Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2015 | Sep. 28, 2015 | Dec. 31, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | EnSync, Inc. | ||
Entity Central Index Key | 1,140,310 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 14,843,314 | ||
Entity Common Stock, Shares Outstanding | 47,129,334 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 10,757,461 | $ 10,360,721 |
Restricted cash on deposit | 60,193 | 69,901 |
Accounts receivable, net | 113,093 | 1,051,024 |
Inventories, net | 1,198,117 | 1,352,970 |
Prepaid and other current assets | 441,537 | 295,814 |
Deferred financing costs | 545,825 | 0 |
Refundable income tax credit | 0 | 91,191 |
Notes receivable | 159,107 | 0 |
Total current assets | 13,275,333 | 13,221,621 |
Long-term assets: | ||
Property, plant and equipment, net | 4,164,912 | 4,382,203 |
Investment in investee company | 2,408,528 | 1,646,240 |
Goodwill | 803,079 | 803,079 |
Total assets | 20,651,852 | 20,053,143 |
Current liabilities: | ||
Current maturities of bank loans and notes payable | 324,626 | 351,142 |
Accounts payable | 1,056,744 | 589,642 |
Accrued expenses | 1,129,166 | 2,621,479 |
Customer deposits | 1,177,155 | 741,145 |
Accrued compensation and benefits | 235,351 | 195,181 |
Total current liabilities | 3,923,042 | 4,498,589 |
Long-term liabilities: | ||
Bank loans and notes payable, net of current maturities | 1,053,581 | 2,045,127 |
Total liabilities | 4,976,623 | 6,543,716 |
Equity | ||
Series B redeemable convertible preferred stock ($0.01 par value, $1,000 face value) 3,000 shares authorized and issued, 2,575 shares outstanding, preference in liquidation of $5,635,866 and $5,347,994 as of June 30, 2015 and June 30, 2014, respectively | 26 | 26 |
Common stock ($0.01 par value); 150,000,000 authorized, 39,129,334 and 25,651,389 shares issued and outstanding as of June 30, 2015 and June 30, 2014, respectively | 1,099,608 | 964,828 |
Additional paid-in capital | 117,104,936 | 102,286,450 |
Accumulated deficit | (102,674,049) | (89,788,242) |
Accumulated other comprehensive loss | (1,589,486) | (1,599,875) |
Total EnSync, Inc. Equity | 13,941,035 | 11,863,187 |
Noncontrolling interest | 1,734,194 | 1,646,240 |
Total equity | 15,675,229 | 13,509,427 |
Total liabilities and equity | $ 20,651,852 | $ 20,053,143 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares | 3,000 | 3,000 |
Preferred stock, issued shares | 3,000 | 3,000 |
Preferred stock, outstanding shares | 2,575 | 2,575 |
Preferred stock, face value | $ 1,000 | $ 1,000 |
Preferred stock, liquidation preference | $ 5,635,866 | $ 5,347,994 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, Authorized | 150,000,000 | 150,000,000 |
Common stock, Issued | 39,129,334 | 25,651,389 |
Common stock, outstanding | 39,129,334 | 25,651,389 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | ||
Product sales | $ 992,162 | $ 3,526,607 |
Engineering and development | 771,348 | 1,325,000 |
License | 0 | 3,000,000 |
Total Revenues | 1,763,510 | 7,851,607 |
Costs and Expenses | ||
Cost of product sales | 841,928 | 2,895,547 |
Cost of engineering and development | 267,127 | 206,102 |
Advanced engineering and development | 6,420,191 | 5,244,953 |
Selling, general, and administrative | 7,146,649 | 7,259,683 |
Depreciation and amortization | 644,790 | 1,042,577 |
Total Costs and Expenses | 15,320,685 | 16,648,862 |
Loss from Operations | (13,557,175) | (8,797,255) |
Other Income (Expense) | ||
Equity in loss of investee company | (495,119) | (657,882) |
Gain on investment in investee company | 1,257,407 | 0 |
Interest income | 25,108 | 5,635 |
Interest expense | (128,009) | (147,105) |
Other income (expense) | (277) | 896 |
Total Other Income (Expense) | 659,110 | (798,456) |
Loss before provision (benefit) for Income Taxes | (12,898,065) | (9,595,711) |
Benefit for Income Taxes | (86,455) | (82,411) |
Net Loss | (12,811,610) | (9,513,300) |
Net loss attributable to noncontrolling interest | 407,672 | 657,882 |
Gain attributable to noncontrolling interest | (481,870) | 0 |
Net Income (Loss) Attributable to EnSync, Inc. | (12,885,808) | (8,855,418) |
Preferred Stock Dividend | (266,356) | (222,009) |
Net Loss Attributable to Common Shareholders | $ (13,152,164) | $ (9,077,427) |
Net Loss per share - Basic and diluted | $ (0.36) | $ (0.46) |
Weighted average shares-basic and diluted: | 36,944,116 | 19,853,579 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (12,811,610) | $ (9,513,300) |
Foreign exchange translation adjustments | 10,389 | (5,457) |
Comprehensive loss | (12,801,221) | (9,518,757) |
Net loss attributable to noncontrolling interest | (74,198) | 657,882 |
Comprehensive Loss Attributable to EnSync, Inc. | $ (12,875,419) | $ (8,860,875) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Changes in Equity - USD ($) | Series B Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest |
Beginning Balance Shares at Jun. 30, 2013 | 0 | 17,707,431 | ||||
Beginning Balance Amount at Jun. 30, 2013 | $ 0 | $ 885,389 | $ 85,464,055 | $ (80,932,823) | $ (1,594,418) | $ 2,304,122 |
Net income (loss) | (8,855,418) | (657,882) | ||||
Net currency translation adjustment | (5,457) | |||||
Issuance of common stock, net of costs and underwriting fees, Shares | 6,325,000 | |||||
Issuance of common stock, net of costs and underwriting fees, Amount | $ 63,250 | 12,973,214 | ||||
Issuance of preferred stock, net of issuance costs,Shares | 3,000 | |||||
Issuance of preferred stock, net of issuance costs,Amount | $ 30 | 2,388,756 | ||||
Stock-based compensation, Shares | 245,570 | |||||
Stock-based compensation, Amount | $ 2,456 | 959,905 | ||||
Conversion of preferred stock, Shares | (425) | 470,171 | ||||
Conversion of preferred stock, Amount | $ (4) | $ 4,701 | (4,696) | |||
Issuance of warrants | 498,793 | |||||
Issuance of warrants to underwriter | 15,455 | |||||
Exercise of warrants, Shares | 903,217 | |||||
Exercise of warrants, Amount | $ 9,032 | (9,032) | ||||
Ending Balance Shares at Jun. 30, 2014 | 2,575 | 25,651,389 | ||||
Ending Balance Amount at Jun. 30, 2014 | $ 26 | $ 964,828 | 102,286,450 | (89,788,242) | (1,599,875) | 1,646,240 |
Net income (loss) | (12,885,808) | 74,198 | ||||
Net currency translation adjustment | 10,389 | |||||
Issuance of common stock, net of costs and underwriting fees, Shares | 13,248,000 | |||||
Issuance of common stock, net of costs and underwriting fees, Amount | $ 132,480 | 13,557,257 | ||||
Stock-based compensation, Shares | 229,945 | |||||
Stock-based compensation, Amount | $ 2,300 | 1,261,229 | ||||
Contribution of capital from noncontrolling interest | 13,756 | |||||
Ending Balance Shares at Jun. 30, 2015 | 2,575 | 39,129,334 | ||||
Ending Balance Amount at Jun. 30, 2015 | $ 26 | $ 1,099,608 | $ 117,104,936 | $ (102,674,049) | $ (1,589,486) | $ 1,734,194 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (12,811,610) | $ (9,513,300) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation of property, plant and equipment | 644,790 | 736,551 |
Amortization of intangible assets | 0 | 411,073 |
Amortization of discounts and debt issuance costs on notes payable | 0 | 14,566 |
Stock-based compensation, net | 1,263,529 | 962,361 |
Equity in loss of investee company | 495,119 | 657,882 |
Gain on investment in investee company | (1,257,407) | 0 |
Interest accreted on note receivable | (9,107) | 0 |
Changes in assets and liabilities | ||
Accounts receivable | 937,931 | (604,099) |
Inventories | 154,853 | 1,219,306 |
Prepaids and other current assets | (145,723) | (85,838) |
Refundable income taxes | 91,191 | 46,037 |
Accounts payable | 467,102 | 18,710 |
Accrued expenses | (1,473,945) | 1,872,642 |
Customer deposits | 436,010 | (1,453,117) |
Accrued compensation and benefits | 40,170 | 30,744 |
Net cash used in operating activities | (11,167,097) | (5,686,482) |
Cash flows from investing activities | ||
Changes in restricted cash | 9,708 | (9,901) |
Expenditures for property and equipment | (427,499) | (51,543) |
Issuance of note receivable | (150,000) | 0 |
Net cash used in investing activities | (567,791) | (61,444) |
Cash flows from financing activities | ||
Payment of deferred financing costs | (545,825) | 0 |
Repayments of bank loans and notes payable | (1,018,062) | (929,403) |
Proceeds from issuance of preferred stock and warrants | 0 | 3,000,000 |
Preferred stock issuance costs | 0 | (96,967) |
Proceeds from issuance of common stock | 14,837,760 | 14,231,250 |
Common stock issuance costs | (1,148,023) | (1,194,786) |
Contribution of capital from noncontrolling interest | 13,756 | 0 |
Net cash provided by financing activities | 12,139,606 | 15,010,094 |
Effect of exchange rate changes on cash and cash equivalents | (7,978) | 1,932 |
Net increase (decrease) in cash and cash equivalents | 396,740 | 9,264,100 |
Cash and cash equivalents - beginning of period | 10,360,721 | 1,096,621 |
Cash and cash equivalents - end of period | 10,757,461 | 10,360,721 |
Cash paid for interest | 114,236 | 147,106 |
Cash received for income tax credit | $ 0 | $ 133,996 |
1. SUMMARY OF SIGNIFICANT ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Description of Business EnSync, Inc. and its subsidiaries (EnSync, we, us, our, or the Company) develop, license, and manufacture innovative energy management systems solutions serving the utility, commercial and industrial (C&I) building and off-grid markets. Incorporated in 1998, EnSync is headquartered in Menomonee Falls, Wisconsin, USA with offices in San Francisco, California, Honolulu, Hawaii, Shanghai, China and Perth, Western Australia. In August 2015, we changed our corporate name from ZBB Energy Corporation to EnSync, Inc., and we regularly use the name EnSync Energy Systems for marketing and branding purposes. EnSync develops and commercializes application solutions for advanced energy management systems critical to the transition from a coal-centric economy to one reliant on renewable energy sources. EnSync synchronizes conventional utility, distributed generation and storage assets to seamlessly ensure the least expensive and most reliable electricity available, thus enabling the future of energy networks. These advanced systems directly connect wind and solar equipment to the grid and other systems than can form various levels of micro-grids as well as power quality regulation solutions. EnSync brings vital power control and energy storage solutions to problems caused by incorporation of increasingly pervasive renewable energy generating assets that are part of the grid power transmission and distribution network used in commercial, industrial, and multi-tenant buildings. The Company also develops and commercializes energy management systems for off-grid applications such as island or remote power. The consolidated financial statements include the accounts of the Company and those of its wholly-owned subsidiaries ZBB Energy Pty Ltd. (formerly known as ZBB Technologies, Ltd.) located in Perth, Australia, Century West PNL LLC, and its sixty percent owned subsidiary ZBB PowerSav Holdings Limited located in Hong Kong, which was formed in connection with the Companys investment in a China joint venture. Recent Developments On July 13, 2015, pursuant to a Securities Purchase Agreement (the Purchase Agreement) with Solar Power, Inc., a California corporation (SPI), we issued and sold to SPI for an aggregate purchase price of $33,390,000 a total of (i) 8,000,000 shares (the Purchased Common Shares) of common stock and (ii) 28,048 shares (the Purchased Preferred Shares) of Series C Convertible Preferred Stock which are convertible, subject to the completion of projects under our supply agreement with SPI (as described below), into a total of up to 42,000,600 shares of Common Stock. The aggregate purchase price for the Purchased Common Shares was based on a purchase price per share of $0.6678, and the aggregate purchase price for the Purchased Preferred Shares was determined based on price of $0.6678 per common equivalent. Pursuant to the Purchase Agreement, the Company also issued to SPI a warrant to purchase 50,000,000 shares of Common Stock for an aggregate