Cover
Cover - shares | 9 Months Ended | |
Mar. 31, 2021 | Jun. 02, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Troika Media Group, Inc. | |
Entity Central Index Key | 0001021096 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | No | |
Document Period End Date | Mar. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 38,930,751 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 1,426,000 | $ 1,706,000 |
Accounts receivable, net | 3,248,000 | 841,000 |
Prepaid expenses | 121,000 | 143,000 |
Other assets - short term portion | 20,000 | 1,000 |
Total current assets | 4,815,000 | 2,691,000 |
Other assets -long term portion | 534,000 | 615,000 |
Property and equipment, net | 273,000 | 344,000 |
Operating lease right-of-use assets | 7,404,000 | 8,297,000 |
Intangible assets, net | 2,572,000 | 4,191,000 |
Goodwill | 17,362,000 | 17,362,000 |
Total assets | 32,960,000 | 33,500,000 |
Current liabilities: | ||
Accounts payable and accrued expenses | 10,553,000 | 8,137,000 |
Convertible notes payable | 535,000 | 1,435,000 |
Note payable - related party - short term portion | 452,000 | 452,000 |
Contract liabilities | 6,647,000 | 3,327,000 |
Operating lease liability - short term portion | 2,922,000 | 2,255,000 |
Derivative liabilities | 98,000 | 0 |
Stimulus loan program - short term portion | 16,000 | 849,000 |
Total current liabilities | 21,223,000 | 16,455,000 |
Long term liabilities: | ||
Operating lease liability - long term portion | 6,327,000 | 7,003,000 |
Note payable - related party - long term portion | 2,198,000 | 1,975,000 |
Stimulus loan program - long term portion | 553,000 | 855,000 |
Rental deposits | 94,000 | 105,000 |
Liabilities of discontinued operations - long term portion | 107,000 | 107,000 |
Total liabilities | 30,502,000 | 26,500,000 |
Stockholders' equity: | ||
Preferred stock value | 61,000 | 61,000 |
Common stock, ($0.001 par value: 300,000,000 shares authorized; 15,020,512 and 15,454,623 shares issued and outstanding as of March 31, 2021 and June 30, 2020, respectively) | 15,000 | 16,000 |
Additional paid-in-capital | 182,717,000 | 176,262,000 |
Stock payable | 156,000 | 1,300,000 |
Accumulated deficit | (180,115,000) | (170,892,000) |
Other comprehensive (gain)/loss | (376,000) | 253,000 |
Total stockholders' equity (deficit) | 2,458,000 | 7,000,000 |
Total liabilities and stockholders' equity (deficit) | 32,960,000 | 33,500,000 |
Series A Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock value | 7,000 | 7,000 |
Series B Convertible Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock value | 25,000 | 25,000 |
Series C Convertible Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock value | 9,000 | 9,000 |
Series D Convertible Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock value | $ 20,000 | $ 20,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Jun. 30, 2020 |
Stockholder's Equity | ||
Preferred stock, shares par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 15,020,512 | 15,454,623 |
Common stock, shares outstanding | 15,020,512 | 15,454,623 |
Series B Convertible Preferred Stock [Member] | ||
Stockholder's Equity | ||
Preferred stock, shares par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares issued | 2,495,000 | 2,495,000 |
Preferred stock, shares outstanding | 2,495,000 | 2,495,000 |
Series C Convertible Preferred Stock [Member] | ||
Stockholder's Equity | ||
Preferred stock, shares par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,200,000 | 1,200,000 |
Preferred stock, shares issued | 911,149 | 911,149 |
Preferred stock, shares outstanding | 911,149 | 911,149 |
Series D Convertible Preferred Stock [Member] | ||
Stockholder's Equity | ||
Preferred stock, shares par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares issued | 1,979,000 | 1,979,000 |
Preferred stock, shares outstanding | 1,979,000 | 1,979,000 |
Series A Preferred Stock [Member] | ||
Stockholder's Equity | ||
Preferred stock, shares par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 720,000 | 720,000 |
Preferred stock, shares outstanding | 720,000 | 720,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | ||||
Project revenues, net | $ 3,854,000 | $ 3,620,000 | $ 12,437,000 | $ 20,759,000 |
Cost of revenues | 1,941,000 | 2,256,000 | 6,360,000 | 11,106,000 |
Gross profit | 1,913,000 | 1,364,000 | 6,077,000 | 9,653,000 |
Operating expenses: | ||||
Selling, general and administrative expenses | 6,813,000 | 6,089,000 | 14,864,000 | 19,483,000 |
Professional fees | 136,000 | 98,000 | 1,274,000 | 527,000 |
Depreciation expense | 34,000 | 90,000 | 95,000 | 281,000 |
Amortization expense of intangibles | 540,000 | 1,003,000 | 1,619,000 | 3,010,000 |
Goodwill impairment expense | 0 | 1,387,000 | 0 | 1,387,000 |
Total operating expenses | 7,523,000 | 8,667,000 | 17,852,000 | 24,688,000 |
Loss from operations | (5,610,000) | (7,303,000) | (11,775,000) | (15,035,000) |
Other income (expense): | ||||
Contribution revenue from stimulus funding | 831,000 | 0 | 2,535,000 | 0 |
Amortization expense of note payable discount | 0 | (786,000) | (409,000) | (786,000) |
Interest expense | 11,000 | (49,000) | (35,000) | (247,000) |
Foreign exchange gain | (11,000) | 18,000 | (48,000) | 9,000 |
Gain on early termination of operating lease | 0 | 170,000 | 0 | 170,000 |
Other income | 122,000 | 136,000 | 378,000 | 567,000 |
Other expenses | 1,000 | (3,000) | 154,000 | 127,000 |
Total other income (expense) | 954,000 | (514,000) | 2,575,000 | (160,000) |
Net loss from continuing operations before income tax | (4,656,000) | (7,817,000) | (9,200,000) | (15,195,000) |
Provision for income tax | (23,000) | 0 | (23,000) | 0 |
Net loss | (4,679,000) | (7,817,000) | (9,223,000) | (15,195,000) |
Foreign currency translation adjustment | (130,000) | 60,000 | (629,000) | 10,000 |
Comprehensive loss | $ (4,809,000) | $ (7,757,000) | $ (9,852,000) | $ (15,185,000) |
Basic earnings and diluted (loss) per share | ||||
Continuing operations | $ (0.31) | $ (0.51) | $ (0.58) | $ (0.99) |
Net loss attributable to common stockholders | $ (0.31) | $ (0.51) | $ (0.58) | $ (0.99) |
Weighted average basic and diluted shares | 15,110,400 | 15,454,623 | 15,874,783 | 15,413,370 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders Equity (Deficit) (Unaudited) - USD ($) | Total | Series A, Preferred Stock | Series B, Preferred Stock | Series C, Preferred Stock | Series D, Preferred Stock | Common Stock | Additional Paid-in Capital | Stock Payable | Accumulated Deficit | Comprehensive Income (Loss) |
Balance, shares at Jun. 30, 2019 | 720,000 | 2,495,000 | 911,149 | 1,881,500 | 15,211,290 | |||||
Balance, amount at Jun. 30, 2019 | $ 14,823,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 19,000 | $ 15,000 | $ 169,400,000 | $ 1,743,000 | $ (156,445,000) | $ 50,000 |
Sale of preferred stock - series D, shares | 42,500 | |||||||||
Sale of preferred stock - series D, amount | 417,000 | $ 0 | 417,000 | |||||||
Retirement of common stock, shares | (416,667) | |||||||||
Retirement of common stock, amount | 0 | $ 0 | 0 | |||||||
Issuance of common stock related to stock payable, shares | 660,000 | |||||||||
Issuance of common stock related to stock payable, amount | 0 | $ 1,000 | 442,000 | (443,000) | ||||||
Stock-based compensation on options | 49,000 | 49,000 | ||||||||
Stock-based compensation on warrants | 2,646,000 | 2,646,000 | ||||||||
Imputed interest on convertible note payable | 9,000 | 9,000 | ||||||||
Foreign currency translation gain | (57,000) | (57,000) | ||||||||
Net loss | (4,573,000) | (4,573,000) | ||||||||
Balance, shares at Sep. 30, 2019 | 720,000 | 2,495,000 | 911,149 | 1,924,000 | 15,454,623 | |||||
Balance, amount at Sep. 30, 2019 | 13,314,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 19,000 | $ 16,000 | 172,963,000 | 1,300,000 | (161,018,000) | (7,000) |
Balance, shares at Jun. 30, 2019 | 720,000 | 2,495,000 | 911,149 | 1,881,500 | 15,211,290 | |||||
Balance, amount at Jun. 30, 2019 | 14,823,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 19,000 | $ 15,000 | 169,400,000 | 1,743,000 | (156,445,000) | 50,000 |
Stock-based compensation on options | 863,000 | |||||||||
Stock-based compensation on warrants | 3,420,000 | |||||||||
Net loss | (15,195,000) | |||||||||
Warrants related to legal settlement | 33,000 | |||||||||
Beneficial conversion features on convertible promissory notes | 1,093,000 | |||||||||
Warrants granted for convertible promissory note | 0 | |||||||||
Shares to be issued for convertible promissory note | 0 | |||||||||
Balance, shares at Mar. 31, 2020 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 15,454,623 | |||||
Balance, amount at Mar. 31, 2020 | 6,058,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 16,000 | 176,261,000 | 1,300,000 | (171,640,000) | 60,000 |
Balance, shares at Sep. 30, 2019 | 720,000 | 2,495,000 | 911,149 | 1,924,000 | 15,454,623 | |||||
Balance, amount at Sep. 30, 2019 | 13,314,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 19,000 | $ 16,000 | 172,963,000 | 1,300,000 | (161,018,000) | (7,000) |
Sale of preferred stock - series D, shares | 55,000 | |||||||||
Sale of preferred stock - series D, amount | 550,000 | $ 1,000 | 549,000 | |||||||
Stock-based compensation on options | 285,000 | 285,000 | ||||||||
Stock-based compensation on warrants | 462,000 | 462,000 | ||||||||
Imputed interest on convertible note payable | 4,000 | 4,000 | ||||||||
Foreign currency translation gain | 7,000 | 7,000 | ||||||||
Net loss | (2,804,000) | (2,804,000) | ||||||||
Balance, shares at Dec. 31, 2019 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 15,454,623 | |||||
Balance, amount at Dec. 31, 2019 | 11,818,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 16,000 | 174,263,000 | 1,300,000 | (163,822,000) | 0 |
Sale of preferred stock - series D, amount | 9,000 | 9,000 | ||||||||
Stock-based compensation on options | 529,000 | 529,000 | ||||||||
Stock-based compensation on warrants | 312,000 | 312,000 | ||||||||
Imputed interest on convertible note payable | 22,000 | 22,000 | ||||||||
Foreign currency translation gain | 60,000 | 60,000 | ||||||||
Net loss | (7,817,000) | (7,818,000) | ||||||||
Warrants related to legal settlement | 33,000 | 33,000 | ||||||||
Discount on convertible note payable | 1,093,000 | 1,093,000 | ||||||||
Balance, shares at Mar. 31, 2020 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 15,454,623 | |||||
Balance, amount at Mar. 31, 2020 | 6,058,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 16,000 | 176,261,000 | 1,300,000 | (171,640,000) | 60,000 |
Balance, shares at Jun. 30, 2020 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 15,454,623 | |||||
Balance, amount at Jun. 30, 2020 | 7,000,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 16,000 | 176,262,000 | 1,300,000 | (170,892,000) | 253,000 |
Issuance of common stock related to stock payable, amount | 0 | $ 2,000 | 1,298,000 | (1,300,000) | ||||||
Stock-based compensation on options | 166,000 | 166,000 | ||||||||
Stock-based compensation on warrants | 154,000 | 154,000 | ||||||||
Imputed interest on convertible note payable | 4,000 | 4,000 | ||||||||
Net loss | (3,921,000) | (3,921,000) | ||||||||
Issuance of common stock related to convertible note payables, shares | 499,222 | |||||||||
Issuance of common stock related to convertible note payables, amount | 1,400,000 | $ 0 | 1,400,000 | 0 | ||||||
Issuance of common stock related to stock payables, shares | 1,733,333 | |||||||||
Foreign currency translation loss | (93,000) | (93,000) | ||||||||
Balance, shares at Sep. 30, 2020 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 17,687,179 | |||||
Balance, amount at Sep. 30, 2020 | 4,710,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 18,000 | 179,284,000 | 0 | (174,813,000) | 160,000 |
Balance, shares at Jun. 30, 2020 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 15,454,623 | |||||
Balance, amount at Jun. 30, 2020 | 7,000,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 16,000 | 176,262,000 | 1,300,000 | (170,892,000) | 253,000 |
Stock-based compensation on options | 700,000 | |||||||||
Stock-based compensation on warrants | 2,882,000 | |||||||||
Net loss | (9,223,000) | |||||||||
Warrants related to legal settlement | 0 | |||||||||
Beneficial conversion features on convertible promissory notes | 144,000 | |||||||||
Warrants granted for convertible promissory note | 12,000 | |||||||||
Shares to be issued for convertible promissory note | 156,000 | |||||||||
Balance, shares at Mar. 31, 2021 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 15,020,512 | |||||
Balance, amount at Mar. 31, 2021 | 2,458,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 15,000 | 182,717,000 | 156,000 | (180,115,000) | (376,000) |
Balance, shares at Sep. 30, 2020 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 17,687,179 | |||||
Balance, amount at Sep. 30, 2020 | 4,710,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 18,000 | 179,284,000 | 0 | (174,813,000) | 160,000 |
Stock-based compensation on options | 263,000 | 263,000 | ||||||||
Stock-based compensation on warrants | 301,000 | 301,000 | ||||||||
Imputed interest on convertible note payable | 3,000 | 3,000 | ||||||||
Foreign currency translation gain | (406,000) | (406,000) | ||||||||
Net loss | (623,000) | (623,000) | ||||||||
Beneficial conversion features on convertible promissory notes | 144,000 | 144,000 | ||||||||
Warrants granted for convertible promissory note | 12,000 | 12,000 | ||||||||
Shares to be issued for convertible promissory note | 156,000 | 156,000 | ||||||||
Balance, shares at Dec. 31, 2020 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 17,687,179 | |||||
Balance, amount at Dec. 31, 2020 | 4,560,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 18,000 | 180,007,000 | 156,000 | (175,436,000) | (246,000) |
Retirement of common stock, shares | (2,666,667) | |||||||||
Retirement of common stock, amount | 0 | $ (3,000) | 3,000 | |||||||
Stock-based compensation on options | 271,000 | 271,000 | ||||||||
Stock-based compensation on warrants | 2,427,000 | 2,427,000 | ||||||||
Imputed interest on convertible note payable | 9,000 | 9,000 | ||||||||
Foreign currency translation gain | (130,000) | (130,000) | ||||||||
Net loss | (4,679,000) | (4,679,000) | ||||||||
Balance, shares at Mar. 31, 2021 | 720,000 | 2,495,000 | 911,149 | 1,979,000 | 15,020,512 | |||||
Balance, amount at Mar. 31, 2021 | $ 2,458,000 | $ 7,000 | $ 25,000 | $ 9,000 | $ 20,000 | $ 15,000 | $ 182,717,000 | $ 156,000 | $ (180,115,000) | $ (376,000) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (9,223,000) | $ (15,195,000) |
Depreciation | 95,000 | 281,000 |
Amortization of intangibles | 1,619,000 | 3,010,000 |
Amortization of discount on convertible note payables | 409,000 | 786,000 |
Amortization of right-of-use assets | 893,000 | 1,386,000 |
Impairment of goodwill | 0 | 1,387,000 |
Stock-based compensation on options | 700,000 | 863,000 |
Stock-based compensation on warrants | 2,882,000 | 3,420,000 |
Warrants related to legal settlement | 0 | 33,000 |
Imputed interest for note payable | 16,000 | 35,000 |
Gain on early termination of operating lease | 0 | (170,000) |
Recognition of contribution revenue from stimulus funding | (2,535,000) | 0 |
(Recovery) and provision for bad debt | (202,000) | 133,000 |
Change in operating assets and liabilities: | ||
Accounts receivable | (2,205,000) | 985,000 |
Prepaid expenses | 21,000 | 195,000 |
Other assets | 63,000 | (48,000) |
Accounts payable and accrued expenses | 2,418,000 | 1,876,000 |
Deferred expenses | 0 | (660,000) |
Rental deposits | (11,000) | (6,000) |
Operating lease liability | (10,000) | (1,732,000) |
Contract liabilities | 2,462,000 | 565,000 |
Net cash used in operating activities | (2,608,000) | (2,856,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of fixed assets | (24,000) | (89,000) |
Net cash used in investing activities | (24,000) | (89,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Issuance of series D convertible preferred shares for cash | 0 | 976,000 |
Proceeds from stimulus loan programs | 2,258,000 | 0 |
Proceeds from convertible note payable | 500,000 | 1,400,000 |
Payments to convertible note payable | 0 | (44,000) |
Net cash provided by financing activities | 2,758,000 | 2,332,000 |
CASH FLOWS FROM DISCONTINUED OPERATIONS | ||
Change in accounts payable and accrued expenses | 0 | (27,000) |
Net cash used in discontinued operations - operating activities | 0 | (27,000) |
Net cash (used in) provided by discontinued operations | 0 | (27,000) |
Effect of exchange rate on cash | (406,000) | 10,000 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (280,000) | (630,000) |
CASH AND CASH EQUIVALENTS - beginning of period | 1,706,000 | 1,589,000 |
CASH AND CASH EQUIVALENTS - end of period | 1,426,000 | 959,000 |
Cash paid during the period for: | ||
Income taxes | 0 | 0 |
Interest expense | 0 | 0 |
Noncash investing and financing activities: | ||
Retirement of common stock | 2,666,667 | 6,000 |
Beneficial conversion features on convertible promissory notes | 144,000 | 1,093,000 |
Warrants granted for convertible promissory note | 12,000 | 0 |
Shares to be issued for convertible promissory note | 156,000 | 0 |
Record derivative liability on convertible notes | 98,000 | 0 |
Conversion of convertible note payable | 1,400,000 | 0 |
Issuance of common stock related to stock payable | 1,300,000 | 443,000 |
Right-of-use assets acquired through adoption of ASC 842 | 0 | 13,092,000 |
Right-of-use assets acquired through operating leases | $ 0 | $ 0 |
PRESENTATION OF THE FINANCIAL S
PRESENTATION OF THE FINANCIAL STATEMENTS | 9 Months Ended |
Mar. 31, 2021 | |
PRESENTATION OF THE FINANCIAL STATEMENTS | |
NOTE 1- PRESENTATION OF THE FINANCIAL STATEMENTS | The terms “Troika,” “the Company,” “we,” “our” and “us” each refer to Troika Media Group, Inc. and its subsidiaries, unless the context indicates otherwise. The accompanying unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP, for interim financial information and Article 8 of Regulation S-X of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures have been condensed or omitted. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, in all material respects, of the information contained herein. These unaudited condensed consolidated financial statements should be read in conjunction with our annual report for the year ended June 30, 2020. RISKS & UNCERTAINTIES Liquidity The Company has incurred net losses since its inception and anticipates net losses and negative operating cash flows until fiscal year 2022. For the nine months ended March 31, 2021, the Company had a net loss of $9,223,000 which increased the accumulated deficit to $180.1 million at March 31, 2021 from $170.9 million at June 30, 2020. At March 31, 2021, the Company had approximately $1.4 million in cash and cash equivalents and a total of $4.8 million in current assets in relation to $21.2 million in current liabilities. While the Company continues to find efficiencies with its acquisitions of Troika Design Group, Inc. and Mission Group, the departure of Mission’s President and Founder in fiscal year 2019 together with the coronavirus (COVID-19) pandemic in fiscal years 2020 and 2021 impacted revenue more than anticipated. With the acquisition of Mission Group, the Company anticipated increasing Troika’s footprint in a major media markets, such as NY and London. The Company also continues to expand its consulting services and breadth of product offering with existing Mission and Troika clients and increase business development in NY and London as a result of the Mission acquisition. Additionally, the Company intends to add to Mission business development due to Troika’s existing clientele. During the fiscal year ended June 30, 2020, the Company entered into an agreement with a financial advisory firm to analyze potential financing transactions including preparing the Company for an initial public offering (IPO). In April 2021, the Company’s Form S-1 registration statement was declared effective by the U.S. Securities and Exchange Commission. The Company received net proceeds of $21.9 million ’and the Company’s securities were listed on the Nasdaq Capital Market. Management believes the proceeds from the IPO will be more than sufficient to meet the Company’s cash requirements until the Company generates positive cash flow. Impact of COVID-19 Pandemic In March 2020, the World Health Organization categorized the coronavirus (COVID-19) as a pandemic, and it continues to spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and the resulting public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have adversely impacted our business and those of our clients. Businesses have adjusted, reduced or suspended operating activities, which has negatively impacted the clients we service. We continue to believe our focus on our strategic strengths, including talent, our differentiated market strategy and the relevance of our services, including the longevity of our relationships, will continue to assist our Company as we navigate a rapidly changing marketplace. The effects of the COVID-19 pandemic have negatively impacted our results of operations, cash flows and financial position; however, the continued extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19. We took steps to protect the safety of our employees, with a large majority of our worldwide workforce working from home, while developing creative ideas to protect the health and well-being of our communities and setting up our people to help them do their best work for our clients while working remotely. With respect to managing costs, we have took multiple initiatives to align our expenses with changes in revenue. The steps taken across our agencies and corporate group include deferred merit increases, freezes on hiring and temporary labor, major cuts in non-essential spending, staff reductions, furloughs in markets where that option is available and salary reductions, including voluntary salary deferment for our senior corporate management team. In addition, we remain committed to and have intensified our efforts around cash flow discipline, including the identification of significant capital expenditures that can be deferred, and working capital management. We began to see the effects of COVID-19 on client spending, notably in the UK and US markets with our Mission subsidiaries throughout the second quarter of calendar 2020 with much of the work force of the UK subsidiary on furlough, and with our Troika Design subsidiary furloughed as March 2020 progressed. Due to mandatory stay at home orders and social distancing, our experiential business has been particularly impacted by COVID-19. Promotional and experiential events with the Company’s assistance are particularly susceptible to external factors were delayed by many of the Company’s Mission clients due to the effects of COVID-19. The Company had temporarily furloughed employees to reflect current reduced demands associated with those client sets. However, as of mid-February 2021, we started to see business dramatically improve and expect greater improvement in our results in our next fiscal quarters. As cities have commenced openings with the improvement of vaccines distribution and infection rates declining, our client activities have doubled and there is a real optimism that the economic conditions are improving. Sports, Entertainment, Pharma clients are contracting our services across all entities at rates similar to 2019. We took steps to strengthen our financial position during this period of heightened uncertainty. