business. The Companys 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 Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. 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 Companys Mods during the period ended September 30, 2015. 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 Companys 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 Companys 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 Companys 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 Revenue The Company accrues deferred revenue when customer payments are received, but product has not yet shipped. As of September 30, 2015 and June 30, 2015, the Company had recorded $ 52,831 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 expects to recognize the $52,831 into revenue during the fiscal year ended June 30, 2016. Advertising Expense Advertising costs are expensed as incurred. Advertising expense for the three months ended September 30, 2014 and 2015 was $ 6,383 and $ 38,657 , respectively and are included in general and administrative expenses. 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 September 30, 2015, there were no dilutive securities. Recent Accounting Pronouncements The Company has reviewed all recent accounting pronouncements issued to date of the issuance of these unaudited condensed consolidated financial statements, and does not believe any of those pronouncements will have a material impact on the Companys unaudited condensed consolidated financial statements. |
Note 3 - Officers' Loans Payabl
Note 3 - Officers' Loans Payable | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 3 - Officers' Loans Payable | NOTE 3 OFFICERS LOANS PAYABLE As of September 30, 2015 and June 30, 2015, the Company had a balance of $ 60,124 and $ 96,312 respectively, outstanding as related party loans from Kyle Winther, the Companys CEO, Lori Winther, the Companys 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 a 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 4 - Inventories
Note 4 - Inventories | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 4 - Inventories | NOTE 4 INVENTORIES As of September 30, 2015 and June 30, 2015, the Company had a balance of $ 500,008 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 September 30, 2015 and June 30, 2015. |
Note 5 - Lease Commitments
Note 5 - Lease Commitments | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 5 - Lease Commitments | NOTE 5 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 was for two years with a monthly lease payment of $ 2,214 . Effective October 15, 2015, the Company and the landlord agreed to terminate the lease and the Company closed its retail store located at the location. The Company has no further obligation due under the lease agreement. 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 $57,420 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. On September 1, 2015, the Company terminated this lease and surrendered its facility at 67 W Easy St., Unit 115, Simi Valley, CA 93065 in favor of entering into a lease with Winther Family Trust for executive, sales, and warehouse space at 1871 Tapo Street, Simi Valley, CA 93063. The trustees of the trust are Niels Winther, CPA, a director of the Company, as well as Lori Winther, the Chief Financial Officer and a shareholder of the Company. The lease term extends through August 31, 2020 with a monthly lease payment of $ 5,650 . The Company has a commitment under this lease of $333,350 and a security deposit of $5,650 was paid to the landlord in relation to this lease. On September 15, 2015, the Company entered into a lease agreement with Santa Susana Business Center, LLC to lease warehouse and office space at 4685 Runway Street, Unit D, Simi Valley, CA 93063. The lease term extends through September 30, 2016 with a monthly lease payment of $ 1,716 . The Company has a commitment under this lease of $20,592 and a security deposit of $1,716 was paid to the landlord in relation to this lease. |
Note 6 - Related Parties
Note 6 - Related Parties | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 6 - Related Parties | NOTE 6 RELATED PARTIES As of September 30, 2015 and June 30, 2015, the Company had a balance of $60,124 and $96,312, respectively, outstanding as related party loans from Kyle Winther, the Companys CEO, Lori Winther, the Companys 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. From time to time the Company will engage the services of Winther & Co. an accounting firm owned by the husband of the Companys CFO. Winther & Co. provides bookkeeping, accounting and tax services to the Company. For the three months ended September 30, 2015 the Company incurred approximately $ 20,000 and $ 20,000 in fees with Winther & Co. As of September 30, 2015 and June 30, 2015 the Company had Accounts Payable outstanding to related parties for accounting fees of $10,548 and $12,369, respectively. |
Note 7 - Convertible Notes Paya
