UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X]	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2015
[  ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number: 000-54434

 

Oxford City Football Club, Inc.

(Exact name of registrant as specified in its charter)

 

Florida		05-0554762
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

 

10 Fairway Drive, Suite 302, Deerfield Beach, FL 33441

(Address of principal executive offices)

 

1.866.776.8674

(Registrant’s telephone number)

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [  ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [  ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

[  ] Large accelerated filer	[  ] Accelerated filer
[  ] Non-accelerated filer	[X] Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [  ] Yes [X] No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 4,300,816 as of November 13, 2015.

 

 

 

TABLE OF CONTENTS

 

		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4:	Controls and Procedures	13
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	14
Item 1A:	Risk Factors	14
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3:	Defaults Upon Senior Securities	14
Item 4:	Mine Safety Disclosures	14
Item 5:	Other Information	14
Item 6:	Exhibits	15

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Our financial statements included in this Form 10-Q are as follows:

 

F-1	Condensed Consolidated Balance Sheets as of September 30, 2015 (unaudited) and June 30, 2015;
F-2	Condensed Consolidated Statements of Operations for the three months ended September 30, 2015 and 2014 (unaudited);
F-3	Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2015 and 2014 (unaudited);
F-4	Notes to Condensed Consolidated Financial Statements (unaudited).

 

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2015 are not necessarily indicative of the results that can be expected for the full year.

 

 

 

OXFORD CITY FOOTBALL CLUB, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		September 30, 2015				June 30, 2015
		(unaudited)
ASSETS
Current assets:
Cash		$	1,522			$	172,653
Accounts receivable			28,551				14,070
Inventory			10,607				13,286
Prepaid expenses			18,227				19,359
Total current assets			58,907				219,368
Property and equipment, net			59,938				65,208
Premier Arena Soccer League membership, deposit			14,000				10,000
Online course development			128,000				128,000
Total assets		$	260,845			$	422,576
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities		$	114,970			$	176,722
Officer compensation payable			3,815				8,132,337
Deferred revenue			283				5,968
Deposits			10,000				10,000
Loan payable			24,842				27,495
Due to related parties			249,717				256,340
Total current liabilities			403,627				8,608,862
Promissory note (net of discount $0 and $2,351,872, respectively) - related party			-				248,128
Total liabilities			403,627				8,856,990
Deficit:
Preferred stock: $0.0001 par value; authorized 40,000,000 shares; issued and outstanding: 0 and 0, respectively			-				-
Series A Convertible Preferred Stock: $0.0001 par value; designated 10,000,000 shares; issued and outstanding: 2 and 2 respectively			-				-
Series B Convertible Preferred Stock: $0.0001 par value; designated 5,000,000 shares; issued and outstanding: 42 and 42, respectively			-				-
Common stock: $0.0001 par value; authorized 500,000,000 shares; issued and outstanding: 1,670,382 and 51,072, respectively			167				5
Additional paid-in capital			31,235,145				14,027,970
Stock payable			2,298,641				288,641
Shares subscription receivable			(30,000	)			(20,000	)
Treasury Stock			(1,338	)			(1,338	)
Accumulated other comprehensive loss			(91,042	)			(95,569	)
Accumulated deficit			(32,355,514	)			(21,555,578	)
Total stockholders' equity (deficit)			1,056,059				(7,355,869	)
Non-controlling interest			(1,198,841	)			(1,078,545	)
Total deficit			(142,782	)			(8,434,414	)
Total liabilities and deficit		$	260,845			$	422,576

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

 

		For the three months ended September 30, 2015				For the three months ended September 30, 2014
Sales		$	136,343			$	122,777
Cost of sales			20,731				14,757
Gross profit			115,612				108,020
Operating expenses:
General and administrative			227,539				341,063
Amortization			-				8,437
Depreciation			3,791				3,127
Advertising			6,492				-
Event expenses			10,923				-
Salaries and wages			69,263				38,155
Officer compensation			1,109,589				1,511,500
Professional fees			43,397				76,628
Stock-based fees			3,580,000				-
Total operating expenses			5,050,994				1,978,910
Other income (loss):
Interest expense			(33,633	)			-
Loss on extinguishment of debt			(5,343,944	)			-
Amortization on debt discount			(550,495	)			-
			(5,928,072	)			-
Loss before income taxes			(10,863,454	)			(1,870,890	)
Provision for income taxes			-				-
Net loss			(10,863,454	)			(1,870,890	)
Net income attributable to non-controlling interest			63,520				7,597
Net loss attributable to Oxford City Football Club, Inc. shareholders’			(10,799,934	)			(1,863,293	)
Other comprehensive income Foreign exchange translation adjustment			4,527				7,216
Comprehensive loss		$	(10,795,407	)		$	(1,856,077	)
Comprehensive income attributable to non-controlling interest			(2,264	)			(3,608	)
Comprehensive loss attributable to Oxford City Football Club, Inc. shareholders’		$	(10,797,671	)		$	(1,859,685	)
Net loss per common share (basic and fully diluted)		$	(200.43	)		$	(240.51	)
Weighted average number of shares outstanding (basic and fully diluted)			54,201				7,779

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the three months ended September 30, 2015				For the three months ended September 30, 2014
Cash flows from operating activities:
Net loss		$	(10,863,454	)		$	(1,870,890	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			3,791				3,127
Amortization			-				8,437
Bad debt expense			-				-
Stock-based fees			3,580,000				-
Interest expense			33,633				-
Loss on extinguishment of debt			5,343,944				-
Amortization on debt discount			550,495				-
Changes in operating assets and liabilities:
Increase in accounts receivable			(22,321	)			(1,666	)
Decrease in advances due from Academy of Healing Art, Message and Facial Skin Care, Inc.			-				74,040
Decrease (increase) in inventory			2,284				(835	)
Decrease in prepaid expense			1,132				9,612
Increase in officer compensation payable			1,003,815				1,346,500
Decrease accounts payable and accrued liabilities			(52,108	)			(201,797	)
Decrease in deferred revenue			(5,685	)			-
Increase (decrease) in due to related parties			2,634				(2,400	)
Net cash used in operating activities			(421,840	)			(635,872	)
Cash flows from investing activities:
Purchase of fixed assets			-				(5,249	)
Oxford City Football club membership			-				(25,000	)
Major Soccer Arena League membership			(4,000	)			-
Investment in joint venture			-				(100,000	)
Net cash used in investing activities			(4,000	)			(130,249	)
Cash flows from financing activities:
Proceeds from issuance of common stock			20,000				233,546
Payments to related party			(1,704	)			-
Promissory notes			298,800				-
Payments to non-controlling interest			(58,047	)			(116,201	)
Net cash provided by financing activities			259,049				117,345
Foreign exchange loss			(4,340	)			(7,233	)
Net change in cash			(171,131	)			(656,009	)
Cash, beginning of period			172,653				1,259,359
Cash, end of period		$	1,522			$	603,350
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest		$	-			$	-
Cash paid for taxes		$	-			$	-
Non-cash investing and financing activities:
Stock issued for promissory notes and accrued interest		$	8,060,000			$	-
Derecognition of long-term debt		$	-			$	732,758
Derecognition of property, plant and equipment		$	-			$	883,086
Promissory note issued for consulting services		$	1,580,000			$	-

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

1.	DESCRIPTION OF BUSINESS AND HISTORY

 

Description of business – Oxford City Football Club, Inc. (the “Company” or “Oxford City”) is engaged in a vertically integrated growth strategy across a spectrum of sectors which includes professional sports teams, academic institutions, media and entertainment and real estate and property management. Oxford City has been a publicly listed company since 2009 and was incorporated in 2003.