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide relief as a result of the COVID-19 outbreak. The CARES Act, among other things, includes 1) provisions relating to compensation, benefits and payroll tax relief, 2) the availability of net operating loss carrybacks for periods beginning in 2018 and before 2021 and alternative minimum tax credit refunds, and 3) modifications to the net interest deduction limitations. The Company continues to examine the impacts the CARES Act may have on its business. The governments in which our International subsidiaries are located are offering similar business relief programs and the Company is examining the impacts of these programs on its operations as well. In the current environment, a major priority for us is preserving liquidity. Our primary liquidity sources are operating cash flow, cash and cash equivalents and short-term investments. Although we expect to experience a decrease in our cash flow from operations as a result of the impact of COVID-19, we have obtained relief under the CARES Act in the form of a Small Business Administration backed loans. In aggregate we received $1.7 million in SBA stimulus “Payroll Protection Program” funding in April 2020 of which the majority of these funds were used for payroll. As per the US Government rules, the funds used for payroll, healthcare benefits, and other applicable operating expenses can be forgiven and the Company reported them as such in December 2020 considering the Company believes we have substantially met these conditions. On August 14, 2020, the Company received an additional $500,000 in loans with 30 year terms under the SBA’s “Economic Injury Disaster Loan” program which the Company intends to use to address any cash shortfalls that may result from the current pandemic. In February 2021, the Company obtained additional relief under the CARES Act in the form of a Small Business Administration backed loans and received an additional $1.7 million in SBA stimulus “Payroll Protection Program” funds which will be used for payroll, healthcare benefits, and other applicable operating expenses. In the United Kingdom, as of April 1, 2020, Mission furloughed 27 employees, saving £78,000 in April payroll, being made up of £55,000 of furlough monies from the government and £16,000 in associated payroll savings and applied for a 3-month rent holiday. In May 1, 2020, Mission put on furlough an additional 5 employees bringing the total to 32, alongside a 10% pay cut for all employees not furloughed, saving £111,000 in May payroll, being made up of £62,000 of furlough monies from the government, £33,000 of associated payroll savings and £16,000 in savings related to the pay cut. On April 1, 2020, Troika Design Group actioned a 15% salary reduction across the majority of the Los Angeles staff and furloughed one office manager for a total savings of $112,000 per month. Finally, certain members of the Company’s executive team deferred compensation temporarily. In August 2020, the Company received £50,000 in loans related to the COVID pandemic with an interest rate of 2.5% to be paid over five years beginning one year after receipt. The Company used these proceeds to address any cash shortfalls that resulted from the pandemic. The extent to which the COVID-19 outbreak continues to impact the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact. While the Company’s revenue has declined by $8.3 million from $20.8 million to $12.4 million in the nine months ending March 31, 2021 and 2020 respectively, the Company is still quantifying how much of this decline in revenue was caused by the pandemic as well as the impact from the departure of Mission’s founder. PRINCIPLES OF CONSOLIDATION The accompanying unaudited condensed financial statements include the accounts of TMG, and its wholly-owned subsidiaries, Troika Design Group, Inc. (California), Troika Services Inc. (New York), Troika Analytics Inc. (New York), Troika Productions, LLC (California), Troika-Mission Holdings, Inc. (New York), Mission Culture LLC (Delaware), Mission-Media Holdings Limited (England and Wales), and Mission Media USA, Inc. (New York). All significant intercompany accounts and transactions have been eliminated in consolidation. USE OF ESTIMATES 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions made by management include, among others, the assessment of the collectability of accounts receivable and the determination of the allowance for doubtful accounts, the valuation and useful life of capitalized equipment costs and long-lived assets, valuation of warrants and options, the determination of the useful lives and any potential impairment of long-lived assets such as intangible assets, the valuation of goodwill, stock-based compensation, and deferred tax assets. Actual results could differ from those estimates. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS The Company has estimated the fair value of its financial instruments using the available market information and valuation methodologies considered to be appropriate and has determined that the book value of the Company’s accounts receivable, prepaid expenses, accounts payable, and accrued expenses, as of March 31, 2021 and 2020, respectively, approximate fair value based on their short-term nature. FAIR VALUE MEASUREMENT Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Other inputs that are directly or indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as March 31, 2021 and 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable, accrued liabilities, and convertible notes payable. Fair values for these items were assumed to approximate carrying values because of their short-term nature or they are payable on demand. IMPAIRMENT OF LONG-LIVED ASSETS The Company evaluates, on a periodic basis, long-lived assets to be held and used for impairment in accordance with the reporting requirements of ASC 360-10. The evaluation is based on certain impairment indicators, such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If these impairment indicators are present or other factors exist that indicate that the carrying amount of the asset may not be recoverable, then an estimate of the undiscounted value of expected future operating cash flows is used to determine whether the asset is recoverable and the amount of any impairment is measured as the difference between the carrying amount of the asset and its estimated fair value. The fair value is estimated using valuation techniques such as market prices for similar assets or discounted future operating cash flows. CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalent account balances with financial institutions in the United States and United Kingdom which at times exceed federally insured limits for accounts in the United States. Considering deposits with these institutions can be redeemed on demand, the Company believes there is minimal risk. As of March 31, 2021 and 2020, the Company had $365,000 and $401,000 in cash that was uninsured, respectively. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. As of March 31, 2021 and 2020, the Company had no cash equivalents. ACCOUNTS RECEIVABLE Our accounts receivable are amounts due from our clients. The Company accounts for unbilled accounts receivable using the percentage-of-completion accounting method for revenue recognized and the customer has not been invoiced due to the terms of the contract or the timing of the account invoicing cycle. For those clients to whom we extend credit, we perform periodic evaluations of accounts receivable and maintain allowances for potential credit losses as deemed necessary. The Company periodically reviews the outstanding accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. When a customer’s account is deemed to be uncollectible the outstanding balance is charged to the allowance for doubtful accounts. As of March 31, 2021 and 2020, the Company had $579,000 and $518,000 in allowance for doubtful accounts, respectively. GOODWILL AND INTANGIBLE ASSETS As a result of acquisitions, the Company recorded goodwill and identifiable intangible assets as part of its allocation of the purchase consideration. Goodwill Goodwill is the excess of the purchase price paid over the fair value of the net assets of the acquired business. Goodwill is tested annually at June 30 for impairment. The annual qualitative or quantitative assessments involve determining an estimate of the fair value of reporting units in order to evaluate whether an impairment of the current carrying amount of goodwill exists. A qualitative assessment evaluates whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test. The first step of a quantitative goodwill impairment test compares the fair value of the reporting unit to its carrying amount including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss may be recognized. The amount of impairment loss is determined by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount. If the carrying amount exceeds the implied fair value then an impairment loss is recognized equal to that excess. A goodwill impairment charge of $598,000 was recorded as a result of the Company’s annual impairment assessment on June 30, 2020. The Company has adopted the provisions of ASU 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 requires goodwill impairments to be measured on the basis of the fair value of a reporting unit relative to the reporting unit’s carrying amount rather than on the basis of the implied amount of goodwill relative to the goodwill balance of the reporting unit. Thus, ASU 2017-04 permits an entity to record a goodwill impairment that is entirely or partly due to a decline in the fair value of other assets that, under existing GAAP, would not be impaired or have a reduced carrying amount. Furthermore, the ASU removes “the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.” Instead, all reporting units, even those with a zero or negative carrying amount will apply the same impairment test. Accordingly, the goodwill of reporting unit or entity with zero or negative carrying values will not be impaired, even when conditions underlying the reporting unit/entity may indicate that goodwill is impaired. We test our goodwill for impairment annually, or, under certain circumstances, more frequently, such as when events or circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our testing determines the recorded amount of goodwill exceeds the fair value. Our annual measurement date for testing goodwill impairment is June 30. Internal evaluations on both March 31, 2021 and 2020 determined that impairments were not necessary and this will be reevaluated June 30, 2021. None of the goodwill is deductible for income tax purposes. Intangibles Intangible assets with finite useful lives consist of tradenames, non-compete agreements, acquired workforce and customer relationships and are amortized on a straight-line basis over their estimated useful lives, which range from three to ten years. The estimated useful lives associated with finite-lived intangible assets are consistent with the estimated lives of the associated products and may be modified when circumstances warrant. Such assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset and its eventual disposition are less than its carrying amount. The amount of any impairment is measured as the difference between the carrying amount and the fair value of the impaired asset. It was determined by the Company that the COVID-19 pandemic was a triggering event and after an internal evaluation it was concluded that an impairment for intangibles was required on March 31, 2020 for $1,387,000. An internal evaluation was also carried out on March 31, 2021 and it was determined that an impairment was not necessary. BENEFICIAL CONVERSION FEATURE The Company accounts for convertible notes payable in accordance with the guidelines established by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options, Emerging Issues Task Force (“EITF”) 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF 00-27, Application of Issue No 98-5 To Certain Convertible Instruments. The Beneficial Conversion Feature (“BCF”) of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of a convertible note when issued and also records the estimated fair value of any warrants issued with those convertible notes. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved. The BCF of a convertible note is measured by allocating a portion of the note’s proceeds to the warrants, if applicable, and as a reduction of the carrying amount of the convertible note equal to the intrinsic value of the conversion feature, both of which are credited to additional paid-in-capital. The value of the proceeds received from a convertible note is then allocated between the conversion features and warrants on an allocated fair value basis. The allocated fair value is recorded in the financial statements as a debt discount (premium) from the face amount of the note and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense using interest method. STOCK-BASED COMPENSATION The Company recognizes stock-based compensation in accordance with ASC Topic 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values. For non-employee stock-based compensation, the Company has adopted ASC 2018-07, Improvements to Nonemployee Share-Based Payment Accounting FOREIGN CURRENCY TRANSLATION The consolidated financial statements of the Company are presented in U.S. dollars. The functional currency for the Company is U.S. dollars for all entities other than Mission Media Limited whose operations are based in the United Kingdom and their functional currency is British Pound Sterling (GBP). Transactions in currencies other than the functional currencies are recorded using the appropriate exchange rate at the time of the transaction. All assets and liabilities are translated into U.S. Dollars at balance sheet date, stockholders’ equity is translated at historical rates and revenue and expense accounts are translated at the average exchange rate for the year or the reporting period. The translation adjustments are reported as a separate component of stockholders’ equity, captioned as accumulated other comprehensive (loss) income. Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the statements of operations. The relevant translation rates are as follows: for the quarter ended March 31, 2021 closing rate at 1.378900 US$: GBP, average rate at 1.342278 US$: GBP, for the quarter ended March 31, 2020 closing rate at 1.241200 US$: GBP, average rate at 1.268544 US$. COMPREHENSIVE LOSS Comprehensive loss is defined as a change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. For the Company, comprehensive loss for the three and nine months ended March 31, 2021 and 2020 included net loss and unrealized losses from foreign currency translation adjustments. BASIC AND DILUTED NET LOSS PER COMMON SHARE Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. The following table provides the numerators and denominators in the basic and diluted earnings per share computations for the three months ended March 31. The figures represent the converted common stock equivalent. Three Months Ended March 31, 2021 2020 Numerator: Net loss attributable to common stockholders $ (4,679,000 ) $ (7,817,000 ) Denominator: Basic EPS: Common shares outstanding, beginning of period 17,687,179 15,454,623 Weighted average common stock retired (2,576,779 ) - Weighted average common shares issued during the period - - Denominator for basic earnings per common shares - - Weighted average common shares 15,110,400 15,454,623 Diluted EPS: Common shares outstanding, beginning of period 17,687,179 15,454,623 Weighted average common stock retired (2,576,779 ) - Weighted average common shares issued during the period - - Denominator for basic earnings per common shares - - Preferred Stock Series A, beginning of period 720,000 720,000 Preferred Stock Series B, beginning of period 2,495,000 2,495,000 Preferred Stock Series C, beginning of period 911,149 911,149 Preferred Stock Series D, beginning of period 1,979,000 1,979,000 Stock payable, beginning of period 156,000 1,300,000 Weighted average diluted effect of stock options 2,771,081 2,342,660 Weighted average diluted effect of warrants 7,622,411 6,110,534 Lock-Up Agreements - common stock equivalents - (5,711,111 ) Weighted average common shares 31,765,041 25,601,854 The following table provides the numerators and denominators in the basic and diluted earnings per share computations for the nine months ended March 31. The figures represent the converted common stock equivalent. Nine Months Ended March 31, 2021 2020 Numerator: Net loss attributable to common stockholders $ (9,223,000 ) $ (15,195,000 ) Denominator: Basic EPS: Common shares outstanding, beginning of period 15,454,623 15,211,290 Weighted average common stock retired (836,983 ) (296,533 ) Weighted average common shares issued during the period 1,257,143 498,613 Denominator for basic earnings per common shares - - Weighted average common shares 15,874,783 15,413,370 Diluted EPS: Common shares outstanding, beginning of period 15,454,623 15,211,290 Weighted average common stock retired (836,983 ) (296,533 ) Weighted average common shares issued during the period 1,257,143 498,613 Denominator for basic earnings per common shares - - Preferred Stock Series A, beginning of period 720,000 720,000 Preferred Stock Series B, beginning of period 2,495,000 2,495,000 Preferred Stock Series C, beginning of period 911,149 911,149 Preferred Stock Series D, beginning of period 1,979,000 1,881,500 Stock payable, beginning of period 1,300,000 1,743,000 Weighted average preferred stock series D purchased during the period - 260,000 Weighted average stock payable issued during the period - - Weighted average diluted effect of stock options 2,686,722 2,127,915 Weighted average diluted effect of warrants 7,756,204 6,443,472 Lock-Up Agreements - common stock equivalents - (5,711,111 ) Weighted average common shares 33,722,857 26,284,295 CORRECTION OF AN IMMATERIAL MISSTATEMENT During the nine months ending March 31, 2021 the Company identified certain liabilities recorded as of June 30, 2020 relating to “Payroll Protection Program” stimulus funding totaling $1,704,000 that were to be treated as a government grant rather than debt. In accordance with IAS-20, Accounting for Government Grants and Disclosure of Government Assistance RECLASSIFICATION OF PRIOR YEAR PRESENTATION Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported consolidated balance sheets and statement of operations and comprehensive loss. RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements In February 2016 the FASB issued amended guidance in the form of ASU No. 2016-02, “Leases.” The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet but recognize expenses on their income statements in a manner similar to today’s accounting for all leases with terms longer than twelve months. Lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs. Leases will be classified as either finance (formerly “capital leases”) or operating, with classification affecting the pattern of expense recognition in the income statement. The standard provides for a modified retrospective transition approach for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain optional practical expedients. In July 2018, the FASB issued ASU 2018-11, “Leases: Targeted Improvements”, allowing for an alternative transition method (the effective date approach). It allows an entity to initially apply the new lease guidance at the adoption date (rather than at the beginning of the earliest period presented). The Company adopted the new guidance on July 1, 2019 using the optional transitional method and elected to use the package of three practical expedients which allows the Company not to reassess whether contracts are or contain leases, lease classification and whether initial direct costs qualify for capitalization. Upon adoption of the standard, the Company has recognized an $8.9 million right-of-use asset and offsetting lease liability on the balance sheet which resulted in no impact on accumulated deficit. The Company also removed deferred rent of approximately $842,000 when adopting the new guidance. In July 2017, the FASB issued amended guidance in the form of ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Mar. 31, 2021 | |
PROPERTY AND EQUIPMENT | |
