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Document And Entity Information

v3.3.1.900
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 0001623554  
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 2016  

Condensed Consolidated Balance Sheets

v3.3.1.900
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 Balance Sheets (Parenthetical)

v3.3.1.900
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 Statements of Operations (Unaudited)

v3.3.1.900
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 Statements of Cash Flows (Unaudited)

v3.3.1.900
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 Significant Accounting Policies

v3.3.1.900
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. XFit’s 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 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, 2015 and 2014, which were filed with the Company’s 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, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs (“ASU-2015-03”). ASU 2015-03 requires companies to present debt issuance costs as a direct deduction from the carrying value of that debt liability. ASU 2015-03 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is allowed for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e., the balance sheet for each period is adjusted). The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Income (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 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

v3.3.1.900
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

v3.3.1.900
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

v3.3.1.900
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 Company’s 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 Company’s 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

v3.3.1.900
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 Company’s 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

v3.3.1.900
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

v3.3.1.900
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 Company’s 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 4—Note Payable).

 

On November 17, 2015, the Company issued options to purchase 43,000 shares of stock to six employees for services rendered. (See Note 8—Commitments and Contingencies—Stock Incentive Plan)

Commitments and Contingencies

v3.3.1.900
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 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 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 with Kodiak Capital LLC. 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”) up to an aggregate purchase price of $5.0 million (the “Maximum Commitment Amount”) during the commitment period. The commitment period is defined as the period beginning on the trading day immediately following the effectiveness of the registration statement and ending December 31, 2016. In addition, in no event shall Kodiak be entitled to purchase that number of Put Shares which when added to the sum of the number of shares of common stock already beneficially owned by Kodiak would exceed 9.99% of the number of shares of common stock outstanding on the applicable closing date.

 

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.

 

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 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 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

v3.3.1.900
Subsequent Events
6 Months Ended
Dec. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events

NOTE 9 – SUBSEQUENT EVENTS

 

None

Nature of the Business and Significant Accounting Policies (Policies)

v3.3.1.900
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 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, 2015 and 2014, which were filed with the Company’s 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, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs (“ASU-2015-03”). ASU 2015-03 requires companies to present debt issuance costs as a direct deduction from the carrying value of that debt liability. ASU 2015-03 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is allowed for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e., the balance sheet for each period is adjusted). The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Income (Loss) per Share

Income (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 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 (Tables)

v3.3.1.900
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)

v3.3.1.900
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)

v3.3.1.900
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 Significant Accounting Policies (Details Narrative)

v3.3.1.900
Nature of the Business and Significant Accounting Policies (Details Narrative) - USD ($)
6 Months Ended 12 Months Ended
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 (Details Narrative)

v3.3.1.900
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 - Summary of Property and Equipment (Details)

v3.3.1.900
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 (Disclosure Narrative)

v3.3.1.900
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 - Summary of Intangible Assets (Deatils)

v3.3.1.900
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)

v3.3.1.900
Note Payable (Details Narrative) - USD ($)
6 Months Ended
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 Payable (Details)

v3.3.1.900
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 Narrative)

v3.3.1.900
Bank Line of Credit (Details Narrative) - USD ($)
6 Months Ended
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 (Details Narrative)

v3.3.1.900
Related Party Transactions (Details Narrative)
6 Months Ended
Dec. 31, 2015
USD ($)
Officers
Jun. 30, 2015
USD ($)
Related Party Transactions [Abstract]    
Salaries and bonuses payable | $ $ 95,620 $ 95,620
Number of officers and membership holders | Officers 4  

Stockholders' Deficit (Details Narrative)

v3.3.1.900
Stockholders' Deficit (Details Narrative) - USD ($)
6 Months Ended
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 (Details Narrative)

v3.3.1.900
Commitments and Contingencies (Details Narrative)
1 Months Ended 6 Months Ended
Nov. 17, 2015
USD ($)
$ / shares
shares
Jun. 26, 2015
USD ($)
$ / shares
shares
Jun. 18, 2015
USD ($)
$ / shares
shares
Feb. 26, 2015
USD ($)
shares
Dec. 17, 2014
USD ($)
Jun. 30, 2015
USD ($)
ft²
Dec. 31, 2015
USD ($)
shares
Dec. 31, 2014
USD ($)
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     $ 5.00          
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   $ 5.00            
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 $ 5.00              
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