purchase price of $36,729,000 (the Warrant). In connection with the Securities Purchase Agreement, the Company incurred $545,825 of financing related costs. As of June 30, 2015, the specific costs directly attributable to the Securities Purchase Agreement have been deferred and will be charged against the gross proceeds of the offering. The Company also entered into a supply agreement with SPI pursuant to which the Company will sell and SPI will purchase certain products and services offered by the Company from time to time, including certain energy management system solutions for solar projects (the Supply Agreement). The Purchased Preferred Shares were sold for $1,000 per share and are convertible at a conversion price of $0.6678, paid at the closing of the transaction; provided that (A) the first one-fourth (the Series C-1 Preferred Stock) of the Purchased Preferred Shares only become convertible upon the completion of five megawatts worth of solar projects in accordance with the Supply Agreement (the Projects), (B) the second one-fourth (the Series C-2 Preferred Stock) only become convertible upon the completion of 15 megawatts worth of Projects, (C) the third one-fourth (the Series C-3 Preferred Stock) only become convertible upon the completion of 25 megawatts worth of projects, and (D) the last one fourth (the Series C-4 Preferred Stock) only become convertible upon the completion of 40 megawatts worth of Projects. The Warrant represents the right to acquire 50,000,000 shares of Common Stock at an exercise price equal to $0.7346. The Warrant only becomes exercisable upon the completion of 40 megawatts worth of Projects. The Company also entered into a form of governance agreement with SPI (the Governance Agreement) pursuant to which SPI is entitled to nominate one director to the Companys board of directors for so long as SPI holds at least 10,000 Purchased Preferred Shares or 25 million of Common Stock or Common Stock equivalents (the Requisite Shares). Additionally, for so long as the Purchaser holds the Requisite Shares (1) following the time at which the Series C-2 Preferred Stock shall have become convertible in full, the Purchaser shall be entitled to nominate a total of two Directors to the Board and (2) following the time at which the Series C-3 Preferred Stock shall have convertible in full, the Purchaser shall be entitled to nominate a total of three directors. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly and majority-owned subsidiaries and have been prepared in accordance with US GAAP. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions. These estimates and assumptions 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 amount of revenues and expenses during the reporting period. It is reasonably possible that the estimates we have made may change in the near future. Significant estimates underlying the accompanying consolidated financial statements include those related to: · the timing of revenue recognition; · the allowance for doubtful accounts; · provisions for excess and obsolete inventory; · the lives and recoverability of property, plant and equipment and other long-lived assets, including goodwill; · contract costs, losses, and reserves; · warranty obligations; · income tax valuation allowances; · stock-based compensation; and · valuation of warrants. Fair Value of Financial Instruments The Companys financial instruments consist of cash and cash equivalents, restricted cash on deposit, accounts receivable, a note receivable, accounts payable, and bank loans and notes payable. The carrying amounts of the Companys financial instruments approximate their respective fair values due to the relatively short-term nature of these instruments, except for the bank loans and notes payable. The carrying amount of the bank loans and notes payable approximates fair value due to the interest rate and terms approximating those available to us for similar obligations. The Company accounts for the fair value of financial instruments in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level or pricing observability. FASB ASC 820 describes a fair value hierarchy based on the following three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, for similar assets or liabilities in active markets. Level 3 inputs are unobservable inputs for the asset or liability. As such, the prices or valuation techniques require inputs that are both significant to the fair value measurement and are unobservable. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. The Company maintains its cash deposits at financial institutions predominately in the United States, Australia, and Hong Kong. The Company has not experienced any losses in such accounts. Restricted Cash on Deposit The Company had $60,193 and $69,901 in restricted cash on deposit as of June 30, 2015 and June 30, 2014, respectively, as collateral for certain credit arrangements. Accounts Receivable Credit is extended based on an evaluation of a customers financial condition. Accounts receivable are stated at the amount the Company expects to collect from outstanding balances. The Company records allowances for doubtful accounts based on customer-specific analysis and general matters such as current assessments of past due balances and economic conditions. The Company writes off accounts receivable against the allowance when they become uncollectible. Accounts receivable are stated net of an allowance for doubtful accounts of $11,074 and $10,878 as of June 30, 2015 and June 30, 2014. The composition of accounts receivable by aging category is as follows as of: Year ended June 30, 2015 2014 Current $ 4,291 $ 902,545 30-60 days - - 60-90 days 3,555 - Over 90 days 105,248 148,479 Total $ 113,093 $ 1,051,024 Inventories Inventories are stated at the lower of cost or market. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. The Company provides inventory write-downs based on excess and obsolete inventories determined primarily by future demand forecasts. The write-down is measured as the difference between the cost of the inventory and market based upon assumptions about future demand and charged to the provision for inventory, which is a component of cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Note Receivable The Company has one note receivable from an unrelated party. The note matures on December 15, 2015 and is classified as Note receivable in the financial statements. We regularly evaluate the financial condition of the borrower to determine if any reserve for uncollectible amount should be established. To date, no such reserve is required. See further discussion of the note receivable in Note 5. Property, Plant and Equipment Land, building, equipment, computers, furniture and fixtures are recorded at cost. Maintenance, repairs and betterments are charged to expense as incurred. Depreciation is provided for all plant and equipment on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives used for each class of depreciable asset are: Estimated Useful Lives Manufacturing equipment 3 - 7 years Office equipment 3 - 7 years Building and improvements 7 - 40 years The Company completed a review of the estimated useful lives of specific assets for the year ended June 30, 2015 and determined that there were no changes in the estimated useful lives of assets. Impairment of Long-Lived Assets In accordance with FASB ASC Topic 360, "Impairment or Disposal of Long-Lived Assets," the Company assesses potential impairments to its long-lived assets including property, plant, equipment and intangible assets when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. If such an indication exists, the recoverable amount of the asset is compared to the assets carrying value. Any excess of the assets carrying value over its recoverable amount is expensed in the statement of operations. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate. Management has determined that there were no long-lived assets impaired as of June 30, 2015 and June 30, 2014. Investment in Investee Company Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee companys board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under the equity method of accounting, an investee companys accounts are not reported in the Companys consolidated balance sheets and statements of operations; however, the Companys share of the earnings or losses of the investee company is reflected in the caption Equity in loss of investee company in the consolidated statements of operations. The Companys carrying value in an equity method investee company is reported in the caption Investment in investee company in the Companys consolidated balance sheets. When the Companys carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Companys consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Goodwill Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized but reviewed for impairment annually as of June 30 or more frequently if events or changes in circumstances indicate that its carrying value may be impaired. These conditions could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. The first step of the impairment test requires the comparing of a reporting units fair value to its carrying value. If the carrying value is less than the fair value, no impairment exists and the second step is not performed. If the carrying value is higher than the fair value, there is an indication that impairment may exist and the second step must be performed to compute the amount of the impairment. In the second step, the impairment is computed by estimating the fair values of all recognized and unrecognized assets and liabilities of the reporting unit and comparing the implied fair value of reporting unit goodwill with the carrying amount of that units goodwill. The Company determined fair value as evidenced by market capitalization, and concluded that there was no need for an impairment charge as of June 30, 2015 and June 30, 2014. Accrued Expenses Accrued expenses consist of the Companys present obligations related to various expenses incurred during the period and includes a reserve for estimated contract losses, other accrued expenses, and warranty obligations. Included in accrued expenses as of June 30, 2015 and June 30, 2014 is a reserve of approximately $685,000 and $1.7 million, respectively, for a product upgrade initiative established in the fourth quarter of fiscal 2014. Subsequent to commercialization, installation and commissioning of units in the field, the Company garnered meaningful insights that resulted in system design modifications and other general upgrades, which improved the performance, efficiency, and reliability of its systems. In the interest of enhancing customer satisfaction, the Company launched the product upgrade initiative to implement these improvements at certain locations of its installed base through fiscal year 2016. Warranty Obligations The Company typically warrants its products for the shorter of twelve months after installation or eighteen months after date of shipment. Warranty costs are provided for estimated claims and charged to cost of product sales as revenue is recognized. Warranty obligations are also evaluated quarterly to determine a reasonable estimate for the replacement of potentially defective materials of all energy storage systems that have been shipped to customers. While the Company actively engages in monitoring and improving its evolving battery and production technologies, there is only a limited product history and relatively short time frame available to test and evaluate the rate of product failure. Should actual product failure rates differ from the Companys estimates, revisions are made to the estimated rate of product failures and resulting changes to the liability for warranty obligations. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. As of June 30, 2015 and June 30, 2014, included in the Companys accrued expenses were $176,967 and $731,910, respectively, related to warranty obligations. The following is a summary of accrued warranty activity: Year ended June 30, 2015 2014 Beginning balance $ 731,910 $ 479,873 Accruals for warranties during the period 167,901 741,412 Settlements during the period (480,683 ) (673,588 ) Adjustments relating to preexisting warranties (242,161 ) 184,213 Ending balance $ 176,967 $ 731,910 Revenue Recognition Revenues are recognized when persuasive evidence of a contractual arrangement exits, delivery has occurred or services have been rendered, the sellers price to buyer is fixed and determinable, and collectability is reasonably assured. The portion of revenue related to installation and final acceptance, is deferred until such installation and final customer acceptance are completed. From time to time, the Company may enter into separate agreements at or near the same time with the same customer. The Company evaluates such agreements to determine whether they should be accounted for individually as distinct arrangements or whether the separate agreements are, in substance, a single multiple element arrangement. The Company evaluates whether the negotiations are conducted jointly as part of a single negotiation, whether the deliverables are interrelated or interdependent, whether the fees in one arrangement are tied to performance in another arrangement, and whether elements in one arrangement are essential to another arrangement. The Companys evaluation involves significant judgment to determine whether a group of agreements might be so closely related that they are, in effect, part of a single arrangement. Our collaboration agreements typically involve multiple elements or deliverables, including upfront fees, contract research and development, milestone payments, technology licenses or options to obtain technology licenses, and royalties. For these arrangements, revenues are recognized in accordance with FASB ASC 605-25, The portion of revenue related to engineering and development is recognized ratably upon delivery of the goods or services pertaining to the underlying contractual arrangement, or revenue is recognized as certain activities are performed by the Company over the estimated performance period. The Company charges shipping and handling fees when products are shipped or delivered to a customer, and includes such amounts in product revenues and shipping costs in cost of sales. The Company reports its revenues net of estimated returns and allowances. Total revenues of $1,763,510 and $7,851,607 were recognized for the years ended June 30, 2015 and June 30, 2014, respectively. Revenues for the year ended June 30, 2015 were comprised of two significant customers (59% and 22% of total revenue) and revenues for year ended June 30, 2014 were comprised of two significant customers (66% and 11% of total revenue). The Company had two significant customers with outstanding receivable balances of $77,000 and $31,000 (68% and 28% of accounts receivable, net) as of June 30, 2015. The Company had three significant customers with outstanding receivable balances of $375,000, $365,000, and $188,000 (35%, 35%, and 18% of accounts receivable, net) as of June 30, 2014. Engineering, Development, and License Revenues We assess whether a substantive milestone exists at the inception of our agreements. In evaluating if a milestone is substantive we consider whether: · Substantive uncertainty exists as to the achievement of the milestone event at the inception of the arrangement; · The achievement of the milestone involves substantive effort and can only be achieved based in whole or in part on our performance or the occurrence of a specific outcome resulting from our performance; · The amount of the milestone payment appears reasonable either in relation to the effort expended or the enhancement of the value of the delivered item(s); · There is no future performance required to earn the milestone; and · The consideration is reasonable relative to all deliverables and payment terms in the arrangement. If any of these conditions are not met, we do not consider the milestone to be substantive and we defer recognition of the milestone payment and recognize it as revenue over the estimated period of performance, if any. On December 13, 2011, the Company entered into a joint development and license agreement with a global technology company to jointly develop flow batteries. The objective of the joint development agreement was to develop low cost, high energy density grid scale flow battery stacks and systems that could lead to a significant cost reduction for grid level storage. The Company recognized revenue under this agreement upon achievement of certain performance milestones. The Company recognized $0 of revenue under this agreement for the year ended June 30, 2015 and $200,000 for the year ended June 30, 2014. On April 8, 2011, the Company entered into a Collaboration Agreement (the Collaboration Agreement) with Honam Petrochemical Corporation, now known as Lotte Chemical Corporation (Lotte), pursuant to which the Company and Lotte collaborated on the technical development of the Companys third generation Zinc Bromide flow battery module (the Version 3 Battery Module) and Lotte received a fully paid-up, exclusive and royalty-free license to sell and manufacture the Version 3 Battery Module in South Korea and a non-exclusive royalty-bearing license to sell the Version 3 Battery Module in Japan, Thailand, Taiwan, Malaysia, Vietnam and Singapore. On December 16, 2013, the Company and Lotte entered into a Research and Development Agreement (the R&D Agreement) pursuant to which the Company has agreed to develop and provide to Lotte a Zinc Bromide chemical flow battery system, including a Zinc Bromide chemical flow battery module and related software (the Product), on the terms and conditions set forth in the R&D Agreement (the Project). The Project is scheduled to continue until December 16, 2015, unless extended by the mutual agreement of the Company and Lotte. Subject to the satisfaction of certain specified milestones, Lotte is required to make payments to the Company under the R&D Agreement totaling $3,000,000 over the term of the Project. We recognize revenue based upon a Performance Based Method pursuant to the model described in FASB ASC 980-605-25, where revenue is recognized based on the lesser of the amount of nonrefundable cash received or the amounts due based on the proportional amount of the total effort expected to be expended on the contract that has been provided to date as there does not exist substantial doubt that the milestones will be achieved. The Company recognized $755,000 of revenue under this agreement for the year ended June 30, 2015, and $1,125,000 of revenue under this agreement for the year ended June 30, 2014. Additionally, on December 16, 2013, the Company and Lotte entered into an Amended License Agreement (the Amended License). Pursuant to the Amended License Agreement, the Company granted to Lotte, (1) an exclusive and royalty-free limited license in South Korea to use the Companys Zinc Bromide flow battery module, Zinc Bromide flow battery stack and the technical information and know how related to the intellectual property arising from the Project (collectively, the Technology) to manufacture or sell a Zinc Bromide flow battery (the Lotte Product) in South Korea and (2) a non-exclusive (a) royalty-free limited license for Lotte and its affiliates to use the Technology internally in all locations other than China and South Korea to manufacture the Lotte Product and (b) royalty-bearing limited license to sell the Lotte Product in all locations other than China, the United States and South Korea. Lotte is required to pay the Company a total license fee of $3,000,000 under the Amended License Agreement plus up to an additional $1,000,000 if certain specific milestones are successfully achieved. In addition, Lotte is required to make ongoing royalty payments to the Company equal to a single digit percentage of Lottes sales of the Lotte Product outside of South Korea until December 31, 2019. The license fees are subject to a 16.5% non-refundable Korea withholding tax. Overall since the agreement date, through June 30, 2015 there were $5,250,000 of payments received and $4,880,178 of revenue recognized under the Lotte agreements. Included in engineering and development revenues were $755,000 and $1,325,000 for the years ended June 30, 2015 and June 30, 2014, respectively, related to collaborative agreements. Engineering and development costs related to the collaboration agreements totaled $267,000 and $206,000 for the years ended June 30, 2015 and June 20, 2014, respectively. As of June 30, 2015 and June 30, 2014, the Company had no unbilled amounts from engineering and development contracts in process. The Company had received $370,000 and $0 in customer payments for engineering and development contracts, representing deposits in advance of performance of the contracted work, as of June 30, 2015, and June 30, 2014, respectively. Advanced Engineering and Development Expenses In accordance with FASB ASC Topic 730, Research and Development, the Company expenses advanced engineering and development costs as incurred. These costs consist primarily of materials, labor, and allocable indirect costs incurred to design, build, and test prototype units, as well as the development of manufacturing processes for these units. Advanced engineering and development costs also include consulting fees and other costs. To the extent these costs are separately identifiable, incurred and funded by advanced engineering and development type agreements with outside parties, they are shown separately on the consolidated statements of operations as a Cost of engineering and development. Stock-Based Compensation The Company measures all Share-Based Payments," including grants of stock options, restricted shares and restricted stock units in its consolidated statement of operations based on their fair values on the grant date, which is consistent with FASB ASC Topic 718, Stock Compensation, guidelines. Accordingly, the Company measures share-based compensation cost for all share-based awards at the fair value on the grant date and recognizes share-based compensation over the service period for awards that are expected to vest. The fair value of stock options is determined based on the number of shares granted and the price of the shares at grant, and calculated based on the Black-Scholes valuation model. The Company compensates its outside directors primarily with restricted stock units (RSUs) rather than cash. The grant date fair value of the restricted stock unit awards is determined using the closing stock price of the Companys common stock on the day prior to the date of the grant, with the compensation expense amortized over the vesting period of restricted stock unit awards, net of estimated forfeitures. The Company only recognizes expense for those options or shares that are expected ultimately to vest, using two attribution methods to record expense, the straight-line method for grants with only service-based vesting or the graded-vesting method, which considers each performance period, for all other awards. See further discussion of stock-based compensation in Note 9. Advertising Expense Advertising costs of $44,176 and $66,086 for the years ended June 30, 2015 and June 30, 2014, respectively, were charged to selling, general, and administrative expenses as incurred. Income Taxes The Company records deferred income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes. FASB ASC Topic 740 requires recognition of deferred income tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred income tax assets to the amount expected to be realized. There were no net deferred income tax assets recorded as of June 30, 2015 and June 30, 2014. The Company applies a more-likely-than-not recognition threshold for all tax uncertainties as required under FASB ASC Topic 740, which only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. The Companys U.S. Federal income tax returns for the years ended June 30, 2011 through June 30, 2014 and the Companys Wisconsin and Australian income tax returns for the years ended June 30, 2010 through June 30, 2014 are subject to examination by taxing authorities. As of June 30, 2015, there were no examinations in progress. Foreign Currency The Company uses the United States dollar as its functional and reporting currency, while the Australian dollar and Hong Kong dollar are the functional currencies of its foreign subsidiaries. Assets and liabilities of the Companys foreign subsidiaries are translated into United States dollars at exchange rates that are in effect at the balance sheet date while equity accounts are translated at historical exchange rates. Income and expense items are translated at average exchange rates which were applicable during the reporting period. Translation adjustments are recorded in accumulated other comprehensive loss as a separate component of equity in the consolidated balance sheets. Loss per Share The Company follows the FASB ASC Topic 260, Earnings per Share, provisions which require the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (net loss) per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with the FASB ASC Topic 260, any anti-dilutive effects on net income (loss) per share are excluded. For the years ended June 30, 2015 and June 30, 2014 there were 9,663,729 and 8,618,574 shares of common stock underlying convertible preferred stock, options, restricted stock units and warrants that are excluded, respectively. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains significant cash deposits primarily with two financial institutions. The Company has not previously experienced any losses on such deposits. Additionally, the Company performs periodic evaluations of the relative credit ratings of these institutions as part of its banking strategy. Concentrations of credit risk with respect to accounts receiv |
2. CHINA JOINT VENTURE
2. CHINA JOINT VENTURE | 12 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
CHINA JOINT VENTURE | On August 30, 2011, the Company entered into agreements providing for establishment of a joint venture to develop, produce, sell, distribute and service advanced storage batteries and power electronics in China (the Joint Venture). Joint Venture partners include ZBB PowerSav Holdings Limited (Holdco), AnHui XinLong Electrical Co. and Wuhu Huarui Power Transmission and Transformation Engineering Co. The Joint Venture was established upon receipt of certain governmental approvals from China which were received in November 2011. The Joint Venture operates through a jointly-owned Chinese company located in Wuhu City, Anhui Province named Anhui Meineng Store Energy Co., Ltd. (Meineng Energy). Meineng Energy intends to initially assemble and ultimately manufacture the Companys products for sale in the power management industry on an exclusive basis in mainland China and on a non-exclusive basis in Hong Kong and Taiwan. The Companys President and Chief Executive Officer (President and CEO) has served as the Chief Executive Officer of Meineng Energy since December 2011. The President and CEO owns an indirect 6% equity interest in Meineng Energy. In connection with the Joint Venture, on August 30, 2011 the Company and certain of its subsidiaries entered into the following agreements: · Joint Venture Agreement of Anhui Meineng Store Energy Co., Ltd. (the China JV Agreement) by and between ZBB PowerSav Holdings Limited, a Hong Kong limited liability company (Holdco), and Anhui Xinrui Investment Co., Ltd, a Chinese limited liability company; and · Limited Liability Company Agreement of ZBB PowerSav Holdings Limited by and between ZBB Cayman Corporation and PowerSav New Energy Holdings Limited (the Holdco Agreement). In connection with the Joint Venture, upon establishment of Meineng Energy, the Company and certain of its subsidiaries entered into the following agreements: · Management Services Agreement by and between Meineng Energy and Holdco (the Management Services Agreement); · License Agreement by and between Holdco and Meineng Energy (the License Agreement); and · Research and Development Agreement by and between the Company and Meineng Energy (the Research and Development Agreement). Pursuant to the China JV Agreement, Meineng Energy was capitalized with approximately $13.6 million of equity capital. The Companys only capital contributions to the Joint Venture were the contribution of technology to Meineng Energy via the License Agreement and $200,000 in cash. The Companys indirect interest in Meineng Energy equaled approximately 33%. On August 12, 2014, Meineng Energy received a cash investment of 20,000,000 RMB (approximately $3.2 million) from Wuhu Fuhai-Haoyan Venture Investment, L.P., a branch of Shenzhen Oriental Fortune Capital Co., Ltd., for a post-closing equity position of 8%. Required governmental approval was obtained in October 2014. This investment capital will be used to fund ongoing operations and development of the China market, and provided Meineng Energy a 250,000,000 RMB (approximately $42 million) post-closing valuation. Following this investment, the Companys indirect investment in Meineng Energy equals approximately 30%. The Companys indirect gain as a result of the investment was $775,537, which is net of the gain attributable to the noncontrolling interest of $481,870. The Companys investment in Meineng Energy was made through Holdco. Pursuant to the Holdco Agreement, the Company contributed technology to Holdco via a license agreement with an agreed upon value of approximately $4.1 million and $200,000 in cash in exchange for a 60% equity interest. PowerSav agreed to contribute to Holdco $3.3 million in cash in exchange for a 40% equity interest. The initial capital contributions (consisting of the Companys technology contribution and one half of required cash contributions) were made in December 2011. The subsequent capital contributions (consisting of one half of the required cash contribution) were made on May 16, 2012. For financial reporting purposes, Holdcos assets and liabilities are consolidated with those of the Company and PowerSavs 40% interest in Holdco is included in the Companys consolidated financial statements as a noncontrolling interest. As of June 30, 2015, the Companys indirect investment in the China JV was $674,334. The Companys basis in the technology contributed to Holdco was $0 due to US GAAP requirements related to research and development expenditures. The difference between the Companys basis in this technology and the valuation of the technology by Meineng Energy of approximately $4.1 million is accounted for by the Company through the elimination of the amortization expense recognized by Meineng Energy related to the technology. The Company has the right to appoint a majority of the members of the Board of Directors of Holdco and Holdco has the right to appoint a majority of the members of the Board of Directors of Meineng Energy. Pursuant to the Management Services Agreement, Holdco will provide certain management services to Meineng Energy in exchange for a management services fee equal to five percent of Meineng Energys net sales for the five year period beginning on the first day of the first quarter in which the JV Company achieves operational breakeven results and three percent of Meineng Energys net sales for the subsequent three years, provided the payment of such fees will terminate upon Meineng Energy completing an initial public offering on a nationally recognized securities exchange. To date, no management service fee revenues have been recognized by Holdco. Pursuant to the License Agreement (as amended on July 1, 2014), Holdco granted to Meineng Energy (1) an exclusive royalty-free license to manufacture and distribute the Companys ZBB EnerStore, Zinc Bromide flow battery, version three (V3) (50KW) (and any other Zinc Bromide Flow Battery product developed internally by us based on the V3 EnerStore, ranging from 50kWh - 500 kWh module design) and ZBB EnerSection, power and energy control center (up to 250KW) (the Products) in mainland China in the power supply management industry and (2) a non-exclusive royalty-free license to manufacture and distribute the Products in Hong Kong and Taiwan in the power supply management industry. Pursuant to the Research and Development Agreement, Meineng Energy may request the Company to provide research and development services upon commercially reasonable terms and conditions. Meineng Energy would pay the Companys fully-loaded costs and expenses incurred in providing such services. The Company had product sales of $70,328 and $853,663 to Meineng Energy during the years ended June 30, 2015 and June 30, 2014, respectively. The associated costs of the product sales to Meineng Energy were $55,550 and $645,853 during the years ended June 30, 2015 and June 30, 2014, respectively. During the years ended June 30, 2015 and June 30, 2014, the Company had total product purchases from Meineng Energy of $482,161 and $143,636, respectively. As of June 30, 2015, the total amount due to Meineng Energy was $250,562 . The operating results for Meineng Energy for the years ended June 30, 2015 and June 30, 2014 are summarized as follows: Year ended June 30, 2015 2014 Revenues $ 588,190 $ 285,631 Gross Profit (loss) (197,957 ) (309,406 ) Income (loss) from operations (2,095,980 ) (3,002,192 ) Net Income (loss) (2,046,548 ) (3,038,432 ) |
3. MANAGEMENT_S PLANS AND FUTUR
3. MANAGEMENT’S PLANS AND FUTURE OPERATIONS | 12 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
MANAGEMENT'S PLANS AND FUTURE OPERATIONS | The accompanying consolidated financial statements have been prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge its liabilities in the normal course of business. Accordingly, they do not give effect to any adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred a net loss of $12,885,808 attributable to EnSync, Inc. for year ended June 30, 2015, and as of June 30, 2015 has an accumulated deficit of $102,674,049 and total EnSync, Inc. equity of $13,941,035. The ability of the Company to settle its total liabilities of $4,976,623 and to continue as a going concern is dependent upon increasing revenues and achieving profitability. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. We believe that cash and cash equivalents on hand at June 30, 2015, expected collections on the Lotte R&D Agreement, the July 13, 2015 financing from SPI, and other potential sources of cash, will be sufficient to fund our current operations through the fourth quarter of fiscal year 2017. However, there can be no assurances that unforeseen circumstances will not require the Company to raise additional investment capital to fund its operations. If the Company is unable to obtain additional required funding, the Companys financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations. |
4. INVENTORIES
4. INVENTORIES | 12 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | Inventories are comprised of the following as of: As of June 30, 2015 2014 Raw materials $ 1,125,251 $ 1,054,197 Work in progress 72,866 298,773 Finished goods - - Total $ 1,198,117 $ 1,352,970 |
5. NOTES RECEIVABLE
5. NOTES RECEIVABLE | 12 Months Ended |
Jun. 30, 2015 | |
Receivables [Abstract] | |
NOTES RECEIVABLE | On September 23, 2014, the Company was issued a $150,000 convertible promissory note from an unrelated party. The note accrues interest at 8% per annum on the outstanding principal amount. The entire outstanding principal balance and accrued interest is due and payable on December 15, 2015, the maturity date of the note. If at the maturity date the note and accrued interest has not been paid in full, the Company may convert the principal and interest outstanding into shares of its convertible preferred stock at the then-current valuation. |
6. PROPERTY, PLANT & EQUIPMENT