NOTE 2 - PROPERTY AND EQUIPMENT | Property and equipment consist of the following as of March 31, 2021 and June 30, 2020: March 31, 2021 June 30, 2020 Computer equipment $ 650,000 $ 620,000 Website design 6,000 6,000 Office machine & equipment 97,000 89,000 Furniture & fixtures 437,000 429,000 Leasehold improvements 191,000 173,000 Tenant incentives 145,000 145,000 1,526,000 1,462,000 Accumulated depreciation (1,253,000 ) (1,118,000 ) Net book value $ 273,000 $ 344,000 During the three months ended March 31, 2021 and 2020, depreciation expense was $34,000 and $90,000, respectively. During the nine months ended March 31, 2021 and 2020, depreciation expense was $95,000 and $281,000, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Mar. 31, 2021 | |
INTANGIBLE ASSETS | |
NOTE 3 - INTANGIBLE ASSETS | Intangible assets consisted of the following as of March 31, 2021 and June 30, 2020: March 31, 2021 June 30, 2020 Customer relationship $ 4,960,000 $ 8,510,000 Non-core customer relationships 760,000 760,000 Non-compete agreements 1,430,000 2,200,000 Tradename 410,000 410,000 Workforce acquired 2,125,000 2,790,000 9,685,000 14,670,000 Less: impairment expense - (1,867,000 ) Less: accumulated amortization (7,113,000 ) (8,612,000 ) Net book value $ 2,572,000 $ 4,191,000 Purchased intangible assets with finite useful lives are amortized over their respective estimated useful lives (using an accelerated method for customer relationships and trade names) to their estimated residual values, if any. The Company’s finite-lived intangible assets consist of customer relationships, contractor and resume databases, trade names, and internal use software and are being amortized over periods ranging from two to nine years. Purchased intangible assets are reviewed annually to determine if facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, recoverability is assessed by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the rate of amortization is accelerated and the remaining carrying value is amortized over the new shorter useful life. For the three and nine months ended March 31, 2021, the Company had no impairments. During the fiscal year ending June 30, 2020, the Company recorded $1,867,000 in impairment expense related to intangibles. During the three months ended March 31, 2021 and 2020, amortization expense was $540,000 and $1,003,000, respectively. During the nine months ended March 31, 2021 and 2020, amortization expense was $1,619,000 and $3,010,000, respectively. |
ACCOUNTS PAYABLE ACCRUED EXPENS
ACCOUNTS PAYABLE ACCRUED EXPENSES | 9 Months Ended |
Mar. 31, 2021 | |
ACCOUNTS PAYABLE ACCRUED EXPENSES | |
NOTE 4 - ACCOUNTS PAYABLE & ACCRUED EXPENSES | As of March 31, 2021 and June 30, 2020, the Company recorded $10,525,000 and $8,137,000 in accounts payable and accrued expenses respectively. Both accounts payable and accrued expenses are treated as current liabilities however the difference is that a formal invoice has been received and entered to record an accounts payable transaction. March 31, 2021 June 30, 2020 Accounts payable $ 2,774,000 $ 3,578,000 Accrued expenses 6,116,000 3,750,000 Accrued payroll 822,000 482,000 Accrued taxes 841,000 327,000 $ 10,553,000 $ 8,137,000 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Mar. 31, 2021 | |
CONVERTIBLE NOTES PAYABLE | |
NOTE 5 - CONVERTIBLE NOTES PAYABLE | During the fiscal year ending June 30, 2020, the Company issued a convertible promissory note of $200,000 to a lender with an interest rate of 10.0%, a loan fee of $10,000, and the balance was convertible into shares of the Company’s common stock at a rate of $3.75 per share. The balance was recorded as a current liability as payment was due on the earlier of February 28, 2020 or listing to a US national securities exchange which was anticipated within the next twelve months. In consideration for the loan, the lender received warrants for 13,333 shares of common stock at an exercise price of $3.75 per share vesting over three years. In July 7, 2020, the note holder elected to convert the entire balance. During the fiscal year ending June 30, 2020, the Company issued a convertible promissory note of $200,000 to a lender with an interest rate of 10.0%, a loan fee of $10,000, and the balance was convertible into shares of the Company’s common stock at a rate of $3.75 per share. The balance was recorded as a current liability as payment was due on the earlier of March 7, 2020 or listing on a US national securities exchange which was anticipated within the next twelve months. In consideration for the loan, the lender received warrants for 66,667 shares of common stock at an exercise price of $3.75 per share vesting over five years. In July 7, 2020, the note holder elected to convert the entire balance. During the fiscal year ending June 30, 2020, the Company issued a convertible promissory note of $1,000,000 to a lender with an interest rate of 10.0%, a loan fee of $120,000, and the balance was convertible into shares of the Company’s common stock at a rate of $1.50 per share. The balance was recorded as a current liability as payment was due on the earlier of April 15, 2020 or listing on a US national securities exchange which was anticipated within the next twelve months. In consideration for the loan, the lender received securities warrants for 13,334 shares of common stock at an exercise price of $0.75 per share vesting over three years and warrants for 66,667 shares of common stock at an exercise price of $1.50 per share vesting over three years. The note also includes a loan conversion option which entitled the lender upon conversion to additional warrants for 26,667 shares of common stock at an exercise price of $0.75 per share. In July 2020, the note holder elected to convert the entire balance. The additional warrants for 26,667 shares of common stock at an exercise price of $0.75 per share due upon conversion shall vest over three years and have been recorded though have not been issued. In August 2020, the Company issued a convertible promissory note of $100,000 to a lender with an interest rate of 10.0%. If the loan was not paid by its maturity date which was the earlier of November 30, 2020 or five business days after the Company is listed on a national securities exchange, the principal due shall incur prospective interest of 20%. Upon mutual agreement, the balance including accrued interest is convertible into shares of the Company’s common stock at its then current market price less a 25% discount. A discount was recorded of $49,000 due to the conversion price being less than the market value and $21,000 of the discount was amortized during the three and nine months ended March 31, 2021. The balance was recorded as a current liability and interest expense of $2,000 was recorded for the three months ended March 31, 2021. The Company determined that the note’s conversion feature should be valued separately and bifurcated from the host instrument and accounted for as a separate derivative lability. The fair market value of the embedded conversion feature was determined to be $49,000 using the Black-Scholes model as of March 31, 2021 and a derivative liability was recorded as a short-term liability. The assumptions used in the Black-Scholes valuation include a volatility of 66.48%, risk-free rate of 0.10% and term of one year. In September 2020, the Company issued a convertible promissory note of $50,000 to a lender with an interest rate of 10.0%. If the loan is not paid by its maturity date which was the earlier of November 30, 2020 or five business days after the Company is listed on a national securities exchange, the principal due shall incur prospective interest of 20%. Upon mutual agreement, the balance including accrued interest is convertible into shares of the Company’s common stock at its then current offering price less a 25% discount. A discount was recorded of $24,000 due to the conversion price being less than the market value and $12,000 of that discount was amortized during the three months ended March 31, 2021. The balance was recorded as a current liability and interest expense of $1,000 was recorded for the three months ended March 31, 2021. The Company determined that the note’s conversion feature should be valued separately and bifurcated from the host instrument and accounted for as a separate derivative lability. The fair market value of the embedded conversion feature was determined to be $25,000 using the Black-Scholes model as of March 31, 2021 and a derivative liability was recorded as a short-term liability. The assumptions used in the Black-Scholes valuation include a volatility of 66.48%, risk-free rate of 0.10% and term of one year. In October 2020 and December 2020, the Company received gross proceeds of $247,500 and $52,500, respectively, for a total of $300,000 representing a convertible note payable issued to an existing investor. Terms include a maturity date of December 7, 2020, interest rate of 10% if the loan was not paid in full by the maturity date, and the outstanding balance can be converted to common stock at a conversion price of $3.00 per share of common stock if mutually agreed. In consideration for the loan, 26,667 warrants were issued at an exercise price of $1.95 per share vesting over three years and the issuance of 106,667 shares of restricted shares of common stock. A total discount of $300,000 was recorded due to the conversion price being less than the market value, which resulting a discount of $117,000, the discount value of $26,000 attributed to the 26,667 warrants, and the discount value of $156,000 attributed to the restricted shares of common stock. $300,000 of that discount was amortized during the nine months ended March 31, 2021. The balance was recorded as a current liability and interest expense of $7,000 was recorded for the three months ended March 31, 2021. In January 2021, it was mutually agreed to extend the maturity date to October 6, 2021. In October 2020, the Company received gross proceeds of $50,000 representing a convertible note payable issued to an existing investor. Terms include an interest rate of 10% and a maturity date the earlier of January 1, 2021 or five business days after the Company is listed on a US national securities exchange. Upon mutual agreement, the outstanding balance can be converted to common stock at a conversion price 25% less the current offering price. In consideration for the loan, 6,667 warrants were issued at an exercise price of $2.25 per share vesting over three years. A total discount of $37,000 was recorded due to the conversion price being less than the market value, which resulted in a discount of $25,000 and the discount value of $12,000 attributed to the 6,667 warrants. $37,000 of that discount was amortized during the nine months ended March 31, 2021. The Company determined that the note’s conversion feature should be valued separately and bifurcated from the host instrument and accounted for as a separate derivative lability. The fair market value of the embedded conversion feature was determined to be $25,000 using the Black-Scholes model as of March 31, 2021, a derivative liability was recorded as a short-term liability, and interest expense of $1,000 was recorded for the three months ended March 31, 2021. The assumptions used in the Black-Scholes valuation include a volatility of 66.48%, risk-free rate of 0.10% and a term of one. As of March 31, 2021 and June 30, 2020, there was a total $535,000 and $1,435,000 in notes payable outstanding. The Company recorded $12,000 and $54,000 in interest expense relating to convertible note payables during the three and nine months ended March 31, 2021, respectively. The Company recorded $7,000 and $7,000 in interest expense relating to convertible note payables during the three and nine months ended March 31, 2020, respectively. The Company recorded $409,000 and $0 in amortization expense relating to the note payable discount during the nine months ended March 31, 2021 and 2020, respectively. |
NOTE PAYABLE RELATED PARTY
NOTE PAYABLE RELATED PARTY | 9 Months Ended |
Mar. 31, 2021 | |
NOTE PAYABLE RELATED PARTY | |
NOTE 6 - NOTE PAYABLE RELATED PARTY | As of March 31, 2021 and 2020, the Company owed the founder and CEO of Troika Design Group, Inc., Dan Pappalardo, approximately $200,000 and the estate of his mother Sally Pappalardo $235,000. Repayment of the loans were contractually due to begin on July 1, 2019 and accrue interest at 10.0% per annum. Interest expense of $10,000 and $10,000 were recorded for these notes for the three months ending March 31, 2021 and 2020, respectively. Interest expense of $30,000 and $30,000 were recorded for these notes for the nine months ended March 31, 2021 and 2020, respectively. During the year ended June 30, 2020, the Company issued a convertible promissory note of $1,300,000 to a related party with an interest rate of 5.0% and convertible into shares of the Company’s common stock at a rate of $0.75 per share. The holder elected to convert the debt into shares of the Company’s common stock in July 2019 at a rate of $0.75 per share for 1,733,334 shares. This balance was recorded as stock payable on June 30, 2020 as the shares were not issued until July 2020. On January 27, 2019, Daniel Jankowski and Tom Ochocki (collectively as the “Lenders”) entered into a facility agreement with Mission Media Limited (“MML”) in order to provide certain funds allowing MML to exit administration in the United Kingdom. Mr. Ochocki, as primary lender, provided MML £1,594,211 ($2,198,000) which was received in January 2019. The same agreement allows the Company to draw upon Mr. Jankowski in upwards of £992,895 ($1,369,000) however the funds were not needed. Mr. Ochocki was a member of the Board of the Company and subsequent to the loan, Mr. Jankowski was appointed to the Board. Both Lenders were appointed to the Board of Mission Media Holdings Limited. The loan has a repayment date of January 2022 and an interest rate of 0%. Imputed interest for $22,000 and $35,000 were recorded for this facility agreement for the nine months ending March 31, 2021 and 2020, respectively. The Company paid the balance due of the note in April 2021. March 31, 2021 June 30, 2020 Short term portion Dan Pappalardo $ 217,000 $ 217,000 Estate of Sally Pappalardo 235,000 235,000 452,000 452,000 Long term portion Tom Ochocki 2,198,000 1,975,000 $ 2,198,000 $ 1,975,000 |
LEASE LIABILITIES
LEASE LIABILITIES | 9 Months Ended |
Mar. 31, 2021 | |
LEASE LIABILITIES | |
NOTE 7 - LEASE LIABILITIES | The Company leases office space and as a result of our adoption of ASC 842, the operating leases are reflected on our balance sheet within operating lease right-of-use (ROU) assets and the related current and non-current operating lease liabilities. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from lease agreement. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectation regarding the terms. Variable lease costs such as common area maintenance, property taxes and insurance are expensed as incurred. When the new accounting standard was adopted on July 1, 2019, the Company had current and long-term operating lease liabilities of $2,275,000 and $6,916,000, respectively, and right of use of assets of $8,348,000. As of June 30, 2020, the Company had current and long-term operating lease liabilities of $2,255,000 and $7,003,000, respectively, and right of use of assets of $8,297,000. As of March 31, 2021, the Company had current and long-term operating lease liabilities of $2,922,000 and $6,327,000, respectively, and right of use of assets of $7,404,000. Future minimum lease payments on a discounted and undiscounted basis under these leases are as follows: Troika Gower Troika LaBrea Corporate Englewood Mission US Brooklyn Mission US Manhattan Mission UK London Undiscounted Cash Flows Discount rate 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 2021 310,000 838,000 14,000 602,000 93,000 166,000 2,023,000 2022 536,000 - 55,000 460,000 - 677,000 1,728,000 2023 558,000 - 19,000 497,000 - 677,000 1,751,000 2024 580,000 - - 509,000 - 677,000 1,766,000 2025 346,000 - - 522,000 - 677,000 1,545,000 2026 - - - 535,000 - 564,000 1,099,000 2027 - - - 455,000 - - 455,000 Total undiscounted minimum future payments 2,330,000 838,000 88,000 3,580,000 93,000 3,438,000 10,367,000 Imputed interest (185,000 ) - (4,000 ) (392,000 ) (93,000 ) (444,000 ) (1,118,000 ) Total operating lease liabilities $ 2,145,000 $ 838,000 $ 84,000 $ 3,188,000 $ - $ 2,994,000 $ 9,249,000 Short-term lease liabilities $ 610,000 $ 838,000 $ 52,000 $ 899,000 $ - $ 523,000 $ 2,922,000 Long-term lease liabilities $ 1,535,000 $ - $ 32,000 $ 2,289,000 $ - $ 2,471,000 $ 6,327,000 Other information related to our operating leases is as follows: March 31, 2021 Weighted average remaining lease term in years 3.4 years Weighted average discount rate 10.8 % LEASE AGREEMENTS On February 8, 2013, our Troika Design Group, Inc. subsidiary entered into a lease agreement for office space in Los Angeles, CA. The lease commenced upon move in, December 15, 2013. As part of the lease agreement, Troika received a rent abatement in months two through six of the lease and partial rent abatement in months seven through nine. The lease also provides for an escalation clause where the Company will be subject to an annual rent increase of 3%, year over year. Initially the lease expired on May 31, 2021, however the Company surrendered the premises in January 2020. On February 1, 2018, Troika Media Group entered into a five-year lease agreement for office space in Englewood Cliffs, NJ. The beginning lease expense was $4,120 per month escalating annually at 3.5%. The lease expires on January 31, 2023. On January 9, 2014, Mission USA entered into a seven year and five-month lease agreement for office space in New York, NY. The beginning lease expense was $19,230 per month escalating annually at 2.5%. As part of the lease agreement, Mission USA received a rent abatement in months one through five of the lease. The lease expired on May 8, 2021. On May 2, 2017, Mission USA entered into a ten-year lease agreement for office space in Brooklyn, NY. The beginning lease expense was $34,278 per month escalating annually at 2.5%. As part of the lease agreement, Mission USA received a rent abatement in months one through four of the lease. The lease expires on May 1, 2027. On April 6, 2016, Mission UK entered into a ten-year lease agreement for office space in London, UK. The beginning lease expense was £17,365 ($22,432) per month for the first twelve months and then escalated to £40,916 ($52,855) per month for the remainder of the lease which expires April 5, 2026. As part of the lease agreement, Mission UK received a rent abatement in months sixty-one through sixty-six of the lease. On September 8, 2020, Mission UK entered into an amendment to the current lease providing a discount for the period between March 25, 2020 and September 28, 2020 in acceptance of an increase in the monthly payments from £40,916 to £46,766 for the months of October 2020 through April 2021. In April 2021, Mission UK terminated the original lease agreement and has agreed with the landlord to occupy the first floor of the building through June 2021 at £8,858 per month. In April 2021, Mission UK entered into a three-year lease agreement for office space in London, UK ending in April 2024. The lease expense is £39,173 ($54,016) per month throughout the life of the lease. On February 1, 2020, Troika Production Group entered into a five-year lease agreement for office space in Los Angeles, CA. The beginning lease expense is $42,265 and the lease provides for an escalation clause where the Company will be subject to an annual rent increase of 3.5%, year over year. The lease expires on January 31, 2025. The Company accounts for leases based on the new accounting standard ASC 842 and recorded $537,000 and $773,000 in rent expense for the three months ended March 31, 2021 and 2020, respectively. The Company recorded $1,283,000 and $1,439,000 in rent expense for the nine months ended March 31, 2021 and 2020, respectively. SUBLEASE AGREEMENTS On January 19, 2018, Mission Media USA, Inc. entered into a four-year sublease agreement pertaining to the aforementioned office space in New York, NY. The sublease commenced on March 1, 2018 and lease income was $22,496 per month escalating annually at 3.0%. On April 6, 2019, Mission-Media Limited entered into a sublease agreement pertaining to a floor within the aforementioned office space in London, UK. The sublease commenced in April 2019 and the lease income is £3,000 per month and could be terminated by either party with 30 days written notice. On April 19, 2018, Mission-Media Limited entered into a sublease agreement pertaining to a floor within the aforementioned office space in London, UK. The sublease commenced in April 2018 and terminated in March 2021. The lease income was £5,163 per month. |
LEGAL CONTINGENCIES
LEGAL CONTINGENCIES | 9 Months Ended |
Mar. 31, 2021 | |
LEGAL CONTINGENCIES | |
NOTE 8 - LEGAL CONTINGENCIES | We may become a party to litigation in the normal course of business. In the opinion of management, there are no legal matters involving us that would have a material adverse effect upon our financial condition, results of operations or cash flows. Stephenson Disputes. On February 13, 2019, the Court granted the Company a preliminary injunction barring the Stephensons from, among other things: entering the physical or virtual premises of the Company; communicating with Company employees; accessing the Company’s and its affiliates’ property or funds, and holding themselves out as being associated with the Company. In March 2019, the parties agreed to submit their disputes to arbitration before JAMS. On January 4, 2021, the Arbitrator issued a Partial Final Award (made final on March 8, 2021) in favor of the Company. The Arbitrator found that the Stephensons were terminated properly for cause, had violated their fiduciary duties to the Company and that there was no fraud on the part of the Company or its management and awarded the Company approximately $900,000 in net damages after the Stephensons were reimbursed for previously incurred business expenses. The Arbitrator also provided limited relief to the Stephensons from their expiring non-compete agreement. On October 30, 2019, the Court issued an order disqualifying the Stephensons’ law firm from serving as counsel in this matter due to the fact that, among other findings, Stephensons’ counsel simultaneously impermissibly represented the Stephensons in an adversarial manner while it still represented the Company. Studio Fathom Dispute. Other than the foregoing, no material legal proceedings to which the Company (or any officer or director of the Company, or any affiliate, to management’s knowledge) is party to or to which the property of the Company is subject is pending, and no such material proceeding is known by management of the Company to be contemplated. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 9 Months Ended |