 

Effective July 1, 2013, all the stockholders and directors of Oxford City Football Club (Trading) Limited entered into a Voting Agreement whereby the Company, a 49% shareholder, has the right to appoint four Board members, Guerriero, LLC, a company which our CEO and director is the sole member and 1% shareholder of the Company, has the right to appoint one Board member and Oxford City Youth Football Club Limited, a 50% shareholder, has the right to appoint five Board members. Guerriero, LLC has agreed to appoint a Board Member as directed by the Company. In the case of all and any ties in voting of the Board of Directors, the Directors have agreed to give the Managing Director of the Company the authority to be the deciding vote. The Company has the ultimate right to select the Managing Director. As a result of the Voting Agreement, the Company controls greater than 50% of the votes on the Board of Directors of Oxford City Football Club (Trading) Limited. In accordance with ASC 810, the Company on July 1, 2013 includes the accounts of Oxford City Football Club (Trading) Limited in its consolidated financial statements.

 

All activities of the Company to December 31, 2012 relate to its organization, share issuances for services and cash and the development of software platforms for e-commerce trade. Commencing on October 1, 2012, the Company started to implement its WMX Executive Training Program Strategic Action Plan. In order to facilitate the Strategic Action Plan, WMX has incorporated three wholly owned subsidiaries; CIT Cambridge Institute of Technology Christian University, Inc., WMX Wealth Advisors, LLC and WMX Insurance Group, Inc. On April 29, 2013, the Company acquired 100% of Oxford City Football Club, LLC, a commonly controlled entity that is owned by the Company’s CEO and Director, Mr. Thomas Guerriero, in a Share Exchange Agreement. Oxford City Football Club, LLC has a 49% equity method investment in Oxford City Football Club (Trading) Limited which operates the Oxford City Football Club located in the City of Oxford, England.

 

On June 20, 2012, the Board of Directors approved a change in fiscal year from December 31 to June 30.

 

On April 30, 2012, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with WMX Group, Inc., a Nevada corporation (“WMX Private Co.”), and SKGI Acquisition Corp., Nevada corporation, and a wholly-owned subsidiary of the Company (“Acquisition Sub”), pursuant to which Acquisition Sub merged with and into WMX Private Co. (the “Merger”) with the filing of the Articles of Merger with the Nevada Secretary of State on May 1, 2012 and became a wholly-owned subsidiary of the Company. In accordance with the terms of the Merger Agreement, at the closing an aggregate of 13 shares of the Company’s common stock was issued to the holders of WMX Private Co.’s common stock in exchange for their shares of WMX Private Co. WMX Private Co. was incorporated on January 18, 2011 in the Province of New Brunswick, Canada as World Mercantile Exchange, Ltd. and subsequently changed its name to WMX, Group, Inc. and re-domiciled to the State of Nevada.

 

The Merger has been accounted for as a reverse acquisition transaction for accounting purposes as WMX Private Co. was deemed to be the acquirer, and thus, these consolidated financial statements are the historical financial information and operating results of WMX Private Co. The carrying amounts of the Company’s assets and liabilities prior to the Merger (Smart Kids Group, Inc.) are included in these consolidated financial statements.

 

Oxford City Football Club, Inc. (formerly WMX Group Holdings, Inc.), (the “Company” or “Oxford City”) was incorporated on February 11, 2003 in the State of Florida as Smart Kids Group, Inc. On June 11, 2012, the Company changed its name from Smart Kids Group, Inc. to WMX Holdings Group, Inc. and on July 8, 2013, the Company changed its name from WMX Holdings Group, Inc. to Oxford City Football Club, Inc.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

2.	BASIS OF PREPARATION

 

Pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q, the condensed consolidated financial statements, footnote disclosures and other information normally included in condensed consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The condensed consolidated financial statements contained in this report are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the consolidated financial statements. All significant inter-company accounts and transactions have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet at June 30, 2015 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The information included in this Form 10-Q should be read in conjunction with the Company’s annual report filed on Form 10-K for the year ended June 30, 2015.

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management reviews these estimates and assumptions on an ongoing basis using currently available information. Actual results could differ from those estimates.

 

Consolidation – The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company balances and transactions have been eliminated. The Company and its subsidiaries will be collectively referred to herein as the “Company”.

 

Investments – Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for using the equity method. Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method.

 

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

 

Cash and cash equivalents – Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value. At September 30, 2015, cash comprised $2,613 held in a bank in the United States and £(720) ($1,091) held in a bank in the United Kingdom. Cash held in a bank in the United States is insured by the Federal Deposit Insurance Corporation up to a maximum of $250,000.

 

Allowance for doubtful accounts – The Company records an allowance for doubtful accounts as a best estimate of the amount of probable credit losses in its accounts receivable. Each month, the Company reviews this allowance and considers factors such as customer credit, past transaction history with the customer and changes in customer payment terms when determining whether the collection of a receivable is reasonably assured. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. Receivables are charged off against the allowance for doubtful accounts when it becomes probable that a receivable will not be recovered. At September 30, 2015 and 2014, the allowance for doubtful accounts amounted to $0 and $0, respectively.

 

Inventory – Inventory comprises finished goods held for sale and is stated at the lower of cost or market value. Cost is determined by the average cost method. The Company estimates the realizable value of inventory based on assumptions about forecasted demand, market conditions and obsolescence. If the estimated realizable value is less than cost, the inventory value is reduced to its estimated realizable value. If estimates regarding demand and market conditions are inaccurate or unexpected changes in technology affect demand, the Company could be exposed to losses in excess of amounts recorded. On this basis management recorded a reserve of $2,284 at September 30, 2015 (June 30, 2015 - $0).

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Revenue Recognition – Revenue is only recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price to the buyer is fixed or determinable, and (4) collectability is reasonably assured. Executive Training Program revenue is recognized as the services are performed.

 

We recognize revenue from the following sources:

 

i) Executive Training Program revenue is recognized when the services are performed.

 

ii) Hourly rental of facilities is recognized when the rental occurs.

 

iii) Admission to sporting events is recognized when the event occurs.

 

iv) Food and beverages revenue is recognized at the time of sale.

