Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Dec. 31, 2015 | Feb. 16, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | XFIT BRANDS, INC. | |
Entity Central Index Key | 1,623,554 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 4,098,500 | |
Trading Symbol | XFTB | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Jun. 30, 2015 |
Current Assets | ||
Cash | $ 139,666 | $ 51,016 |
Accounts receivable | 208,888 | 92,823 |
Royalties receivable | 65,413 | 75,000 |
Inventory | 253,452 | 169,292 |
Prepaid expenses | 206,235 | 333,572 |
Total Current Assets | 873,654 | 721,703 |
Long Term Assets | ||
Property and equipment, net | 37,652 | 42,292 |
Other assets | ||
Deposits | 27,480 | 27,480 |
Intangible assets, net | 37,472 | 52,264 |
TOTAL ASSETS | 976,258 | 843,739 |
Current Liabilities | ||
Accounts payable | 604,104 | 446,063 |
Related party payable | 95,620 | 95,620 |
Accrued expenses and interest | 67,507 | 129,182 |
Customer deposits | 210,100 | $ 158,467 |
Line of credit | 34,197 | |
Total Current Liabilities | 1,011,528 | $ 829,332 |
Note payable, net | 2,307,960 | 1,705,417 |
Total Liabilities | $ 3,319,488 | $ 2,534,749 |
Commitments and contingencies (Note 8) | ||
Stockholders' Deficit | ||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2015 and June 30, 2015 | ||
Common stock, $0.0001 par value, 250,000,000 shares authorized, 4,098,500 and 4,073, 500 shares issued and outstanding as of December 31, 2015 and June 30, 2015, respectively | $ 409 | $ 407 |
Additional paid in capital | 4,444,505 | 4,319,074 |
Accumulated deficit | (6,788,144) | (6,010,491) |
Total Stockholders' Deficit | (2,343,230) | (1,691,010) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 976,258 | $ 843,739 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Jun. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
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 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 4,098,500 | 4,073,500 |
Common stock, shares outstanding | 4,098,500 | 4,073,500 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | ||||
Product sales | $ 659,262 | $ 542,118 | $ 1,132,518 | $ 773,321 |
Royalties | 15,413 | 67,492 | 15,413 | 130,440 |
Net revenues | 674,675 | 609,610 | 1,147,931 | 903,761 |
Cost of revenues | 386,487 | 397,708 | 645,331 | 605,759 |
Gross Profit | 288,188 | 211,902 | 502,600 | 298,002 |
Operating expenses | ||||
General and administrative | 402,575 | 563,271 | 847,505 | 877,355 |
Sales and marketing | 84,302 | 55,428 | 174,196 | 101,720 |
Total operating expenses | 486,877 | 618,699 | 1,021,701 | 979,075 |
(Loss) Income from operations | (198,689) | (406,797) | (519,101) | (681,073) |
Interest expense | $ (142,279) | (94,304) | $ (258,556) | (171,912) |
Other income | 12,758 | 14,757 | ||
Net (Loss) Income | $ (340,968) | $ (488,343) | $ (777,657) | $ (838,228) |
Loss per common share - basic and diluted | $ (0.09) | $ (0.12) | $ (0.19) | $ (0.21) |
Weighted average shares outstanding - basic and diluted | 4,098,500 | 4,000,000 | 4,098,500 | 4,000,000 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (777,657) | $ (838,228) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 29,942 | 4,200 |
Amortization of debt issuance costs and loan discount | 91,905 | 69,020 |
Stock based compensation | 75,000 | $ 232,314 |
Value of options issued to employees | 433 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (116,065) | $ (81,547) |
Royalties receivable | 9,587 | $ 18,133 |
Prepaid expenses | 127,337 | |
Inventory | (84,160) | $ (125,127) |
Accounts payable | 158,044 | 239,545 |
Accrued expenses and interest | (1,036) | 71,151 |
Customer deposits | 51,633 | 268,161 |
Net cash used in operating activities | (435,037) | (142,378) |
Cash flows from investing activities | ||
Acquisition of intangible assets | (8,999) | (3,596) |
Purchase of property and equipment | (1,511) | (33,634) |
Net cash used in investing activities | (10,510) | $ (37,230) |
Cash flows from financing activities | ||
Payoff of line of credit | (19,224) | |
Proceeds from line of credit | 53,421 | |
Proceeds from increase in PIMCO note payable | 500,000 | |
Net cash provided by financing activities | 534,197 | |
Net increase (decrease) in cash | 88,650 | $ (179,608) |
Cash at beginning of period | 51,016 | 360,323 |
Cash at end of period | 139,666 | 180,715 |
Supplemental cash flow information: | ||
Cash paid for interest | 103,305 | $ 65,233 |
Non-cash investing and financing activities: | ||
Value of common shares issued as a loan fee | $ 50,000 | |
Distribution | $ 100,000 | |