Mar. 31, 2021 | |
STOCKHOLDERS EQUITY | |
NOTE 9 - STOCKHOLDERS' EQUITY | REVERSE STOCK SPLIT In June 2020, our Board of Directors and stockholders holding a majority of the outstanding shares of our common stock approved a resolution authorizing our Board of Directors to effect a reverse stock split of our common stock at a certain exchange ratios from 1:10 to 1:15 with our Board of Directors retaining the discretion as to whether to implement the reverse stock split and which exchange ratio to implement. In September 2020, the Company amended its articles of incorporation and enacted a reverse stock split of 1 share for each 15 shares and the accompanying financials reflect the reverse stock split retroactively. The reverse stock split resulted in a decrease in authorized shares of all classes of stock from 615,000,000 to 315,000,000 shares consisting of 300,000,000 shares of common stock at a par value of $0.001 and 15,000,000 shares of preferred stock at a par value of $0.01 per share. Prior to the reverse stock split, the Company had 600,000,000 shares of common stock at a par value of $0.001, 15,000,000 shares of preferred stock at a par value of $0.20 per share. COMMON STOCK As of March 31, 2021 and June 30, 2020, the Company has 15,020,512 and 15,454,623 shares of common stock issued and outstanding. In July 2020, the holder of a convertible promissory note for $1,000,000 informed the Company that they had elected to convert the balance due to common shares at the agreed upon conversion price of $1.50 per share and 387,222 shares were issued representing the outstanding principal and accrued interest. In July 2020, the holder of a convertible promissory note for $200,000 informed the Company that they had elected to convert the balance due to common shares at the agreed upon conversion price of $3.75 per share and 56,000 shares were issued representing the outstanding principal and loan fee. In July 2020, the holder of a convertible promissory note for $200,000 informed the Company that they had elected to convert the balance due to common shares at the agreed upon conversion price of $3.75 per share and 56,000 shares were issued representing the outstanding principal and loan fee. In January 2021, the Company reported the return of the two million six hundred sixty thousand six hundred and sixty-seven (2,666,667) shares of the Company’s stock granted to the Stephensons regarding the aforementioned legal dispute. Upon their termination for Cause, the restricted shares held in escrow were forfeited back to the Company. PREFERRED STOCK The Company has designated 15,000,000 shares as preferred stock, par value $1.50 series A, B, C and D, of which 5,000,000 shares have been designated as Series A preferred stock; 3,000,000 shares have been designated as Series B convertible preferred stock; 1,200,000 shares have been designated as Series C convertible preferred stock; and 2,500,000 shares have been designated as Series D convertible preferred stock. As of March 31, 2021, 720,000 shares of Series A Preferred Stock were issued and outstanding; 2,495,000 shares of Series B Preferred Stock were issued and outstanding; 911,149 shares of Series C Preferred Stock were issued and outstanding; and 1,979,000 shares of Series D Preferred Stock were issued and outstanding. As of June 30, 2020, 720,000 shares of Series A Preferred Stock were issued and outstanding; 2,495,000 shares of Series B Preferred Stock were issued and outstanding; 911,149 shares of Series C Preferred Stock were issued and outstanding; and 1,979,000 shares of Series D Preferred Stock were issued and outstanding. WARRANTS During the three months ended March 31, 2021, the Company issued warrants to a certain aforementioned investor to purchase 26,667 shares of the Company’s common stock at $1.95 vested over three years in consideration for convertible note payables. Valued at $66,000, a total of $0 was expensed in the three months ending March 31, 2021. During the three months ended March 31, 2021, the Company issued warrants to certain directors and consultants to purchase 566,667 shares of the Company’s common stock between $0.75 and $3.75 per share which vested over three years and were valued at $1,682,000. The Company recorded compensation of $1,558,000 for the vested portion during the three months ended March 31, 2021. During the three months ended March 31, 2020, the Company issued warrants to certain aforementioned investors to purchase 438,333 shares of the Company’s common stock between $0.75 and $3.75 vested over three years in consideration for new issued convertible note payables and extensions of previously issued notes. Valued at $1,075,000, a total of $748,000 was expensed in the three months ending March 31, 2020. During the three months ended March 31, 2020, the Company issued warrants to certain directors and consultants to purchase 327,333 shares of the Company’s common stock between $0.75 and $3.75 per share which vested between three and four years and were valued at $858,000. The Company recorded compensation of $0 for the vested portion during the three months ended March 31, 2020. As of March 31, 2021 and 2020, respectively, the Company issued 8,551,000 warrants valued at $16,050,000 and 7,187,518 warrants valued at $11,934,000 using the Black-Scholes model. The Company uses the Black-Scholes Model to determine the fair value of warrants granted. Option-pricing models require the input of highly subjective assumptions, particularly for the expected stock price volatility and the expected term of options. Changes in the subjective input assumptions can materially affect the fair value estimate. The expected stock price volatility assumptions are based on the historical volatility of the Company’s common stock over periods that are similar to the expected terms of grants and other relevant factors. The Company derives the expected term based on an average of the contract term and the vesting period taking into consideration the vesting schedules and future employee behavior with regard to option exercise. The risk-free interest rate is based on U.S. Treasury yields for a maturity approximating the expected term calculated at the date of grant. The Company has never paid any cash dividends on its common stock and the Company has no intention to pay a dividend at this time; therefore, the Company assumes that no dividends will be paid over the expected terms of warrants awards. The Company determines the assumptions used in the valuation of warrants awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for warrants granted throughout the year. The Company has utilized the following assumptions in its Black-Scholes warrant valuation model to calculate the estimated grant date fair value of the warrants during the nine months ended March 31, 2021 and 2020: 2021 2020 Volatility - range 63.5% - 66.5 % 56.4% – 74.1 % Risk-free rate 0.2% - 0.5 % 0.3% - 1.8 % Contractual term 4.0 - 5.0 years 4.0 - 5.0 years Exercise price $ 0.75 - $3.75 $ 0.75 - $3.75 A summary of the warrants granted, exercised, forfeited and expired for the nine months ending March 31, 2021 are presented in the table below: Number of Warrant Shares Weighted-Average Exercise Price Weighted-Average Grant-Date Fair Value Aggregate Intrinsic Value of Outstanding Warrant Shares Weighted-Average Remaining Contractual Term (in years) Outstanding July 1, 2020 7,858,741 $ 1.52 $ 1.92 $ 9,234,295 3.0 Granted 1,256,667 0.93 3.04 3,845,945 4.7 Exercised - - - - - Forfeited - - - - - Expired (564,556 ) 3.16 3.13 (733,295 ) - Outstanding March 31, 2021 8,550,852 1.12 1.88 12,039,000 2.5 Vested and exercisable March 31, 2021 7,598,630 1.10 1.73 9,644,333 2.4 Non-vested March 31, 2021 952,223 $ 1.24 $ 3.02 $ 2,394,667 3.4 The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants under the Company’s warrant plans as of March 31, 2021. Outstanding Warrant Shares Exercisable Warrant Shares Exercise price range Number of Warrant Shares Weighted average remaining contractual life Number of Warrant Shares Weighted average remaining contractual life $ 0.75 7,440,667 2.5 years 6,658,444 2.3 years $ 1.50 400,000 3.2 years 400,000 3.2 years $ 1.50 26,667 0.0 years - 0.0 years $ 3.00 66,667 3.9 years 66,667 3.9 years $ 3.75 435,000 3.2 years 291,667 3.7 years $ 6.00 163,333 0.2 years 163,333 0.2 years $ 27.00 18,518 0.4 years 18,518 0.4 years 8,550,852 2.5 years 7,598,630 2.4 years A summary of the warrants granted, exercised, forfeited and expired for the nine months ending March 31, 2020 are presented in the table below: Number of Warrant Shares Weighted-Average Exercise Price Weighted-Average Grant-Date Fair Value Aggregate Intrinsic Value of Outstanding Warrant Shares Weighted-Average Remaining Contractual Term (in years) Outstanding July 1, 2019 6,275,593 $ 1.65 $ 1.65 $ 5,509,850 3.8 Granted 1,667,815 1.50 2.85 3,845,945 3.0 Exercised - - - - - Forfeited - - - - - Cancelled (164,815 ) - - (44,445 ) - Outstanding March 31, 2020 7,778,593 1.50 1.95 9,311,350 3.1 Vested and exercisable March 31, 2020 7,303,741 1.65 1.95 7,814,295 3.1 Non vested March 31, 2020 474,852 $ 1.65 $ 2.55 $ 1,497,055 2.3 The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants under the Company’s warrant plans as of March 31, 2020. Outstanding Warrant Shares Exercisable Warrant Shares Exercise price range Number of Warrant Shares Weighted average remaining contractual life Number of Warrant Shares Weighted average remaining contractual life $ 0.75 6,546,333 3.3 years 6,404,259 3.2 years $ 1.50 416,667 2.5 years 133,333 4.0 years $ 1.50 66,667 4.9 years - - $ 2.25 261,667 2.1 years 262,222 1.4 years $ 3.00 381,333 1.0 years 381,333 1.0 years $ 3.75 105,926 0.3 years 122,593 0.3 years 7,778,593 3.1 years 7,303,741 3.1 years 2017 EQUITY INCENTIVE PLAN On June 13, 2017, the Board adopted and approved an amendment to the Troika Media Group, Inc. 2015 Employee, Director and Consultant Equity Incentive Plan (the “Equity Plan”), to change the name from M2 nGage Group, Inc. to Troika Media Group, Inc., in order to attract, motivate, retain, and reward high-quality executives and other employees, officers, directors, consultants, and other persons who provide services to the Company by enabling such persons to acquire an equity interest in the Company. Under the Plan, the Board (or the compensation committee of the Board, if one is established) may award stock options, either stock grant of shares of the Company’s common stock, incentive stock option under IRS section 422 (“ISO’s”) or a non-qualified stock option (“Non-ISO’s”) (collectively “Options”). The Plan allocates 3,333,334 shares of the Company’s common stock (“Plan Shares”) for issuance of equity awards under the Plan. ISO’s Awards During the three months ended March 31, 2021, the Company did not issue additional options. During the three months ended March 31, 2020 the Company issued options to certain employees to purchase 308,333 shares of the Company’s common stock between $0.75 and $3.75 per share which vested during various terms and were valued at $582,000. The Company recorded compensation of $271,000 and $314,000 for the three months ended March 31, 2021 and 2020, respectively, relating to the vested portion of options that were issued in previous periods. The total compensation of the unvested options to be recognized in future periods is $812,000 and the weighted average remaining is 1.5 years. The Company uses the Black-Scholes Model to determine the fair value of Options granted. Option-pricing models require the input of highly subjective assumptions, particularly for the expected stock price volatility and the expected term of options. Changes in the subjective input assumptions can materially affect the fair value estimate. The expected stock price volatility assumptions are based on the historical volatility of the Company’s common stock over periods that are similar to the expected terms of grants and other relevant factors. The Company derives the expected term based on an average of the contract term and the vesting period taking into consideration the vesting schedules and future employee behavior with regard to option exercise. The risk-free interest rate is based on U.S. Treasury yields for a maturity approximating the expected term calculated at the date of grant. The Company has never paid any cash dividends on its common stock and the Company has no intention to pay a dividend at this time; therefore, the Company assumes that no dividends will be paid over the expected terms of option awards. The Company determines the assumptions used in the valuation of Option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for options granted throughout the year. The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated grant date fair value of the options during the nine months ended March 31, 2021 and 2020. 2021 2020 Volatility - range 64.8 % 57.5% – 64.8 % Risk-free rate 0.3 % 0.9% - 1.7 % Contractual term 3.0 years 3.0 years Exercise price $ 3.75 $ 0.75 - $3.75 A summary of the options granted, exercised, forfeited and expired for the nine months ending March 31, 2021 are presented in the table below: Number of Option Shares Weighted-Average Exercise Price Weighted-Average Grant-Date Fair Value Aggregate Intrinsic Value of Outstanding Option Shares Weighted-Average Remaining Contractual Term (in years) Outstanding July 1, 2020 3,377,222 $ 1.10 $ 1.06 $ 2,030,000 0.7 Granted 76,667 3.75 - - 2.8 Exercised - - - - - Forfeited - - - - - Expired (143,333 ) - - (200,000 ) - Outstanding March 31, 2021 3,310,556 1.10 1.01 1,830,000 0.5 Vested and exercisable March 31, 2021 2,883,458 0.89 0.93 1,469,818 0.3 Non-vested March 31, 2021 427,098 $ 2.59 $ 1.90 $ 360,182 1.5 The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s warrant plans as of March 31, 2021. Outstanding Option Shares Exercisable Option Shares Exercise price range Number of Option Shares Weighted average remaining contractual life Number of Option Shares Weighted average remaining contractual life $ 0.75 2,768,889 0.3 years 2,628,458 0.2 years $ 1.50 200,000 0.5 years 166,667 0.5 years $ 3.75 341,667 2.0 years 88,333 1.9 years 3,310,556 0.5 years 2,883,458 0.3 years A summary of the options granted, exercised, forfeited and expired for the nine months ending March 31, 2020 are presented in the table below: Number of Option Shares Weighted-Average Exercise Price Weighted-Average Grant-Date Fair Value Aggregate Intrinsic Value of Outstanding Option Shares Weighted-Average Remaining Contractual Term (in years) Outstanding July 1, 2019 3,512,500 $ 0.90 $ 0.90 $ 1,908,750 1.1 Granted 511,667 2.70 2.10 550,000 - Exercised - - - - - Forfeited - - - - - Expired (139,167 ) - - 243,750 - Outstanding March 31, 2020 3,885,000 1.05 1.05 2,152,500 0.8 Vested and exercisable March 31, 2020 2,522,731 0.75 0.90 1,155,000 0.5 Non-vested March 31, 2020 1,362,269 $ 1.50 $ 1.35 $ 997,500 1.5 The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s warrant plans as of March 31, 2020. Outstanding Option Shares Exercisable Option Shares Exercise price range Number of Option Shares Weighted average remaining contractual life Number of Option Shares Weighted average remaining contractual life $ 0.75 3,326,667 0.6 years 2,334,398 0.4 years $ 1.50 200,000 1.5 years 177,778 1.1 years $ 3.00 16,667 1.8 years 7,222 2.0 years $ 3.75 341,667 3.0 years 3,333 0.9 years 3,885,000 0.8 years 2,522,731 0.5 years |
DISAGGREGATION OF REVENUE LONG-
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS | 9 Months Ended |
Mar. 31, 2021 | |
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS | |
NOTE 10 - DISAGGREGATION OF REVENUE & LONG-LIVED ASSETS | The following table presents the disaggregation of gross revenue between revenue types: Three Months Ended March 31, Nine months Ended March 31, 2021 2020 2021 2020 Project fees $ 1,627,000 $ 697,000 5,268,000 $ 5,091,000 Retainer fees 560,000 631,000 1,648,000 2,913,000 Fee income 676,000 1,003,000 2,435,000 4,602,000 Reimbursement income 991,000 1,290,000 3,086,000 8,149,000 Other revenue - (1,000 ) - 4,000 $ 3,854,000 $ 3,620,000 12,437,000 $ 20,759,000 The following table presents the disaggregation of gross revenue between the United States and the United Kingdom: Three Months Ended March 31 Nine Months Ended March 31 2021 2020 2021 2020 Gross Revenue: United States $ 2,309,000 $ 2,239,000 $ 7,940,000 $ 12,927,000 United Kingdom 1,545,000 1,381,000 4,497,000 7,832,000 Total gross revenue $ 3,854,000 $ 3,620,000 $ 12,437,000 $ 20,759,000 The following table presents the disaggregation of gross profit between the United States and the United Kingdom: Three Months Ended March 31 Nine Months Ended March 31 2021 2020 2021 2020 Gross Profit: United States $ 1,078,000 $ 439,000 $ 3,770,000 $ 5,509,000 United Kingdom 835,000 925,000 2,307,000 4,144,000 Total gross profit $ 1,913,000 $ 1,364,000 $ 6,077,000 $ 9,653,000 The following table presents the disaggregation of net income (loss) between the United States and the United Kingdom: Three Months Ended March 31 Nine Months Ended March 31 2021 2020 2021 2020 Net Gain or Loss: United States $ (4,188,000 ) $ (8,129,000 ) $ (8,147,000 ) $ (14,874,000 ) United Kingdom (491,000 ) 312,000 (1,076,000 ) (321,000 ) Total net gain/(loss) $ (4,679,000 ) $ (7,817,000 ) $ (9,223,000 ) $ (15,195,000 ) The following table presents the disaggregation of fixed assets between the United States and the United Kingdom as of March 31, 2021: United States United Kingdom Total Computer equipment $ 457,000 $ 193,000 $ 650,000 Website design 6,000 - 6,000 Office machine & equipment 52,000 45,000 97,000 Furniture & fixtures 351,000 86,000 437,000 Leasehold improvements 62,000 129,000 191,000 Tenant incentives 145,000 - 145,000 1,073,000 453,000 1,526,000 Accumulated depreciation (844,000 ) (409,000 ) (1,253,000 ) Net book value $ 229,000 $ 44,000 $ 273,000 The following table presents the disaggregation of fixed assets between the United States and the United Kingdom as of June 30, 2020: United States United Kingdom Total Computer equipment $ 460,000 $ 160,000 $ 620,000 Website design 6,000 - 6,000 Office machine & equipment 53,000 36,000 89,000 Furniture & fixtures 350,000 79,000 429,000 Leasehold improvements 54,000 119,000 173,000 Tenant incentives 145,000 - 45,000 1,068,000 394,000 1,462,000 Accumulated depreciation (770,000 ) (348,000 ) (1,118,000 ) Net book value $ 298,000 $ 46,000 $ 344,000 The following table presents the disaggregation of intangible assets and goodwill between the United States and the United Kingdom as of March 31, 2021. Intangibles United States United Kingdom Total Customer relationship $ 4,960,000 $ - $ 4,960,000 Non-core customer relationships 760,000 - 760,000 Non-compete agreements 1,430,000 - 1,430,000 Tradename 410,000 - 410,000 Workforce acquired 2,125,000 - 2,125,000 9,685,000 - 9,685,000 Less: accumulated amortization (7,113,000 ) - (7,113,000 ) Net book value $ 2,572,000 $ - $ 2,572,000 Goodwill $ 9,831,000 $ 7,531,000 $ 17,362,000 The following table presents the disaggregation of intangible assets and goodwill between the United States and the United Kingdom as of June 30, 2020. Intangibles United States United Kingdom Total Customer relationship $ 4,960,000 $ 3,550,000 $ 8,510,000 Non-core customer relationships 760,000 - 760,000 Non-compete agreements 1,430,000 770,000 2,200,000 Tradename 410,000 - 410,000 Workforce acquired 2,125,000 665,000 2,790,000 9,685,000 4,985,000 14,670,000 Less: impairment - (1,867,000 ) (1,867,000 ) Less: accumulated amortization (5,494,000 ) (3,118,000 ) (8,612,000 ) Net book value $ 4,191,000 $ - $ 4,191,000 Goodwill $ 9,831,000 $ 7,531,000 $ 17,362,000 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Mar. 31, 2021 | |
SUBSEQUENT EVENTS | |