 

v) Sponsorship revenue is recognized ratably over the period of the agreement.

 

Foreign Currency Translation – The Company determined the functional currency for Oxford City Football Club, Inc. and all its subsidiaries to be the U.S. dollar and, accordingly, our financial information is translated into U.S. dollars using exchange rates in effect at period-end. The income statement is translated at the average year-to-date exchange rate. Adjustments resulting from translation of foreign currency are included as a component of other comprehensive income within stockholders’ deficit.

 

Impairment of Long-lived Assets – The carrying value of long-lived assets is evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable from the estimated undiscounted future cash flows expected to result from its use and eventual disposition. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount of the assets exceeds the fair value as estimated by discounted cash flows. No impairment was recognized during the years ended September 30, 2015 and 2014.

 

Earnings (loss) per share – Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. During the years ended September 30, 2015 and 2014, common stock equivalents were anti-dilutive due to net losses of the Company and were not considered in the computation.

 

Promissory Notes

 

i) Beneficial Conversion Feature

 

If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

 

ii) Debt Discount

 

The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity. ASC 480, applies to certain contracts involving a company’s own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer’s equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on:

 

– A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer’s equity shares with an issuance date fair value equal to a fixed dollar amount,

 

– Variations in something other than the fair value of the issuer’s equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer’s equity shares, or

 

– Variations inversely related to changes in the fair value of the issuer’s equity shares, for example, a written put that could be net share settled.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of promissory notes (see Note 6). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

iii) Derivative Financial Instruments

 

Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

 

The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible promissory notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our consolidated financial statements.

 

Stock-based compensation – The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

 

Fair value of financial instruments – As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC (“ASC 820-10”), fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The three levels of the fair value hierarchy are described below:

 

	Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
	Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
	Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities, loan payable, due to related parties and promissory note. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. Promissory notes and derivative liabilities are measured at fair value based on “Level 3” inputs on the Company’s consolidated balance sheets as of September 30, 2015 and June 30, 2015.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Concentration of credit risk – Financial instruments that potentially expose the Company to significant concentrations of credit risk consist principally of cash. The Company places its cash with financial institutions with high-credit ratings.

 

Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016, however, the FASB has proposed a one-year deferral. Early adoption is not permitted, and either full retrospective adoption or modified retrospective adoption is permitted. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

 

In January 2015, the FASB issued Accounting Standards Update No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements.

 

In February, 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements.

 

In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as an asset. ASU 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. The Company is currently evaluating the impact of ASU 2015-03 on the Company’s financial statements and disclosures.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

 

3.	GOING CONCERN

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses since inception and has a cumulative retained deficit of $32,355,514 as of September 30, 2015. The Company requires capital for its contemplated operational and marketing activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties. In order to mitigate the risk related with this uncertainty, the Company plans to issue additional shares of common stock for cash and services during the next 12 months.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

4.	INVESTMENT IN JOINT VENTURE

 

On November 23, 2014, the Company entered into a Joint Venture Agreement with Z-Square Technology, LLC (“Z-Square”) for the purpose of the development of technology of a single project. The Company is to provide funding of the project and Z-Square will provide the actual creation, development, and management of all technology. The contributions from each of the Joint Ventures (i) Company - $150,000 (ii) Z-Square - $0. Upon completion of the project, the Joint Venture will distribute the original capital invested of $150,000 plus $15,000 for a total of $165,000. On February 6, 2015 the Company received $50,000. As of September 30, 2015, the outstanding net balance of investment in Joint Venture is $0 (net of valuation allowance of $190,000).

 

In May 2015, we filed a lawsuit against Z Square Technology, Inc. and Syed Gilani. We are in the process of obtaining a default against defendant Z Square Technology, Inc.

 

5.	INTANGIBLE ASSETS

 

(i)

Oxford City Football Club trade name

 

Oxford City Football Club trade name was acquired on July 1, 2013 for $475,651. The trade name is amortized on a straight-line basis over 12 months. The trade name of $0 (intangible assets of $475,651 less accumulated amortization of $475,651) and $0 are recorded on the consolidated balance sheet at September 30, 2015 and June 30, 2015, respectively.

 

(ii)

Oxford City Basketball League membership

 

Oxford City Basketball League membership was acquired on October 1, 2013 for $33,750. The Company acquired the Oxford City Basketball League membership from Oxford City Basketball Club, Inc., a commonly controlled entity that is owned by Thomas Guerriero, the Company’s Chief Executive Officer and sole director, in exchange for 80,000 shares of Series B Convertible Preferred Stock. As the Company and Oxford City Basketball Club, Inc., prior to the exchange, was under the control of Thomas Guerriero, the membership was valued at its carrying value of $33,750. The membership of $0 (intangible assets of $33,750 less accumulated amortization of $33,750) and $8,437 are recorded on the consolidated balance sheet at September 30, 2015 and June 30, 2015, respectively.

 

(iii)

MASL Major Arena Soccer League

 

On April 22, 2014, the Company paid a $10,000 deposit to reserve the home territories of Sioux Falls, South Dakota and Boca Raton/Detray Beach, Florida in the Tarpon Arena Soccer League. An additional $20,000 per team is due in the season which begins play. The deposits expire on April 2, 2016. On August 13, 2015, the Company advanced an additional cash deposit to MASL Soccer LLC of $4,000.

 

On July 15, 2014, the Company paid $25,000 to acquire the franchise rights for the Oxford City FC of Texas. At September 30, 2015, the franchise rights was fully impaired due to the Company’s inability to formally secure an official home stadium. In the consolidated statements of operations the Company recorded an impairment of intangible asset of $25,000.

 

(iv)

Online course development

 

On February 14, 2013, the Company entered into a contract with AlvaEDU, Inc. (“AlvaEDU”) to develop online courses in sports management and financial and economics for undergraduate and graduate degree curriculum. On April 28, 2014, the Company made a $100,000 contribution towards the development of these online courses.

 

On February 12, 2015, the Company, entered into an Asset Purchase Agreement with AlvaEDU pursuant to which the Company will acquire certain assets of AlvaEDU. On March 6, 2015, the Company was notified by AlvaEDU that the Asset Purchase Agreement was not approved by the majority of shareholders. As such, the Purchase Agreement was terminated.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

On March 11, 2015, however, the Company was able to negotiate and enter into a modification of an Online Degree Program Development Agreement (the “Development Agreement”) between CIT University, the Company’s wholly-owned subsidiary, and AlvaEDU. Under the Development Agreement, dated February 14, 2014, AlvaEDU agreed to develop an online Master’s Degree curriculum in Sports Management. In consideration for developing the curriculum, CIT University agreed to pay AlvaEDU a combination of cash and a percentage of the gross annual tuition for each student enrolled in the program. The percentage was calculated as 20% of the gross annual tuition if the total number of students was greater than 1,000, or 30% if the total number of students was less than 1,000. As a result of the March 11, 2015 modification to the Development Agreement, AlvaEDU has agreed to waive and release its right to any percentage of tuition in the program. Thus, in exchange for a release of claims in AlvaEDU’s favor, CIT is now entitled to 100% of the tuition from students enrollment in the program.