Issuance of common stock in exchange for LLC interests | $ 400 |
Nature of the Business and Sign
Nature of the Business and Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Nature of the Business and Significant Accounting Policies | NOTE 1 NATURE OF THE BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES History of the Company XFit Brands, Inc. (XFit or the Company) was incorporated on September 16, 2014 under the laws of the State of Nevada. The fiscal year of the Company is June 30. XFits principal business activity is the design, development, and worldwide marketing and selling of functional equipment, training gear, apparel and accessories for the impact sports market and fitness industry. Products are marketed and sold under the Throwdown® brand name to gyms, fitness facilities and directly to consumers via an internet website and through third party catalogues through a mix of independent distributors and licensees throughout the world. These financial statements represent the condensed consolidated financial statements of XFit and its wholly owned operating subsidiaries Throwdown Industries Holdings, LLC (Holdings), Throwdown Holdings, LLC (TDLLC), and Throwdown Industries, Inc. (TDINC). On September 26, 2014, XFit entered into a Contribution and Exchange Agreement with TD Legacy, LLC (TD Legacy) and Holdings under which TD Legacy contributed all of its membership interest in Holdings to XFit in exchange for the issuance by XFit of 4,000,000 shares of common stock to TD Legacy. The result of this transaction was that Holdings became a wholly owned subsidiary of XFit. Basis of presentation The accompanying condensed consolidated financial statements are unaudited, but in the opinion of management, reflect all adjustments necessary to fairly state the Companys financial position, results of operations, and cash flows as of and for the dates and periods presented. The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. These unaudited condensed consolidated financial statements should be read in conjunction with the Companys audited financial statements and footnotes as of and for the years ended June 30, 2015 and 2014, which were filed with the Companys annual report form 10K on September 28, 2015. The results of operations for the six months ended December 31, 2015 are not necessarily indicative of results that may be expected for the year ending June 30, 2016, or for any other interim period. Basis of Consolidation The condensed consolidated financial statements include the accounts of XFit, Holdings and TDINC. All significant intercompany transactions and balances have been eliminated in consolidation. The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined within Accounting Standards Codification (ASC) 810. The Company does not have any VIEs that are required to be consolidated as of December 31, 2015 or June 30, 2015. Recent Accounting Pronouncements The Company has implemented all new accounting standards and does not believe that there are any other new accounting pronouncements that have been issued that may have a material impact on the consolidated financial statements. In April 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-03, InterestImputation of Interest: Simplifying the Presentation of Debt Issuance Costs . Income (Loss) per Share The basic loss per share is calculated by dividing the Companys net loss available to common shareholders by the weighted average number of common shares during the period. The diluted net loss per share is calculated by dividing the Companys net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity. Diluted net loss per share is the same as basic net loss per share due to the lack of dilutive items. As of December 31, 2015 and June 30, 2015, the Company had 453,723 and 452,612, respectively, of potential shares exercisable that are attributable to the PIMCO warrant, which have been excluded as their effect is anti-dilutive. Use of Estimates Condensed consolidated financial statements prepared in accordance with GAAP require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management has estimated the collectability of its accounts receivable, the valuation of long-lived assets, and equity instruments issued for financing. Actual results could differ from those estimates. Loan Discounts and Loan Fees The Company amortizes loan discounts over the term of the loan using the effective interest method. Costs associated with obtaining financing are capitalized and amortized over the term of the related loans using the effective interest method. As of December 31, 2015 and June 30, 