6. PROPERTY, PLANT & EQUIPMENT | 12 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT & EQUIPMENT | Property, plant, and equipment are comprised of the following as of: As of June 30, 2015 2014 Land $ 217,000 $ 217,000 Building and improvements 3,532,375 3,520,872 Manufacturing equipment 3,965,750 3,710,127 Office equipment 407,191 399,583 Construction in process 35,700 - Total, at cost 8,158,016 7,847,582 Less: accumulated depreciation (3,993,104 ) (3,465,379 ) Property, plant and equipment, net $ 4,164,912 $ 4,382,203 The Company recorded depreciation expense of $644,790 and $736,551 for the years ended June 30, 2015 and June 30, 2014, respectively. |
7. GOODWILL
7. GOODWILL | 12 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | The Company acquired ZBB Technologies, Inc., a former wholly-owned subsidiary, through a series of transactions in March 1996. ZBB Technologies Inc. was subsequently merged with and into EnSync, Inc. on January 1, 2012. The goodwill amount of $1.134 million, the difference between the price paid for ZBB Technologies, Inc. and the net assets of the acquisition, amortized through fiscal 2002, resulted in the net goodwill amount of $803,079 as of June 30, 2015 and June 30, 2014. |
8. BANK LOANS AND NOTES PAYABLE
8. BANK LOANS AND NOTES PAYABLE | 12 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
BANK LOANS AND NOTES PAYABLE | The Companys debt consisted of the following as of: As of June 30, 2015 2014 Bank loans and notes payable-current $ 324,626 $ 351,142 Bank loans and notes payable-long term 1,053,581 2,045,127 Total $ 1,378,207 $ 2,396,269 Bank loans and notes payable consisted of the following as of: As of June 30, 2015 2014 Note payable to Wisconsin Econcomic Development Corporation payable in monthly installments of $23,685, including interest at 2%, with the final payment due May 1, 2018; collateralized by equipment purchased with the loan proceeds and substantially all assets of the Company not otherwise collateralized. The Company is required to maintain and increase a specified number of employees, and the interest rate is increased in certain cases for failure to meet this requirement. $ 804,550 $ 1,069,793 Bank loan payable in fixed monthly payments of $6,800 of principal and interest at a rate of 0.25% below prime, as defined, subject to a floor of 5% with any principal due at maturity on June 1, 2018; collateralized by the building and land. 573,657 624,760 Note payable in fixed monthly installments of $6,610 of principal and interest at a rate of 5.5% with any principal due at maturity on May 1, 2028; collateralized by the building and land; paid in full during fiscal year 2015. - 701,716 $ 1,378,207 $ 2,396,269 Maximum aggregate annual principal payments for fiscal periods subsequent to June 30, 2015 are as follows: 2016 $ 324,626 2017 332,970 2018 720,611 $ 1,378,207 |
9. EMPLOYEE AND DIRECTOR EQUITY
9. EMPLOYEE AND DIRECTOR EQUITY INCENTIVE PLANS | 12 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EMPLOYEE AND DIRECTOR EQUITY INCENTIVE PLANS | The Company previously adopted the 2002 Stock Option Plan (2002 Plan) in which a stock option committee could grant up to 1,000,000 shares to key employees or non-employee members of the board of directors. The options vest in accordance with specific terms and conditions contained in an employment agreement. If vesting terms and conditions are not defined in an employment agreement, then the options vest as determined by the stock option committee. If the vesting period is not defined in an employment agreement or by the stock option committee, then the options immediately vest in full upon death, disability, or termination of employment. Vested options expire upon the earlier of either the five year anniversary of the vesting date or termination of employment. No shares are available to be issued under the 2002 Plan. The Company also previously adopted the 2007 Equity Incentive Plan (2007 Plan) that authorized the board of directors or a committee to grant up to 300,000 shares to employees and directors of the Company. Unless defined in an employment agreement or otherwise determined, the options vest ratably over a three-year period. Options expire 10 years after the date of grant. No shares are available to be issued under the 2007 Plan. In November 2010, the Company adopted the 2010 Omnibus Long-Term Incentive Plan (Omnibus Plan) which authorizes a committee of the board of directors to grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other stock-based awards, and cash awards. The Omnibus Plan authorized up to 800,000 shares plus shares of Common Stock underlying any outstanding stock option of other awards granted by any predecessor employee stock plan of the Company that is forfeited, terminated, or cancelled without issuance of shares, to employees, officers, non-employee members of the board of directors, consultants, and advisors. Unless otherwise determined, options vest ratably over a three-year period and expire 8 years after the date of grant. At the annual meeting of shareholders held on November 7, 2012 the Companys shareholders approved an amendment of the Omnibus Plan which increased the number of shares of the Companys common stock available for issuance pursuant to awards under the Omnibus Plan by 900,000 shares and the creation of the 2012 Non-Employee Director Equity Compensation Plan (2012 Director Equity Plan), under which the Company may issue up to 700,000 restricted stock unit (RSU) awards and other equity awards to our non-employee directors pursuant to the Companys director compensation policy. At the annual meeting of shareholders held on November 18, 2014, the Companys shareholders approved an amendment of the Omnibus Plan which increased the number of shares of the Companys common stock available for issuance under the Omnibus Plan by 1,250,000. The shareholders also approved an amendment of the 2012 Director Equity Plan which increased the number of shares of the Companys common stock available for issuance under the 2012 Director Equity Plan by 1,000,000. As of June 30, 2015, there were a total of 1,704,933 shares available to be issued under the Omnibus Plan and 456,804 shares available to be issued under the 2012 Director Equity Plan. In aggregate for all plans, at June 30, 2015 there were outstanding a total of 1,577,778 options and 1,936,035 RSUs. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing method. The Company uses historical data to estimate the expected price volatility, the expected option life and the expected forfeiture rate. The Company has not made any dividend payments nor does it have plans to pay dividends in the foreseeable future. The following assumptions were used to estimate the fair value of options granted during the years ended June 30, 2015 and June 30, 2014 using the Black-Scholes option-pricing model: Year ended June 30, 2015 2014 Expected life of option (years) 4 4 Risk-free interest rate 1.07 - 1.42% 0.95 - 1.20% Assumed volatility 99.43 - 103.90% 94.35 - 154.68% Expected dividend rate 0% 0% Expected forfeiture rate 5.00 - 6.32% 4.91 - 5.62% Time-vested and performance-based stock awards, including stock options and RSUs are accounted for at fair value at date of grant. Compensation expense is recognized over the requisite service and performance periods. During the years ended June 30, 2015 and June 30, 2014, the Companys results of operations include compensation expense for stock options and RSUs granted under its various equity incentive plans. The amount recognized in the financial statements related to stock-based compensation was $1,263,529 and $962,361, based on the amortized grant date fair value of options and RSUs during the years ended June 30, 2015 and June 30, 2014, respectively. Information with respect to stock option activity is as follows: Number of Options Weighted Average Exercise Price Average Remaining Contractual Life (in years) Balance at June 30, 2013 785,284 $ 5.78 Options granted 699,850 1.33 Options forfeited (66,066 ) 13.23 Balance at June 30, 2014 1,419,068 3.23 6.09 Options granted 423,000 0.85 Options forfeited (264,290 ) 3.22 Balance at June 30, 2015 1,577,778 $ 2.60 5.74 The following table summarizes information relating to the stock options outstanding as of June 30, 2015: Outstanding Exercisable Range of Exercise Prices Number of Options Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number of Options Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 0.48 to $1.00 389,500 6.83 $ 0.69 157,600 6.81 $ 0.68 $ 1.01 to $2.50 750,528 6.75 1.51 205,903 6.15 1.82 $ 2.51 to $5.00 98,900 3.99 3.94 98,900 3.99 3.94 $ 5.01 to $7.50 323,850 2.86 6.28 323,850 2.86 6.28 $ 7.51 to $17.95 15,000 0.58 17.95 15,000 0.58 17.95 Balance at June 30, 2015 1,577,778 5.74 $ 2.60 801,253 4.58 $ 3.96 During the year ended June 30, 2015, options to purchase 423,000 shares were granted to employees exercisable at $0.48 to $1.67 per share based on various service-based and performance-based vesting terms from July 2014 through June 2018 and exercisable at various dates through June 2023. During the year ended June 30, 2014, options to purchase 699,850 shares were granted to employees exercisable at $0.76 to $1.90 per share based on service based vesting terms from July 2013 through June 2017 and exercisable at various dates through June 2022. The aggregate intrinsic value of outstanding options totaled $75,425 and was based on the Companys adjusted closing stock price of $0.88 as of June 30, 2015. A summary of the status of unvested employee stock options as of June 30, 2015 and June 30, 2014 and changes during the years then ended is presented below: Number of Options Weighted Average Grant Date Fair Value Per Share Average Remaining Contractual Life (in years) Balance at June 30, 2013 262,668 $ 3.44 Options granted 699,850 1.33 Options vested (127,586 ) 3.55 Options forfeited (12,463 ) 3.38 Balance at June 30, 2014 822,469 1.63 Options granted 423,000 0.85 Options vested (347,328 ) 1.42 Options forfeited (121,616 ) 2.31 Balance at June 30, 2015 776,525 $ 1.19 6.94 Total fair value of options granted for the years ended June 30, 2015 and June 30, 2014 was $250,771 and $665,414, respectively. At June 30, 2015, there was $305,094 in unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.3 years. The Company compensates its directors with RSUs and cash. On December 20, 2013, 455,696 RSUs were granted to the Companys directors in partial payment of directors fees through November 2014 under the 2012 Director Equity Plan. As of June 30, 2015, 445,696 of the RSUs had vested and there were $90,000 in directors fees expense settled with RSUs for the year ended June 30, 2015. On May 1, 2013, the Companys Chief Executive Officer (CEO) and Chief Operating Officer (COO) were awarded 200,000 RSUs each which would have vested on the satisfaction of certain performance targets. The RSUs were forfeited on December 31, 2013 resulting in a credit to selling, general, and administrative expense of $406,000 during the year ended June 30, 2014. On January 14, 2014, the Companys CEO and COO were awarded 500,000 RSUs, of which 100,000 vested immediately upon grant, and the remaining 400,000 were cancelled prior to June 30, 2014. On April 9, 2014, the Companys CEO was awarded 200,000 RSUs which vested immediately upon grant. On November 18, 2014, 562,500 RSUs were granted to the Companys directors in partial payment of directors fees through November 2015 under the 2012 Director Equity Plan. As of June 30, 2015, 421,875 of the RSUs had vested and there were $270,000 in directors fees expense settled with RSUs for the year ended June 30, 2015. As of June 30, 2015 there were 230,625 unvested RSUs outstanding which will vest through January 15, 2016 and $90,000 in unrecognized compensation cost related to unvested RSUs which is expected to be recognized through January 15, 2016. Generally, shares of common stock related to vested RSUs are to be issued six months after the holders separation from service with the Company. The table below summarizes the activity of the restricted stock units for the years ended June 30, 2015 and June 30, 2014: Number of Restricted Stock Units Weighted Average Valuation Price Per Unit Balance at June 30, 2013 1,131,687 $ 2.30 RSUs granted 1,660,696 0.99 RSUs forfeited (1,200,000 ) 1.10 Shares issued (245,570 ) 1.61 Balance at June 30, 2014 1,346,813 1.87 RSUs granted 922,500 1.05 RSUs forfeited (103,334 ) 1.69 Shares issued (229,944 ) 0.80 Balance at June 30, 2015 1,936,035 $ 1.53 |