 

At September 30, 2015 and June 30, 2015, the carrying value of the online course development asset is $128,000.

 

6.	PROMISSORY NOTE

 

On June 25, 2015, the Company issued a discounted promissory note with a price of $20,000 in cash and a principal amount of $2,000,000 with a fully accreted value of $2,600,000 bearing a 15% annual interest rate and maturing June 25, 2017, to Nick Havas, a shareholder of the Company. The Company, at its option only, may upon five days prior written notice (i) prepay the promissory note and accrued interest in cash in whole or in part (ii) prepay the promissory note in shares of common stock of the Company at 130% of the outstanding principal amount, which includes accrued interest. The number of shares issued is based on the weighted average price for 10 days immediately preceding (but not including) the repayment date.

 

From July 2, 2015 to September 1, 2015, the Company issued discounted promissory notes with an aggregate price of $303,800 in cash (at September 30, 2015 total cash received by the Company was $298,800 and $5,000 is due from the investor) with an aggregate principal amount of $2,620,000 with a fully accreted value of $3,406,000 bearing a 15% annual interest rate and maturing on the second anniversary date. The Company, at its option only, may upon five days prior written notice (i) prepay the promissory note and accrued interest in cash in whole or in part (ii) prepay the promissory note in shares of common stock of the Company at 130% of the outstanding principal amount, which includes accrued interest. The number of shares issued is based on the weighted average price for 10 days immediately preceding (but not including) the repayment date.

 

From July 17, 2015 to August 28, 2015, the Company issued discounted promissory notes for consulting services received with an aggregate principal amount of $1,580,000 with a fully accreted value of $2,054,000 bearing a 15% annual interest rate and maturing on the second anniversary date. The Company, at its option only, may upon five days prior written notice (i) prepay the promissory note and accrued interest in cash in whole or in part (ii) prepay the promissory note in shares of common stock of the Company at 130% of the outstanding principal amount, which includes accrued interest. The number of shares issued is based on the weighted average price for 10 days immediately preceding (but not including) the repayment date.

 

These discounted promissory notes have been accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity.

 

On September 23, 2015, the Company elected to prepay various promissory notes with principal totaling $6,200,000 with a fully accreted value of $8,060,000 in 801,990 shares of common stock. The promissory notes provide that the Company may prepay the notes in common stock provided that any such prepayment will amount to 130% of the principal amount, which amount includes all accrued interest. The conversion price of our prepayment is based on the Weighted Average Price for the ten (10) trading days immediately preceding (but not including) the applicable repayment date. As a result of the election to prepay promissory notes, the Company recorded a loss on extinguishment of debt of $5,343,944.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Continuity of promissory notes:

 

Opening balance at July 1, 2015		$	248,128
Cash advanced			303,800
Consulting services received			1,580,000
Accretion of debt discount			550,495
Accrued interest			33,633
Loss on extinguishment of debt			5,343,944
Prepayment of promissory note in shares of common stock			(8,060,000	)
Closing balance at September 30, 2015		$	-

 

7.	STOCKHOLDERS’ EQUITY

 

On August 18, 2015, the Company approved and effected a 1-for-2000 reverse stock split of issued and outstanding common stock, Series A Convertible Preferred Stock and Series B Convertible Preferred Stock. Consequently, all share information has been revised to reflect the reverse stock split from the Company’s inception.

 

Preferred Stock – The Company is authorized to issue 40,000,000 shares of $.0001 par value preferred stock. The Company has designated 10,000,000 shares of preferred stock as Series A Convertible Preferred Stock. As of September 30, 2015 and 2014, 2 and 2 Series A Convertible Preferred Stock are issued and outstanding, respectively.

 

The Company has designated 5,000,000 shares of preferred stock as Series B Convertible Preferred Stock. As of September 30, 2015 and June 30, 2015, 42 and 42 Series B Convertible Preferred Stock are issued and outstanding, respectively.

 

Series A Convertible Preferred Stock have the right to cast one hundred (100) votes for each share held of record on all matters submitted to a vote of holders of the Corporation’s common stock and provides that any one (1) share of Series A Convertible Preferred Stock are convertible into one hundred (100) shares of the Corporation’s common stock, par value $.0001 per share.

 

Series B Convertible Preferred Stock are entitled to vote together with the holders of our Series A Preferred Stock and common stock on all matters submitted to shareholders. The total aggregate issued shares of Series B Convertible Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 2 times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of any Preferred Stock which are issued and outstanding at the time of voting.

 

Series B Convertible Preferred Stock shall have anti-dilution protection such that any issuance of Common Stock or other financial instruments shall result in an equal number of shares to be issued to the Series B Convertible Preferred Stock shareholders on a pro-rated basis to the number of shares then outstanding. If anti-dilution protection ends for whatever reason, then Holders of Series B Convertible Preferred Stock are entitled to dividends at the rate of 6% per annum. On September 30, 2015 and June 30, 2015, the Series B Convertible Preferred Stock holders are due 65,709 and 50,199 shares of common stock of the Company, respectively, for anti-dilution protection.

 

Series B Convertible Preferred Stock have a preference in any liquidation, dissolution or winding up of the company in an amount equal to $4 per share, plus any declared but unpaid dividends, and may, at any time after 18 months, have rights to convert each share of Series B Convertible Preferred Stock into three hundred (300) shares of common stock.

 

On November 20, 2013, 40 shares of Series B Convertible Preferred Stock was issued to Thomas Guerriero our Chief Executive Officer and sole director, in exchange for the transfer of the Oxford City Basketball Club league membership held by Oxford City Football Club, Inc. As the Company and Oxford City Basketball Club, Inc., prior to the exchange, was under the control of Thomas Guerriero, the membership was valued at its carrying value of $33,750.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

On January 21, 2014, the Company issued 2 shares of Series B Convertible Preferred Stock for consulting services valued at $4,000.

 

Common Stock – The Company is authorized to issue 500,000,000 shares of $.0001 par value common stock. As of September 30, 2015 and June 30, 2015 1,670,382 and 51,072 shares were issued and outstanding, respectively.

 

From July 1, 2015 to September 30, 2015, the Company received $10,000 in cash in exchange for 10,000 shares of common stock ($1.00 per share).

 

On September 23, 2015, the Company elected to prepay various promissory notes with principal totaling $6,200,000 in 801,990 shares of common stock. The promissory notes provide that the Company may prepay the notes in common stock provided that any such prepayment will amount to 130% of the principal amount, which amount includes all accrued interest. The conversion price of our prepayment is based on the Weighted Average Price for the ten (10) trading days immediately preceding (but not including) the applicable repayment date.

