Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Sep. 30, 2016 | Nov. 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 | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 26,866,251 | |
Trading Symbol | XFTB | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2016 | Jun. 30, 2016 |
Current Assets | ||
Cash | $ 61,096 | $ 6,829 |
Accounts receivable | 91,814 | 179,636 |
Inventory | 373,354 | 288,184 |
Prepaid expenses | 91,047 | 114,060 |
Total Current Assets | 617,312 | 588,709 |
Long Term Assets | ||
Property and equipment, net | 32,207 | 37,676 |
Deposits | 23,467 | 23,467 |
Intangible assets, net | 5,541 | 13,640 |
TOTAL ASSETS | 678,526 | 663,492 |
Current Liabilities | ||
Accounts payable | 755,528 | 730,026 |
Related party payable | 95,620 | 95,620 |
Accrued expenses and interest | 336,787 | 273,819 |
Customer deposits | 183,636 | 129,201 |
Line of credit | 33,978 | 34,999 |
Total Current Liabilities | 1,405,549 | 1,263,665 |
Notes payable, net of discounts | 2,544,469 | 2,478,720 |
Total Liabilities | 3,950,018 | 3,742,385 |
Commitments and contingencies (Note 9) | ||
Stockholders’ Deficit | ||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued and outstanding as of September 30, 2016 and June 30, 2016 | ||
Common stock, $0.0001 par value, 1,250,000,000 shares authorized, 21,742,806 and 21,192,807 shares issued and outstanding as of September 30, 2016 and June 30, 2016, respectively | 2,174 | 2,119 |
Additional paid in capital | 4,926,015 | 4,712,245 |
Accumulated deficit | (8,199,681) | (7,793,257) |
Total Stockholders’ Deficit | (3,271,492) | (3,078,893) |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ 678,526 | $ 663,492 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Jun. 30, 2016 |
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 | 1,250,000,000 | 1,250,000,000 |
Common stock, shares issued | 21,742,806 | 21,192,807 |
Common stock, shares outstanding | 21,742,806 | 21,192,807 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||
Product sales | $ 492,007 | $ 473,257 |
Cost of revenues | 277,108 | 258,845 |
Gross profit | 214,899 | 214,412 |
Operating expenses | ||
General and administrative | 398,245 | 444,930 |
Sales and marketing | 64,175 | 89,894 |
Total operating expenses | 462,420 | 534,824 |
Loss from operations | (247,521) | (320,412) |
Interest expense | (158,932) | (116,277) |
Net Loss | $ (406,453) | $ (436,689) |
Loss per common share – basic and diluted | $ (.0186) | $ (0.022) |
Weighted average shares outstanding - basic and diluted | 21,742,806 | 20,492,500 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (406,453) | $ (436,689) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 12,093 | 15,382 |
Amortization of debt issuance costs and loan discount | 60,377 | 41,108 |
Stock based compensation | 75,000 | |
Changes in operating assets and liabilities | ||
Accounts receivable | 87,851 | 6,917 |
Royalties receivable | 25,000 | |
Prepaid expenses | 23,013 | 100,265 |
Inventory | (85,170) | (50,872) |
Accounts payable | 25,502 | 241,279 |
Accrued expenses | 69,815 | 1,528 |
Customer deposits | 54,435 | (67,516) |
Net cash used in operating activities | (158,537) | (48,598) |
Cash flows from financing activities | ||
Net proceeds from (payments on) line of credit | (1,021) | 19,224 |
Proceeds from sale of stock | 213,825 | |
Net cash provided by financing activities | 212,804 | 19,224 |
Net increase (decrease) in cash | 54,267 | (29,374) |
Cash at beginning of period | 6,829 | 51,016 |
Cash at end of period | 61,096 | 21,642 |
Supplemental cash flow information: | ||
Cash paid for interest | 30,400 | 64,525 |
Non-cash investing and financing activities: | ||
Value of common shares issued as a loan fee | 50,000 | |
Interest expense added to loan principal balance | $ 34,000 | $ 26,173 |
Nature of the Business and Sign
Nature of the Business and Significant Accounting Policies | 3 Months Ended |
Sep. 30, 2016 | |
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. XFit’s principal business activity is the design, development, and worldwide marketing and selling of functional equipment, training gear, apparel and accessories for the sports market and fitness industry. The Company provides a full portfolio of products and services spanning Mixed Martial Arts and other high and low impact fitness regimes and own the trademarks Throwdown®, EnviroTurf®, GlideBoxx® and Transformations. Products are sold to gyms, fitness facilities, universities, first responders and directly to consumers via website and through third party catalogues through a mix of independent distributors and licensees. These financial statements represent the consolidated financial statements of XFit and its wholly owned operating subsidiaries Throwdown Industries Holdings, LLC (“Holdings”), Throwdown Industries, LLC (“TDLLC”), and Throwdown Industries, Inc. (“TDINC”). Forward Stock Split On March 28, 2016, the Board of Directors approved a 1-for-5 forward split of its outstanding shares of common stock (and proportional increase of its authorized common stock from 250 million shares to 1.25 billion shares) with a record date of April 14, 2016 and an effective date of April 15, 2016. Prior to the split, the Company had 4,118,500 shares issued and outstanding and after the split, the Company had 20,592,500 shares issued and outstanding. All references to the number of shares and per-share amounts within these condensed consolidated financial statements, including the notes thereto, have been retroactively restated to reflect this stock split, unless explicitly stated otherwise. 