10. WARRANTS
10. WARRANTS | 12 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
WARRANTS | At June 30, 2015, the following warrants to purchase the Companys common stock were outstanding and exercisable: · 81,579 warrants exercisable at $0.95 per share and which expire in September 2016 issued as placement agents compensation in connection with the sale of $3 million of preferred stock on September 27, 2013 as described in Note 12. · 1,710,525 warrants exercisable at $0.95 per share and which expire in September 2016 issued in connection with Securities Purchase Agreements entered into with certain investors providing for the sale of a total of $3.0 million of preferred stock on September 27, 2013 described in Note 12. In March 2014, 1,447,369 warrants were exercised via a cashless exercise resulting in the issuance of 850,169 shares of common stock of the Company. · 15,000 warrants exercisable at $2.10 per share which expire in July 2015 issued as partial payment for services. · 306,902 warrants exercisable at $2.375 per share and which expire in June 2017 issued in connection with the Underwriting Agreement entered into with MDB Capital Group, LLC as part of underwriting compensation which provided for the sale of $12 million of common stock on June 19, 2012. On March 19, 2014, 272,159 warrants were exercised via a cashless exercise resulting in the issuance of 53,048 shares of common stock of the Company. · 511,604 warrants exercisable at $2.65 per share and which expire in May 2017 issued in connection with Securities Purchase Agreements entered into with certain investors providing for the sale of a total of $2,465,000 of Zero Coupon Convertible Subordinated Notes on May 1, 2012. · 6,300 warrants exercisable at $5.00 per share which expire in July 2015 issued as partial payment for services. · 224,375 warrants exercisable at $5.20 per share and which expire in September 2015 issued to certain purchasers of Company shares in March 2010. · 71,667 warrants exercisable at $6.65 per share and which expire in August 2015 issued to certain purchasers of Company shares in August 2009. The table below summarizes warrant balances and activity for the years ended June 30, 2015 and June 30, 2014: Number of Warrants Weighted Average Exercise Price Per Share Balance at June 30, 2013 1,421,806 $ 3.15 Warrants granted 3,239,474 0.95 Warrants expired (8,000 ) 2.80 Warrants exercised (1,719,528 ) 1.18 Balance at June 30, 2014 2,933,752 1.88 Warrants granted - - Warrants expired (5,800 ) 5.00 Warrants exercised - - Balance at June 30, 2015 2,927,952 $ 1.88 |
11. BASIC AND DILUTED NET LOSS
11. BASIC AND DILUTED NET LOSS PER SHARE | 12 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
BASIC AND DILUTED NET LOSS PER SHARE | Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period reported. Diluted net loss per common share is computed giving effect to all dilutive potential common shares that were outstanding for the period reported. Diluted potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of preferred stock. In computing diluted net loss per share for the years ended June 30, 2015 and June 30, 2014, no adjustment has been made to the weighted average outstanding common shares as the assumed exercise of outstanding options and warrants and conversion of preferred stock is anti-dilutive. Potential common shares not included in calculating diluted net loss per share are as follow: As of June 30, 2015 2014 Stock options and restricted stock units 3,513,813 2,765,880 Stock warrants 2,927,952 2,933,752 Series B preferred shares 3,221,964 2,918,942 Total 9,663,729 8,618,574 |
12. EQUITY
12. EQUITY | 12 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
EQUITY | On August 27, 2014, the Company completed an underwritten public offering of its common stock at a price to the public of $1.12 per share. The Company sold a total of 13,248,000 shares of its common stock in the offering for aggregate proceeds of approximately $14.8 million. The Company received approximately $13.7 million of net proceeds from the offering, after deducting the underwriting discount and expenses. On March 13, 2013, the Company entered into a Common Stock Purchase Agreement (Purchase Agreement) with Aspire Capital Fund, LLC, an Illinois limited liability company (Aspire Capital), which provided that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital was committed to purchase up to an aggregate of $10 million of shares of the Companys common stock over the two-year term of the Purchase Agreement. On August 18, 2014, the Company provided notice to Aspire Capital electing to terminate the Purchase Agreement. On March 19, 2014, the Company completed an underwritten public offering of its common stock at a price to the public of $2.25 per share. The Company sold a total of 6,325,000 shares of its common stock in the offering for aggregate proceeds of approximately $14.2 million. The Company received approximately $13.0 million of net proceeds from the offering, after deducting the underwriting discount and expenses. On October 31, 2013, the Company effected a reverse stock split of its common stock by a ratio of 1-for-5 (the Reverse Split). As a result of the Reverse Split every five outstanding shares of Common Stock became one share of common stock. No fractional shares were issued in connection with the Reverse Split. A shareholder who would otherwise have been entitled to receive a fractional share of common stock received a cash payment equal to the closing sales price of the Companys Common Stock on October 31, 2013 as reported on the NYSE MKT times the amount of the fractional share. The Reverse Split did not change the number of shares of common or preferred stock that the Company is authorized to issue, or the par value of the Companys common or preferred stock. The Reverse Split resulted in a proportionate adjustment to the per share exercise price and the number of shares of common stock issuable upon the exercise of outstanding warrants and stock options, as well as the number of shares of common stock eligible for issuance under the Omnibus Plan and the 2012 Director Equity Plan. All of the information in these financial statements has been presented to reflect the impact of the 1-for-5 Reverse Split on a retroactive basis. On September 26, 2013 the Company entered into a Securities Purchase Agreement with certain investors providing for the sale of 3,000 shares of Series B Convertible Preferred Stock (the Preferred Stock). Certain Directors of the Company purchased 500 shares. Shares of Preferred Stock were sold for $1,000 per share (the Stated Value) and accrue dividends on the Stated Value at an annual rate of 10%. The net proceeds to the Company, after deducting $90,966 of offering costs, were $2,903,004. During the year ended June 30, 2014, 425 shares of Preferred Stock were converted into 470,171 shares of common stock of the Company. At June 30, 2015, 2,575 shares of Preferred Stock were convertible into 3,221,964 shares of common stock of the Company (Common Stock) at a conversion price equal to $0.95. Upon any liquidation, dissolution or winding up of the Company, holders of Preferred Stock are entitled to receive out of the assets of the Company an amount equal to two times the Stated Value, plus any accrued and unpaid dividends thereon. At June 30, 2015 the liquidation preference of the Preferred Stock was $5,635,866. In connection with the purchase of the Preferred Stock, investors received warrants to purchase a total of 3,157,897 shares of Common Stock at an exercise price of $0.95. The warrants are exercisable at any time prior to September 27, 2016. During the year ended June 30, 2014, 1,447,369 warrants were exercised via a cashless exercise resulting in the issuance of 850,169 shares of common stock of the Company. In addition, the Company issued a total of 81,579 warrants to a placement agent in connection with the transaction. These warrants expire on September 27, 2016. |
13. COMMITMENTS
13. COMMITMENTS | 12 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | Leasing Activities The Company leases its Australian research and development facility from a non-related Australian company under the terms of a lease that expires October 31, 2016. In July of 2011, the Company renewed the lease on its Australian facility through October 2016 subject to an annual CPI adjustment. Rent expense was $87,568 and $93,434 for the years ended June 30, 2015 and June 30, 2014, respectively. The future payments required under the terms of the leases for fiscal periods subsequent to June 30, 2015 are as follows: 2016 $ 81,376 2017 27,125 $ 108,502 The Company also leased a building from an officer of its subsidiary, Tier Electronics LLC, who is also a shareholder and was a director, under a lease agreement that was due to expire on June 30, 2015. Subsequently a lease termination agreement was entered into on October 20, 2013, which terminated the lease effective December 31, 2013 for a fee of $21,000. The rent expense was $63,000 for year ended June 30, 2014. The Company was required to pay real estate taxes and other occupancy costs related to the facility. Employment Contracts The Company has entered into employment contracts with executives and management personnel. The contracts provide for salaries, bonuses and stock option grants, along with other employee benefits. The employment contracts generally have no set term and can be terminated by either party. There is a provision for payments of up to six months of annual salary as severance if the Company terminates a contract without cause, along with the acceleration of certain unvested stock option grants. |
14. RETIREMENT PLANS
14. RETIREMENT PLANS | 12 Months Ended |
Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
RETIREMENT PLANS | All Australian based employees are entitled to varying degrees of benefits on retirement, disability, or death. The Company contributes to an accumulation fund on behalf of the employees under an award which is legally enforceable. For U.S. employees, the Company has a 401(k) plan. All active participants are 100% vested immediately. Expenses under these plans were $108,044 and $134,831 for the years ended June 30, 2015 and June 30, 2014, respectively. |
15. INCOME TAXES