2015, the Company had total gross debt issuance costs of $199,632 and $149,632, respectively. Amortization of the debt issuance costs was $32,947 and $19,611 for the six month periods ended December 31, 2015 and 2014, respectively, which was recorded as a component of interest expense on the condensed consolidated statements of operations. Subsequent Events In accordance with ASC 855, the Company evaluated subsequent events through February 16, 2016, which was the date the consolidated financial statements were available for issue. |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | NOTE 2 PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following at: December 31, 2015 June 30, 2015 (Unaudited) Office furniture and equipment $ 48,193 $ 46,233 Warehouse equipment 15,254 13,254 Molds and dies 4,200 6,650 Total, cost 67,647 66,137 Accumulated Depreciation (29,995 ) (23,845 ) Property and equipment, net $ 37,652 $ 42,292 Depreciation expense for the six month periods ended December 31, 2015 and 2014 was $6,151 and $4,200, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Dec. 31, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets, Net | NOTE 3 INTANGIBLE ASSETS, NET Intangible assets consisted of the following at: December 31, 2015 June 30, 2015 (Unaudited) Transformations exercise fitness program $ 62,500 $ 62,500 Trademark and patent 7,811 4,396 Computer software 5,584 Total, cost 75,895 66,896 Accumulated amortization (38,423 ) (14,622 ) Intangible assets, net $ 37,472 $ 52,264 Amortization expense for the six months ended December 31, 2015 and 2014 was $23,791 and $270, respectively. |
Note Payable
Note Payable | 6 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Note Payable | NOTE 4 NOTE PAYABLE The note payable is comprised of the following at: December 31, 2015 June 30, 2015 (Unaudited) Note payable $ 2,620,098 $ 2,085,128 Add: accrued interest added to note principal 25,670 Less: unamortized loan discount (218,113 ) (277,070 ) Less: unamortized debt issuance costs (119,695 ) (102,641 ) Total note payable, net $ 2,307,960 $ 1,705,417 On June 10, 2014, the Company entered into a Note Purchase Agreement with Pacific Investment Management Company (PIMCO) that authorized the issuance of up to $2,500,000. On June 12, 2014, the Company entered into a Senior Secured Note (Note) whereby the Company drew $1,500,000. The note bears interest at 14% and an effective interest rate of 21%. This Note is collateralized by all of the assets of the Company. On February 6, 2015, the Company drew down an additional $500,000 of funds on the PIMCO Note Payable. Following the February 6, 2015 draw, the principal balance payable (including accrued interest added to the principal amount) on the PIMCO note was $2,044,300, and the Company had an additional $500,000 available to draw on this loan facility. The full principal balance outstanding related to this note is due in June 2017. The Note includes various covenants, including but not limited to, having annual audited financial statements within 90 days of the end of the fiscal year. At December 31, 2015, the Company is in compliance with all covenants. In connection with the Note, the Company granted warrants to acquire up to 10% of the Companys capital stock based on an aggregate enterprise fair market value of $15.0 million. The Company valued the warrants using the Black-Scholes option pricing model with the following variables: annual dividend yield of 0%; expected life of 10 years; risk free rate of return of 2.92%; and expected volatility of 0%. The Company estimated the value of the warrants to be $377,480, which is recorded as a loan discount and is being amortized under the effective interest method to interest expense over the term of the loan. On September 30, 2015, in consideration of the draw-down of the remaining $500,000 available on the PIMCO Note Payable, the Company issued 10,000 shares of its common stock at a fair value of $50,000 as determined by the Companys board of directors. This amount was recorded as a loan fee to be amortized over the remaining term of the PIMCO Note Payable. On October 20, 2015, the Company drew the remaining $500,000 available under its delayed draw note facility with PIMCO to increase the principal amount under this note (including the accrued interest added to the principal amount) to $2,620,098. A replacement note was issued on this date to reflect the note increase. During the six month periods ended December 31, 2015 and 2014, the Company amortized $91,905 and $69,020, respectively, of the loan fees and discount which is recorded as a component of interest expense on the consolidated statements of operations. |