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 Company’s 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 Company’s audited financial statements and footnotes as of and for the years ended June 30, 2016 and 2015, which were filed with the Company’s annual report Form 10-K on September 29, 2016. The results of operations for the three months ended September 30, 2016 are not necessarily indicative of results that may be expected for the year ending June 30, 2017 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 financial statements do not include the financials or any impact from it recent acquisition of EnviroTurf® and GlideBoxx® which were acquired after September 30, 2016 (see Note 11, Subsequent Events). Recent Accounting Pronouncements The Company has implemented all applicable 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, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs . Loss per Share The basic loss per share is calculated by dividing the Company’s 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 Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the period. To compute the diluted weighted average number of shares outstanding, the company begins with the basic weighted average number of shares outstanding and adds any potentially dilutive securities that are convertible into shares of common stock. Diluted net loss per share is the same as basic net loss per share due to the lack of dilutive items. For the three months ended September 30, 2016 and 2015, the Company had warrants outstanding to acquire shares of common stock that totaled 2,174,281 and 2,055,838 shares, respectively, which were excluded as their effect would have been anti-dilutive. Reclassifications Certain reclassifications were made to the prior period condensed consolidated financial statements to conform to the current period presentation. There was no change to the previously reported net loss. 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 the fair value of equity instruments issued. 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. Amortization of the debt issuance costs was $60,377 and $41,108 for the three months ended September 30, 2016 and 2015, respectively, which was recorded as a component of interest expense on the condensed consolidated statements of operations. |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | NOTE 2 – PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following at: September 30, 2016 June 30, 2016 (Unaudited) Office furniture and equipment $ 51,794 $ 51,794 Warehouse equipment 15,254 15,254 Molds and dies 4,200 4,200 Leasehold Improvements 4,227 4,227 Total, cost 75,475 75,475 Accumulated Depreciation (43,268 ) (37,799 ) Property and equipment, net $ 32,207 $ 37,676 Depreciation expense for the three months ended September 30, 2016 and 2015 was $5,469 and $4,599, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Sep. 30, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets, Net | NOTE 3 – INTANGIBLE ASSETS, NET Intangible assets consisted of the following at: September 30, 2016 June 30, 2016 (Unaudited) Trademark and patent $ 8,277 $ 8,277 Transformations exercise fitness program 62,500 62,500 Computer Software 5,584 5,584 Total, cost 76,361 76,361 Accumulated Amortization (70,820 ) (62,721 ) Intangible assets, net $ 5,541 $ 13,640 Amortization expense for the three months ended September 30, 2016 and 2015 was $8,100 and $10,783, respectively. |
Short Term Financing