Note 7 - Convertible Notes Payable | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 7 - Convertible Notes Payable | NOTE 7 CONVERTIBLE NOTES PAYABLE Note Holder Balance September 30, 2015 Unamortized Original Derivative Discount Unamortized Original Issue Discount Balance of Debt Discount Balance, net of Discount September 30, 2015 Typenex Co-Investment, LLC $ 95,367 $ (26,008) $ (13,608) $ (39,616) $ 55,751 Typenex Co-Investment, LLC 51,352 (14,005) (2,473) (16,478) 34,874 Total Convertible Notes Payable $ 146,719 $ (40,013) $ (16,081) $ (56,094) $ 90,625 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 Companys 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 $ 1,165 was amortized to interest expense for the three months ended September 30, 2015. As of September 30, 2015 and June 30, 2015 the unamortized balance was $ 16,081 and $ 17,246 , respectively. 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 $2,837 was amortized to interest expense for the three months ended September 30, 2015. As of September 30, 2015 and June 30, 2015 the unamortized balance was $40,013 and $42,850, respectively. Beginning on May 4, 2015, the Company was 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys common stock unless the Investor has paid in full the Investor Note corresponding to such tranche, which payment requires the Companys 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 Companys 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 Companys common stock, the Company may also elect to convert the entire outstanding balance under the Company Note into shares of the Companys 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. As of November 15, 2015, the outstanding loan balance is $87,655. 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 Companys market capitalization (as defined in the Company Note) is less than $10,000,000, more than 9.99%, of the Companys outstanding common stock. The Company paid MSC-BD, LLC $20,000 as a finders fee (equal to 10% of the gross proceeds) in connection with the first closing and $10,020 in connection with the second closing and paid additional finders fees of $16,000 to MSC-BD, LLC as discussed in Note 8. The total finders fee of $46,020 was capitalized as deferred finance costs and amortized over the term of the respective notes. As of September 30, 2015 and June 30, 2015 unamortized deferred finance costs related to these instruments were $29,493 and $39,258, respectively. 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 Companys stock, and the scope exception to ASC 815s 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 September 30, 2015 and June 30, 2015, the Company had a derivative liability of $114,067 and $68,584, respectively, and reflected a change in derivative liability of ($45,483) and $0 for the three months ended September 30, 2015 and 2014, respectively. 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 Companys 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 Companys prepayment option under the Company Note. Derivative Liabilities The Company Note discussed above contains 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 as of September 30, 2015 and June 30, 2015. The change in fair value was recorded as other income (expense) in operations for the three months ended September 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 September 30, 2015. The Company categorized the derivative liability as Level 3 using the Black-Scholes pricing model with a fair value of $114,067 and $68,584 as of September 30, 2015 and June 30, 2015. The Company used the following input ranges: stock price $0.0280-$0.0419; expected term 0.3-3.58 years; risk-free rate 0.08%-1.01%; and volatility 121.1%-140.8%. Unobservable inputs were the prevailing interest rates, the Companys stock volatility and the expected term. There have been no transfers between Level 1, Level 2, or Level 3 categories. Level 3 additions for the three months ended September 30, 2015 were $45,483 for the valuation adjustment at September 30, 2015. |
Note 8 -notes Payable
Note 8 -notes Payable | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 8 -notes Payable | NOTE 8 NOTES PAYABLE Note Holder Balance September 30, 2015 Unamortized Original Issue Discount Balance, net of Discount September 30, 2015 Typenex Unsecured Short Term $ 245,000 $ (13,989) $ 231,011 Iliad Unsecured Short Term 245,000 (21,931) 223,070 B of I Bank 67,652 - 67,652 The Hartford - - - Capital Premium 42,843 - 42,843 AFCO Insurance 84,560 - 84,560 Bank of the West - short term portion 7,211 - 7,211 Total Short Term Notes Payable $ 692,266 $ (35,919) $ 656,347 Bank of the West - long term $ 27,698 $ - $ 27,698 Total Long Term Notes Payable $ 27,698 $ - $ 27,698 Bank of the West On December 29, 2014, Kyle Winther, the Companys 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. As of September 30, 2015 and June 30, 2015 the outstanding balance was $34,909 and $36,400, respectively, with $7,211 classified as short term and $27,698 and $29,189, respectively, classified as long term. 