NOTE 11 - SUBSEQUENT EVENTS | INITIAL PUBLIC OFFERING AND NASDAQ LISTING On April 22, 2021, the Company completed an underwritten public offering of 5,783,133 shares of common stock and warrants at a public offering price of $4.15 per share and accompanying warrant for aggregate gross proceeds of $24,000,000. After deducting underwriting commissions and other offering expenses, the Company received approximately $21,700,000 in net proceeds. The Company has granted the underwriters a 45 day option to purchase up to 867,469 additional shares and warrants at the public offering price of $4.15 less discounts and commissions. The Company has listed its common stock and warrants on the Nasdaq Capital Market under the symbols “TRKA” and “TRKAW”, respectively, and trading began on April 20, 2021. PREFERRED STOCK CONVERSION On May 10, 2021, the Company converted all Preferred Stock Series B, C, and D into Common Stock following its uplisting to the Nasdaq Capital Market. At the time of the conversion the Company had 2,495,000 shares of Series B Convertible Preferred Stock that were convertible into 594,051 shares of common stock at a price of $4.20 per share; 911,149 shares of Series C Convertible Preferred Stock convertible into 12,148,654 shares of Common Stock at $0.75 per share; and 1,979,000 shares of Series D Convertible Preferred Stock convertible into 5,277,335 shares of Common Stock at $3.75 per share for a total of 18,020,040 shares of Common Stock. REDEEEM, LLC ACQUISITION & EXECUTIVE COMPENSATION On May 21, 2021, the Company acquired substantially all the assets and approximately $165,000 of specific liabilities of Redeeem LLC a fintech platform that empowers businesses to digitize any asset to build their own blockchain-based payment solution for a total purchase price of $12.1 million. The acquisition price consisted of $1.21 million in cash and $10.89 million in common stock vested over three years. On May 21, 2021, the Company entered into an employment agreement with Kyle Hill to continue serving as President and reporting directly to the CEO of the Company. The executive will be compensated at $300,000 in base salary per year and the contract is three years with automatic renewal annually unless either party has given written notice. SEPARATION AGREEMENT WITH SAB MANAGEMENT, LLC In order to facilitate the Company’s listing on a national securities exchange, the Company had entered into a Separation Agreement dated as of February 28, 2021 with SAB Management, LLC (“SAB”) and Andrew Bressman (“Bressman”). Under the terms of the Separation Agreement, Mr. Bressman’s consultancy with the Company under a Consultant Agreement dated as of June 1, 2017 terminated, without cause, effective immediately prior to the listing of the Company’s securities on a National Securities Exchange. The Consultant Agreement provided for Mr. Bressman to be Managing Director and Assistant to the CEO and Chairman of the Board until March 31, 2024. Upon the completion of the offering, the Company paid Mr. Bressman (i) accrued and unpaid consulting fees, expenses and interest in the amount of $378,836.85, and (ii) one-half of the consulting fees owed under the Consultant Agreement in the amount of $1,291,833.33. The balance of Consultant’s fees under the Consultant Agreement in the amount of $1,291,833.33 shall be paid on a regular bi-weekly schedule through March 21, 2023. Provided the terms of the Bonus Provision in the Consultant Agreement are satisfied prior to the effective date of the Agreement, or will be reasonably fulfilled after such date, the Consultant shall be paid such bonus. On March 31, 2021, the Company accrued Mr. Bressman’s unpaid consulting fees, expenses and interest however the subsequent consulting fees were not accrued as the separation agreement was contingent upon the Company’s listing on a National Securities Exchange which did not occur until April 2021. EXECUTIVE COMPENSATION The Company entered into a First Amendment to the Executive Employment Agreement of Robert Machinist, Chief Executive Officer dated April 30, 2021, effective as of April 1, 2021. Under the first amendment Mr. Machinist’s base salary was increased from $210,000 to $300,000. Mr. Machinist also received a $100,000 cash bonus as a result of the Company’s IPO. SETTLEMENT OF NOTE PAYABLE RELATED PARTY In April 2021, the Company paid $300,000 to the estate of Sally Pappalardo representing the outstanding principal and accrued interest. The holder provided the Company a signed release acknowledging all obligations under the note had been paid in full. SETTLEMENT OF NOTE PAYABLE In May 2021, the Company paid $119,000 to a holder of a $100,000 convertible promissory note with an interest rate of 10.0% from August 2020. The holder provided the Company a signed release acknowledging all obligations under the note had been paid in full and the payment consisted of $100,000 in principal and $19,000 in accrued interest. EXERCISE OF WARRANTS BY FORMER DIRECTOR In May 13, 2021, a former director Jeffrey Schwartz exercised 166,667 in warrants at a closing price of $2.81 and an exercise price of $0.75 resulting in the issuance of 122,183 shares of common stock. |
PRESENTATION OF THE FINANCIAL_2
PRESENTATION OF THE FINANCIAL STATEMENTS (Policies) | 9 Months Ended |
Mar. 31, 2021 | |
PRESENTATION OF THE FINANCIAL STATEMENTS (Policies) | |
RISKS & UNCERTAINTIES | Liquidity The Company has incurred net losses since its inception and anticipates net losses and negative operating cash flows until fiscal year 2022. For the nine months ended March 31, 2021, the Company had a net loss of $9,223,000 which increased the accumulated deficit to $180.1 million at March 31, 2021 from $170.9 million at June 30, 2020. At March 31, 2021, the Company had approximately $1.4 million in cash and cash equivalents and a total of $4.8 million in current assets in relation to $21.2 million in current liabilities. While the Company continues to find efficiencies with its acquisitions of Troika Design Group, Inc. and Mission Group, the departure of Mission’s President and Founder in fiscal year 2019 together with the coronavirus (COVID-19) pandemic in fiscal years 2020 and 2021 impacted revenue more than anticipated. With the acquisition of Mission Group, the Company anticipated increasing Troika’s footprint in a major media markets, such as NY and London. The Company also continues to expand its consulting services and breadth of product offering with existing Mission and Troika clients and increase business development in NY and London as a result of the Mission acquisition. Additionally, the Company intends to add to Mission business development due to Troika’s existing clientele. During the fiscal year ended June 30, 2020, the Company entered into an agreement with a financial advisory firm to analyze potential financing transactions including preparing the Company for an initial public offering (IPO). In April 2021, the Company’s Form S-1 registration statement was declared effective by the U.S. Securities and Exchange Commission. The Company received net proceeds of $21.9 million ’and the Company’s securities were listed on the Nasdaq Capital Market. Management believes the proceeds from the IPO will be more than sufficient to meet the Company’s cash requirements until the Company generates positive cash flow. Impact of COVID-19 Pandemic In March 2020, the World Health Organization categorized the coronavirus (COVID-19) as a pandemic, and it continues to spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and the resulting public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have adversely impacted our business and those of our clients. Businesses have adjusted, reduced or suspended operating activities, which has negatively impacted the clients we service. We continue to believe our focus on our strategic strengths, including talent, our differentiated market strategy and the relevance of our services, including the longevity of our relationships, will continue to assist our Company as we navigate a rapidly changing marketplace. The effects of the COVID-19 pandemic have negatively impacted our results of operations, cash flows and financial position; however, the continued extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19. We took steps to protect the safety of our employees, with a large majority of our worldwide workforce working from home, while developing creative ideas to protect the health and well-being of our communities and setting up our people to help them do their best work for our clients while working remotely. With respect to managing costs, we have took multiple initiatives to align our expenses with changes in revenue. The steps taken across our agencies and corporate group include deferred merit increases, freezes on hiring and temporary labor, major cuts in non-essential spending, staff reductions, furloughs in markets where that option is available and salary reductions, including voluntary salary deferment for our senior corporate management team. In addition, we remain committed to and have intensified our efforts around cash flow discipline, including the identification of significant capital expenditures that can be deferred, and working capital management. We began to see the effects of COVID-19 on client spending, notably in the UK and US markets with our Mission subsidiaries throughout the second quarter of calendar 2020 with much of the work force of the UK subsidiary on furlough, and with our Troika Design subsidiary furloughed as March 2020 progressed. Due to mandatory stay at home orders and social distancing, our experiential business has been particularly impacted by COVID-19. Promotional and experiential events with the Company’s assistance are particularly susceptible to external factors were delayed by many of the Company’s Mission clients due to the effects of COVID-19. The Company had temporarily furloughed employees to reflect current reduced demands associated with those client sets. However, as of mid-February 2021, we started to see business dramatically improve and expect greater improvement in our results in our next fiscal quarters. As cities have commenced openings with the improvement of vaccines distribution and infection rates declining, our client activities have doubled and there is a real optimism that the economic conditions are improving. Sports, Entertainment, Pharma clients are contracting our services across all entities at rates similar to 2019. We took steps to strengthen our financial position during this period of heightened uncertainty. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide relief as a result of the COVID-19 outbreak. The CARES Act, among other things, includes 1) provisions relating to compensation, benefits and payroll tax relief, 2) the availability of net operating loss carrybacks for periods beginning in 2018 and before 2021 and alternative minimum tax credit refunds, and 3) modifications to the net interest deduction limitations. The Company continues to examine the impacts the CARES Act may have on its business. The governments in which our International subsidiaries are located are offering similar business relief programs and the Company is examining the impacts of these programs on its operations as well. In the current environment, a major priority for us is preserving liquidity. Our primary liquidity sources are operating cash flow, cash and cash equivalents and short-term investments. Although we expect to experience a decrease in our cash flow from operations as a result of the impact of COVID-19, we have obtained relief under the CARES Act in the form of a Small Business Administration backed loans. In aggregate we received $1.7 million in SBA stimulus “Payroll Protection Program” funding in April 2020 of which the majority of these funds were used for payroll. As per the US Government rules, the funds used for payroll, healthcare benefits, and other applicable operating expenses can be forgiven and the Company reported them as such in December 2020 considering the Company believes we have substantially met these conditions. On August 14, 2020, the Company received an additional $500,000 in loans with 30 year terms under the SBA’s “Economic Injury Disaster Loan” program which the Company intends to use to address any cash shortfalls that may result from the current pandemic. In February 2021, the Company obtained additional relief under the CARES Act in the form of a Small Business Administration backed loans and received an additional $1.7 million in SBA stimulus “Payroll Protection Program” funds which will be used for payroll, healthcare benefits, and other applicable operating expenses. In the United Kingdom, as of April 1, 2020, Mission furloughed 27 employees, saving £78,000 in April payroll, being made up of £55,000 of furlough monies from the government and £16,000 in associated payroll savings and applied for a 3-month rent holiday. In May 1, 2020, Mission put on furlough an additional 5 employees bringing the total to 32, alongside a 10% pay cut for all employees not furloughed, saving £111,000 in May payroll, being made up of £62,000 of furlough monies from the government, £33,000 of associated payroll savings and £16,000 in savings related to the pay cut. On April 1, 2020, Troika Design Group actioned a 15% salary reduction across the majority of the Los Angeles staff and furloughed one office manager for a total savings of $112,000 per month. Finally, certain members of the Company’s executive team deferred compensation temporarily. In August 2020, the Company received £50,000 in loans related to the COVID pandemic with an interest rate of 2.5% to be paid over five years beginning one year after receipt. The Company used these proceeds to address any cash shortfalls that resulted from the pandemic. The extent to which the COVID-19 outbreak continues to impact the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact. While the Company’s revenue has declined by $8.3 million from $20.8 million to $12.4 million in the nine months ending March 31, 2021 and 2020 respectively, the Company is still quantifying how much of this decline in revenue was caused by the pandemic as well as the impact from the departure of Mission’s founder. |
PRINCIPLES OF CONSOLIDATION | The accompanying unaudited condensed financial statements include the accounts of TMG, and its wholly-owned subsidiaries, Troika Design Group, Inc. (California), Troika Services Inc. (New York), Troika Analytics Inc. (New York), Troika Productions, LLC (California), Troika-Mission Holdings, Inc. (New York), Mission Culture LLC (Delaware), Mission-Media Holdings Limited (England and Wales), and Mission Media USA, Inc. (New York). All significant intercompany accounts and transactions have been eliminated in consolidation. |
USE OF ESTIMATES | 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions made by management include, among others, the assessment of the collectability of accounts receivable and the determination of the allowance for doubtful accounts, the valuation and useful life of capitalized equipment costs and long-lived assets, valuation of warrants and options, the determination of the useful lives and any potential impairment of long-lived assets such as intangible assets, the valuation of goodwill, stock-based compensation, and deferred tax assets. Actual results could differ from those estimates. |
FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS | The Company has estimated the fair value of its financial instruments using the available market information and valuation methodologies considered to be appropriate and has determined that the book value of the Company’s accounts receivable, prepaid expenses, accounts payable, and accrued expenses, as of March 31, 2021 and 2020, respectively, approximate fair value based on their short-term nature. |
FAIR VALUE MEASUREMENT | Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Other inputs that are directly or indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as March 31, 2021 and 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable, accrued liabilities, and convertible notes payable. Fair values for these items were assumed to approximate carrying values because of their short-term nature or they are payable on demand. |
IMPAIRMENT OF LONG-LIVED ASSETS | The Company evaluates, on a periodic basis, long-lived assets to be held and used for impairment in accordance with the reporting requirements of ASC 360-10. The evaluation is based on certain impairment indicators, such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If these impairment indicators are present or other factors exist that indicate that the carrying amount of the asset may not be recoverable, then an estimate of the undiscounted value of expected future operating cash flows is used to determine whether the asset is recoverable and the amount of any impairment is measured as the difference between the carrying amount of the asset and its estimated fair value. The fair value is estimated using valuation techniques such as market prices for similar assets or discounted future operating cash flows. |
CONCENTRATION OF CREDIT RISK | Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalent account balances with financial institutions in the United States and United Kingdom which at times exceed federally insured limits for accounts in the United States. Considering deposits with these institutions can be redeemed on demand, the Company believes there is minimal risk. As of March 31, 2021 and 2020, the Company had $365,000 and $401,000 in cash that was uninsured, respectively. |
CASH AND CASH EQUIVALENTS | The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. As of March 31, 2021 and 2020, the Company had no cash equivalents. |
ACCOUNTS RECEIVABLE | Our accounts receivable are amounts due from our clients. The Company accounts for unbilled accounts receivable using the percentage-of-completion accounting method for revenue recognized and the customer has not been invoiced due to the terms of the contract or the timing of the account invoicing cycle. For those clients to whom we extend credit, we perform periodic evaluations of accounts receivable and maintain allowances for potential credit losses as deemed necessary. The Company periodically reviews the outstanding accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. When a customer’s account is deemed to be uncollectible the outstanding balance is charged to the allowance for doubtful accounts. As of March 31, 2021 and 2020, the Company had $579,000 and $518,000 in allowance for doubtful accounts, respectively. |
GOODWILL AND INTANGIBLE ASSETS | As a result of acquisitions, the Company recorded goodwill and identifiable intangible assets as part of its allocation of the purchase consideration. Goodwill Goodwill is the excess of the purchase price paid over the fair value of the net assets of the acquired business. Goodwill is tested annually at June 30 for impairment. The annual qualitative or quantitative assessments involve determining an estimate of the fair value of reporting units in order to evaluate whether an impairment of the current carrying amount of goodwill exists. A qualitative assessment evaluates whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test. The first step of a quantitative goodwill impairment test compares the fair value of the reporting unit to its carrying amount including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss may be recognized. The amount of impairment loss is determined by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount. If the carrying amount exceeds the implied fair value then an impairment loss is recognized equal to that excess. A goodwill impairment charge of $598,000 was recorded as a result of the Company’s annual impairment assessment on June 30, 2020. The Company has adopted the provisions of ASU 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 requires goodwill impairments to be measured on the basis of the fair value of a reporting unit relative to the reporting unit’s carrying amount rather than on the basis of the implied amount of goodwill relative to the goodwill balance of the reporting unit. Thus, ASU 2017-04 permits an entity to record a goodwill impairment that is entirely or partly due to a decline in the fair value of other assets that, under existing GAAP, would not be impaired or have a reduced carrying amount. Furthermore, the ASU removes “the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.” Instead, all reporting units, even those with a zero or negative carrying amount will apply the same impairment test. Accordingly, the goodwill of reporting unit or entity with zero or negative carrying values will not be impaired, even when conditions underlying the reporting unit/entity may indicate that goodwill is impaired. We test our goodwill for impairment annually, or, under certain circumstances, more frequently, such as when events or circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our testing determines the recorded amount of goodwill exceeds the fair value. Our annual measurement date for testing goodwill impairment is June 30. Internal evaluations on both March 31, 2021 and 2020 determined that impairments were not necessary and this will be reevaluated June 30, 2021. None of the goodwill is deductible for income tax purposes. Intangibles Intangible assets with finite useful lives consist of tradenames, non-compete agreements, acquired workforce and customer relationships and are amortized on a straight-line basis over their estimated useful lives, which range from three to ten years. The estimated useful lives associated with finite-lived intangible assets are consistent with the estimated lives of the associated products and may be modified when circumstances warrant. Such assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset and its eventual disposition are less than its carrying amount. The amount of any impairment is measured as the difference between the carrying amount and the fair value of the impaired asset. It was determined by the Company that the COVID-19 pandemic was a triggering event and after an internal evaluation it was concluded that an impairment for intangibles was required on March 31, 2020 for $1,387,000. An internal evaluation was also carried out on March 31, 2021 and it was determined that an impairment was not necessary. |
BENEFICIAL CONVERSION FEATURE | The Company accounts for convertible notes payable in accordance with the guidelines established by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options, Emerging Issues Task Force (“EITF”) 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF 00-27, Application of Issue No 98-5 To Certain Convertible Instruments. The Beneficial Conversion Feature (“BCF”) of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of a convertible note when issued and also records the estimated fair value of any warrants issued with those convertible notes. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved. The BCF of a convertible note is measured by allocating a portion of the note’s proceeds to the warrants, if applicable, and as a reduction of the carrying amount of the convertible note equal to the intrinsic value of the conversion feature, both of which are credited to additional paid-in-capital. The value of the proceeds received from a convertible note is then allocated between the conversion features and warrants on an allocated fair value basis. The allocated fair value is recorded in the financial statements as a debt discount (premium) from the face amount of the note and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense using interest method. |