 

On September 30, 2015, the Company issued 801,990 shares of common stock to Thomas Guerriero our Chief Executive Officer and sole director for anti-dilution protection due to Series B Convertible Stock holders.

 

Stock Payable

 

From July 1, 2015 to September 30, 2015, the Company received $10,000 in cash in exchange for a common stock payable of 37,450 shares of common stock ($0.27 per share).

 

On September 25, 2015, the Company recorded $2,000,000 in stock-based fees for services provided by Colin Taylor, the managing director of the Oxford City Football Club (Trading) Limited, a subsidiary of the Company, in exchange for a common stock payable of 2,000,000 shares of common stock valued at $2,000,000 ($1.00 per share).

 

Stock Receivable

 

From July 1, 2015 to September 30, 2015, the Company issued 5,000 shares of common stock for a common stock receivable of $5,000. In addition, the Company is due $5,000 for a promissory note which the Company elected to prepay in shares of common stock on September 23, 2015.

 

Treasury Stock

 

As of September 30, 2015 and June 30, 2015, the Company has a treasury stock balance of $1,338.

 

8.	Related Party transactions

 

At September 30, 2015 and June 30, 2015, $249,717 and $256,340 respectively, is due Colin Taylor, the managing director of the Oxford City Football Club (Trading) Limited, a subsidiary of the Company. The advances are non-interest bearing, unsecured and due on demand.

 

On September 25, 2015, the Company recorded $2,000,000 in stock-based fees for services provided by Colin Taylor in exchange for a common stock payable of 2,000,000 shares of common stock valued at $2,000,000 ($1.00 per share).

 

On September 30, 2015, the Company issued 801,990 shares of common stock to Thomas Guerriero our Chief Executive Officer and sole director for anti-dilution protection due to Series B Convertible Stock holders.

 

Employment – On December 1, 2012, the Company executed a consulting agreement (the “Agreement”) with GCE Wealth, Inc. (“GCE”), a company controlled by our CEO, Mr. Thomas Guerriero. Pursuant to the terms and conditions of the Agreement, among other things GCE will act as our consultant through December 2015 and GCE will receive $950 per hour for services rendered. The total expense related to this agreement was $1,100,000 and $1,511,500 for the three months ended September 30, 2015 and 2014, respectively.

 

 

OXFORD CITY FOOTBALL CLUB, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

On September 23, 2015, the Agreement was amended to cancel and remove from the accounting records of the Company all accruing compensation, including officer compensation payable of $8,132,337 recorded in the consolidated balance sheet at June 30, 2015, and to provide for an annual compensation of $500,000 per annum payable in monthly installments. The total expenses of $9,589 was recorded for the three months ended September 30, 2015 related to the amended agreement. At September 23, 2015, additional paid-in capital was increased by $9,132,337 for cancellation of officer compensation payable.

 

As of September 30, 2015 and June 30, 2015, $3,815 and $8,132,337 of total officer compensation was unpaid and recorded as payable, respectively.

 

On December 1, 2013 and 2014, the Company executed consulting agreements (the “Agreement”) with Dorset Solutions Inc., and its representative Philip Clark. Pursuant to the terms and conditions of the Agreement, among other things Philip Clark will act as a Chief Financial Officer through November 30, 2015 and will receive $3,000 per month for services rendered. The total expense related to this Agreement was $9,000 for the three months ended September 30, 2015 and 2014, respectively. As of September 30, 2015 and June 30, 2015, $3,000 of total compensation was unpaid and recorded as payable.

 

9.	GEOGRAPHIC SEGMENTS

 

Reconciliation of revenues for the three months ended September 30, 2015 and long-lived assets at September 30, 2015 by country.

 

		Revenues				Long-lived assets
United States		$	5,685			$	162,201
United Kingdom			130,658				39,737
Consolidated total		$	136,343			$	201,938

 

Revenues are attributed to countries based on the location of the customers.

 

10.	SUBSEQUENT EVENTS

 

On January 30, 2015, NPNC Management LLC filed a complaint against us in the District Court for the State of Nevada. The complaint alleges debt owing in the amount of $29,250 for legal services rendered. We did not answer the complaint and NPNC obtained a default judgment of $39,209 on November 17, 2015 for $29,250 plus interest, costs and attorneys’ fees.

 

Series B Convertible Preferred Stock

 

On November 5, 2015, the Company received notice that the holder of 2 shares of Series B Convertible Preferred Stock wishes to terminate ownership of these shares and return these shares to the Company.

 

Common Stock

 

From October 1, 2015 to November 13, 2015, the Company received $98,000 in cash in exchange for 2,214,184 shares of common stock ($0.04 per share).

 

From October 1, 2015 to November 13, 2015, the Company issued 106,250 shares of common stock to satisfy obligations under share subscription agreements for $25,000 and share subscription receivable for $7,500.

 

From October 1, 2015 to November 13, 2015, the Company issued 310,000 shares of common stock as a stock-based compensation valued at $3,115,500.

 

Stock Payable

 

From October 1, 2015 to November 13, 2015, the Company received $25,500 in cash in exchange for a common stock payable of 99,500 shares of common stock ($0.27 per shares).

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

 

Company Overview

 

We are an international diversified holding company, which serves as the controlling owner of Oxford City Football Club (Trading) Limited, (the “Oxford City FC” or “Club”) located in Oxford, England which owns the Oxford City Football Club and manages Oxford City Stadium, the Club’s home stadium. The Club also manages Oxford City 3G Training Facility.

 

The First Portfolio (OXFC Sports Portfolio)

 

As provided below, we own an interest in five (5) professional sports teams that are currently active and the rights to two (2) other expansion teams.

 

1) We own 49% of Oxford City Football Club (Trading) Limited, which operates a professional outdoor soccer team, which competes in the “Conference South” of the English Football Association under the name Oxford City Football Club. The team has been in existence for 132 years, being established in 1882. The Conference South, and its member clubs, are collectively able to compete for the prestigious English FA Cup, competing against some of the best English teams in the world for this championship trophy.

 

2) Oxford City Nomads is our 2nd professional outdoor soccer team, which competes in the “Hellenic Premier League” of the English Football Association under the name Oxford City Nomads. The Hellenic Premier League, and its member clubs, are collectively able to compete for the prestigious English FA Vase, competing against some of the best English teams in the lower steps for this championship trophy.

 

3) Oxford City Futsal is our 1st professional indoor soccer team, which competes in the “Futsal Premier League” of the English Futsal under the name Oxford City Futsal. The Premier League, and its member clubs, are collectively able to compete for the prestigious English FA Cup for Futsal for a championship trophy, competing against some the best English Futsal teams and the opportunity to play in the UEFA Champions League.