Bank Line of Credit
Bank Line of Credit | 6 Months Ended |
Dec. 31, 2015 | |
Line of Credit Facility [Abstract] | |
Bank Line of Credit | NOTE 5 BANK LINE OF CREDIT On July 24, 2015, the Company entered into an unsecured line of credit with Wells Fargo Bank for up to $35,000. The line of credit bears interest at prime plus 4% and is personally guaranteed by the Companys chief executive officer. As of September 30, 2015, the balance payable on the line of credit was $19,224, which amount was repaid on October 23, 2015. After October 23, 2015, the Company borrowed an additional $34,197 from this line of credit and has an unpaid balance on the line of credit of $34,197 as of December 31, 2015. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 6 RELATED PARTY TRANSACTIONS Related Party Payable As of December 31, 2015 and June 30, 2015, the Company has $95,620 of salaries and bonuses payable to four of its officers and membership interest holders. These bonuses were to cover income taxes relating to bonuses issued during 2009. |
Stockholders' Deficit
Stockholders' Deficit | 6 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 7 STOCKHOLDERS DEFICIT On July 1, 2015, the Company issued 15,000 shares of its common stock valued at $75,000 to an employee as a signing bonus. On July 15, 2015, the board of directors approved the issuance of 63,500 stock options to employees to be utilized on a performance and retention basis. On September 30, 2015, the Company issued 10,000 shares of its common stock valued by the Companys board of directors at $50,000 to PIMCO as a loan fee in consideration of the additional $500,000 draw-down on the PIMCO Note Payable that was funded on October 20, 2015. (See Note 4Note Payable). On November 17, 2015, the Company issued options to purchase 43,000 shares of stock to six employees for services rendered. (See Note 8Commitments and ContingenciesStock Incentive Plan) |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 8 COMMITMENTS AND CONTINGENCIES Lease Commitments In June 2015, the Company entered into a lease agreement for approximately 25,788 square feet of warehouse and office space under a 38 month operating lease that commenced on October 1, 2015 and expires on October 31, 2018. The lease has monthly payments starting at $8,252 for the period October 1, 2015 through February 28, 2016. Thereafter with monthly payments ranging $16,504 to $17,509 over the term of the lease. The Company previously leased office and warehouse facilities under a lease which expired on November 30, 2015 pursuant to which it paid $4,865 per month which included operating expenses, insurance and property taxes In June 2015, the Company entered into a sublease of a portion of the premises for the period October 1, 2015 through August 31, 2016, at a monthly rental rate of $5,000. Rent expense for the six month periods ended December 31, 2015 and 2014, were $67,937 and $29,383, respectively. Litigation From time-to-time, the Company is subject to various litigation and other claims in the normal course of business. The Company establishes liabilities in connection with legal actions that management deems to be probable and estimable. No amounts have been accrued in the condensed consolidated financial statements with respect to any matters. Stock Incentive Plan On October 21, 2014, the Board of Directors and the Companys sole stockholder adopted the 2014 Stock Incentive Plan. The purpose of the 2014 Stock Incentive Plan is to advance the best interests of the Company by providing those persons who have a substantial responsibility for management and growth of the Company with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company. Further, the availability and offering of stock options and common stock under the plan supports and increases the Companys ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which the Company depends. The total number of shares available for the grant of either stock options or compensation stock under the plan is 600,000 shares of common stock, subject to adjustment. The Board of Directors administers the plan and has full power to grant stock options. At December 31, 2015, the Company had not issued any shares under the plan and had granted options to purchase 43,000 shares under the plan. On November 17, 2015, the Company granted 43,000 aggregate stock options to six employees. The value of the shares granted was determined to be $17,742 utilizing the Black-Scholes valuation model based on stock value of $5.00 at the date of issuance, a 5 year life of the options, a discount rate of 1.73%, and a zero percent stock volatility rate. For the six months ended December 31, 2015, the value of the stock options was $433 and was recorded as stock based compensation expense on the statement of operations. Equity Purchase Agreement On December 17, 2014, the Company entered into an Equity Purchase Agreement Put Shares Maximum Commitment Amount The Equity Purchase Agreement will terminate when any of the following events occur: (i) Kodiak has purchased an aggregate of $5.0 million of the Companys common stock, (ii) on December 31, 2016 or (iii) upon written notice from the Company to Kodiak. Registration Rights Agreement On December 17, 2014, the Company entered into a registration rights agreement with Kodiak Capital, LLC under which the Company is obligated to register the shares to be acquired by Kodiak pursuant to that certain Equity Purchase Agreement dated December 17, 2014, under which Kodiak agreed to purchase up to $5 million of XFit common stock, subject to certain conditions. Asset Purchase Agreement On February 26, 2015, the Company entered into an Asset Purchase Agreement to acquire the exclusive rights, title, and interest in the Transformations exercise and fitness program. The purchase price was $62,500 which comprised of a $7,500 cash payment and eleven thousand (11,000) shares of the Companys common stock that was valued at $55,000. The agreement also has a performance based earn out for a period of eighteen (18) months that is based on fifty percent (50%) of all programming services gross revenues derived from the Transformations program, up to a maximum earn out of $187,500. The earn out is payable in tranches and none of the tranches were met as of December 31, 2015. Vendor Credit Agreements On June 18 2015, the Company entered into a Stock Purchase Agreement with Ever Blooming Industrial Limited, whereby the Company issued 20,000 shares of its common stock at $5.00 per share. The purchase price is in the form of a manufacturing credit totaling $100,000 to use for future inventory purchases (the Vendor Credit). The Company can use all or part of the Vendor Credit over the next 12 months until the Vendor Credit is exhausted. As of December 31, 2015 and June 30, 2015, the Company had none and $100,000, respectively, of Vendor Credit included in prepaid expenses on the condensed consolidated balance sheets. On June 26 2015, the Company entered into a Stock Purchase Agreement with Yayu General Machinery Co., LTD, whereby the Company issued 40,000 shares of its common stock at $5.00 per share. The purchase price is in the form of a manufacturing credit of $200,000 to use for future inventory purchases (the Vendor Credit). The Company can use all or part of the Vendor Credit over the next 12 months until the Vendor Credit is exhausted. As of Deceember 31, 2015 and June 30, 2015, the Company had $191,549 and $200,000, respectively, of Vendor Credit included in prepaid expenses in the condensed consolidated balance sheets. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 9 SUBSEQUENT EVENTS None |
Nature of the Business and Si15
Nature of the Business and Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation The accompanying condensed consolidated financial statements are unaudited, but in the opinion of management, reflect all adjustments necessary to fairly state the Companys financial position, results of operations, and cash flows as of and for the dates and periods presented. The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. These unaudited condensed consolidated financial statements should be read in conjunction with the Companys audited financial statements and footnotes as of and for the years ended June 30, 2015 and 2014, which were filed with the Companys annual report form 10K on September 28, 2015. The results of operations for the six months ended December 31, 2015 are not necessarily indicative of results that may be expected for the year ending June 30, 2016, or for any other interim period. |
Basis of Consolidation | Basis of Consolidation The condensed consolidated financial statements include the accounts of XFit, Holdings and TDINC. All significant intercompany transactions and balances have been eliminated in consolidation. The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined within Accounting Standards Codification (ASC) 810. The Company does not have any VIEs that are required to be consolidated as of December 31, 2015 or June 30, 2015. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has implemented all new accounting standards and does not believe that there are any other new accounting pronouncements that have been issued that may have a material impact on the consolidated financial statements. In April 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-03, InterestImputation of Interest: Simplifying the Presentation of Debt Issuance Costs . |