Short Term Financing | 3 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Short Term Financing | NOTE 4 SHORT TERM FINANCING On May 3, 2016, the Company entered into a Securities Purchase Agreement (SPA) with a single accredited investor (Investor) under which it issued and sold to Investor a promissory note in the principal amount of $125,000 (the Note). The Note has a maturity date of December 31, 2016 and an original issue discount of $20,000. In addition, the Company agreed to pay Investors expenses in connection with the SPA and issuance of the Note of $5,000. Accordingly, the Company received net proceeds from Investor of $100,000, which proceeds were used for investor relation services. This financing is listed on the condensed consolidated balance sheets under accrued expenses. So long as the Note is outstanding, upon any issuance of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Investor in the Note or the SPA, then the Company will notify Investor of such additional or more favorable term and such term, at Investors option, shall become a part of the Note and/or SPA. The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms interest rates, and original issue discounts. Interest shall not accrue on the unpaid principal balance of this Note unless an Event of Default occurs. Upon the occurrence of an Event of Default, the outstanding balance of this Note shall bear interest at the lesser of the rate of fifteen percent (15%) per annum or the maximum rate permitted by applicable law. The Note has a prepayment deadline of November 3, 2016. Events of Default under the Note include failure to pay any amounts when due, including on the prepayment deadline, breach of covenants or representations and warranties or upon voluntary bankruptcy or insolvency proceedings. At any time following the occurrence of an Event of Default, Investor may, by written notice to the Company, declare all unpaid principal, plus all accrued interest and other amounts due hereunder to be immediately due and payable at an amount equal to 125% of the outstanding principal amount of the Note at the time of the default (Mandatory Default Amount); provided, however, that for an Event of Default for failure to pay the Note in full on the Prepayment Deadline, Investor will not accelerate the Note unless the Company fails to pay the Mandatory Default Amount (plus all accrued interest from and after the Event of Default) on the Maturity Date. |
Note Payable
Note Payable | 3 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Note Payable | NOTE 5 NOTES PAYABLE The note payable is comprised of the following at: September 30, 2016 June 30, 2016 (Unaudited) Note payable $ 2,727,968 $ 2,712,787 Less: unamortized loan discount (122,463 ) (154,462 ) Less: unamortized debt issuance costs (59,560 ) (79,605 ) Total note payable, net $ 2,545,945 $ 2,478,720 On June 10, 2014, the Company entered into a Note Purchase Agreement (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 except its Accounts Receivable which it is in second position to Crown Financial. On February 6, 2015, the Company drew down an additional $500,000 of funds on the PIMCO Agreement. Following the February 6, 2015 draw, the principal balance payable on the PIMCO note is $2,000,000, and on October 20, 2015 the Company drew down the final $500,000 in funds on this loan facility. The full principal balance outstanding related to this note is due on July 12, 2017. During November 2016 the Company finalized terms of refinancing its note payable with PIMCO. Both the note holder and the Company are in process of executing the final note agreements. The parties reached an agreement to treat the interest as Payment in Kind (PIK) and add the interest to the amount of the loan on a monthly basis. This, in effect, increased the amount of the loan. Currently the Company is finalizing an agreement with the lender to extend the note for an additional 3 years. 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 September 30, 2016, 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. |
Bank Line of Credit
Bank Line of Credit | 3 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Bank Line of Credit | NOTE 6 – BANK LINE OF CREDIT On July 24, 2015, the Company entered into an unsecured line of credit with Wells Fargo Bank. The line of credit bears interest at prime plus 4% and is personally guaranteed by the Company’s chief executive officer. There is no maturity date and the Company was in compliance as of September 30, 2016. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 7 RELATED PARTY TRANSACTIONS Related Party Payable As of September 30, 2016 and June 30, 2016, the Company has $95,620 of bonuses payable to four of its officers which also owns shares of common stock. These bonuses were to cover income taxes relating to bonuses issued during 2009. As of September 30, 2016, the Company has a salary and variable compensation payable to David E Vautrin, CEO and Charles Joiner, President of $50,224 and $66,565 respectively, which has been reflected under the caption accrued expenses and interest on the condensed consolidated balance sheets. The Company has also accrued 100% of their compensation since September 30, 2016 through November 16, 2016. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 8 – STOCKHOLDERS’ DEFICIT Equity Purchase Agreement On December 17, 2014, the Company entered into an Equity Purchase Agreement with Kodiak Capital LLC (Kodiak). The Equity Purchase Agreement provides the Company with financing whereby the Company can issue and sell to Kodiak, from time to time, shares of common stock (the “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 Company’s common stock, (ii) on December 31, 2016 or (iii) upon written notice from the Company to Kodiak. During the three months ended September 30, 2016, The Company put 2,650 shares to Kodiak and received $213,560. As of September 30, 2016, the Company has put 3,100,000 shares to Kodiak under the equity purchase agreement. There are no more registered shares remaining that could be put to Kodiak in the future. Investment Agreement with GHS Investments, LLC On August 13, 2016 the Company entered into an Investment Agreement (the “Investment Agreement”) with GHS Investments, LLC (“GHS”). The Investment Agreement gives the Company the option to sell to GHS, up to $5,000,000 worth of its common stock (“Shares”), over the period following effectiveness of a registration statement covering the resale of the Shares (the “Effective Date”) and ending thirty-six (36) months after the Effective Date. Under the terms of the Investment Agreement, the Company has the right to deliver from time to time a Put Notice to GHS stating the dollar amount of Put Shares (up to $500,000 under any individual Put Notice)(the “Put Amount”) that it intends to sell to GHS with the price per share based on the following formula: the lesser of (a) the lowest sale price for the Common Stock on the date of the Put Notice (the “Put Notice Date”); or (b) the arithmetic average of the three (3) lowest trading prices for the Company’s Common Stock during the five trading days following the Put Notice Date. The maximum number of shares that can be put to GHS is two times the average daily trading volume during the ten trading days prior to the closing of a put (the “Closing Date”). If the amount of the tranche of its outstanding shares exceeds the volume limitation, additional tranches will be delivered until the entire Purchase Amount is delivered. Each tranche, including the initial tranche, will trigger a new purchase price, and will be priced according to the purchase price definition. There are a number of conditions to the Company effecting a put, including the effectiveness of the registration statement. As of September 30, 2016 the registration statement for the above Investment Agreement still needs to be amended to include the consolidated financials of the recent EnviroTurf acquisition (see Note 11, Subsequent Events). Therefore the Company has not placed any shares under this GHS agreement. Vendor Credit Agreements On June 26 2015, the Company entered into a Stock Purchase Agreement with Yayu General Machinery Co., LTD, whereby the Company issued 200,000 shares of its common stock at $1.00 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 until the Vendor Credit is exhausted. As of September 30, 2016 and June 30, 2016, the Company had $82,112 and $105,096, respectfully, of Vendor Credit included in prepaid expenses in the condensed consolidated balance sheets. Stock Incentive Plan On October 21, 2014, the Board of Directors and the Company’s 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 Company’s 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 3,000,000 shares of common stock, subject to adjustment. The Board of Directors administers the plan and has full power to grant stock options. As of September 30, 2016, the Company has not issued any options under the plan. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9– COMMITMENTS AND CONTINGENCIES Lease Commitments On June 18, 2015, the Company entered into a lease agreement for approximately 25,788 square feet of warehouse and office space under a thirty-eight (38) month operating lease that commences on September 1, 2015 and expires on October 31, 2018. The lease has monthly payments of $16,504 with standard rent increases over the life of the lease scheduled in October of each year. On June 5, 2015, the Company entered into a sublease of a portion of the premises for the period September 1, 2015 through January 31, 2017, at a monthly rental rate of $5,000. Rent expense for the three-month ended September 30, 2016 and 2015, was $67,870 and $15,182, 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 consolidated financial statements with respect to any matters. |
Asset Purchases