15. INCOME TAXES | 12 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The provision (benefit) for income taxes consists of the following: Year ended June 30, 2015 2014 Current $ (86,455 ) $ (82,411 ) Deferred - - Provision (benefit) for income taxes $ (86,455 ) $ (82,411 ) The Company accounts for income taxes using an asset and liability approach which generally requires the recognition of deferred income tax assets and liabilities based on the expected future income tax consequences of events that have previously been recognized in the Companys financial statements or tax returns. In addition, a valuation allowance is recognized if it is more likely than not that some or all of the deferred income tax assets will not be realized in the foreseeable future. Deferred income tax assets are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax planning strategies and projections of future taxable income. As a result of this analysis, the Company has provided for a valuation allowance against its net deferred income tax assets as of June 30, 2015 and June 30, 2014. The Companys combined effective income tax rate differed from the U.S. federal statutory income rate as follows: Year ended June 30, 2015 2014 Income tax expense/(benefit) computed at the U.S. federal statutory rate -34 % -34 % Settlement of uncertain tax positions -1 % 0 % Foreign tax expense/(benefit) 0 % -1 % Write-off of expired net operating loss carryforwards 68 % 0 % Change in valuation allowance -34 % 34 % Total -1 % -1 % Significant components of the Companys net deferred income tax assets as of June 30, 2015 and June 30, 2014 were as follows: As of June 30, 2015 2014 Federal net operating loss carryforwards $ 11,780,604 $ 22,238,624 Federal - other 2,783,304 2,737,404 Wisconsin net operating loss carryforwards 1,748,976 2,747,275 Australia net operating loss carryforwards 1,497,779 1,497,779 Deferred income tax asset valuation allowance (17,810,663 ) (29,221,082 ) Total deferred income tax assets $ - $ - The Company has U.S. federal net operating loss carryforwards of approximately $34.6 million as of June 30, 2015, that expire at various dates between June 30, 2017 and 2034. The Company also has $8.2 million in other federal deferred tax assets comprised of charitable contributions carryforwards and intangible amortization. The Company has U.S. federal research and development tax credit carryforwards of approximately $247,000 as of June 30, 2015 that expire at various dates through June 30, 2033. As of June 30, 2015, the Company has approximately $36.9 million of Wisconsin net operating loss carryforwards that expire at various dates between June 30, 2015 and 2028. As of June 30, 2015, the Company also has approximately $5.0 million of Australian net operating loss carryforwards available to reduce future taxable income of its Australian subsidiaries with an indefinite carryforward period. A reconciliation of the beginning and ending balance of unrecognized income tax benefits is as follows: As of June 30, 2015 2014 Beginning balance $ 196,583 $ 193,097 Lapses of statutes of limitations $ (161,344 ) $ - Effect of foreign currency translation (35,239 ) 3,486 Ending balance $ - $ 196,583 The Companys issuance of additional shares of common stock has constituted an ownership change under Section 382 of the Internal Revenue Code which places an annual dollar limit on the use of net operating loss (NOL) carryforwards and other tax attributes that may be utilized in the future. The calculation of the annual limitation of usage is based on a percentage of the equity value immediately after any ownership change. The annual amount of tax attributes that may be utilized after the change in ownership is limited. Previous issuances of additional shares of common stock also resulted in ownership changes and the annual amount of tax attributes from previous years is limited as well. The estimated U.S. federal net operating loss carryforward expected to expire due to the Section 382 limitation is $44.5 million and the estimated state net operating losses expected to expire due to the limitation is $28.2 million. The net operating loss deferred tax assets reflect this limitation. |
16. SUBSEQUENT EVENT
16. SUBSEQUENT EVENT | 12 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | Solar Power, Inc. On July 13, 2015, we entered into a Securities Purchase Agreement (the Purchase Agreement) with Solar Power, Inc., a California corporation (SPI) pursuant to which we sold to SPI for an aggregate purchase price of $33,390,000 a total of (i) 8,000,000 shares (the Purchased Common Shares) of common stock and (ii) 28,048 shares (the Purchased Preferred Shares) of Series C Convertible Preferred Stock which are convertible, subject to the completion of projects under our supply agreement with SPI (as described below), into a total of up to 42,000,600 shares of Common Stock. The aggregate purchase price for the Purchased Common Shares was based on a purchase price per shares of $0.6678 and the aggregate purchase price for the Purchased Preferred Shares was determined based on price of $0.6678 per common share equivalent. Pursuant to the purchase agreement, SPI was also issued a warrant to purchase 50,000,000 shares of Common Stock for an aggregate purchase price of $36,729,000 (the Warrant). The Company also entered into a supply agreement with SPI pursuant to which the Company will sell and SPI will purchase certain products and services offered by the Company from time to time, including certain energy management system solutions for solar projects (the Supply Agreement). The Purchased Preferred Shares were sold for $1,000 per share and are convertible at a conversion price of $0.6678 provided that (A) the first one-fourth (the Series C-1 Preferred Stock) of the Purchased Preferred Shares only become convertible upon the completion of five megawatts worth of solar projects in accordance with the Supply Agreement (the Projects), (B) the second one-fourth (the Series C-2 Preferred Stock) only become convertible upon the completion of 15 megawatts worth of Projects, (C) the third one-fourth) the Series C-3 Preferred Stock) only become convertible upon the completion of 25 megawatts worth of Projects, and (D) the last one-fourth (the Series C-4 Preferred Stock) only become convertible upon the completion of 40 megawatts worth of Projects. The Warrant represents the right to acquire 50,000,000 shares of Common Stock at an exercise price equal to $0.7346. The Warrant only becomes exercisable upon the completion of 40 megawatts worth of Projects. The Company also entered into a form of governance agreement with SPI (the Governance Agreement) pursuant to which SPI is entitled to nominate one director to the Companys board of directors for so long as SPI holds at least 10,000 Purchased Preferred Shares or 25 million of Common Stock or Common Stock equivalents (the Requisite Shares). Additionally, for so long as the Purchaser holds the Requisite Shares (1) following the time at which the Series C-2 Preferred Stock shall have become convertible in full, the Purchaser shall be entitled to nominate a total of two Directors to the Board and (2) following the time at which the Series C-3 Preferred Stock shall have convertible in full, the Purchaser shall be entitled to nominate a total of three directors. Corporate Name Change Effective August 17, 2015, ZBB Energy Corporation (NYSE MKT: ZBB) changed the company name to EnSync, Inc. (NYSE MKT: ESNC). The Company will be doing business as EnSync Energy Systems. Holu Energy LLC On August 17, 2015, Holu Energy LLC was established as a majority owned entity of EnSync, Inc. The entity is based in Honolulu, Hawaii and is dedicated to the development of energy projects and related equipment sales. |
1. SUMMARY OF SIGNIFICANT ACC24
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Description of Business | EnSync, Inc. and its subsidiaries (EnSync, we, us, our, or the Company) develop, license, and manufacture innovative energy management systems solutions serving the utility, commercial and industrial (C&I) building and off-grid markets. Incorporated in 1998, EnSync is headquartered in Menomonee Falls, Wisconsin, USA with offices in San Francisco, California, Honolulu, Hawaii, Shanghai, China and Perth, Western Australia. In August 2015, we changed our corporate name from ZBB Energy Corporation to EnSync, Inc., and we regularly use the name EnSync Energy Systems for marketing and branding purposes. EnSync develops and commercializes application solutions for advanced energy management systems critical to the transition from a coal-centric economy to one reliant on renewable energy sources. EnSync synchronizes conventional utility, distributed generation and storage assets to seamlessly ensure the least expensive and most reliable electricity available, thus enabling the future of energy networks. These advanced systems directly connect wind and solar equipment to the grid and other systems than can form various levels of micro-grids as well as power quality regulation solutions. EnSync brings vital power control and energy storage solutions to problems caused by incorporation of increasingly pervasive renewable energy generating assets that are part of the grid power transmission and distribution network used in commercial, industrial, and multi-tenant buildings. The Company also develops and commercializes energy management systems for off-grid applications such as island or remote power. The consolidated financial statements include the accounts of the Company and those of its wholly-owned subsidiaries ZBB Energy Pty Ltd. (formerly known as ZBB Technologies, Ltd.) located in Perth, Australia, Century West PNL LLC, and its sixty percent owned subsidiary ZBB PowerSav Holdings Limited located in Hong Kong, which was formed in connection with the Companys investment in a China joint venture. |
Recent Developments | On July 13, 2015, pursuant to a Securities Purchase Agreement (the Purchase Agreement) with Solar Power, Inc., a California corporation (SPI), we issued and sold to SPI for an aggregate purchase price of $33,390,000 a total of (i) 8,000,000 shares (the Purchased Common Shares) of common stock and (ii) 28,048 shares (the Purchased Preferred Shares) of Series C Convertible Preferred Stock which are convertible, subject to the completion of projects under our supply agreement with SPI (as described below), into a total of up to 42,000,600 shares of Common Stock. The aggregate purchase price for the Purchased Common Shares was based on a purchase price per share of $0.6678, and the aggregate purchase price for the Purchased Preferred Shares was determined based on price of $0.6678 per common equivalent. Pursuant to the Purchase Agreement, the Company also issued to SPI a warrant to purchase 50,000,000 shares of Common Stock for an aggregate purchase price of $36,729,000 (the Warrant). In connection with the Securities Purchase Agreement, the Company incurred $545,825 of financing related costs. As of June 30, 2015, the specific costs directly attributable to the Securities Purchase Agreement have been deferred and will be charged against the gross proceeds of the offering. The Company also entered into a supply agreement with SPI pursuant to which the Company will sell and SPI will purchase certain products and services offered by the Company from time to time, including certain energy management system solutions for solar projects (the Supply Agreement). The Purchased Preferred Shares were sold for $1,000 per share and are convertible at a conversion price of $0.6678, paid at the closing of the transaction; provided that (A) the first one-fourth (the Series C-1 Preferred Stock) of the Purchased Preferred Shares only become convertible upon the completion of five megawatts worth of solar projects in accordance with the Supply Agreement (the Projects), (B) the second one-fourth (the Series C-2 Preferred Stock) only become convertible upon the completion of 15 megawatts worth of Projects, (C) the third one-fourth (the Series C-3 Preferred Stock) only become convertible upon the completion of 25 megawatts worth of projects, and (D) the last one fourth (the Series C-4 Preferred Stock) only become convertible upon the completion of 40 megawatts worth of Projects. The Warrant represents the right to acquire 50,000,000 shares of Common Stock at an exercise price equal to $0.7346. The Warrant only becomes exercisable upon the completion of 40 megawatts worth of Projects. The Company also entered into a form of governance agreement with SPI (the Governance Agreement) pursuant to which SPI is entitled to nominate one director to the Companys board of directors for so long as SPI holds at least 10,000 Purchased Preferred Shares or 25 million of Common Stock or Common Stock equivalents (the Requisite Shares). Additionally, for so long as the Purchaser holds the Requisite Shares (1) following the time at which the Series C-2 Preferred Stock shall have become convertible in full, the Purchaser shall be entitled to nominate a total of two Directors to the Board and (2) following the time at which the Series C-3 Preferred Stock shall have convertible in full, the Purchaser shall be entitled to nominate a total of three directors. |