 

4) We own a 10% interest in the Soles De Sonora team that competes in the Oxford City Major Arena Soccer League Franchise. The MASL is the highest level of professional indoor soccer in North America, with teams from Mexico, Canada, and the US competing for the MASL Cup. Until recently, we had two teams in the MASL: the Soles De Sonora in Mexico and Jupiter City in Florida. As a result of difficulties in obtaining financing to cover a field for play, we no longer have the Jupiter team in Florida. We still have an option for two additional home territories in Sioux Falls, South Dakota, and South Florida in the MASL and we hope to acquire a team in one or both territories if financing permits.

 

 

5) Oxford City FC Basketball is our professional basketball team, which competes in the “EBL” of the English Basketball League under the name Oxford City Basketball. The EBL and its member clubs are collectively able to compete for the prestigious EBL Championship, competing against the best English Basketball teams for this championship trophy.

 

The Second Portfolio (OXFC Academic Portfolio)

 

Our Academic Portfolio consists of the CIT University and the Oxford City Sports College in Oxford England. We own CIT University in the US, which has designed and completed its first Certificate Program, Associates Degree Program, Bachelors Degree Program, and Masters Degree Program in Sports Management, which it plans to partner with an accredited university to deliver the degree program globally online.

 

On February 12, 2015, we entered into an Asset Purchase Agreement (the “Purchase Agreement”), with AlvaEDU, Inc., a Florida Corporation (“AlvaEDU”), pursuant to which, among other things, we agreed to acquire certain assets from AlvaEDU for an aggregate purchase price of 14,000 shares of our restricted stock.

 

The closing of the Purchase Agreement was subject to customary closing conditions, including approval by the majority of shareholders of AlvaEDU. On March 6, 2015, we were notified by AlvaEDU that the Purchase Agreement was not approved by the majority of shareholders. As such, the Purchase Agreement was terminated.

 

On March 11, 2015, however, we were able to negotiate and enter into a modification of an Online Degree Program Development Agreement (the “Development Agreement”) between CIT University, the Company’s wholly-owned subsidiary, and AlvaEDU. Under the Development Agreement, dated February 14, 2014, AlvaEDU agreed to develop an online Master’s Degree curriculum in Sports Management. In consideration for developing the curriculum, CIT University agreed to pay AlvaEDU a combination of cash and a percentage of the gross annual tuition for each student enrolled in the program. The percentage was calculated as 20% of the gross annual tuition if the total number of students was greater than 1,000, or 30% if the total number of students was less than 1,000.

 

As a result of the March 11, 2015 modification to the Development Agreement, AlvaEDU has agreed to waive and release its right to any percentage of tuition in the program. Thus, in exchange for a release of claims in AlvaEDU’s favor, CIT is now entitled to 100% of the tuition from students’ enrollment in the program.

 

We do not have any students or tuition from our degree programs of CIT University. Our plan with regards to the program is twofold. First, we hope to partner with an accredited university that will use our program at its institution. Second, we hope to build a campus of our own and complete the accreditation process for our own students. We have applied to the State for a license for our first academic program, a certificate in sports management. We expect to receive a response to our application in December 2015. We plan to add additional programs if the license is approved. If the license is denied we will re-evaluate and may have to end our plans for our degree program.

 

The Company also owns Oxford City Sports College, which expects the strong ties in Oxford to strategically put the College in a tremendous position for the future. The Oxford City Sports Collage is based at the stadium at Marsh Lane, Oxford, England. We have partnerships with City of Oxford College and Ignite Sports which proved education in a real football environment with approximately 70 students. The College supports three full time under age 19 football teams and in 2015-16 season a further five younger age groups (under age 10 to age 15) on week-ends comprising our elite players. For the next season we are re-assessing our educational partners with the hope of increasing the scope, flexibility and revenue generated from the programme.

 

 

The Third Portfolio (OXFC Media & Entertainment Portfolio)

 

Our Media & Entertainment Portfolio consists, as of now, solely of Oxford City Broadcasting Network, which is broadcasted online at 1882.tv. OCBN on 1882.tv is best known for broadcasting Oxford City matches around the world via webcast. This brings global exposure to our players and our sponsors. The network has a tradition of producing high quality production and programming, as well as combining resources and contributors. We anticipate this to become the global television platform for our company and our interests now and in the future.

 

The Fourth Portfolio (OXFC Real Estate & Property Management Portfolio)

 

The OXFC Real Estate & Property Management Portfolio manages a diversified portfolio of real estate including Oxford City Stadium, Oxford City Indoor Arena, and the Oxford City 3G Training Facility. OXFC benefits from these facilities both in usage and in rental income.

 

The below table shows all of our subsidiaries, the interest we hold in those subsidiaries and the operations that each subsidiary is engaged in.

 

Name of Subsidiary		Interest Held				Operations
Oxford City Football Club, LLC			100	%		Holds 49% interest in Oxford City Football Club (Trading) Limited
Oxford City Football Club (Trading) Limited			49% held indirectly through Oxford City Football Club, LLC, Voting Agreement gives the Company greater than 50% of the votes on the Board of Directors			Oxford City Football Club
Oxford City Basketball Club, Inc.			100	%		Holds the franchise rights for Oxford City FC Basketball in the English Basketball League (EBL)
CIT University, A Christian Institution, Inc.			100	%		Holds content for degree program for the Masters Degree in Sports Management
Oxford City Broadcasting Network, Inc.			100	%		Online broadcasting company
Soles De Sonora in Mexico			10	%		Soles De Sonora has professional teams in both the Major Arena Soccer League (MASL) and Fútbol Rápido Professional (LMFR-Pro).

 

Results of operations for the three months ended September 30, 2015 and 2014

 

Our operating results for the three months ended September 30, 2015 and 2014 are summarized as follows:

 

		Three Months Ended				Three Months Ended
		September 30, 2015				September 30, 2014
Revenue		$	136,343			$	122,777
Cost of sales			(20,731	)			(14,757	)
Gross profit			115,612				108,020
Operating expenses			(5,050,994	)			(1,978,910	)
Interest expense			(33,633	)			-
Loss on issuance of promissory note			(5,343,944	)			-
Amortization on debt discount			(550,495	)			-
Net loss			(10,863,454	)			(1,870,890	)
Net income (loss) attributed to non-controlling interest			63,520				7,597
Net loss attributable to Oxford City Football Club, Inc.		$	(10,799,934	)		$	(1,863,293	)

 

 

Revenues

 

Our revenues are primarily derived from Oxford City Football Club, Oxford City Nomads, Oxford City Futsal and Oxford City FC Basketball, which are operated by Oxford City Football Club (Trading) Limited in United Kingdom.

 

Our revenue increased by $13,566 for the three months ended September 30, 2015, as compared with the three months ended September 30, 2014.

 

Ticket, concessions and merchandise sales for the three months ended September 30, 2015 and 2014 were $5,191 and $13,549, respectively. Ticket prices for regular season home games for 1^st team matches during the 2015-2016 season are £12.00 - adults, £6.00 –concessions, students - £3.00 and under age 16 free. Season tickets are £205.00 - adults, £100.00 –concessions and students - £50.00.