Asset Purchases | 3 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Asset Purchases | NOTE 10 – ASSET PURCHASES 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 Company’s 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 within the 18-month earn-out period that ended on September 26, 2016. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 11 SUBSEQUENT EVENTS Acquisition of Assets of Environmental Turf Services, LLC On October 14, 2016 but effective as of October 10, 2016, XFit Brands, Inc. (XFit or the Company) acquired the assets of Environmental Turf Services, LLC (EnviroTurf) pursuant to a definitive Asset Purchase Agreement dated October 10, 2016 (the Purchase Agreement) between the Company and EnviroTurf. The acquired assets consisted of inventory, accounts receivable, equipment and vehicles, the registered trademark ENVIROTURF and the associated goodwill. The acquisition was completed on October 14, 2016 upon delivery and acceptance of the schedules to the Purchase Agreement (the Acquisition). At the closing of the Acquisition, the Company paid and issued to EnviroTurf a total purchase price of $346,000 as follows: (i) assumption of $200,000 of EnviroTurfs accounts payable and (ii) 2,000,000 unregistered shares of XFit Common Stock (the Purchase Price Shares), which were valued at the closing price on the date of XFits Common Stock on the date of the Acquisition. The Company will finance the Acquisition and related costs through a combination of cash on hand and internally-generated working capital. The Purchase Agreement contains customary representations, warranties and covenants by the parties. Acquisition of Assets of Glideboxx LLC On October 10, 2016 the Company acquired all of the rights, title, and interest to the GlideBoxx Product, USPTO # 7857734, and related training programs and marketing materials to the Company free and clear of any and all liens, encumbrances, and or liabilities for a purchase price of 100,000 shares of common stock and will also pay Glideboxx LLC 5% (five percent) in total of all net revenue derived from sales of the GlideBoxx for a period of 7 (seven) years in cash or kind. Net Revenue is defined as Gross revenue net discounts and returns. Issuance of Options On October 7, 2016, the Company issued 825,000 options to employees in accordance to the Stock Incentive Plan. Options generally vest over three years, expire after 3 years, and have an exercise price of $0.07 per share. Refinancing with PIMCO During November 2016 the Company finalized terms of refinancing its note payable with PIMCO. Both the note holder and the Company are in process of executing the final note agreements. The revised terms of the financing arrangement will include a new note with a principal of $3,500,000 which bears interest at 9% per annum and is due July 12, 2020. In addition, the Company will allow PIMCO to convert any accrued interest due as of November 2016 into shares of the Companys common stock. |
Nature of the Business and Si17
Nature of the Business and Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Forward Stock Split | Forward Stock Split On March 28, 2016, the Board of Directors approved a 1-for-5 forward split of its outstanding shares of common stock (and proportional increase of its authorized common stock from 250 million shares to 1.25 billion shares) with a record date of April 14, 2016 and an effective date of April 15, 2016. Prior to the split, the Company had 4,118,500 shares issued and outstanding and after the split, the Company had 20,592,500 shares issued and outstanding. All references to the number of shares and per-share amounts within these condensed consolidated financial statements, including the notes thereto, have been retroactively restated to reflect this stock split, unless explicitly stated otherwise. |
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 Company’s 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 Company’s audited financial statements and footnotes as of and for the years ended June 30, 2016 and 2015, which were filed with the Company’s annual report Form 10-K on September 29, 2016. The results of operations for the three months ended September 30, 2016 are not necessarily indicative of results that may be expected for the year ending June 30, 2017 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 financial statements do not include the financials or any impact from it recent acquisition of EnviroTurf® and GlideBoxx® which were acquired after September 30, 2016 (see Note 11, Subsequent Events). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has implemented all applicable 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, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs . |
Loss per Share | Loss per Share The basic loss per share is calculated by dividing the Company’s 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 Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the period. To compute the diluted weighted average number of shares outstanding, the company begins with the basic weighted average number of shares outstanding and adds any potentially dilutive securities that are convertible into shares of common stock. Diluted net loss per share is the same as basic net loss per share due to the lack of dilutive items. For the three months ended September 30, 2016 and 2015, the Company had warrants outstanding to acquire shares of common stock that totaled 2,174,281 and 2,055,838 shares, respectively, which were excluded as their effect would have been anti-dilutive. |