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 Companys 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 Companys Chief Financial Officer and a director of the Company, Kyle Winther, the Companys Chief Executive Officer and a director of the Company, and Gary Perlingos, the Companys 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 Banks 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 investors 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 September 30, 2015 and June 30, 2015 the outstanding balance of the June Note 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 finders fee (equal to 8% of the net proceeds) in connection with financing from the investor. Iliad Co-Investment Note On August 12, 2015, the Company entered into a Note Purchase Agreement (the Purchase Agreement) with Iliad Research & Trading, L.P, a Utah limited liability partnership, pursuant to which the Company concurrently issued to the investor an unsecured non-convertible Promissory Note in a principal amount of $245,000 (the August Note). The principal amount includes an original issue discount of $40,000 plus an additional $5,000 to cover the investors legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the transaction. In consideration for the August 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 August 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. The original issue discount and issuance costs for both the June Note and the August Note were recorded as debt discount and amortized to interest expense over the life of the notes. As of September 30, 2015 and June 30, 2015 the outstanding balance of the August Note was $245,000 and zero, respectively. Interest does not accrue on the unpaid principal balance of the August Note unless an event of default occurs. Upon the occurrence of an event of default, the outstanding balance of the August 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 August Note, the investor may declare all unpaid principal, plus all accrued interest and other amounts due under the August Note to be immediately due and payable at an amount equal to 115% of the outstanding balance of the August 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. 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. The Company cancelled the policy with the Hartford Group and started the new policy as of October 1, 2015. At September 30, 2015 and June 30, 2015, the premium obligation due under the Agreement was zero and $ 13,001 and $ 13,001 , respectively. 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 $4,620. At June 30, 2015, the remaining premium obligation due under the Agreement was $ 0 . Effective July 10, 2015 the Company entered into a new agreement to finance its General Liability insurance coverage. The amount of the policy is $70,848 with $ 53,159 financed over 10 months at 9% interest with a monthly payment of $5,538. At September 30, 2015, the remaining premium obligation is $ 42,843 As of August 22, 2015, the Company entered into an insurance contract with AFCO for Directors and Officers insurance coverage. The amount of the policy is $129,000 with $ 93,750 being financed at 5.3% over 10 months with a monthly payment of $9,604. At September 30, 2015, the remaining balance is $ 84,560 . In the quarter ended September 30, 2015, the Company paid $ 17,500 in connection with the negotiation of a potential financing transaction which amount is included in deferred finance costs as of September 30, 2015 (See Note 10). Finance fees for the three months ended September 30, 2015 and 2014 were $ 9,765 and $ 0 , respectively. |
Note 9 - Income (loss) Per Comm
Note 9 - Income (loss) Per Common Share | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 9 - Income (loss) Per Common Share | NOTE 9 INCOME (LOSS) PER COMMON SHARE A summary of the net loss and shares used to compute net loss per share for the three months ended September 30, 2015 and 2014 is as follows: September 30, 2015 September 30, 2014 Net income (loss) for computation of basic and dilutive net income (loss) per share $ (13,317) $ 44,487 Basic and dilutive net income (loss) per share $ (0.01) $ 0.00 Basic and dilutive weighted average shares outstanding $ 72,455,606 $ 68,060,001 |
Note 10 - Subsequent Events