Income (Loss) per Share | Income (Loss) per Share The basic loss per share is calculated by dividing the Companys net loss available to common shareholders by the weighted average number of common shares during the period. The diluted net loss per share is calculated by dividing the Companys net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity. Diluted net loss per share is the same as basic net loss per share due to the lack of dilutive items. As of December 31, 2015 and June 30, 2015, the Company had 453,723 and 452,612, respectively, of potential shares exercisable that are attributable to the PIMCO warrant, which have been excluded as their effect is anti-dilutive. |
Use of Estimates | Use of Estimates Condensed consolidated financial statements prepared in accordance with GAAP require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management has estimated the collectability of its accounts receivable, the valuation of long-lived assets, and equity instruments issued for financing. Actual results could differ from those estimates. |
Loan Discounts and Loan Fees | Loan Discounts and Loan Fees The Company amortizes loan discounts over the term of the loan using the effective interest method. Costs associated with obtaining financing are capitalized and amortized over the term of the related loans using the effective interest method. As of December 31, 2015 and June 30, 2015, the Company had total gross debt issuance costs of $199,632 and $149,632, respectively. Amortization of the debt issuance costs was $32,947 and $19,611 for the six month periods ended December 31, 2015 and 2014, respectively, which was recorded as a component of interest expense on the condensed consolidated statements of operations. |
Subsequent Events | Subsequent Events In accordance with ASC 855, the Company evaluated subsequent events through February 16, 2016, which was the date the consolidated financial statements were available for issue. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment consisted of the following at: December 31, 2015 June 30, 2015 (Unaudited) Office furniture and equipment $ 48,193 $ 46,233 Warehouse equipment 15,254 13,254 Molds and dies 4,200 6,650 Total, cost 67,647 66,137 Accumulated Depreciation (29,995 ) (23,845 ) Property and equipment, net $ 37,652 $ 42,292 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Summary of Intangible Assets | Intangible assets consisted of the following at: December 31, 2015 June 30, 2015 (Unaudited) Transformations exercise fitness program $ 62,500 $ 62,500 Trademark and patent 7,811 4,396 Computer software 5,584 Total, cost 75,895 66,896 Accumulated amortization (38,423 ) (14,622 ) Intangible assets, net $ 37,472 $ 52,264 |
Note Payable (Tables)
Note Payable (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Note Payable | The note payable is comprised of the following at: December 31, 2015 June 30, 2015 (Unaudited) Note payable $ 2,620,098 $ 2,085,128 Add: accrued interest added to note principal 25,670 Less: unamortized loan discount (218,113 ) (277,070 ) Less: unamortized debt issuance costs (119,695 ) (102,641 ) Total note payable, net $ 2,307,960 $ 1,705,417 |
Nature of the Business and Si19
Nature of the Business and Significant Accounting Policies (Details Narrative) - USD ($) | Sep. 26, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 |
Financing Receivable, Impaired [Line Items] | ||||
Net loss per share due to dilutive shares | $ 453,723 | $ 452,612 | ||
Gross debt issuance costs | 199,632 | $ 149,632 | ||
Amortization of the debt issuance costs | $ 32,947 | $ 19,611 | ||
TD Legacy [Member] | ||||
Financing Receivable, Impaired [Line Items] | ||||
Stock issued during period, shares | 4,000,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 6,151 | $ 4,200 |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) | Dec. 31, 2015 | Jun. 30, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 67,647 | $ 66,137 |
Less: Accumulated depreciation | (29,995) | (23,845) |
Total Property and equipment, net | 37,652 | 42,292 |
Office Furniture and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 48,193 | 46,233 |
Warehouse Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 15,254 | 13,254 |