Reclassifications | Reclassifications Certain reclassifications were made to the prior period condensed consolidated financial statements to conform to the current period presentation. There was no change to the previously reported net loss. |
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 the fair value of equity instruments issued. 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. Amortization of the debt issuance costs was $60,377 and $41,108 for the three months ended September 30, 2016 and 2015, respectively, which was recorded as a component of interest expense on the condensed consolidated statements of operations. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment consisted of the following at: September 30, 2016 June 30, 2016 (Unaudited) Office furniture and equipment $ 51,794 $ 51,794 Warehouse equipment 15,254 15,254 Molds and dies 4,200 4,200 Leasehold Improvements 4,227 4,227 Total, cost 75,475 75,475 Accumulated Depreciation (43,268 ) (37,799 ) Property and equipment, net $ 32,207 $ 37,676 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Summary of Intangible Assets | Intangible assets consisted of the following at: September 30, 2016 June 30, 2016 (Unaudited) Trademark and patent $ 8,277 $ 8,277 Transformations exercise fitness program 62,500 62,500 Computer Software 5,584 5,584 Total, cost 76,361 76,361 Accumulated Amortization (70,820 ) (62,721 ) Intangible assets, net $ 5,541 $ 13,640 |
Note Payable (Tables)
Note Payable (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Note Payable | The note payable is comprised of the following at: September 30, 2016 June 30, 2016 (Unaudited) Note payable $ 2,727,968 $ 2,712,787 Less: unamortized loan discount (122,463 ) (154,462 ) Less: unamortized debt issuance costs (59,560 ) (79,605 ) Total note payable, net $ 2,545,945 $ 2,478,720 |
Nature of the Business and Si21
Nature of the Business and Significant Accounting Policies (Details Narrative) - USD ($) | Mar. 28, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2016 |
Financing Receivable, Impaired [Line Items] | ||||
Forward split stock description | 1-for-5 forward split | |||
Excess stock shares authorized | 250,000,000 | |||
Common stock, shares authorized | 1,250,000,000 | 1,250,000,000 | ||
Common stock, shares issued | 21,742,806 | 21,192,807 | ||
Common stock, shares outstanding | 21,742,806 | 21,192,807 | ||
Warrants outstanding to acquire shares of common stock | 2,174,281 | 2,055,838 | ||
Amortization of debt issuance costs | $ 60,377 | $ 41,108 | ||
April 15, 2016 [Member] | ||||
Financing Receivable, Impaired [Line Items] | ||||
Common stock, shares issued | 4,118,500 | |||
Common stock, shares outstanding | 4,118,500 | |||
April 15, 2016 [Member] | Forward Stock Split [Member] | ||||
Financing Receivable, Impaired [Line Items] | ||||
Common stock, shares issued | 20,592,500 | |||
Common stock, shares outstanding | 20,592,500 |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 5,469 | $ 4,599 |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) | Sep. 30, 2016 | Jun. 30, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 75,475 | $ 75,475 |
Less: Accumulated depreciation | (43,268) | (37,799) |
Total Property and equipment, net | 32,207 | 37,676 |
Office Furniture and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 51,794 | 51,794 |
Warehouse Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 15,254 | 15,254 |
Molds and Dies [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,200 | 4,200 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,227 | $ 4,227 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortization expense | $ 8,100 | $ 10,783 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary of Intangible Assets (Details) - USD ($) | Sep. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 |
Total, cost | $ 76,361 | $ 76,361 | |
Accumulated Amortization | (70,820) | (62,721) | |
Intangible assets, net | $ 5,541 | 13,640 | |
Trademark and Patent [Member] | |||
Total, cost | 8,277 | $ 8,277 | |
Transformations Exercise Fitness Program [Member] | |||
Total, cost | 62,500 | 62,500 | |
Computer Software [Member] | |||
Total, cost | $ 5,584 | $ 5,584 |
Short Term Financing (Details N
Short Term Financing (Details Narrative) - USD ($) | May 03, 2016 | Sep. 30, 2016 | Jun. 30, 2016 |
Original issue discount amount | $ 122,463 | $ (154,462) | |
Securities Purchase Agreement [Member] | Single Accredited Investor [Member] | |||
Debt principal amount | $ 125,000 | ||
Debt maturity date | Dec. 31, 2016 | ||
Original issue discount amount | $ 20,000 | ||
Debt issued to pay related party debt expenses | 5,000 | ||
Proceeds from related party debt | $ 100,000 | ||
Debt bear interest rate | 15.00% | ||
Debt default rate | 125.00% |