Note 10 - Subsequent Events | 3 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 10 - Subsequent Events | NOTE 10 SUBSEQUENT EVENTS B of I Business Loan and Security Agreement On November 3, 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 $ 125,000 from the Bank and received net proceeds of $93,616 after deducting the repayment of $31,384 in full satisfaction of the Companys remaining obligations under that certain Business Loan and Security Agreement entered into with the Bank on June 2, 2015 (See Note 8 for further details). The new loan is payable in 126 payments of $1,220 due each business day beginning on November 4, 2015, with the total repayment amount (subject to certain exceptions) being equal to $153,750 (the Total Repayment Amount). The 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 loan is secured by all personal property of the Company and is also personally guaranteed by Lori Winther, the Chief Financial Officer and a director of the Company, Kyle Winther, the Chief Executive Officer and a director of the Company, and Gary Perlingos, the 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 Banks election, become immediately due and payable and the Bank may exercise its rights as a secured creditor. Chatsworth Store The Company closed its retail location located in Chatsworth, California on October 16, 2015. In connection with the closing, the Company analyzed the consumer base near the Chatsworth store and concluded that it did not represent the Companys target market. The Company plans to continue to operate its retail store in Simi Valley, California, which it believes is a more suitable beta test site and facility. |
Note 2 -summary of Significan16
Note 2 -summary of Significant Accounting Policies: Basis of Presentation - Consolidation (Policies) | 3 Months Ended |
Sep. 30, 2015 | |
Policies | |
Basis of Presentation - Consolidation | Basis of Presentation Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. The Condensed Consolidated Financial Statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with US GAAP and do not contain certain information and footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2015. The interim Condensed Consolidated Financial Statements should be read in conjunction with the Companys Annual Report on Form 10-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. The Company operates in one segment in accordance with accounting guidance Financial Accounting Standards Board (FASB) ASC Topic 280, Segment Reporting. The Companys Chief Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280. |
Note 2 -summary of Significan17
Note 2 -summary of Significant Accounting Policies: Going Concern (Policies) | 3 Months Ended |
Sep. 30, 2015 | |
Policies | |
Going Concern | Going Concern The Companys unaudited condensed 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 Companys cash balance as of September 30, 2015 along with its net loss and negative cash flow from operations, raise substantial doubt about its ability to continue as a going concern. The accompanying unaudited condensed 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 7) along with its operating cash flows will be sufficient to meet its financing needs for the next twelve months. The extent of the Companys future capital requirements will depend on many factors, including the Companys results from operations and the growth rate of the Companys business. The Companys 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 2 -summary of Significan18
Note 2 -summary of Significant Accounting Policies: Use of Estimates (Policies) | 3 Months Ended |
Sep. 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 Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Note 2 -summary of Significan19
Note 2 -summary of Significant Accounting Policies: Concentration of Risk (Policies) | 3 Months Ended |
Sep. 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 Companys Mods during the period ended September 30, 2015. |
Note 2 -summary of Significan20
Note 2 -summary of Significant Accounting Policies: Financial Instruments and Fair Value Measurement (Policies) | 3 Months Ended |
Sep. 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 Companys 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 Companys 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 Companys 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 2 -summary of Significan21
Note 2 -summary of Significant Accounting Policies: Revenue Recognition (Policies) | 3 Months Ended |
Sep. 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 2 -summary of Significan22
Note 2 -summary of Significant Accounting Policies: Deferred Revenue (Policies) | 3 Months Ended |
Sep. 30, 2015 | |
Policies | |
Deferred Revenue | Deferred Revenue The Company accrues deferred revenue when customer payments are received, but product has not yet shipped. As of September 30, 2015 and June 30, 2015, the Company had recorded $ 52,831 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 expects to recognize the $52,831 into revenue during the fiscal year ended June 30, 2016. |
Note 2 -summary of Significan23
Note 2 -summary of Significant Accounting Policies: Advertising Expense (Policies) | 3 Months Ended |
Sep. 30, 2015 | |
Policies | |
Advertising Expense | Advertising Expense Advertising costs are expensed as incurred. Advertising expense for the three months ended September 30, 2014 and 2015 was $ 6,383 and $ 38,657 , respectively and are included in general and administrative expenses. |
Note 2 -summary of Significan24
Note 2 -summary of Significant Accounting Policies: Basic and Diluted Net Income Per Share (Policies) | 3 Months Ended |