STOCK-BASED COMPENSATION | The Company recognizes stock-based compensation in accordance with ASC Topic 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values. For non-employee stock-based compensation, the Company has adopted ASC 2018-07, Improvements to Nonemployee Share-Based Payment Accounting |
FOREIGN CURRENCY TRANSLATION | The consolidated financial statements of the Company are presented in U.S. dollars. The functional currency for the Company is U.S. dollars for all entities other than Mission Media Limited whose operations are based in the United Kingdom and their functional currency is British Pound Sterling (GBP). Transactions in currencies other than the functional currencies are recorded using the appropriate exchange rate at the time of the transaction. All assets and liabilities are translated into U.S. Dollars at balance sheet date, stockholders’ equity is translated at historical rates and revenue and expense accounts are translated at the average exchange rate for the year or the reporting period. The translation adjustments are reported as a separate component of stockholders’ equity, captioned as accumulated other comprehensive (loss) income. Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the statements of operations. The relevant translation rates are as follows: for the quarter ended March 31, 2021 closing rate at 1.378900 US$: GBP, average rate at 1.342278 US$: GBP, for the quarter ended March 31, 2020 closing rate at 1.241200 US$: GBP, average rate at 1.268544 US$. |
COMPREHENSIVE LOSS | Comprehensive loss is defined as a change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. For the Company, comprehensive loss for the three and nine months ended March 31, 2021 and 2020 included net loss and unrealized losses from foreign currency translation adjustments. |
BASIC AND DILUTED NET LOSS PER COMMON SHARE | Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. The following table provides the numerators and denominators in the basic and diluted earnings per share computations for the three months ended March 31. The figures represent the converted common stock equivalent. Three Months Ended March 31, 2021 2020 Numerator: Net loss attributable to common stockholders $ (4,679,000 ) $ (7,817,000 ) Denominator: Basic EPS: Common shares outstanding, beginning of period 17,687,179 15,454,623 Weighted average common stock retired (2,576,779 ) - Weighted average common shares issued during the period - - Denominator for basic earnings per common shares - - Weighted average common shares 15,110,400 15,454,623 Diluted EPS: Common shares outstanding, beginning of period 17,687,179 15,454,623 Weighted average common stock retired (2,576,779 ) - Weighted average common shares issued during the period - - Denominator for basic earnings per common shares - - Preferred Stock Series A, beginning of period 720,000 720,000 Preferred Stock Series B, beginning of period 2,495,000 2,495,000 Preferred Stock Series C, beginning of period 911,149 911,149 Preferred Stock Series D, beginning of period 1,979,000 1,979,000 Stock payable, beginning of period 156,000 1,300,000 Weighted average diluted effect of stock options 2,771,081 2,342,660 Weighted average diluted effect of warrants 7,622,411 6,110,534 Lock-Up Agreements - common stock equivalents - (5,711,111 ) Weighted average common shares 31,765,041 25,601,854 The following table provides the numerators and denominators in the basic and diluted earnings per share computations for the nine months ended March 31. The figures represent the converted common stock equivalent. Nine Months Ended March 31, 2021 2020 Numerator: Net loss attributable to common stockholders $ (9,223,000 ) $ (15,195,000 ) Denominator: Basic EPS: Common shares outstanding, beginning of period 15,454,623 15,211,290 Weighted average common stock retired (836,983 ) (296,533 ) Weighted average common shares issued during the period 1,257,143 498,613 Denominator for basic earnings per common shares - - Weighted average common shares 15,874,783 15,413,370 Diluted EPS: Common shares outstanding, beginning of period 15,454,623 15,211,290 Weighted average common stock retired (836,983 ) (296,533 ) Weighted average common shares issued during the period 1,257,143 498,613 Denominator for basic earnings per common shares - - Preferred Stock Series A, beginning of period 720,000 720,000 Preferred Stock Series B, beginning of period 2,495,000 2,495,000 Preferred Stock Series C, beginning of period 911,149 911,149 Preferred Stock Series D, beginning of period 1,979,000 1,881,500 Stock payable, beginning of period 1,300,000 1,743,000 Weighted average preferred stock series D purchased during the period - 260,000 Weighted average stock payable issued during the period - - Weighted average diluted effect of stock options 2,686,722 2,127,915 Weighted average diluted effect of warrants 7,756,204 6,443,472 Lock-Up Agreements - common stock equivalents - (5,711,111 ) Weighted average common shares 33,722,857 26,284,295 |
CORRECTION OF AN IMMATERIAL MISSTATEMENT | During the nine months ending March 31, 2021 the Company identified certain liabilities recorded as of June 30, 2020 relating to “Payroll Protection Program” stimulus funding totaling $1,704,000 that were to be treated as a government grant rather than debt. In accordance with IAS-20, Accounting for Government Grants and Disclosure of Government Assistance |
RECLASSIFICATION OF PRIOR YEAR PRESENTATION | Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported consolidated balance sheets and statement of operations and comprehensive loss. |
RECENT ACCOUNTING PRONOUNCEMENTS | Recently Adopted Accounting Pronouncements In February 2016 the FASB issued amended guidance in the form of ASU No. 2016-02, “Leases.” The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet but recognize expenses on their income statements in a manner similar to today’s accounting for all leases with terms longer than twelve months. Lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs. Leases will be classified as either finance (formerly “capital leases”) or operating, with classification affecting the pattern of expense recognition in the income statement. The standard provides for a modified retrospective transition approach for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain optional practical expedients. In July 2018, the FASB issued ASU 2018-11, “Leases: Targeted Improvements”, allowing for an alternative transition method (the effective date approach). It allows an entity to initially apply the new lease guidance at the adoption date (rather than at the beginning of the earliest period presented). The Company adopted the new guidance on July 1, 2019 using the optional transitional method and elected to use the package of three practical expedients which allows the Company not to reassess whether contracts are or contain leases, lease classification and whether initial direct costs qualify for capitalization. Upon adoption of the standard, the Company has recognized an $8.9 million right-of-use asset and offsetting lease liability on the balance sheet which resulted in no impact on accumulated deficit. The Company also removed deferred rent of approximately $842,000 when adopting the new guidance. In July 2017, the FASB issued amended guidance in the form of ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception”. The ASU was issued to address the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt, warrants and other financing instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The Company has adopted this standard effective July 1, 2019 and has determined that there was no material impact to the financials. In February 2018 the FASB issued amended guidance in the form of ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220)”, which amends the previous guidance to allow for certain tax effects “stranded” in accumulated other comprehensive income, which are impacted by the Tax Cuts and Jobs Act (the “Tax Reform Act”), to be reclassified from accumulated other comprehensive income into retained earnings. This amendment pertains only to those items impacted by the new tax law and will not apply to any future tax effects stranded in accumulated other comprehensive income. The Company has adopted this standard effective July 1, 2019 and has determined that there was no material impact to the financials. In June 2018, the FASB issued amended guidance in the form of ASU No. 2018-07 “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. The guidance is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company has adopted this standard effective July 1, 2019 and has determined that there was no material impact to the financials. In October 2018, the FASB issued amended guidance in the form of ASU No. 2018-17, “Targeted Improvements to Related Party Guidance for Variable Interest Entities.” This ASU amends the guidance for determining whether a decision-making fee is a variable interest. ASU No. 2018-17 is effective for interim and annual reporting periods beginning after December 15, 2019. The Company has adopted this standard effective July 1, 2019 and has determined that there were no such instances resulting in no material impact to the financials. |
ACCOUNTING PRONOUNCEMENTS NOT YET EFFECTIVE | In August 2020, FASB issued ASU 2020-06, ”Debt—Debt with Conversion and Other and Derivatives and Hedging—Contracts in Entity’s Own Equity: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” which simplifies the accounting for convertible instruments by removing the separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost. These changes will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was bifurcated according to previously existing rules. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The new guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 however it is not believed that it will result in a material to the financials. |
PRESENTATION OF THE FINANCIAL_3
PRESENTATION OF THE FINANCIAL STATEMENTS (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
PRESENTATION OF THE FINANCIAL STATEMENTS | |
Schedule of basic and diluted earnings per share | Three Months Ended March 31, 2021 2020 Numerator: Net loss attributable to common stockholders $ (4,679,000 ) $ (7,817,000 ) Denominator: Basic EPS: Common shares outstanding, beginning of period 17,687,179 15,454,623 Weighted average common stock retired (2,576,779 ) - Weighted average common shares issued during the period - - Denominator for basic earnings per common shares - - Weighted average common shares 15,110,400 15,454,623 Diluted EPS: Common shares outstanding, beginning of period 17,687,179 15,454,623 Weighted average common stock retired (2,576,779 ) - Weighted average common shares issued during the period - - Denominator for basic earnings per common shares - - Preferred Stock Series A, beginning of period 720,000 720,000 Preferred Stock Series B, beginning of period 2,495,000 2,495,000 Preferred Stock Series C, beginning of period 911,149 911,149 Preferred Stock Series D, beginning of period 1,979,000 1,979,000 Stock payable, beginning of period 156,000 1,300,000 Weighted average diluted effect of stock options 2,771,081 2,342,660 Weighted average diluted effect of warrants 7,622,411 6,110,534 Lock-Up Agreements - common stock equivalents - (5,711,111 ) Weighted average common shares 31,765,041 25,601,854 Nine Months Ended March 31, 2021 2020 Numerator: Net loss attributable to common stockholders $ (9,223,000 ) $ (15,195,000 ) Denominator: Basic EPS: Common shares outstanding, beginning of period 15,454,623 15,211,290 Weighted average common stock retired (836,983 ) (296,533 ) Weighted average common shares issued during the period 1,257,143 498,613 Denominator for basic earnings per common shares - - Weighted average common shares 15,874,783 15,413,370 Diluted EPS: Common shares outstanding, beginning of period 15,454,623 15,211,290 Weighted average common stock retired (836,983 ) (296,533 ) Weighted average common shares issued during the period 1,257,143 498,613 Denominator for basic earnings per common shares - - Preferred Stock Series A, beginning of period 720,000 720,000 Preferred Stock Series B, beginning of period 2,495,000 2,495,000 Preferred Stock Series C, beginning of period 911,149 911,149 Preferred Stock Series D, beginning of period 1,979,000 1,881,500 Stock payable, beginning of period 1,300,000 1,743,000 Weighted average preferred stock series D purchased during the period - 260,000 Weighted average stock payable issued during the period - - Weighted average diluted effect of stock options 2,686,722 2,127,915 Weighted average diluted effect of warrants 7,756,204 6,443,472 Lock-Up Agreements - common stock equivalents - (5,711,111 ) Weighted average common shares 33,722,857 26,284,295 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment | March 31, 2021 June 30, 2020 Computer equipment $ 650,000 $ 620,000 Website design 6,000 6,000 Office machine & equipment 97,000 89,000 Furniture & fixtures 437,000 429,000 Leasehold improvements 191,000 173,000 Tenant incentives 145,000 145,000 1,526,000 1,462,000 Accumulated depreciation (1,253,000 ) (1,118,000 ) Net book value $ 273,000 $ 344,000 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | March 31, 2021 June 30, 2020 Customer relationship $ 4,960,000 $ 8,510,000 Non-core customer relationships 760,000 760,000 Non-compete agreements 1,430,000 2,200,000 Tradename 410,000 410,000 Workforce acquired 2,125,000 2,790,000 9,685,000 14,670,000 Less: impairment expense - (1,867,000 ) Less: accumulated amortization (7,113,000 ) (8,612,000 ) Net book value $ 2,572,000 $ 4,191,000 |
ACCOUNTS PAYABLE ACCRUED EXPE_2
ACCOUNTS PAYABLE ACCRUED EXPENSES (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
ACCOUNTS PAYABLE ACCRUED EXPENSES | |
Schedule of accounts payable | March 31, 2021 June 30, 2020 Accounts payable $ 2,774,000 $ 3,578,000 Accrued expenses 6,116,000 3,750,000 Accrued payroll 822,000 482,000 Accrued taxes 841,000 327,000 $ 10,553,000 $ 8,137,000 |
NOTE PAYABLE RELATED PARTY (Tab
NOTE PAYABLE RELATED PARTY (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
CONVERTIBLE NOTES PAYABLE | |
Schedule of notes payable related party | March 31, 2021 June 30, 2020 Short term portion Dan Pappalardo $ 217,000 $ 217,000 Estate of Sally Pappalardo 235,000 235,000 452,000 452,000 Long term portion Tom Ochocki 2,198,000 1,975,000 $ 2,198,000 $ 1,975,000 |
LEASE LIABILITIES (Tables)
LEASE LIABILITIES (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
LEASE LIABILITIES | |
Schedule of Future minimum lease payments | Troika Gower Troika LaBrea Corporate Englewood Mission US Brooklyn Mission US Manhattan Mission UK London Undiscounted Cash Flows Discount rate 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 2021 310,000 838,000 14,000 602,000 93,000 166,000 2,023,000 2022 536,000 - 55,000 460,000 - 677,000 1,728,000 2023 558,000 - 19,000 497,000 - 677,000 1,751,000 2024 580,000 - - 509,000 - 677,000 1,766,000 2025 346,000 - - 522,000 - 677,000 1,545,000 2026 - - - 535,000 - 564,000 1,099,000 2027 - - - 455,000 - - 455,000 Total undiscounted minimum future payments 2,330,000 838,000 88,000 3,580,000 93,000 3,438,000 10,367,000 Imputed interest (185,000 ) - (4,000 ) (392,000 ) (93,000 ) (444,000 ) (1,118,000 ) Total operating lease liabilities $ 2,145,000 $ 838,000 $ 84,000 $ 3,188,000 $ - $ 2,994,000 $ 9,249,000 Short-term lease liabilities $ 610,000 $ 838,000 $ 52,000 $ 899,000 $ - $ 523,000 $ 2,922,000 Long-term lease liabilities $ 1,535,000 $ - $ 32,000 $ 2,289,000 $ - $ 2,471,000 $ 6,327,000 |
Schedule of operating leases | March 31, 2021 Weighted average remaining lease term in years 3.4 years Weighted average discount rate 10.8 % |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Options [Member] | |
Schedule of warrant plans | The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s warrant plans as of March 31, 2021. Outstanding Option Shares Exercisable Option Shares Exercise price range Number of Option Shares Weighted average remaining contractual life Number of Option Shares Weighted average remaining contractual life $ 0.75 2,768,889 0.3 years 2,628,458 0.2 years $ 1.50 200,000 0.5 years 166,667 0.5 years $ 3.75 341,667 2.0 years 88,333 1.9 years 3,310,556 0.5 years 2,883,458 0.3 years A summary of the options granted, exercised, forfeited and expired for the nine months ending March 31, 2020 are presented in the table below: Number of Option Shares Weighted-Average Exercise Price Weighted-Average Grant-Date Fair Value Aggregate Intrinsic Value of Outstanding Option Shares Weighted-Average Remaining Contractual Term (in years) Outstanding July 1, 2019 3,512,500 $ 0.90 $ 0.90 $ 1,908,750 1.1 Granted 511,667 2.70 2.10 550,000 - Exercised - - - - - Forfeited - - - - - Expired (139,167 ) - - 243,750 - Outstanding March 31, 2020 3,885,000 1.05 1.05 2,152,500 0.8 Vested and exercisable March 31, 2020 2,522,731 0.75 0.90 1,155,000 0.5 Non-vested March 31, 2020 1,362,269 $ 1.50 $ 1.35 $ 997,500 1.5 The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s warrant plans as of March 31, 2020. Outstanding Option Shares Exercisable Option Shares Exercise price range Number of Option Shares Weighted average remaining contractual life Number of Option Shares Weighted average remaining contractual life $ 0.75 3,326,667 0.6 years 2,334,398 0.4 years $ 1.50 200,000 1.5 years 177,778 1.1 years $ 3.00 16,667 1.8 years 7,222 2.0 years $ 3.75 341,667 3.0 years 3,333 0.9 years 3,885,000 0.8 years 2,522,731 0.5 years |
Schedule of estimated grant date fair value of the options | 2021 2020 Volatility - range 64.8 % 57.5% – 64.8 % Risk-free rate 0.3 % 0.9% - 1.7 % Contractual term 3.0 years 3.0 years Exercise price $ 3.75 $ 0.75 - $3.75 |
Schedule of options granted, exercised, forfeited and expired | Number of Option Shares Weighted-Average Exercise Price Weighted-Average Grant-Date Fair Value Aggregate Intrinsic Value of Outstanding Option Shares Weighted-Average Remaining Contractual Term (in years) Outstanding July 1, 2020 3,377,222 $ 1.10 $ 1.06 $ 2,030,000 0.7 Granted 76,667 3.75 - - 2.8 Exercised - - - - - Forfeited - - - - - Expired (143,333 ) - - (200,000 ) - Outstanding March 31, 2021 3,310,556 1.10 1.01 1,830,000 0.5 Vested and exercisable March 31, 2021 2,883,458 0.89 0.93 1,469,818 0.3 Non-vested March 31, 2021 427,098 $ 2.59 $ 1.90 $ 360,182 1.5 |
Warrant [Member] | |
Schedule of estimated grant date fair value of the warrants | 2021 2020 Volatility - range 63.5% - 66.5 % 56.4% – 74.1 % Risk-free rate 0.2% - 0.5 % 0.3% - 1.8 % Contractual term 4.0 - 5.0 years 4.0 - 5.0 years Exercise price $ 0.75 - $3.75 $ 0.75 - $3.75 |
Schedule of warrants granted, exercised, forfeited and expired | Number of Warrant Shares Weighted-Average Exercise Price Weighted-Average Grant-Date Fair Value Aggregate Intrinsic Value of Outstanding Warrant Shares Weighted-Average Remaining Contractual Term (in years) Outstanding July 1, 2020 7,858,741 $ 1.52 $ 1.92 $ 9,234,295 3.0 Granted 1,256,667 0.93 3.04 3,845,945 4.7 Exercised - - - - - Forfeited - - - - - Expired (564,556 ) 3.16 3.13 (733,295 ) - Outstanding March 31, 2021 8,550,852 1.12 1.88 12,039,000 2.5 Vested and exercisable March 31, 2021 7,598,630 1.10 1.73 9,644,333 2.4 Non-vested March 31, 2021 952,223 $ 1.24 $ 3.02 $ 2,394,667 3.4 |
Schedule of warrant plans | Outstanding Warrant Shares Exercisable Warrant Shares Exercise price range Number of Warrant Shares Weighted average remaining contractual life Number of Warrant Shares Weighted average remaining contractual life $ 0.75 7,440,667 2.5 years 6,658,444 2.3 years $ 1.50 400,000 3.2 years 400,000 3.2 years $ 1.50 26,667 0.0 years - 0.0 years $ 3.00 66,667 3.9 years 66,667 3.9 years $ 3.75 435,000 3.2 years 291,667 3.7 years $ 6.00 163,333 0.2 years 163,333 0.2 years $ 27.00 18,518 0.4 years 18,518 0.4 years 8,550,852 2.5 years 7,598,630 2.4 years Number of Warrant Shares Weighted-Average Exercise Price Weighted-Average Grant-Date Fair Value Aggregate Intrinsic Value of Outstanding Warrant Shares Weighted-Average Remaining Contractual Term (in years) Outstanding July 1, 2019 6,275,593 $ 1.65 $ 1.65 $ 5,509,850 3.8 Granted 1,667,815 1.50 2.85 3,845,945 3.0 Exercised - - - - - Forfeited - - - - - Cancelled (164,815 ) - - (44,445 ) - Outstanding March 31, 2020 7,778,593 1.50 1.95 9,311,350 3.1 Vested and exercisable March 31, 2020 7,303,741 1.65 1.95 7,814,295 3.1 Non vested March 31, 2020 474,852 $ 1.65 $ 2.55 $ 1,497,055 2.3 Outstanding Warrant Shares Exercisable Warrant Shares Exercise price range Number of Warrant Shares Weighted average remaining contractual life Number of Warrant Shares Weighted average remaining contractual life $ 0.75 6,546,333 3.3 years 6,404,259 3.2 years $ 1.50 416,667 2.5 years 133,333 4.0 years $ 1.50 66,667 4.9 years - - $ 2.25 261,667 2.1 years 262,222 1.4 years $ 3.00 381,333 1.0 years 381,333 1.0 years $ 3.75 105,926 0.3 years 122,593 0.3 years 7,778,593 3.1 years 7,303,741 3.1 years |
DISAGGREGATION OF REVENUE LON_2
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS | |
Schedule of disaggregation of gross revenue | Three Months Ended March 31, Nine months Ended March 31, 2021 2020 2021 2020 Project fees $ 1,627,000 $ 697,000 5,268,000 $ 5,091,000 Retainer fees 560,000 631,000 1,648,000 2,913,000 Fee income 676,000 1,003,000 2,435,000 4,602,000 Reimbursement income 991,000 1,290,000 3,086,000 8,149,000 Other revenue - (1,000 ) - 4,000 $ 3,854,000 $ 3,620,000 12,437,000 $ 20,759,000 Three Months Ended March 31 Nine Months Ended March 31 2021 2020 2021 2020 Gross Revenue: United States $ 2,309,000 $ 2,239,000 $ 7,940,000 $ 12,927,000 United Kingdom 1,545,000 1,381,000 4,497,000 7,832,000 Total gross revenue $ 3,854,000 $ 3,620,000 $ 12,437,000 $ 20,759,000 Three Months Ended March 31 Nine Months Ended March 31 2021 2020 2021 2020 Gross Profit: United States $ 1,078,000 $ 439,000 $ 3,770,000 $ 5,509,000 United Kingdom 835,000 925,000 2,307,000 4,144,000 Total gross profit $ 1,913,000 $ 1,364,000 $ 6,077,000 $ 9,653,000 Three Months Ended March 31 Nine Months Ended March 31 2021 2020 2021 2020 Net Gain or Loss: United States $ (4,188,000 ) $ (8,129,000 ) $ (8,147,000 ) $ (14,874,000 ) United Kingdom (491,000 ) 312,000 (1,076,000 ) (321,000 ) Total net gain/(loss) $ (4,679,000 ) $ (7,817,000 ) $ (9,223,000 ) $ (15,195,000 ) |