 

We have the exclusive right to operate all Oxford City Stadium concessions, including private room and catering, and to receive all concession revenues.

 

Advertising and corporate sponsorship revenue in the UK for the three months ended September 30, 2015 and 2014 were $15,007 and $18,277, respectively, $5,685 and $0 earned by Oxford City FC for the three months ended September 30, 2015 and 2014, respectively.

 

Many Oxford City FC games are broadcast on local radio on BBC Radio. In 2015, there will be a total of 42 games in England. There will be 21 regular season games at home and 21 away games. In addition, there will be FA Cup Qualifying matches and potentially FA CUP and playoff games.

 

We typically coordinate the sale of advertising with the sale of advertising at locations in both Oxford City Stadium in England, including space on the main scoreboard, ancillary scoreboards, outfield walls and concourse signage. Advertising is sold in game programs and on the Club’s Internet website. We also license the Club’s name and logo in connection with corporate sponsorships and promotions globally.

 

Rental income of venue for the three months ended September 30, 2015 and 2014 were $109,113 and $89,950, respectively. We expect that the revenue generated from Oxford City Stadium and the Oxford City 3G Training Facility will increase significantly in 2016. During the calendar year of 2016 we expect to initiate new ground improvements to the Oxford City Stadium. A new 3G turf field is expected to increase rental income by at least 50% according to our projections. The ground improvements is dependent on us receiving final approval from the Oxfordshire County Council. In addition, we are planning to establish one of the largest indoor sports facilities in all of Oxfordshire. This new facility will be the home to both Oxford City Futsal and Oxford City Basketball. The facility will also provide several additional fields, offices, and a restaurant that are expected to increase rental income. The improvements to the Oxford City Stadium and the ground improvements are also dependent on the Company obtaining new equity and/ or debt financing. If we do raise sufficient capital we will not be able to carry out our plans.

 

Prize money revenue for the three months ended September 30, 2015 and 2014 was $1,348 and $0, respectively.

 

Cost of Sales

 

Our cost of sales increased by $5,974 for the three months ended September 30, 2015, as compared with the three months ended September 30, 2014. The increase is due to the purchase of food, drinks and goods for our concessions as a result of the consolidation of Oxford City Football Club.

 

 

Operating Expenses

 

Our expenses for the three ended September 30, 2015 and 2014 are outlined in the table below:

 

		Three months Ended
		September 30, 2015				September 30, 2014
General and administrative		$	227,539			$	341,063
Amortization			-				8,437
Depreciation			3,791				3,127
Advertising			6,492				-
Event expenses			10,923				-
Salaries and wages			69,263				38,155
Officer compensation			1,109,589				1,511,500
Professional fees			43,397				76,628
Stock-based compensation			3,580,000				-
Total		$	5,050,994			$	1,978,910

 

Our operating expenses increased by $3,072,084 for the three months ended September 30, 2015 as compared with the three months ended September 30, 2014. Our increase in operating expenses is largely attributable to a stock payable for consulting services valued at $3,580,000. We also had an increase in event expenses, advertising, depreciation and general and administrative, offset by a decrease in officer compensation, professional fees and amortization.

 

Both the English FA and the MASL require each team to enter into a uniform player contract with each of its players. Player contracts may be for single-year or multi-year terms. We are not obligated to continue to pay players under single-year or multi-year contracts if the player resigns, breaches team or organizational rules, or refuses to play. We currently do not have multi-year commitments with our players.

 

General and administrative expenses have decreased due to decreases in promotion, subcontractor and travel costs.

 

Event expenses relate to rental of facilities and other cost of sporting events for football, futsal and basketball.

 

Salaries and wages relate to player costs and administrative personnel and has primarily increased as a result of the first year of operations and contracts with higher caliber players in the United Kingdom.

 

Officer compensation relates to a consulting agreement we have with Mr. Thomas Guerriero. The total expense related to this agreement was $1,109,589 and $1,511,500 for the three months ended September 30, 2015 and 2014, respectively. On September 23, 2015, the Agreement was amended to cancel and remove from the accounting records of the Company all accruing compensation, including officer compensation payable of $8,132,337 recorded in the consolidated balance sheet at June 30, 2015, and to provide for an annual compensation of $500,000 per annum payable in monthly installments. The total expenses of $9,589 was recorded for the three months ended September 30, 2015 related to the amended agreement. At September 23, 2015, additional paid-in capital was increased by $9,132,337 for cancellation of officer compensation payable.

 

As of September 30, 2015 and June 30, 2015, $3,815 and $8,132,337 of total officer compensation was unpaid and recorded as payable, respectively.

 

Professional fees comprise audit and legal costs for SEC compliance, fees related to evaluating acquisitions and for litigation.

 

We anticipate that we will incur approximately $150,000 for operating expenses, including, legal, accounting and audit expenses associated with our reporting requirements as a public company under the Exchange Act during the next twelve months.

 

  

Other Expenses

 

We recorded other expenses of $5,928,072 for the three months ended September 30, 2015, as compared with $0 for the same period ended 2014. Other expenses for the three months ended September 30, 2015 largely consisted of a loss on the extinguishment of debt. On September 23, 2015, we elected to prepay various promissory notes with principal totaling $6,200,000 into 801,990 shares of our common stock. The promissory notes provide that we may prepay the notes in common stock provided that any such prepayment will amount to 130% of the principal amount, which amount includes all accrued interest. The conversion price of our prepayment is based on the Weighted Average Price for the ten (10) trading days immediately preceding (but not including) the applicable repayment date. As a result of the election to prepay promissory notes, we recorded a loss on extinguishment of debt of $5,343,944.

 

We also recorded $550,495 in the amortization of debt discount and $33,633 in interest expenses for the three months ended September 30, 2015.

 

Net Loss

 

Largely as a result of the stock payable under our operating costs and the loss on extinguishment of debt, our net loss for the three months ended September 30, 2015 was $10,863,454 compared to net loss of $1,870,890 for the three months ended September 30, 2014.

 

Liquidity and Capital Resources

 

Working Capital

 

		September 30, 2015				June 30, 2015
Current Assets		$	58,907			$	219,368
Current Liabilities		$	(403,627	)		$	(8,608,862	)
Working Capital (Deficit)		$	(344,720	)		$	(8,389,494	)

 

Cash Flows

 

		Three months Ended September 30, 2015				Three months Ended September 30, 2015
Cash used in Operating Activities		$	(421,840	)		$	(635,872	)
Cash provided by (used in) Investing Activities		$	(4,000	)		$	(130,249	)
Cash provided by Financing Activities		$	259,049			$	117,345
Foreign exchange gain (loss)		$	(4,340	)		$	(7,233	)
Increase (Decrease) in Cash		$	(171,131	)		$	(656,009	)

 

Cash Used In Operating Activities

 

Our net loss for the three months ended September 30, 2015 was the main contributing factor for our negative operating cash flow, offset mainly by the loss on extinguishment of debt of $5,343,944, amortization on debt discount of $550,495, stock-based fees of $3,580,000 and increase in officer compensation payable of $1,003,815. The officer compensation payable is due in accordance a consulting agreement with GCE Wealth, Inc. (“GCE”), a company controlled by our CEO, Mr. Thomas Guerriero. Pursuant to the terms and conditions of the Agreement, among other things GCE will act as our consultant through December 2015 and GCE will receive $950 per hour for services rendered. On September 23, 2015, the Agreement was amended to cancel and remove from the accounting records of the Company all accruing compensation, including officer compensation payable of $8,132,337 recorded in the consolidated balance sheet at June 30, 2015, and to provide for an annual compensation of $500,000 per annum payable in monthly installments.