Sep. 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 September 30, 2015, there were no dilutive securities. |
Note 2 -summary of Significan25
Note 2 -summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Sep. 30, 2015 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has reviewed all recent accounting pronouncements issued to date of the issuance of these unaudited condensed consolidated financial statements, and does not believe any of those pronouncements will have a material impact on the Companys unaudited condensed consolidated financial statements. |
Note 7 - Convertible Notes Pa26
Note 7 - Convertible Notes Payable: Schedule of Convertible Notes Payable Text Block (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Convertible Notes Payable Text Block | Note Holder Balance September 30, 2015 Unamortized Original Derivative Discount Unamortized Original Issue Discount Balance of Debt Discount Balance, net of Discount September 30, 2015 Typenex Co-Investment, LLC $ 95,367 $ (26,008) $ (13,608) $ (39,616) $ 55,751 Typenex Co-Investment, LLC 51,352 (14,005) (2,473) (16,478) 34,874 Total Convertible Notes Payable $ 146,719 $ (40,013) $ (16,081) $ (56,094) $ 90,625 |
Note 8 -notes Payable_ Schedule
Note 8 -notes Payable: Schedule Of Notes Payable (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule Of Notes Payable | Note Holder Balance September 30, 2015 Unamortized Original Issue Discount Balance, net of Discount September 30, 2015 Typenex Unsecured Short Term $ 245,000 $ (13,989) $ 231,011 Iliad Unsecured Short Term 245,000 (21,931) 223,070 B of I Bank 67,652 - 67,652 The Hartford - - - Capital Premium 42,843 - 42,843 AFCO Insurance 84,560 - 84,560 Bank of the West - short term portion 7,211 - 7,211 Total Short Term Notes Payable $ 692,266 $ (35,919) $ 656,347 Bank of the West - long term $ 27,698 $ - $ 27,698 Total Long Term Notes Payable $ 27,698 $ - $ 27,698 |
Note 9 - Income (loss) Per Co28
Note 9 - Income (loss) Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Earnings Per Share, Basic and Diluted | September 30, 2015 September 30, 2014 Net income (loss) for computation of basic and dilutive net income (loss) per share $ (13,317) $ 44,487 Basic and dilutive net income (loss) per share $ (0.01) $ 0.00 Basic and dilutive weighted average shares outstanding $ 72,455,606 $ 68,060,001 |
Note 1- Incorporation, Nature29
Note 1- Incorporation, Nature of Operations and Acquisition (Details) - shares | 3 Months Ended | |||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 14, 2014 | Feb. 14, 2014 | |
Common Stock, Shares Issued | 72,455,606 | 72,455,606 | ||
Delite | ||||
Common Stock, Other Shares, Outstanding | 30,000 | |||
Common Stock, Shares Issued | 38,000,001 | |||
Treasury Stock, Shares, Retired | 50,928,984 |
Note 2 -summary of Significan30
Note 2 -summary of Significant Accounting Policies: Deferred Revenue (Details) - USD ($) | Sep. 30, 2015 | Jun. 30, 2015 |
Details | ||
Deferred Revenue | $ 52,831 | $ 82,499 |
Note 2 -summary of Significan31
Note 2 -summary of Significant Accounting Policies: Advertising Expense (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Advertising Expense | $ 6,383 | $ 38,657 |
Note 3 - Officers' Loans Paya32
Note 3 - Officers' Loans Payable (Details) - USD ($) | Sep. 30, 2015 | Jun. 30, 2014 |
Details | ||
Related Party Loan Outstanding | $ 60,124 | $ 96,312 |
Note 4 - Inventories (Details)
Note 4 - Inventories (Details) - USD ($) | Sep. 30, 2015 | Jun. 30, 2015 |
Details | ||
Inventory | $ 500,008 | $ 323,784 |
Note 5 - Lease Commitments (Det
Note 5 - Lease Commitments (Details) - USD ($) | 1 Months Ended | 11 Months Ended | 25 Months Ended | |
Sep. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2015 | Aug. 30, 2015 | |
S.J. Real Estate Group, LLC | ||||
Operating Leases, Rent Expense | $ 2,214 | |||
S.B.P.W., LLC | ||||
Operating Leases, Rent Expense | $ 4,070 | $ 2,035 | ||
Winther Family Trust | ||||
Monthly Lease and Rental Expense | $ 5,650 | |||
Susana Business Center, LLC | ||||
Monthly Lease and Rental Expense | $ 1,716 |
Note 6 - Related Parties (Detai
Note 6 - Related Parties (Details) - USD ($) | 24 Months Ended | 27 Months Ended |
Jun. 30, 2015 | Sep. 30, 2015 | |
Details | ||
Professional Fees | $ 20,000 | $ 20,000 |
Note 7 - Convertible Notes Pa36
Note 7 - Convertible Notes Payable: Schedule of Convertible Notes Payable Text Block (Details) | Sep. 30, 2015USD ($) |
Typenex Co- Investment, LLC | Balance 6/30/2015 | |
Convertible Notes Payable, Current | $ 95,367 |
Typenex Co- Investment, LLC | Unamortized Original Derivative Discount | |
Convertible Notes Payable, Current | (26,008) |
Typenex Co- Investment, LLC | Unamortized Original Issue Discount | |
Convertible Notes Payable, Current | (13,608) |
Typenex Co- Investment, LLC | Balance of Debt Discount | |
Convertible Notes Payable, Current | (39,616) |
Typenex Co- Investment, LLC | Balance, net of Discount 6/30/2015 | |
Convertible Notes Payable, Current | 55,751 |
Typenex Co | Balance 6/30/2015 | |
Convertible Notes Payable, Current | 51,352 |