Schedule of disaggregation of fixed assets | United States United Kingdom Total Computer equipment $ 457,000 $ 193,000 $ 650,000 Website design 6,000 - 6,000 Office machine & equipment 52,000 45,000 97,000 Furniture & fixtures 351,000 86,000 437,000 Leasehold improvements 62,000 129,000 191,000 Tenant incentives 145,000 - 145,000 1,073,000 453,000 1,526,000 Accumulated depreciation (844,000 ) (409,000 ) (1,253,000 ) Net book value $ 229,000 $ 44,000 $ 273,000 United States United Kingdom Total Computer equipment $ 460,000 $ 160,000 $ 620,000 Website design 6,000 - 6,000 Office machine & equipment 53,000 36,000 89,000 Furniture & fixtures 350,000 79,000 429,000 Leasehold improvements 54,000 119,000 173,000 Tenant incentives 145,000 - 45,000 1,068,000 394,000 1,462,000 Accumulated depreciation (770,000 ) (348,000 ) (1,118,000 ) Net book value $ 298,000 $ 46,000 $ 344,000 |
Schedule of disaggregation of intangible assets and goodwill policy | Intangibles United States United Kingdom Total Customer relationship $ 4,960,000 $ - $ 4,960,000 Non-core customer relationships 760,000 - 760,000 Non-compete agreements 1,430,000 - 1,430,000 Tradename 410,000 - 410,000 Workforce acquired 2,125,000 - 2,125,000 9,685,000 - 9,685,000 Less: accumulated amortization (7,113,000 ) - (7,113,000 ) Net book value $ 2,572,000 $ - $ 2,572,000 Goodwill $ 9,831,000 $ 7,531,000 $ 17,362,000 Intangibles United States United Kingdom Total Customer relationship $ 4,960,000 $ 3,550,000 $ 8,510,000 Non-core customer relationships 760,000 - 760,000 Non-compete agreements 1,430,000 770,000 2,200,000 Tradename 410,000 - 410,000 Workforce acquired 2,125,000 665,000 2,790,000 9,685,000 4,985,000 14,670,000 Less: impairment - (1,867,000 ) (1,867,000 ) Less: accumulated amortization (5,494,000 ) (3,118,000 ) (8,612,000 ) Net book value $ 4,191,000 $ - $ 4,191,000 Goodwill $ 9,831,000 $ 7,531,000 $ 17,362,000 |
PRESENTATION OF THE FINANCIAL_4
PRESENTATION OF THE FINANCIAL STATEMENTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||||
Net loss attributable to common stockholders | $ (4,679,000) | $ (7,817,000) | $ (9,223,000) | $ (15,195,000) |
Basic EPS: | ||||
Common shares outstanding, beginning of period | 17,687,179 | 15,454,623 | 15,454,623 | 15,211,290 |
Weighted average common stock retired | (2,576,779) | 0 | (836,983) | (296,533) |
Weighted average common shares issued during the period | 0 | 0 | 1,257,143 | 498,613 |
Denominator for basic earnings per common shares | 0 | 0 | 0 | 0 |
Weighted average common shares | 15,110,400 | 15,454,623 | 15,874,783 | 15,413,370 |
Diluted EPS: | ||||
Diluted Common shares outstanding, beginning of period | 17,687,179 | 15,454,623 | 15,454,623 | 15,211,290 |
Diluted Weighted average common stock retired | (2,576,779) | 0 | (836,983) | (296,533) |
Diluted Weighted average common shares issued during the period | 0 | 0 | 1,257,143 | 498,613 |
Dilited Denominator for basic earnings per common shares | 0 | 0 | 0 | 0 |
Preferred Stock Series A, beginning of period | 720,000 | 720,000 | 720,000 | 720,000 |
Preferred Stock Series B, beginning of period | 2,495,000 | 2,495,000 | 2,495,000 | 2,495,000 |
Preferred Stock Series C, beginning of period | 911,149 | 911,149 | 911,149 | 911,149 |
Preferred Stock Series D, beginning of period | 1,979,000 | 1,979,000 | 1,979,000 | 1,881,500 |
Stock payable, beginning of period | 156,000 | 1,300,000 | 1,300,000 | 1,743,000 |
Weighted average preferred stock series D purchased during the period | 260,000 | |||
Weighted average stock payable issued during the period | 0 | 0 | 0 | 0 |
Weighted average diluted effect of stock options | 2,771,081 | 2,342,660 | 2,686,722 | 2,127,915 |
Weighted average diluted effect of warrants | 7,622,411 | 6,110,534 | 7,756,204 | 6,443,472 |
Lock-Up Agreements - common stock equivalents | 0 | (5,711,111) | 0 | (5,711,111) |
Weighted average common shares | 31,765,041 | 25,601,854 | 33,722,857 | 26,284,295 |
PRESENTATION OF THE FINANCIAL_5
PRESENTATION OF THE FINANCIAL STATEMENTS (Details Narrative) - USD ($) | Aug. 14, 2020 | Feb. 28, 2021 | Apr. 30, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Cash and cash equivalents | $ 1,426,000 | $ 959,000 | $ 1,426,000 | $ 959,000 | $ 1,706,000 | $ 1,589,000 | |||||||
Total current assets | 4,815,000 | 4,815,000 | 2,691,000 | ||||||||||
Total current liabilities | 21,223,000 | 21,223,000 | 16,455,000 | ||||||||||
Proceeds from initial public offering | 21,900,000 | ||||||||||||
Project revenues, net | 3,854,000 | 3,620,000 | 12,437,000 | 20,759,000 | |||||||||
Uninsured cash | 365,000 | $ 401,000 | 365,000 | 401,000 | |||||||||
Right-of-use asset and offsetting lease liability | $ 8,900,000 | 8,900,000 | |||||||||||
Closing rate US$: GBP | $ 1.378900 | $ 1.241200 | |||||||||||
Average rate US$: GBP | $ 1.342278 | $ 1.268544 | |||||||||||
Deferred rent | $ 842,000 | 842,000 | |||||||||||
Goodwill impairment expense | 0 | $ 1,387,000 | 0 | 1,387,000 | 598,000 | ||||||||
Accumulated deficit | (180,115,000) | (180,115,000) | (170,892,000) | ||||||||||
Allowance for doubtful accounts | 579,000 | 518,000 | 579,000 | 518,000 | |||||||||
Reduction in revenue | 8,300,000 | ||||||||||||
Net loss | $ (4,679,000) | $ (623,000) | $ (3,921,000) | $ (7,817,000) | $ (2,804,000) | $ (4,573,000) | $ (9,223,000) | $ (15,195,000) | |||||
Economic Injury Disaster Loan [Member] | April 1, 2020 [Member] | |||||||||||||
Salary reduction percentage | 15.00% | ||||||||||||
Total saving per month | $ 112,000 | ||||||||||||
Payroll Protection Program[Member] | |||||||||||||
Proceeds from SBA loan | $ 500,000 | $ 1,700,000 | $ 1,700,000 | ||||||||||
Deferred income liabiity | $ 1,704,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Accumulated depreciation | $ (1,253,000) | $ (1,118,000) |
Net book value | 273,000 | 344,000 |
Property plant and equipment | 1,526,000 | 1,462,000 |
Website Design [Member] | ||
Property plant and equipment | 6,000 | 6,000 |
Tenant Incentives [Member] | ||
Property plant and equipment | 145,000 | 145,000 |
Computer Equipment [Member] | ||
Property plant and equipment | 650,000 | 620,000 |
Office Machine & Equipment [Member] | ||
Property plant and equipment | 97,000 | 89,000 |
Furniture & Fixtures [Member] | ||
Property plant and equipment | 437,000 | 429,000 |
Leasehold Improvements [Member] | ||
Property plant and equipment | $ 191,000 | $ 173,000 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
PROPERTY AND EQUIPMENT | ||||
Depereciation expense | $ 34,000 | $ 90,000 | $ 95,000 | $ 281,000 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2021 | |
Less : Impairment expense | $ (1,867,000) | |
Intangible assets, net | 4,191,000 | $ 2,572,000 |
Intangible assets, Gross | 14,670,000 | 9,685,000 |
Accumulated amortization | (8,612,000) | (7,113,000) |
Customer Relationship [Member] | ||
Intangible assets, Gross | 8,510,000 | 4,960,000 |
Tradename [Member] | ||
Intangible assets, Gross | 410,000 | 410,000 |
Workforce Acquired [Member] | ||
Intangible assets, Gross | 2,790,000 | 2,125,000 |
Non-Core Customer Relationships [Member] | ||
Intangible assets, Gross | 760,000 | 760,000 |
Non-Compete Agreements [Member] | ||
Intangible assets, Gross | $ 2,200,000 | $ 1,430,000 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
INTANGIBLE ASSETS | |||||
Less : Impairment expense | $ (1,867,000) | ||||
Amortization expense | $ 540,000 | $ 1,003,000 | $ 1,619,000 | $ 3,010,000 |
ACCOUNTS PAYABLE (Details)
ACCOUNTS PAYABLE (Details) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
ACCOUNTS PAYABLE ACCRUED EXPENSES | ||
Accounts payable | $ 2,774,000 | $ 3,578,000 |
Accrued expenses | 6,116,000 | 3,750,000 |
Accrued payroll | 822,000 | 482,000 |
Accrued taxes | 841,000 | 327,000 |
Accounts payable and accrued expenses | $ 10,553,000 | $ 8,137,000 |
ACCOUNTS PAYABLE (Details Narra
ACCOUNTS PAYABLE (Details Narrative) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
ACCOUNTS PAYABLE ACCRUED EXPENSES | ||
Accounts payable and accrued expense | $ 10,525,000 | $ 8,137,000 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2020 | Oct. 31, 2020 | Sep. 30, 2020 | Aug. 31, 2020 | Jul. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Interest expense, convertible note payables | $ 12,000 | $ 54,000 | ||||||||
Amortization expenses | 409,000 | $ 0 | ||||||||
Proceeds fom convertible promissory note | 300,000 | |||||||||
Notes payable outstanding | 535,000 | 535,000 | $ 1,435,000 | |||||||
Interest expense related to convertible notes payable | $ 7,000 | 7,000 | ||||||||
Amortization expense of note payable discount | 0 | $ 786,000 | $ 409,000 | 786,000 | ||||||
Interest rate | 10.00% | 5.00% | ||||||||
Risk free rate | 0.30% | |||||||||
Volality rate | 64.80% | |||||||||
Promissory note | $ 1,300,000 | |||||||||
Interest expense | $ 0 | $ 0 | ||||||||
October 2020 [Member] | ||||||||||
Fair market value of the embedded conversion feature | $ 25,000 | |||||||||
Interest rate | 10.00% | |||||||||
Risk free rate | 0.10% | |||||||||
Volality rate | 66.48% | |||||||||
Amortization of discount | $ 37,000 | |||||||||
Warrants exercise price | $ 2.25 | |||||||||
Toal discount | 37,000 | $ 37,000 | ||||||||
Gross proceeds | 50,000 | |||||||||
Discount attributed to market | 25,000 | |||||||||
Discount attributed to warrants | $ 12,000 | |||||||||
Issuance of warrants | 6,667 | |||||||||
Interest expense | 1,000 | |||||||||
Convertible Notes [Member] | Lendor [Member] | ||||||||||
Debt discount | 24,000 | $ 49,000 | ||||||||
Amortization expense of note payable discount | 21,000 | $ 21,000 | ||||||||
Current liability and interest expense | 1,000 | $ 2,000 | 2,000 | |||||||
Fair market value of the embedded conversion feature | $ 25,000 | $ 49,000 | ||||||||
Interest rate | 10.00% | |||||||||
Risk free rate | 0.10% | |||||||||
Volality rate | 66.48% | |||||||||
Amortization of discount | $ 12,000 | |||||||||
Prospective interest rate | 20.00% | 20.00% | ||||||||
Common stock shares exercise price | $ 3.75 | |||||||||
Warrants Exercise price | $ 3.75 | |||||||||
Loan fees | $ 10,000 | |||||||||
Warrants received | 13,333 | |||||||||
Promissory note | $ 50,000 | $ 100,000 | $ 200,000 | |||||||
Convertible Notes Three [Member] | ||||||||||
Current liability and interest expense | $ 7,000 | |||||||||
Interest rate | 10.00% | |||||||||
Maturity date | Dec. 7, 2020 | |||||||||
Warrants exercise price | $ 1.95 | |||||||||
Issuance of restricted shares of common stock | 106,667 | |||||||||
Issuance of restricted shares of common stock, discount | $ 156,000 | |||||||||
Common stock conversion price | $ 3 | |||||||||
Toal discount | $ 300,000 | |||||||||
Gross proceeds | $ 52,500 | $ 247,500 | ||||||||
Convertible Notes One [Member] | ||||||||||
Interest rate | 10.00% | |||||||||
Common stock shares exercise price | $ 3.75 | |||||||||
Warrants Exercise price | $ 3.75 | |||||||||
Loan fees | $ 10,000 | |||||||||
Warrants received | 66,667 | |||||||||
Promissory note | $ 200,000 | |||||||||
Convertible Notes Two [Member] | ||||||||||
Interest rate | 10.00% | |||||||||
Common stock shares exercise price | $ 1.50 | |||||||||
Warrants Exercise price | $ 0.75 | |||||||||
Loan fees | $ 120,000 | |||||||||
Warrants received | 13,334 | |||||||||
Promissory note | $ 1,000,000 | |||||||||
Additional warrants shares of common stock | 26,667 | 26,667 |
NOTES PAYABLE RELATED PARTY (De
NOTES PAYABLE RELATED PARTY (Details) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Short term portion | ||
Short term Notes payable - related party | $ 452,000 | $ 452,000 |
Long term portion | ||
Long term Notes payabe - related parties | 2,198,000 | 1,975,000 |
Dan Pappalardo [Member] | ||
Short term portion | ||
Short term Notes payable - related party | 217,000 | 217,000 |
Tom Ochocki [Member] | ||
Short term portion | ||
Short term Notes payable - related party | 2,198,000 | 1,975,000 |
Long term portion | ||
Long term Notes payabe - related parties | 2,198,000 | |
Estate Of Sally Pappalardo [Member] | ||
Long term portion | ||
Note payable - related parties | $ 235,000 | $ 235,000 |
NOTES PAYABLE RELATED PARTY (_2
NOTES PAYABLE RELATED PARTY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Interest rate | 10.00% | 5.00% | ||||
Common stock shares issued upon conversion of debt | 1,733,334 | |||||
Conversion price per share | $ 0.75 | |||||
Imputed interest | $ 22,000 | $ 35,000 | ||||
Promissory note | $ 1,300,000 | |||||
Interest expense | $ 10,000 | $ 10,000 | 30,000 | $ 30,000 | ||
Notes payable - related party | 452,000 | 452,000 | 452,000 | |||
Long term Notes payabe - related parties | 2,198,000 | 2,198,000 | 1,975,000 | |||
Dan Pappalardo [Member] | ||||||
Notes payable - related party | 217,000 | 217,000 | 217,000 | |||
Estate Of Sally Pappalardo [Member] | ||||||
Note payable - related parties | 235,000 | $ 235,000 | 235,000 | |||
Mr. Jankowski [Member] | ||||||
Interest rate | 0.00% | |||||
Long term Notes payabe - related parties | 1,369,000 | $ 1,369,000 | ||||
Tom Ochocki [Member] | ||||||
Notes payable - related party | 2,198,000 | 2,198,000 | $ 1,975,000 | |||
Long term Notes payabe - related parties | $ 2,198,000 | $ 2,198,000 |
LEASE LIABILITIES (Details)
LEASE LIABILITIES (Details) - USD ($) | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Imputed interest | $ 22,000 | $ 35,000 |
Mission US Manhattan [Member] | ||
Long-term lease liabilities | 0 | |
Short-term lease liabilities | 0 | |
Total operating lease liabilities | 0 | |
2021 | 93,000 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | $ 0 | |
Discount rate | 5.50% | |
Total undiscounted minimum future payments | $ 93,000 | |
Imputed interest | (93,000) | |
Mission UK London [Member] | ||
Long-term lease liabilities | 2,471,000 | |
Short-term lease liabilities | 523,000 | |
Total operating lease liabilities | 2,994,000 | |
2021 | 166,000 | |
2022 | 677,000 | |
2023 | 677,000 | |
2024 | 677,000 | |
2025 | 677,000 | |
2026 | 564,000 | |
2027 | $ 0 | |
Discount rate | 5.50% | |
Total undiscounted minimum future payments | $ 3,438,000 | |
Imputed interest | (444,000) | |
Undiscounted Cash Flows [Member] | ||
Long-term lease liabilities | 6,327,000 | |
Short-term lease liabilities | 2,922,000 | |
Total operating lease liabilities | 9,249,000 | |
2021 | 2,023,000 | |
2022 | 1,728,000 | |
2023 | 1,751,000 | |
2024 | 1,766,000 | |
2025 | 1,545,000 | |
2026 | 1,099,000 | |
2027 | 455,000 | |
Total undiscounted minimum future payments | 10,367,000 | |
Imputed interest | (1,118,000) | |
Mission US Brooklyn [Member] | ||
Long-term lease liabilities | 2,289,000 | |
Short-term lease liabilities | 899,000 | |
Total operating lease liabilities | 3,188,000 | |
2021 | 602,000 | |
2022 | 460,000 | |
2023 | 497,000 | |
2024 | 509,000 | |
2025 | 522,000 | |
2026 | 535,000 | |
2027 | $ 455,000 | |
Discount rate | 5.50% | |
Total undiscounted minimum future payments | $ 3,580,000 | |
Imputed interest | (392,000) | |
Corporate Englewood [Member] | ||
Long-term lease liabilities | 32,000 | |
Short-term lease liabilities | 52,000 | |
Total operating lease liabilities | 84,000 | |
2021 | 14,000 | |
2022 | 55,000 | |
2023 | 19,000 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | $ 0 | |
Discount rate | 5.50% | |
Total undiscounted minimum future payments | $ 88,000 | |
Imputed interest | (4,000) | |
Troika LaBrea[Member] | ||
Short-term lease liabilities | 838,000 | |
Total operating lease liabilities | 838,000 | |
2021 | 838,000 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | $ 0 | |
Discount rate | 5.50% | |
Total undiscounted minimum future payments | $ 838,000 | |
Troika Gower [Member] | ||
Long-term lease liabilities | 1,535,000 | |
Short-term lease liabilities | 610,000 | |
Total operating lease liabilities | 2,145,000 | |
2021 | 310,000 | |
2022 | 536,000 | |
2023 | 558,000 | |
2024 | 580,000 | |
2025 | $ 346,000 | |
Discount rate | 5.50% | |
Total undiscounted minimum future payments | $ 2,330,000 | |
Imputed interest | $ (185,000) |
LEASE LIABILITIES (Details 1)
LEASE LIABILITIES (Details 1) | 9 Months Ended |
Mar. 31, 2021 | |
LEASE LIABILITIES | |
Weighted average remaining lease term in years | 3 years 4 months 24 days |
Weighted average discount rate | 10.80% |
LEASE LIABILITIES (Details Narr
LEASE LIABILITIES (Details Narrative) - USD ($) | May 02, 2017 | Apr. 06, 2016 | Jan. 09, 2014 | Feb. 08, 2013 | Feb. 01, 2020 | Feb. 01, 2018 | Jan. 19, 2018 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 |
Long term Operating lease liability | $ 6,327,000 | $ 6,327,000 | $ 7,003,000 | |||||||||
Operating lease Right of use assets | 7,404,000 | 7,404,000 | 8,297,000 | |||||||||
Current Operating lease liability | 2,922,000 | 2,922,000 | $ 2,255,000 | |||||||||
Rent expense | 537,000 | $ 733,000 | 1,283,000 | $ 1,439,000 | ||||||||
Lease expense | $ 34,278 | $ 22,432 | $ 19,230 | $ 4,120 | 537,000 | |||||||
July 1, 2019 [Member] | ||||||||||||
Long term Operating lease liability | 6,916,000 | 6,916,000 | ||||||||||
Operating lease Right of use assets | 8,348,000 | 8,348,000 | ||||||||||
Current Operating lease liability | $ 2,275,000 | 2,275,000 | ||||||||||
Lease Agreement [Member] | ||||||||||||
Lease expense | $ 34,278 | 22,432 | $ 19,230 | $ 42,265 | $ 4,120 | $ 733,000 | $ 54,016 | |||||
Remainder of lease, monthly payment | $ 52,855 | |||||||||||
Annual rate increase | 2.50% | 2.50% | 3.00% | 3.50% | 3.50% | |||||||
Lease expiry date | May 1, 2027 | Apr. 5, 2026 | May 8, 2021 | Jan. 31, 2025 | Jan. 31, 2023 | |||||||
Sublease Agreements [Member] | ||||||||||||
Annual rate increase | 3.00% | |||||||||||
Lease income | $ 22,496 |
LEGAL CONTINGENCIES (Details Na
LEGAL CONTINGENCIES (Details Narrative) - USD ($) | Jan. 04, 2021 | Jan. 28, 2021 |
Damages net amount | $ 900,000 | |
Mission Culture LLC [Member] | ||
Amount due for services | $ 197,000 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) - $ / shares | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Volatility | 64.80% | |
Risk-free rate | 0.30% | |
Contractual term | 3 years | 3 years |
Exercise price | $ 3.75 | $ 2.70 |
Warrant [Member] | ||
Exercise price | $ 0.93 | $ 1.50 |
Warrant [Member] | Minimum [Member] | ||
Volatility | 63.50% | 56.40% |
Risk-free rate | 0.20% | 0.30% |
Contractual term | 4 years | 4 years |
Exercise price | $ 0.75 | $ 0.75 |
Warrant [Member] | Maximum [Member] | ||
Volatility | 66.50% | 74.10% |
Risk-free rate | 0.50% | 1.80% |
Contractual term | 5 years | 5 years |
Exercise price | $ 3.75 | $ 3.75 |
STOCKHOLDERS EQUITY (Details 1)
STOCKHOLDERS EQUITY (Details 1) - USD ($) | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Weighted-Average Exercise Price, Granted | $ 3.75 | $ 2.70 |
Warrant [Member] | ||
Number of Shares, Outstanding Beginning Balance | 7,858,741 | 6,275,593 |
Number of Shares, Granted | 1,256,667 | 1,667,815 |
Number of Shares, Exercised | 0 | 0 |
Number of Shares, Forfeited | 0 | 0 |
Number of Shares, Expired | (564,556) | (164,815) |
Number of Shares, Outstanding Ending Balance | 8,550,852 | 7,778,593 |
Number of Shares, Vested and exercisable Ending Balance | 7,598,630 | 7,303,741 |
Number of Shares, Non-vested Ending Balance | 952,223 | 474,852 |
Weighted-Average Exercise Price, Outstanding Beginning Balance | $ 1.52 | $ 1.65 |
Weighted-Average Exercise Price, Granted | 0.93 | 1.50 |
Weighted-Average Exercise Price, Exercised | 0 | 0 |
Weighted-Average Exercise Price, Forfeited | 0 | 0 |
Weighted-Average Exercise Price, Expired | 3.16 | 0 |
Weighted-Average Exercise Price, Outstanding Ending Balance | 1.12 | 1.50 |
Weighted-Average Exercise Price, Vested and exercisable Ending Balance | 1.10 | 1.65 |
Weighted-Average Exercise Price, Non-vested Ending Balance | 1.24 | 1.65 |
Weighted-Average Grant-Date Fair Value, Outstanding Beginning Balance | 1.92 | 1.65 |
Weighted-Average Grant-Date Fair Value, Granted | 3.04 | 2.85 |
Weighted-Average Grant-Date Fair Value, Exercised | 0 | 0 |
Weighted-Average Grant-Date Fair Value, Forfeited | 0 | 0 |
Weighted-Average Grant-Date Fair Value, Expired | 3.13 | 0 |
Weighted-Average Grant-Date Fair Value, Outstanding Ending Balance | 1.88 | 1.95 |
Weighted-Average Grant-Date Fair Value, Vested and exercisable Ending Balance | 1.73 | 1.95 |
Weighted-Average Grant-Date Fair Value, Non-vested Ending Balance | $ 3.02 | $ 2.55 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Outstanding Beginning Balance | $ 9,234,295 | $ 5,509,850 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Granted | 3,845,945 | 3,845,945 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Exercised | 0 | 0 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Forfeited | 0 | 0 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Expired | (733,295) | (44,445) |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Outstanding Ending Balance | 12,039,000 | 9,311,350 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Vested and exercisable Ending Balance | 9,644,333 | 7,814,295 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Non-vested Ending Balance | $ 2,394,667 | $ 1,497,055 |
Weighted-Average Remaining Contractual Term (in years), Outstanding Beginning Balance | 3 years | 3 years 9 months 18 days |
Weighted-Average Remaining Contractual Term (in years), Granted | 4 years 8 months 12 days | 3 years |
Weighted-Average Remaining Contractual Term (in years), Outstanding Ending Balance | 2 years 5 months 30 days | 3 years 1 month 6 days |
Weighted-Average Remaining Contractual Term (in years), Vested and exercisable Ending Balance | 2 years 4 months 24 days | 3 years 1 month 6 days |
Weighted-Average Remaining Contractual Term (in years), Non-vested Ending Balance | 3 years 4 months 24 days | 2 years 3 months 18 days |
STOCKHOLDERS EQUITY (Details 2)
STOCKHOLDERS EQUITY (Details 2) - shares | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
0.75 [Member] | ||
Number of Shares, Outstanding | 7,440,667 | 6,546,333 |
Weighted average remaining contractual life, Outstanding | 2 years 6 months | 3 years 3 months 18 days |
Number of Shares, Exercisable | 6,658,444 | 6,404,259 |