Molds and Dies [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,200 | $ 6,650 |
Intangible Assets, Net (Disclos
Intangible Assets, Net (Disclosure Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortization expense | $ 23,791 | $ 270 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary of Intangible Assets (Deatils) - USD ($) | Dec. 31, 2015 | Jun. 30, 2015 |
Total, cost | $ 75,895 | $ 66,896 |
Accumulated Amortization | (38,423) | (14,622) |
Intangible assets, net | 37,472 | 52,264 |
Transformations Exercise Fitness Program [Member] | ||
Total, cost | 62,500 | 62,500 |
Trademark and Patent [Member] | ||
Total, cost | 7,811 | $ 4,396 |
Computer Software [Member] | ||
Total, cost | $ 5,584 |
Note Payable (Details Narrative
Note Payable (Details Narrative) - USD ($) | Oct. 20, 2015 | Sep. 30, 2015 | Feb. 06, 2015 | Feb. 06, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | Jun. 12, 2014 | Jun. 10, 2014 |
Debt Instrument [Line Items] | |||||||||
Note payable | $ 2,620,098 | $ 2,085,128 | |||||||
Fair value of common stock on note payable | 50,000 | ||||||||
Debt issuance costs and loan discount | $ 91,905 | $ 69,020 | |||||||
Warrant [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of granted warrants acquire | 10.00% | ||||||||
Note payable fair market value | $ 15,000,000 | ||||||||
Dividend yield | 0.00% | ||||||||
Expected life | 10 years | ||||||||
Risk free rate of return | 2.92% | ||||||||
Expected volatility | 0.00% | ||||||||
Estimated value of warrants | $ 377,480 | ||||||||
PIMCO Note Payable [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Company drew an additional funds | $ 500,000 | ||||||||
Note due date | Jun. 30, 2017 | ||||||||
PIMCO Note Payable [Member] | Delayed Draw Note Facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Company drew an additional funds | 500,000 | ||||||||
Note payable to the PIMCO Funds ("PIMCO") | $ 2,044,300 | $ 2,044,300 | |||||||
PIMCO [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable | $ 2,620,098 | ||||||||
Company drew an additional funds | 500,000 | ||||||||
Drew down remaining available amount | $ 500,000 | $ 500,000 | |||||||
Common stock shares issued on note payable | 10,000 | ||||||||
Fair value of common stock on note payable | $ 50,000 | ||||||||
Note Purchase Agreement [Member] | PIMCO [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable issuance | $ 2,500,000 | ||||||||
Note Purchase Agreement [Member] | PIMCO [Member] | Senior Secured Note [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable | $ 1,500,000 | ||||||||
Note bears interest rate | 14.00% | ||||||||
Note effective interest rate | 21.00% |
Note Payable - Schedule of Note
Note Payable - Schedule of Note Payable (Details) - USD ($) | Dec. 31, 2015 | Jun. 30, 2015 |
Debt Disclosure [Abstract] | ||
Note payable | $ 2,620,098 | $ 2,085,128 |
Add: accrued interest added to note principal | 25,670 | |
Less: unamortized loan discount | (218,113) | $ (277,070) |
Less: unamortized debt issuance costs | (119,695) | (102,641) |
Total note payable, net | $ 2,307,960 | $ 1,705,417 |
Bank Line of Credit (Details Na
Bank Line of Credit (Details Narrative) - USD ($) | Oct. 23, 2015 | Jul. 24, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Jun. 30, 2015 |
Line of credit | $ 34,197 | $ 19,224 | ||||
Line of credit and borrowed additional amount | $ 34,197 | $ 53,421 | ||||
Wells Fargo Bank [Member] | ||||||
Line of credit | $ 35,000 | |||||
Lineof credit amount repayment date | Oct. 23, 2015 | |||||
Wells Fargo Bank [Member] | Prime Rate [Member] | ||||||
Line of credit interest rate | 4.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 6 Months Ended | |
Dec. 31, 2015USD ($)Officers | Jun. 30, 2015USD ($) | |
Related Party Transactions [Abstract] | ||
Salaries and bonuses payable | $ | $ 95,620 | $ 95,620 |
Number of officers and membership holders | Officers | 4 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Nov. 17, 2015 | Oct. 20, 2015 | Sep. 30, 2015 | Jul. 15, 2015 | Jul. 02, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Class of Stock [Line Items] | |||||||
Number of common stock shares issued for employee as performance bonus | 63,500 | ||||||
Fair value of common stock on note payable as loan fee in consideration | $ 50,000 | ||||||
Six Employees [Member] | |||||||
Class of Stock [Line Items] | |||||||
Number of stock options issued | 43,000 | ||||||
PIMCO [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock shares issued as loan fee in consideration | 10,000 | ||||||
Fair value of common stock on note payable as loan fee in consideration | $ 50,000 | ||||||
