Generation NEXT Franchise Brands, Inc.

CIK:0001526689|SEC Filings

Condensed Consolidated Statements of Operations - USD ($)	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Revenues:
Total revenue, net	$ 18,397,434	$ 341,428
Cost of sale	17,114,222	260,202
Gross profit	1,283,212	81,226
Operating expenses:
Personnel	4,846,891	3,753,473
Marketing	1,645,632	4,491,619
Professional fees	1,687,785	544,172
Insurance	429,021	287,069
Rent	329,956	184,672
Depreciation and amortization	427,336	425,526
Stock compensation	2,947,233	1,480,538
Research development and engineering	4,045,940	5,181,587
Provision for franchisee refund	354,743	(34,238)
Other	3,214,183	1,258,379
Total operating expenses	19,928,720	17,572,797
Loss from operations	(18,645,508)	(17,491,571)
Other expenses:
Interest expense	(288,779)	(145,598)
Accretion of discount on notes payable	(113,715)
Gain (loss) on disposition of assets	(69,375)
Other income	8,175
Loss before provision for income taxes	(19,109,202)	(17,637,169)
Provision for income taxes	9,600	4,800
Loss from continuing operations	(19,099,602)	(17,632,369)
Gain (loss) from discontinued operations	141,502	(1,894,223)
Net loss	$ (18,958,100)	$ (19,526,592)
Net loss per share - basic and diluted (in dollars per share)	$ (0.26)	$ (0.41)
Weighted average shares used in computing net loss per share - basic and diluted (in shares)	71,677,171	47,615,411
Vending machine sales, net
Revenues:
Total revenue, net	$ 16,579,044	$ 137,029
Franchise fees
Revenues:
Total revenue, net	1,385,905	13,750
Company owned machine sales
Revenues:
Total revenue, net	54,156	165,686
Royalties
Revenues:
Total revenue, net	314,818	796
Other
Revenues:
Total revenue, net	$ 63,511	$ 24,167

Condensed Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net loss	$ (18,958,100)	$ (19,526,592)
Adjustments to reconcile net loss to net cash flows provided by operating activities:
Depreciation and amortization	427,336	425,526
Interest accretion on notes payable	113,715	70,116
Loss on derivative liability		220,003
Disposal of asset	69,375
Stock-based compensation	2,947,233	1,636,491
Deferred rent	10,169	15,166
Write-off of accounts receivable		67,560
Bad debt expense		(24,699)
Provision for obsolete inventory		350,000
Stock issued for services	136,869	1,161,448
Changes in operating assets and liabilities:
Accounts receivable	48,523	200,519
Contract asset - due from franchisee	6,120,815	5,380,701
Inventory on-hand	(3,741,253)	(3,158,971)
Deposits for inventory	3,668,459	(5,152,897)
Prepaid expenses and other current assets	(8,166)	235,359
Deposits	(23,118)	(12,500)
Accounts payable and accrued liabilities	3,916,985	2,215,678
Customer advances and deferred revenues	(13,572,386)	12,694,610
Provision for franchisee rescissions and refunds	5,436,219	71,503
Accrued personnel expenses	(112,117)	162,242
Cash flows used in operating activities	(13,538,642)	(2,966,713)
Cash flows from investing activities:
Purchases of property plant		(91,252)
Purchases of intangible assets	(757,535)
Cash flows used in investing activities	(757,535)	(91,252)
Cash flows from financing activities:
Proceeds from issuance of convertible notes payable	2,122,010
Proceeds from issuance of notes payable	383,163	(1,187,608)
Payments of notes payable to related party	(240,007)	(113,180)
Proceeds from issuance of common stock, net of issuance costs	1,977,994	16,362,509
Cash flows provided by financing activities	4,243,160	15,061,721
Change in cash and restricted cash	(10,053,017)	12,003,756
Cash and restricted cash, beginning of period	13,756,278	1,752,522
Cash and restricted cash, end of period	3,703,261	13,756,278
Cash paid for:
Interest expense	275,175	93,963
Income taxes	0	0
Supplemental disclosure of non-cash investing and financing activities:
Derivative liability associated with convertible note payable	695,989
Extinguishment of derivative liability		780,010
Stock subscription receivable		300,000
Conversion of debt and accrued interest into shares of common stock	231,915	442,845
Cashless exercise of options	$ 622	$ 628

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2019	Jun. 30, 2018
Current assets:
Cash	$ 517,371	$ 10,017,667
Restricted cash	3,185,890	3,710,694
Accounts receivable	24,056	54,128
Contract assets - due from franchisees	1,130,136	7,250,951
Stock subscriptions receivable		300,000
Inventory on-hand, net of allowance for obsolete inventory of $2,201,699 and $300,000, respectively	6,949,033	3,011,484
Deposit for inventory	1,484,438	5,152,897
Prepaid expenses and other current assets	78,315	70,149
Current assets held for disposition		292,664
Total current assets	13,369,239	29,860,634
Property and equipment, less accumulated depreciation of $97,987 and $115,889, respectively	62,693	199,791
Intangible assets, net of accumulated amortization of $1,075,666 and $686,052, respectively	2,238,045	1,870,124
Investment in 19 Degrees Corporate Service, LLC	80,000
Deposit	68,522	45,404
Total assets	15,818,499	31,975,953
Current liabilities:
Accounts payable and accrued liabilities	8,644,769	4,531,547
Contract liabilities - customer advances and deferred revenues	23,805,074	37,221,943
Provision for franchisee rescissions and refunds	7,856,340	1,924,121
Accrued personnel expenses	441,197	553,314
Notes payable, net of discount of $67,710 and $49,716, respectively	1,314,021	629,017
Convertible notes payable, net of discount of $637,990 and $0, respectively	1,375,000	250,000
Contingent liability	200,000	200,000
Derivative liability	695,989
Due to related party	296,779	536,786
Deferred rent	44,710	34,541
Current liabilities held for disposition		1,291,676
Total current liabilities	44,673,879	47,172,945
Notes payable - long term, net of discount of $3,000 and $49,716, respectively	37,000	736,115
Convertible notes payable - long term, net of discount of $0 and $0, respectively	997,010
Total liabilities	45,707,889	47,909,060
Commitments and contingencies (Notes 5 and 7)
Stockholders' deficit:
Preferred stock; $0.001 par value; 25 million shares authorized; no shares issued and outstanding
Common stock; $0.001 par value; 100 million shares authorized; 73,420,573 and 69,378,052 outstanding, respectively	73,419	69,376
Additional paid-in capital	32,532,576	27,515,602
Accumulated deficit	(62,495,385)	(43,518,085)
Total stockholders' deficit	(29,889,390)	(15,933,107)
Total liabilities and stockholders' deficit	$ 15,818,499	$ 31,975,953