Weighted average remaining contractual life, Exercisable | 2 years 3 months 18 days | 3 years 2 months 12 days |
2.25 [Member] | ||
Number of Shares, Outstanding | 261,667 | |
Weighted average remaining contractual life, Outstanding | 2 years 1 month 6 days | |
Number of Shares, Exercisable | 262,222 | |
Weighted average remaining contractual life, Exercisable | 1 year 4 months 24 days | |
1.50 [Member] | ||
Number of Shares, Outstanding | 400,000 | 416,667 |
Weighted average remaining contractual life, Outstanding | 3 years 2 months 12 days | 2 years 5 months 30 days |
Number of Shares, Exercisable | 400,000 | 133,333 |
Weighted average remaining contractual life, Exercisable | 3 years 2 months 12 days | 4 years |
1.50 One [Member] | ||
Number of Shares, Outstanding | 26,667 | 66,667 |
Weighted average remaining contractual life, Outstanding | 0 years | 4 years 10 months 24 days |
Number of Shares, Exercisable | 0 | 0 |
Weighted average remaining contractual life, Exercisable | 0 years | 0 years |
3.00 [Member] | ||
Number of Shares, Outstanding | 66,667 | 381,333 |
Weighted average remaining contractual life, Outstanding | 3 years 10 months 24 days | 1 year |
Number of Shares, Exercisable | 66,667 | 0 |
Weighted average remaining contractual life, Exercisable | 3 years 10 months 24 days | 1 year |
3.75 [Member] | ||
Number of Shares, Outstanding | 435,000 | 105,926 |
Weighted average remaining contractual life, Outstanding | 3 years 2 months 12 days | 3 months 18 days |
Number of Shares, Exercisable | 291,667 | 122,593 |
Weighted average remaining contractual life, Exercisable | 3 years 8 months 12 days | 3 months 18 days |
6.00 [Member] | ||
Number of Shares, Outstanding | 163,333 | |
Weighted average remaining contractual life, Outstanding | 2 months 12 days | |
Number of Shares, Exercisable | 163,333 | |
Weighted average remaining contractual life, Exercisable | 2 months 12 days | |
27.00 [Member] | ||
Number of Shares, Outstanding | 18,518 | |
Weighted average remaining contractual life, Outstanding | 4 months 24 days | |
Number of Shares, Exercisable | 18,518 | |
Weighted average remaining contractual life, Exercisable | 4 months 24 days | |
Warrant [Member] | ||
Number of Shares, Outstanding | 8,550,852 | 7,778,593 |
Weighted average remaining contractual life, Outstanding | 2 years 6 months | 3 years 1 month 6 days |
Number of Shares, Exercisable | 7,598,630 | 7,303,741 |
Weighted average remaining contractual life, Exercisable | 2 years 4 months 24 days | 3 years |
STOCKHOLDERS EQUITY (Details 3)
STOCKHOLDERS EQUITY (Details 3) - $ / shares | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Volatility | 64.80% | |
Risk-free rate | 0.30% | |
Contractual term | 3 years | 3 years |
Exercise price | $ 3.75 | $ 2.70 |
Options [Member] | ||
Exercise price | $ 3.75 | $ 2.70 |
Options [Member] | Maximun [Member] | ||
Volatility | 64.80% | |
Risk-free rate | 1.70% | |
Exercise price | $ 3.75 | |
Options [Member] | Minimum [Member] | ||
Volatility | 57.50% | |
Risk-free rate | 0.90% | |
Exercise price | $ 0.75 |
STOCKHOLDERS EQUITY (Details 4)
STOCKHOLDERS EQUITY (Details 4) - USD ($) | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Exercise price | $ 3.75 | $ 2.70 |
Options [Member] | ||
Number of Shares, Outstanding Beginning Balance | 3,377,222 | 3,512,500 |
Number of Shares, Granted | 76,667 | 511,667 |
Number of Shares, Exercised | 0 | 0 |
Number of Shares, Forfeited | 0 | 0 |
Number of Shares, Expired | (143,333) | (139,167) |
Number of Shares, Outstanding Ending Balance | 3,310,556 | 3,885,000 |
Number of Shares, Vested and exercisable Ending Balance | 2,883,458 | 2,522,731 |
Number of Shares, Non-vested Ending Balance | 427,098 | 1,362,269 |
Weighted-Average Exercise Price, Outstanding Beginning Balance | $ 1.10 | $ 0.90 |
Exercise price | 3.75 | 2.70 |
Weighted-Average Exercise Price, Exercised | 0 | 0 |
Weighted-Average Exercise Price, Forfeited | 0 | 0 |
Weighted-Average Exercise Price, Expired | 0 | 0 |
Weighted-Average Exercise Price, Outstanding Ending Balance | 1.10 | 1.05 |
Weighted-Average Exercise Price, Vested and exercisable Ending Balance | 0.89 | 0.75 |
Weighted-Average Exercise Price, Non-vested Ending Balance | 2.59 | 1.50 |
Weighted-Average Grant-Date Fair Value, Outstanding Beginning Balance | 1.06 | 0.90 |
Weighted-Average Grant-Date Fair Value, Granted | 0 | 2.10 |
Weighted-Average Grant-Date Fair Value, Exercised | 0 | 0 |
Weighted-Average Grant-Date Fair Value, Forfeited | 0 | 0 |
Weighted-Average Grant-Date Fair Value, Expired | 0 | 0 |
Weighted-Average Grant-Date Fair Value, Outstanding Ending Balance | 1.01 | 1.05 |
Weighted-Average Grant-Date Fair Value, Vested and exercisable Ending Balance | 0.93 | 0.90 |
Weighted-Average Grant-Date Fair Value, Non-vested Ending Balance | $ 1.90 | $ 1.35 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Outstanding Beginning Balance | $ 2,030,000 | $ 1,908,750 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Granted | 0 | 550,000 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Exercised | 0 | 0 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Forfeited | 0 | 0 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Expired | (200,000) | 243,750 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Outstanding Ending Balance | 1,830,000 | 2,152,500 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Vested and exercisable Ending Balance | 1,469,818 | 1,155,000 |
Aggregate Intrinsic Value of Outstanding Warrant Shares, Non-vested Ending Balance | $ 360,182 | $ 997,500 |
Weighted-Average Remaining Contractual Term (in years), Outstanding Beginning Balance | 8 months 12 days | 1 year 1 month 6 days |
Weighted-Average Remaining Contractual Term (in years), Granted | 2 years 9 months 18 days | |
Weighted-Average Remaining Contractual Term (in years), Outstanding Ending Balance | 5 months 30 days | 9 months 18 days |
Weighted-Average Remaining Contractual Term (in years), Vested and exercisable Ending Balance | 3 months 18 days | 5 months 30 days |
Weighted-Average Remaining Contractual Term (in years), Non-vested Ending Balance | 1 year 5 months 30 days | 1 year 5 months 30 days |
STOCKHOLDERS EQUITY (Details 5)
STOCKHOLDERS EQUITY (Details 5) - shares | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Options [Member] | ||
Number of Shares, Outstanding Ending Balance | 3,310,556 | 3,885,000 |
Weighted average remaining contractual life, Outstanding | 6 months | 9 months 18 days |
Number of Shares, Vested and exercisable Ending Balance | 2,883,458 | 2,522,731 |
Weighted average remaining contractual life, Exercisable | 3 months 18 days | 5 months 30 days |
0.75 [Member] | ||
Number of Shares, Outstanding Ending Balance | 2,768,889 | 3,326,667 |
Weighted average remaining contractual life, Outstanding | 2 years 6 months | 3 years 3 months 18 days |
Number of Shares, Vested and exercisable Ending Balance | 6,658,444 | 6,404,259 |
Weighted average remaining contractual life, Exercisable | 2 years 3 months 18 days | 3 years 2 months 12 days |
1.50 [Member] | ||
Weighted average remaining contractual life, Outstanding | 3 years 2 months 12 days | 2 years 5 months 30 days |
Number of Shares, Vested and exercisable Ending Balance | 400,000 | 133,333 |
Weighted average remaining contractual life, Exercisable | 3 years 2 months 12 days | 4 years |
1.50 [Member] | Options [Member] | ||
Number of Shares, Outstanding Ending Balance | 200,000 | 200,000 |
Weighted average remaining contractual life, Outstanding | 5 months 30 days | 1 year 5 months 30 days |
Number of Shares, Vested and exercisable Ending Balance | 166,667 | 177,778 |
Weighted average remaining contractual life, Exercisable | 5 months 30 days | 1 year |
3.75 [Member] | ||
Weighted average remaining contractual life, Outstanding | 3 years 2 months 12 days | 3 months 18 days |
Number of Shares, Vested and exercisable Ending Balance | 291,667 | 122,593 |
Weighted average remaining contractual life, Exercisable | 3 years 8 months 12 days | 3 months 18 days |
3.75 [Member] | Options [Member] | ||
Number of Shares, Outstanding Ending Balance | 341,667 | 341,667 |
Weighted average remaining contractual life, Outstanding | 2 years | 3 years |
Number of Shares, Vested and exercisable Ending Balance | 88,333 | 3,333 |
Weighted average remaining contractual life, Exercisable | 1 year 10 months 24 days | 10 months 24 days |
3.00 [Member] | ||
Weighted average remaining contractual life, Outstanding | 3 years 10 months 24 days | 1 year |
Number of Shares, Vested and exercisable Ending Balance | 66,667 | 0 |
Weighted average remaining contractual life, Exercisable | 3 years 10 months 24 days | 1 year |
3.00 [Member] | Options [Member] | ||
Number of Shares, Outstanding Ending Balance | 16,667 | |
Weighted average remaining contractual life, Outstanding | 1 year 9 months 18 days | |
Number of Shares, Vested and exercisable Ending Balance | 7,222 | |
Weighted average remaining contractual life, Exercisable | 2 years |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | Jun. 13, 2017 | Jan. 31, 2021 | Jul. 31, 2020 | Jun. 30, 2020 | Mar. 31, 2021 | Mar. 31, 2020 |
Common stock, shares outstanding | 15,454,623 | 15,020,512 | ||||
Common stock, shares issued | 15,454,623 | 15,020,512 | ||||
Common stock, shares authorized | 300,000,000 | 300,000,000 | ||||
Common stock, shares par value | $ 0.001 | $ 0.001 | ||||
Restricted shares held in escrow | 2,666,667 | |||||
Preferred stock, shares authorized | 15,000,000 | 15,000,000 | ||||
Reverse stock split desciption | Board of Directors to effect a reverse stock split of our common stock at a certain exchange ratios from 1:10 to 1:15 with our Board of Directors retaining the discretion as to whether to implement the reverse stock split and which exchange ratio to implement | |||||
Preferred stock, shares par value | $ 0.01 | $ 0.01 | ||||
Convertible promissory note one [Member] | ||||||
Convertible promissory note, converted into common shares | $ 1,000,000 | |||||
Common shares issued | 387,222 | |||||
Conversion price | $ 1.50 | |||||
Convertible promissory note two [Member] | ||||||
Convertible promissory note, converted into common shares | $ 200,000 | |||||
Common shares issued | 56,000 | |||||
Conversion price | $ 3.75 | |||||
Investors [Member] | ||||||
Price per share | $ 1.95 | |||||
convertible note payables | $ 66,000 | $ 1,075,000 | ||||
Expenses | $ 0 | $ 748,000 | ||||
Warrants issued | 26,667 | 438,333 | ||||
Directors and consultants [Member] | ||||||
convertible note payables | $ 1,682,000 | $ 858,000 | ||||
Warrants issued | 566,667 | 327,333 | ||||
Compensation expenses | $ 1,558,000 | $ 0 | ||||
Investor One [Member] | ||||||
Preferred stock, shares par value | $ 0.01 | $ 0.01 | ||||
Series D Convertible Preferred Stock [Member] | ||||||
Preferred stock, shares authorized | 2,500,000 | 2,500,000 | ||||
Preferred stock, shares outstanding | 1,979,000 | 1,979,000 | ||||
Preferred stock, shares issued | 1,979,000 | 1,979,000 | ||||
Preferred stock, shares par value | $ 0.01 | $ 0.01 | ||||
Series A Preferred Stock [Member] | ||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||
Preferred stock, shares outstanding | 720,000 | 720,000 | ||||
Preferred stock, shares issued | 720,000 | 720,000 | ||||
Preferred stock, shares par value | $ 0.01 | $ 0.01 | ||||
Series C Convertible Preferred Stock [Member] | ||||||
Preferred stock, shares authorized | 1,200,000 | 1,200,000 | ||||
Preferred stock, shares outstanding | 911,149 | 911,149 | ||||
Preferred stock, shares issued | 911,149 | 911,149 | ||||
Preferred stock, shares par value | $ 0.01 | $ 0.01 | ||||
Series B Convertible Preferred Stock [Member] | ||||||
Preferred stock, shares authorized | 3,000,000 | 3,000,000 | ||||
Preferred stock, shares outstanding | 2,495,000 | 2,495,000 | ||||
Preferred stock, shares issued | 2,495,000 | 2,495,000 | ||||
Preferred stock, shares par value | $ 0.01 | $ 0.01 | ||||
Minimum [Member] | ||||||
Price per share | 0.75 | $ 0.75 | ||||
Maximum [Member] | ||||||
Price per share | $ 3.75 | $ 3.75 | ||||
2017 Equity Incentive Plan [Member] | ||||||
Issuance of equity shares | 3,333,334 | |||||
ISO's Awards [Member] | ||||||
convertible note payables | $ 582,000 | |||||
Compensation expenses | $ 271,000 | $ 314,000 | ||||
Options purchased | 308,333 | |||||
Total compensation | $ 812,000 | |||||
ISO's Awards [Member] | Minimum [Member] | ||||||
Price per share | $ 0.75 | |||||
ISO's Awards [Member] | Maximum [Member] | ||||||
Price per share | $ 3.75 | |||||
Black Scholes models [Member] | ||||||
Warrants issued | 8,551,000 | 7,187,518 | ||||
Warrants issued, Value | $ 16,050,000 | $ 11,934,000 |
DISAGGREGATION OF REVENUE LON_3
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Project revenues, net | $ 3,854,000 | $ 3,620,000 | $ 12,437,000 | $ 20,759,000 |
Project fees [Member] | ||||
Project revenues, net | 1,627,000 | 697,000 | 5,268,000 | 5,091,000 |
Other Revenue [Member] | ||||
Project revenues, net | 0 | (1,000) | 0 | 4,000 |
Retainer Fees [Member] | ||||
Project revenues, net | 560,000 | 631,000 | 1,648,000 | 2,913,000 |
Fee Income [Member] | ||||
Project revenues, net | 676,000 | 1,003,000 | 2,435,000 | 4,602,000 |
Reimbursement Income [Member] | ||||
Project revenues, net | $ 991,000 | $ 1,290,000 | $ 3,086,000 | $ 8,149,000 |
DISAGGREGATION OF REVENUE LON_4
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Project revenues, net | $ 3,854,000 | $ 3,620,000 | $ 12,437,000 | $ 20,759,000 |
United Kingdom [Member] | ||||
Project revenues, net | 1,545,000 | 1,381,000 | 4,497,000 | 7,832,000 |
United States [Member] | Computer Equipment [Member] | ||||
Project revenues, net | $ 2,309,000 | $ 2,239,000 | $ 7,940,000 | $ 12,927,000 |
DISAGGREGATION OF REVENUE LON_5
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Gross profit | $ 1,913,000 | $ 1,364,000 | $ 6,077,000 | $ 9,653,000 |
United States [Member] | ||||
Gross profit | 1,078,000 | 439,000 | 3,770,000 | 5,509,000 |
United Kingdom [Member] | ||||
Gross profit | $ 835,000 | $ 925,000 | $ 2,307,000 | $ 4,144,000 |
DISAGGREGATION OF REVENUE LON_6
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | |
Net loss | $ (4,679,000) | $ (623,000) | $ (3,921,000) | $ (7,817,000) | $ (2,804,000) | $ (4,573,000) | $ (9,223,000) | $ (15,195,000) |
United States [Member] | ||||||||
Net loss | (4,188,000) | (8,129,000) | (8,147,000) | (14,874,000) | ||||
United Kingdom [Member] | ||||||||
Net loss | $ (491,000) | $ 312,000 | $ (1,076,000) | $ (321,000) |
DISAGGREGATION OF REVENUE LON_7
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS (Details 4) - USD ($) | Mar. 31, 2021 | Jun. 30, 2020 |
Property plant and equipment | $ 1,526,000 | $ 1,462,000 |
Accumulated depreciation | (1,253,000) | (1,118,000) |
Net book value | 273,000 | 344,000 |
Tenant Incentives [Member] | ||
Property plant and equipment | 145,000 | 145,000 |
United Kingdom [Member] | ||
Property plant and equipment | 453,000 | 394,000 |
Accumulated depreciation | (409,000) | (348,000) |
Net book value | 44,000 | 46,000 |
United Kingdom [Member] | Customer Relationship [Member] | ||
Property plant and equipment | 193,000 | 160,000 |
United States [Member] | ||
Property plant and equipment | 1,073,000 | 1,068,000 |
Accumulated depreciation | (844,000) | (770,000) |
Net book value | 229,000 | 298,000 |
United States [Member] | Customer Relationship [Member] | ||
Property plant and equipment | 193,000 | 160,000 |
Website Design [Member] | ||
Property plant and equipment | 6,000 | 6,000 |
Website Design [Member] | United Kingdom [Member] | ||
Property plant and equipment | 0 | 0 |
Website Design [Member] | United States [Member] | ||
Property plant and equipment | 6,000 | 6,000 |
Computer Equipment [Member] | United States [Member] | ||
Property plant and equipment | 457,000 | 460,000 |
Computer Equipment [Member] | ||
Property plant and equipment | 650,000 | 620,000 |
Office Machine & Equipment [Member] | United Kingdom [Member] | ||
Property plant and equipment | 45,000 | 36,000 |
Office Machine & Equipment [Member] | United States [Member] | ||
Property plant and equipment | 52,000 | 53,000 |
Office Machine & Equipment [Member] | ||
Property plant and equipment | 97,000 | 89,000 |
Furniture & Fixtures [Member] | United Kingdom [Member] | ||
Property plant and equipment | 86,000 | 79,000 |
Furniture & Fixtures [Member] | United States [Member] | ||
Property plant and equipment | 351,000 | 350,000 |
Furniture & Fixtures [Member] | ||
Property plant and equipment | 437,000 | 429,000 |
Leasehold Improvements [Member] | United Kingdom [Member] | ||
Property plant and equipment | 129,000 | 119,000 |
Leasehold Improvements [Member] | United States [Member] | ||
Property plant and equipment | 62,000 | 54,000 |
Leasehold Improvements [Member] | ||
Property plant and equipment | 191,000 | 173,000 |
Tenant Incentives[Member] | United Kingdom [Member] | ||
Property plant and equipment | 0 | 0 |
Tenant Incentives[Member] | United States [Member] | ||
Property plant and equipment | $ 145,000 | $ 145,000 |
DISAGGREGATION OF REVENUE LON_8
DISAGGREGATION OF REVENUE LONG-LIVED ASSETS (Details 5) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2021 | |
Intangible assets, gross | $ 14,670,000 | $ 9,685,000 |
Accumulated amortization | (8,612,000) | (7,113,000) |
Less : Impairment expense | (1,867,000) | |
Net book value | 4,191,000 | 2,572,000 |
Goodwill | 17,362,000 | 17,362,000 |
Customer Relationship [Member] | ||
Intangible assets, gross | 8,510,000 | 4,960,000 |
Non-Core Customer Relationships [Member] | ||
Intangible assets, gross | 760,000 | 760,000 |
Non-Compete Agreements [Member] | ||
Intangible assets, gross | 2,200,000 | 1,430,000 |
Tradename [Member] | ||
Intangible assets, gross | 410,000 | 410,000 |
Workforce Acquired [Member] | ||
Intangible assets, gross | 2,790,000 | 2,125,000 |
United Kingdom [Member] | ||
Intangible assets, gross | 4,985,000 | 0 |
Accumulated amortization | (3,118,000) | 0 |
Less : Impairment expense | (1,867,000) | |
Net book value | 0 | 0 |
Goodwill | 7,531,000 | 7,531,000 |
United Kingdom [Member] | Customer Relationship [Member] | ||
Intangible assets, gross | 3,550,000 | 0 |
United Kingdom [Member] | Non-Core Customer Relationships [Member] | ||
Intangible assets, gross | 0 | 0 |
United Kingdom [Member] | Non-Compete Agreements [Member] | ||
Intangible assets, gross | 770,000 | 0 |
United Kingdom [Member] | Tradename [Member] | ||
Intangible assets, gross | 0 | 0 |
United Kingdom [Member] | Workforce Acquired [Member] | ||
Intangible assets, gross | 665,000 | 0 |
United States [Member] | ||
Intangible assets, gross | 9,685,000 | 9,685,000 |
Accumulated amortization | (5,494,000) | (7,113,000) |
Less : Impairment expense | 0 | |
Net book value | 4,191,000 | 2,572,000 |
Goodwill | 9,831,000 | 9,831,000 |
United States [Member] | Customer Relationship [Member] | ||
Intangible assets, gross | 4,960,000 | 4,960,000 |
United States [Member] | Non-Core Customer Relationships [Member] | ||
Intangible assets, gross | 760,000 | 760,000 |
United States [Member] | Non-Compete Agreements [Member] | ||
Intangible assets, gross | 1,430,000 | 1,430,000 |
United States [Member] | Tradename [Member] | ||
Intangible assets, gross | 410,000 | 410,000 |
United States [Member] | Workforce Acquired [Member] | ||
Intangible assets, gross | $ 2,125,000 | $ 2,125,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | May 13, 2021 | May 10, 2021 | May 21, 2021 | Apr. 30, 2021 | Apr. 22, 2021 | Mar. 31, 2021 | May 30, 2021 |
Mr Bressman [Member] | |||||||
Total accrued and unpaid consulting fees, expenses | $ 378,837 | ||||||
One-half of the consulting fees paid | 1,291,833 | ||||||
Remaining balance of Consultant's fees | $ 1,291,833 | ||||||
Subsequent Event [Member] | |||||||
Public offering common stock and warrants shares | 5,783,133 | ||||||
Public offering price | $ 4.15 | ||||||
Gross proceeds | $ 24,000,000 | ||||||
Net proceeds | $ 21,700,000 | ||||||
Public offering description | The Company has granted the underwriters a 45 day option to purchase up to 867,469 additional shares and warrants at the public offering price of $4.15 less discounts and commissions. | ||||||
Subsequent Event [Member] | Settlement Of Note Payable [Member] | |||||||
Principal amount note payable | $ 100,000 | ||||||
Accrued interest | $ 19,000 | ||||||
Interest rate | 10.00% | ||||||
Promissory note holder | $ 119,000 | ||||||
Subsequent Event [Member] | Estate Of Sally Pappalardo [Member] | |||||||
Settelment of note payable related party | $ 300,000 | ||||||
Subsequent Event [Member] | Mr Machinist [Member] | |||||||
Cash bonus | $ 100,000 | ||||||
Description of base salary | Under the first amendment Mr. Machinist’s base salary was increased from $210,000 to $300,000. | ||||||
Subsequent Event [Member] | Jeffrey Schwartz [Member] | |||||||
Public offering common stock and warrants shares | 122,183 | ||||||
Options purchased | 166,667 | ||||||
Closing price | $ 2.81 | ||||||
Exercise price | $ 0.75 | ||||||
Subsequent Event [Member] | Kyle Hill [Member] | Redeeem LLC [Member] | |||||||
Consideration in Common stock | $ 10,890,000 | ||||||
Executive compensated per year | 300,000 | ||||||
Assets acquisions | 165,000 | ||||||
Total purchase price | 12,100,000 | ||||||
Acquisions price in cash | $ 1,210,000 | ||||||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | |||||||
Series B Convertible Preferred Stock Shares | 2,495,000 | ||||||
Preferred Stock Conversion into Common stock shares | 594,051 | ||||||
Conversion price | $ 4.20 | ||||||
Subsequent Event [Member] | Series C Convertible Preferred Stock [Member] | |||||||
Series B Convertible Preferred Stock Shares | 911,149 | ||||||
Preferred Stock Conversion into Common stock shares | 12,148,654 | ||||||
Conversion price | $ 0.75 | ||||||
Subsequent Event [Member] | Series D Convertible Preferred Stock [Member] | |||||||
Series B Convertible Preferred Stock Shares | 1,979,000 | ||||||
Preferred Stock Conversion into Common stock shares | 5,277,335 | ||||||
Conversion price | $ 3.75 | ||||||
Subsequent Event [Member] | Preferred Stocks [Member] | |||||||
Total of common stock shares | 18,020,040 |