Typenex Co | Unamortized Original Derivative Discount | |
Convertible Notes Payable, Current | (14,005) |
Typenex Co | Unamortized Original Issue Discount | |
Convertible Notes Payable, Current | (2,473) |
Typenex Co | Balance of Debt Discount | |
Convertible Notes Payable, Current | (16,478) |
Typenex Co | Balance, net of Discount 6/30/2015 | |
Convertible Notes Payable, Current | 34,874 |
Total Convertible Notes Payable | Balance 6/30/2015 | |
Convertible Notes Payable, Current | 146,719 |
Total Convertible Notes Payable | Unamortized Original Derivative Discount | |
Convertible Notes Payable, Current | (40,013) |
Total Convertible Notes Payable | Unamortized Original Issue Discount | |
Convertible Notes Payable, Current | (16,081) |
Total Convertible Notes Payable | Balance of Debt Discount | |
Convertible Notes Payable, Current | (56,094) |
Total Convertible Notes Payable | Balance, net of Discount 6/30/2015 | |
Convertible Notes Payable, Current | $ 90,625 |
Note 7 - Convertible Notes Pa37
Note 7 - Convertible Notes Payable (Details) - USD ($) | 3 Months Ended | |||
Sep. 30, 2015 | Jun. 30, 2015 | Jan. 16, 2015 | Nov. 04, 2014 | |
Amortization of Other Deferred Charges | $ 20,472 | |||
Interest Expense, Other | 1,165 | |||
Unamortized Debt | 16,081 | $ 17,246 | ||
Amortization of Financing Costs and Discounts | $ 48,975 | |||
Typenex Co- Investment, LLC | ||||
Convertible Notes Payable | $ 1,687,500 | |||
Prepayment of Note Obligation | $ 102,028 | |||
Principal Amount of Note | $ 100,000 |
Note 8 -notes Payable_ Schedu38
Note 8 -notes Payable: Schedule Of Notes Payable (Details) | Sep. 30, 2015USD ($) |
Typenex Unsecured Short Term | Balance 9/30/2015 | |
Other Notes Payable | $ 245,000 |
Typenex Unsecured Short Term | Unamortized Original Issue Discount | |
Other Notes Payable | (13,989) |
Typenex Unsecured Short Term | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | 231,011 |
Iliad Unsecured Short Term | Balance 9/30/2015 | |
Other Notes Payable | 245,000 |
Iliad Unsecured Short Term | Unamortized Original Issue Discount | |
Other Notes Payable | (21,931) |
Iliad Unsecured Short Term | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | 223,070 |
B of I Bank | Balance 9/30/2015 | |
Other Notes Payable | 67,652 |
B of I Bank | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | 67,652 |
Capital Premium | Balance 9/30/2015 | |
Other Notes Payable | 42,843 |
Capital Premium | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | 42,843 |
AFCO Insurance | Balance 9/30/2015 | |
Other Notes Payable | 84,560 |
AFCO Insurance | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | 84,560 |
Bank of the West- short term portion | Balance 9/30/2015 | |
Other Notes Payable | 7,211 |
Bank of the West- short term portion | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | 7,211 |
Total Short Term Notes Payable | Balance 9/30/2015 | |
Other Notes Payable | 692,266 |
Total Short Term Notes Payable | Unamortized Original Issue Discount | |
Other Notes Payable | (35,919) |
Total Short Term Notes Payable | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | 656,347 |
Bank of the West- long term portion | Balance 9/30/2015 | |
Other Notes Payable | 27,698 |
Bank of the West- long term portion | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | 27,698 |
Total Long Term Notes Payable | Balance 9/30/2015 | |
Other Notes Payable | 27,698 |
Total Long Term Notes Payable | Balance, net of Discount 9/30/2015 | |
Other Notes Payable | $ 27,698 |
Note 8 -notes Payable (Details)
Note 8 -notes Payable (Details) - USD ($) | 3 Months Ended | |||||||||
Sep. 30, 2015 | Sep. 30, 2014 | Aug. 22, 2015 | Jul. 10, 2015 | Jun. 30, 2015 | Jun. 04, 2015 | Jun. 02, 2015 | May. 29, 2015 | Jan. 02, 2015 | Jul. 10, 2014 | |
Deferred Finance Costs | $ 17,500 | |||||||||
Finance Fees | 9,765 | |||||||||
Finance fees | (9,765) | $ 0 | ||||||||
Worker's Compensation Insurance | ||||||||||
Workers' Compensation Liability, Current | 13,001 | $ 13,001 | $ 18,871 | |||||||
General Liability Insurance | ||||||||||
General Liability Insurance | $ 53,159 | $ 43,953 | ||||||||
General Liability Insurance Coverage | 42,843 | $ 0 | ||||||||
Director's and Officer's Insurance- AFCO | ||||||||||
Workers' Compensation Liability, Current | $ 93,750 | |||||||||
Director's and Officer's Insurance- Loyds of London | ||||||||||
General Liability Insurance Coverage | $ 84,560 | |||||||||
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 9 - Income (loss) Per Co40
Note 9 - Income (loss) Per Common Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Net loss for computation of basic and dilutive net (loss) per share | $ (13,317) | $ 44,487 |
Earnings Per Share, Basic and Diluted | $ (0.01) | $ 0 |
Weighted Average Number of Shares Outstanding, Basic and Diluted | 72,455,606 | 68,060,001 |
Note 10 - Subsequent Events (De
Note 10 - Subsequent Events (Details) | Nov. 03, 2015USD ($) |
B of I Federal Bank | |
Business Loan and Security Agreement | $ 125,000 |