 

 

Cash from Investing Activities

 

We used $4,000 in cash for the three months ended September 30, 2015 for a deposit paid to the Major Arena Soccer League.

 

Cash from Financing Activities

 

We generated $15,000 in cash from the issuance of common stock and $303,800 in cash from issuance of promissory notes during the three months ended September 30, 2015.

 

If we are unable to find alternative sources of funding we may need to scale back our operations until such time as we have sufficient revenue to support increased operations. We currently have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. We require additional working capital to fund our business and to cover our payroll and other expenses.

 

Going Concern

 

At September 30, 2015, we had deficit accumulated of $32,355,514 and as noted throughout this report and our financial statements and notes thereto, our independent auditors have expressed their substantial doubt as to our ability to continue as a going concern as of September 30, 2015. We anticipate incurring significant losses in the future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

 

The financial statements included in this quarterly report have been prepared assuming that we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.

 

Management’s plans include the raising of capital through the equity markets to fund future operations, seeking additional acquisitions, and generating of revenue through our business. However, even if we do raise sufficient capital to support our operating expenses and generate adequate revenues, there can be no assurances that the revenue will be sufficient to enable us to develop business to a level where we will generate profits and positive cash flows from operations. These matters raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

Off-Balance Sheet Arrangements

 

We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

 

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

 

Revenue Recognition – Revenue is only recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price to the buyer is fixed or determinable, and (4) collectability is reasonably assured. Executive Training Program revenue is recognized as the services are performed.

 

We recognize revenue from the following sources:

 

i) Executive Training Program revenue is recognized as the services are performed.

 

ii) Hourly rental of facilities is recognized as the rental occurs.

 

iii) Admission to sporting events is recognized as the event occurs.

 

iv) Food and beverages revenue is recognized on sale.

 

v) Sponsorship revenue is recognized ratably over the period of the agreement.

 

Impairment of Long-lived Assets – The carrying value of long-lived assets is evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable from the estimated undiscounted future cash flows expected to result from its use and eventual disposition. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount of the assets exceeds the fair value as estimated by discounted cash flows. No impairment was recognized for the three months ended September 30, 2015.

 

Stock-based compensation – The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

 

Promissory Notes

 

i) Beneficial Conversion Feature

 

If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

 

ii) Debt Discount

 

The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity. ASC 480, applies to certain contracts involving a company’s own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer’s equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on:

 

– A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer’s equity shares with an issuance date fair value equal to a fixed dollar amount,

 

– Variations in something other than the fair value of the issuer’s equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer’s equity shares, or

 

– Variations inversely related to changes in the fair value of the issuer’s equity shares, for example, a written put that could be net share settled.

 

If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with a respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of promissory notes (see Note 6). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

 

iii) Derivative Financial Instruments

 

Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

 

The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible promissory notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our consolidated financial statements.

 

Recently Issued Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016, however, the FASB has proposed a one-year deferral. Early adoption is not permitted, and either full retrospective adoption or modified retrospective adoption is permitted. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

 

In January 2015, the FASB issued Accounting Standards Update No. 2015-01 (Subtopic 225-20) – Income Statement – Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements.

 

In February, 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements.

 

In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as an asset. ASU 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. The Company is currently evaluating the impact of ASU 2015-03 on the Company’s financial statements and disclosures.

 

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company’s management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) we do not have an audit committee of the Board of Directors or a financial expert serving on the Board of Directors (ii) inadequate segregation of duties and effective risk assessment; and (iii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines (iv) deficient design of our management information systems and information technology because the potential for unauthorized access to certain information systems and software applications existed during 2015 in several departments, including corporate accounting. Certain key controls for maintaining the overall integrity of systems and data processing were not properly designed and operating effectively. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

 

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending June 30, 2016, subject to obtaining additional financing: (i) appoint a financial expert to serve on the Board of Directors (ii) appoint additional qualified personnel to address inadequate segregation of duties, ineffective risk management and deficient design of our management information systems and information technology; and (iii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i), (ii) and (iii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

 

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

In May 2015, we filed a lawsuit against Z Square Technology, Inc. and Syed Gilani. We are in the process of obtaining a default against defendant Z Square Technology, Inc.

 

On January 30, 2015, NPNC Management LLC filed a complaint against us in the District Court for the State of Nevada. The complaint alleges debt owing in the amount of $29,250 for legal services rendered. We did not answer the complaint and NPNC obtained a default judgment of $39,209 on November 17, 2015 for $29,250 plus interest, costs and attorneys’ fees.

 

Item 1A: Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

We incurred the following stock transactions during this quarter and thereafter:

 

From July 1, 2015 to September 30, 2015, we received $10,000 in cash in exchange for 10,000 shares of common stock ($1.00 per share).

 

On September 23, 2015, we elected to prepay various promissory notes with principal totaling $6,200,000 in 801,990 shares of common stock. The promissory notes provide that we may prepay the notes in common stock provided that any such prepayment will amount to 130% of the principal amount, which amount includes all accrued interest. The conversion price of our prepayment is based on the Weighted Average Price for the ten (10) trading days immediately preceding (but not including) the applicable repayment date.

 

On September 30, 2015, we issued 801,990 shares of common stock to Thomas Guerriero our Chief Executive Officer and sole director for anti-dilution protection due to Series B Convertible Stock holders.

 

From July 1, 2015 to September 30, 2015, we issued 5,000 shares of common stock for a common stock receivable of $5,000.

 

From July 1, 2015 to September 30, 2015, we received $10,000 in cash in exchange for a common stock payable of 37,450 shares of common stock ($0.27 per share).

 

Unless otherwise indicated, these securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

 

Item 3. Defaults upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None

 

 

Item 6. Exhibits

 

Exhibit Number		Description of Exhibit
31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in Extensible Business Reporting Language (XBRL).

 

**Provided herewith

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

OXFORD CITY FOOTBALL CLUB, INC.
Date:	November 23, 2015
By:	/s/ Thomas Guerriero
Name:	Thomas Guerriero
Title:	Chief Executive Officer and Director
Date:	November 23, 2015
By:	/s/ Philip Clark
Name:	Philip Clark
Title:	Chief Financial Officer