Company drew an additional funds | $ 500,000 | ||||||
Signing Bonus [Member] | |||||||
Class of Stock [Line Items] | |||||||
Number of common stock shares issued | 15,000 | ||||||
Number of common stock value issued | $ 75,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Nov. 17, 2015USD ($)$ / sharesshares | Jun. 26, 2015USD ($)$ / sharesshares | Jun. 18, 2015USD ($)$ / sharesshares | Feb. 26, 2015USD ($)shares | Dec. 17, 2014USD ($) | Jun. 30, 2015USD ($)ft² | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($) |
Other Commitments [Line Items] | ||||||||
Rent expense | $ 67,937 | $ 29,383 | ||||||
Value of options issued to employees | 433 | |||||||
Cash payment of purchase price | 8,999 | $ 3,596 | ||||||
Equity Purchase Agreement [Member] | Kodiak Capital LLC [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Long-term purchase commitment, amount | $ 5,000,000 | $ 5,000,000 | ||||||
Noncontrolling interest, ownership percentage by non-controlling owners | 9.99% | |||||||
Purchase agreement termination closing date | Dec. 31, 2016 | Dec. 31, 2016 | ||||||
Registration Rights Agreement [Member] | Kodiak Capital LLC [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Registration payment arrangement, maximum potential consideration | $ 5,000,000 | |||||||
Asset Purchase Agreement [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Total purchase price | $ 62,500 | |||||||
Cash payment of purchase price | $ 7,500 | |||||||
Number of common stock shares issued for purchases of assets | shares | 11,000 | |||||||
Number of common stock value issued for purchases of assets | $ 55,000 | |||||||
Performance based earn out period | 18 months | |||||||
Performance percentage | 50.00% | |||||||
Maximum earn out amount | $ 187,500 | |||||||
Stock Purchase Agreement [Member] | Ever Blooming Industrial Limited [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Number of common stock shares issued for consideration of future inventory purchases | shares | 20,000 | |||||||
Common stock price per share | $ / shares | $ 5 | |||||||
Number of common stock value issued for consideration of future inventory purchases | $ 100,000 | |||||||
Vendor credit period | 12 months | |||||||
Prepaid expenses | $ 0 | |||||||
Stock Purchase Agreement [Member] | Yayu General Machinery Co., LTD[Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Number of common stock shares issued for consideration of future inventory purchases | shares | 40,000 | |||||||
Common stock price per share | $ / shares | $ 5 | |||||||
Number of common stock value issued for consideration of future inventory purchases | $ 200,000 | |||||||
Vendor credit period | 12 months | |||||||
Vendor Credit Agreements [Member] | Ever Blooming Industrial Limited [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Prepaid expenses | $ 100,000 | |||||||
Vendor Credit Agreements [Member] | Yayu General Machinery Co., LTD[Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Prepaid expenses | $ 200,000 | $ 191,549 | ||||||
Six Employees [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Number of stock options issued | shares | 43,000 | |||||||
Fair value of shares issued | $ 17,742 | |||||||
Stock price per share | $ / shares | $ 5 | |||||||
Stock options life | 5 years | |||||||
Stock option discount rate | 1.73% | |||||||
Stock option volatility rate | 0.00% | |||||||
2014 Stock Incentive Plan [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, number of shares available for grant | shares | 600,000 | |||||||
Number of options issued to purchase shares of common stock | shares | 43,000 | |||||||
Warehouse Facilities [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Lease expiration date | Nov. 30, 2015 | |||||||
Operating leases rent expense | $ 4,865 | |||||||
October 1, 2015 Through August 31, 2016 [Member] | Premises [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Sublease rent expense | $ 5,000 | |||||||
Lease Agreement [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Area of square feet | ft² | 25,788 | |||||||
Operating lease period | 38 months | |||||||
Lease expiration date | Oct. 31, 2018 | |||||||
Lease Agreement [Member] | Minimum [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Operating leases rent expense | $ 16,504 | |||||||
Lease Agreement [Member] | Maximum [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Operating leases rent expense | 17,509 | |||||||
Lease Agreement [Member] | October 1, 2015 Through February 28, 2016 [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Operating leases rent expense | $ 8,252 |