Note Payable (Details Narrative
Note Payable (Details Narrative) - USD ($) | Oct. 20, 2015 | Feb. 06, 2015 | Sep. 30, 2016 | Jun. 30, 2016 | Jun. 12, 2014 | Jun. 10, 2014 |
Debt Instrument [Line Items] | ||||||
Note payable | $ 2,727,968 | $ 2,712,787 | ||||
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 | Jul. 12, 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") | $ 2,000,000 | |||||
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 ($) | Sep. 30, 2016 | Jun. 30, 2016 |
Debt Disclosure [Abstract] | ||
Note payable | $ 2,727,968 | $ 2,712,787 |
Less: unamortized loan discount | (122,463) | 154,462 |
Less: unamortized debt issuance costs | (59,560) | (79,605) |
Total Note Payable, net | $ 2,544,469 | $ 2,478,720 |
Bank Line of Credit (Details Na
Bank Line of Credit (Details Narrative) | Jul. 24, 2015 |
Chief Executive Officer [Member] | |
Percentage of line of credit bears interest at prime plus rate | 4.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 3 Months Ended | |
Sep. 30, 2016USD ($)Officers | Jun. 30, 2016USD ($) | |
Related Party Transaction [Line Items] | ||
Salaries and bonuses payable | $ 95,620 | $ 95,620 |
Number of officers and membership holders | Officers | 4 | |
David E Vautrin [Member] | ||
Related Party Transaction [Line Items] | ||
Salary and variable compensation payable | $ 50,224 | |
Percentage of accrued compensation | 100.00% | |
Charles Joiner [Member] | ||
Related Party Transaction [Line Items] | ||
Salary and variable compensation payable | $ 66,565 | |
Percentage of accrued compensation | 100.00% |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Jun. 26, 2015 | Dec. 17, 2014 | Sep. 30, 2016 | Aug. 13, 2016 | Jun. 30, 2016 |
2014 Stock Incentive Plan [Member] | |||||
Class of Stock [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, number of shares available for grant | 3,000,000 | ||||
Equity Purchase Agreement [Member] | Kodiak Capital LLC [Member] | |||||
Class of Stock [Line Items] | |||||
Long-term purchase commitment, amount | $ 5,000,000 | $ 5,000,000 | |||
Noncontrolling interest, ownership percentage by noncontrolling owners | 9.99% | ||||
Purcahse agreement termination closing date | Dec. 31, 2016 | Dec. 31, 2016 | |||
Number of common stock shares issued | 2,650 | ||||
Number of common stock value issued | $ 213,560 | ||||
Number of common stock shares issued for services | 3,100,000 | ||||
Investment Agreement [Member] | |||||
Class of Stock [Line Items] | |||||
Maximum value of common stock authorized to sale | $ 5,000,000 | ||||
Value of put option | $ 500,000 | ||||
Stock Purchase Agreement [Member] | Yayu General Machinery Co., LTD[Member] | |||||
Class of Stock [Line Items] | |||||
Number of common stock shares issued for consideration of future inventory purchases | 200,000 | ||||
Common stock price per share | $ 1 | ||||
Number of common stock value issued for consideration of future inventory purchases | $ 200,000 | ||||
Prepaid expenses | $ 82,112 | $ 105,096 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Jun. 18, 2015USD ($)ft² | Jun. 05, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) |
Other Commitments [Line Items] | ||||
Lease expiration date | Jan. 31, 2017 | |||
Sublease rent expense | $ 5,000 | |||
Rent expense | $ 67,870 | $ 15,182 | ||
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 | |||
Operating leases rent expense | $ 16,504 |
Asset Purchases (Details Narrat
Asset Purchases (Details Narrative) - Asset Purchase Agreement [Member] | Feb. 26, 2015USD ($)shares |
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 |
Percentage of programming services gross revenues | 50.00% |
Maximum earn out amount | $ 187,500 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Nov. 30, 2016 | Oct. 10, 2016 | Oct. 07, 2016 | Oct. 20, 2015 | Sep. 30, 2016 | Jun. 30, 2016 |
Accounts payable | $ 755,528 | $ 730,026 | ||||
PIMCO Note Payable [Member] | ||||||
Debt maturity date | Jul. 12, 2017 | |||||
Subsequent Event [Member] | PIMCO Note Payable [Member] | ||||||
Debt principal amount | $ 3,500,000 | |||||
Note bears interest rate | 9.00% | |||||
Debt maturity date | Jul. 12, 2020 | |||||
Subsequent Event [Member] | Stock Incentive Plan [Member] | ||||||
Number of option to employees purchase plan, shares | 825,000 | |||||
Option expiry term | 3 years | |||||
Number of option exercise price, per share | $ 0.07 | |||||
Subsequent Event [Member] | Glideboxx LLC [Member] | ||||||
Number of common stock shares issued for purchases of assets | 100,000 | |||||
Concentration risk, percentage | 5.00% | |||||
Revenue of cash or kind period | 7 years | |||||
Subsequent Event [Member] | Purchase Agreement [Member] | Environmental Turf Services, LLC [Member] | ||||||
Total purchase price | 346,000 | |||||
Accounts payable | $ 200,000 | |||||
Number of common stock shares issued for purchases of assets | 2,000,000 |