Basis of Presentation | The accompanying consolidated financial statements include the accounts of the Company and its wholly and majority-owned subsidiaries and have been prepared in accordance with US GAAP. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions. These estimates and assumptions 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 amount of revenues and expenses during the reporting period. It is reasonably possible that the estimates we have made may change in the near future. Significant estimates underlying the accompanying consolidated financial statements include those related to: · the timing of revenue recognition; · the allowance for doubtful accounts; · provisions for excess and obsolete inventory; · the lives and recoverability of property, plant and equipment and other long-lived assets, including goodwill; · contract costs, losses, and reserves; · warranty obligations; · income tax valuation allowances; · stock-based compensation; and · valuation of warrants. |
Fair Value of Financial Instruments | The Companys financial instruments consist of cash and cash equivalents, restricted cash on deposit, accounts receivable, a note receivable, accounts payable, and bank loans and notes payable. The carrying amounts of the Companys financial instruments approximate their respective fair values due to the relatively short-term nature of these instruments, except for the bank loans and notes payable. The carrying amount of the bank loans and notes payable approximates fair value due to the interest rate and terms approximating those available to us for similar obligations. The Company accounts for the fair value of financial instruments in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level or pricing observability. FASB ASC 820 describes a fair value hierarchy based on the following three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, for similar assets or liabilities in active markets. Level 3 inputs are unobservable inputs for the asset or liability. As such, the prices or valuation techniques require inputs that are both significant to the fair value measurement and are unobservable. |
Cash and Cash Equivalents | The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. The Company maintains its cash deposits at financial institutions predominately in the United States, Australia, and Hong Kong. The Company has not experienced any losses in such accounts. |
Restricted Cash on Deposit | The Company had $60,193 and $69,901 in restricted cash on deposit as of June 30, 2015 and June 30, 2014, respectively, as collateral for certain credit arrangements. |
Accounts Receivable | Credit is extended based on an evaluation of a customers financial condition. Accounts receivable are stated at the amount the Company expects to collect from outstanding balances. The Company records allowances for doubtful accounts based on customer-specific analysis and general matters such as current assessments of past due balances and economic conditions. The Company writes off accounts receivable against the allowance when they become uncollectible. Accounts receivable are stated net of an allowance for doubtful accounts of $11,074 and $10,878 as of June 30, 2015 and June 30, 2014. The composition of accounts receivable by aging category is as follows as of: Year ended June 30, 2015 2014 Current $ 4,291 $ 902,545 30-60 days - - 60-90 days 3,555 - Over 90 days 105,248 148,479 Total $ 113,093 $ 1,051,024 |
Inventories | Inventories are stated at the lower of cost or market. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. The Company provides inventory write-downs based on excess and obsolete inventories determined primarily by future demand forecasts. The write-down is measured as the difference between the cost of the inventory and market based upon assumptions about future demand and charged to the provision for inventory, which is a component of cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. |
Notes Receivable | The Company has one note receivable from an unrelated party. The note matures on December 15, 2015 and is classified as Note receivable in the financial statements. We regularly evaluate the financial condition of the borrower to determine if any reserve for uncollectible amount should be established. To date, no such reserve is required. See further discussion of the note receivable in Note 5. |
Property, Plant and Equipment | Land, building, equipment, computers, furniture and fixtures are recorded at cost. Maintenance, repairs and betterments are charged to expense as incurred. Depreciation is provided for all plant and equipment on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives used for each class of depreciable asset are: Estimated Useful Lives Manufacturing equipment 3 - 7 years Office equipment 3 - 7 years Building and improvements 7 - 40 years The Company completed a review of the estimated useful lives of specific assets for the year ended June 30, 2015 and determined that there were no changes in the estimated useful lives of assets. |
Impairment of Long-Lived Assets | In accordance with FASB ASC Topic 360, "Impairment or Disposal of Long-Lived Assets," the Company assesses potential impairments to its long-lived assets including property, plant, equipment and intangible assets when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. If such an indication exists, the recoverable amount of the asset is compared to the assets carrying value. Any excess of the assets carrying value over its recoverable amount is expensed in the statement of operations. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate. Management has determined that there were no long-lived assets impaired as of June 30, 2015 and June 30, 2014. |
Investment in Investee Company | Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee companys board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under the equity method of accounting, an investee companys accounts are not reported in the Companys consolidated balance sheets and statements of operations; however, the Companys share of the earnings or losses of the investee company is reflected in the caption Equity in loss of investee company in the consolidated statements of operations. The Companys carrying value in an equity method investee company is reported in the caption Investment in investee company in the Companys consolidated balance sheets. When the Companys carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Companys consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. |
Goodwill | Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized but reviewed for impairment annually as of June 30 or more frequently if events or changes in circumstances indicate that its carrying value may be impaired. These conditions could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. The first step of the impairment test requires the comparing of a reporting units fair value to its carrying value. If the carrying value is less than the fair value, no impairment exists and the second step is not performed. If the carrying value is higher than the fair value, there is an indication that impairment may exist and the second step must be performed to compute the amount of the impairment. In the second step, the impairment is computed by estimating the fair values of all recognized and unrecognized assets and liabilities of the reporting unit and comparing the implied fair value of reporting unit goodwill with the carrying amount of that units goodwill. The Company determined fair value as evidenced by market capitalization, and concluded that there was no need for an impairment charge as of June 30, 2015 and June 30, 2014. |
Accrued Expenses | Accrued expenses consist of the Companys present obligations related to various expenses incurred during the period and includes a reserve for estimated contract losses, other accrued expenses, and warranty obligations. Included in accrued expenses as of June 30, 2015 and June 30, 2014 is a reserve of approximately $685,000 and $1.7 million, respectively, for a product upgrade initiative established in the fourth quarter of fiscal 2014. Subsequent to commercialization, installation and commissioning of units in the field, the Company garnered meaningful insights that resulted in system design modifications and other general upgrades, which improved the performance, efficiency, and reliability of its systems. In the interest of enhancing customer satisfaction, the Company launched the product upgrade initiative to implement these improvements at certain locations of its installed base through fiscal year 2016. |
Warranty Obligations | The Company typically warrants its products for the shorter of twelve months after installation or eighteen months after date of shipment. Warranty costs are provided for estimated claims and charged to cost of product sales as revenue is recognized. Warranty obligations are also evaluated quarterly to determine a reasonable estimate for the replacement of potentially defective materials of all energy storage systems that have been shipped to customers. While the Company actively engages in monitoring and improving its evolving battery and production technologies, there is only a limited product history and relatively short time frame available to test and evaluate the rate of product failure. Should actual product failure rates differ from the Companys estimates, revisions are made to the estimated rate of product failures and resulting changes to the liability for warranty obligations. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. As of June 30, 2015 and June 30, 2014, included in the Companys accrued expenses were $176,967 and $731,910, respectively, related to warranty obligations. The following is a summary of accrued warranty activity: Year ended June 30, 2015 2014 Beginning balance $ 731,910 $ 479,873 Accruals for warranties during the period 167,901 741,412 Settlements during the period (480,683 ) (673,588 ) Adjustments relating to preexisting warranties (242,161 ) 184,213 Ending balance $ 176,967 $ 731,910 |
Revenue Recognition | Revenues are recognized when persuasive evidence of a contractual arrangement exits, delivery has occurred or services have been rendered, the sellers price to buyer is fixed and determinable, and collectability is reasonably assured. The portion of revenue related to installation and final acceptance, is deferred until such installation and final customer acceptance are completed. From time to time, the Company may enter into separate agreements at or near the same time with the same customer. The Company evaluates such agreements to determine whether they should be accounted for individually as distinct arrangements or whether the separate agreements are, in substance, a single multiple element arrangement. The Company evaluates whether the negotiations are conducted jointly as part of a single negotiation, whether the deliverables are interrelated or interdependent, whether the fees in one arrangement are tied to performance in another arrangement, and whether elements in one arrangement are essential to another arrangement. The Companys evaluation involves significant judgment to determine whether a group of agreements might be so closely related that they are, in effect, part of a single arrangement. Our collaboration agreements typically involve multiple elements or deliverables, including upfront fees, contract research and development, milestone payments, technology licenses or options to obtain technology licenses, and royalties. For these arrangements, revenues are recognized in accordance with FASB ASC 605-25, The portion of revenue related to engineering and development is recognized ratably upon delivery of the goods or services pertaining to the underlying contractual arrangement, or revenue is recognized as certain activities are performed by the Company over the estimated performance period. The Company charges shipping and handling fees when products are shipped or delivered to a customer, and includes such amounts in product revenues and shipping costs in cost of sales. The Company reports its revenues net of estimated returns and allowances. Total revenues of $1,763,510 and $7,851,607 were recognized for the years ended June 30, 2015 and June 30, 2014, respectively. Revenues for the year ended June 30, 2015 were comprised of two significant customers (59% and 22% of total revenue) and revenues for year ended June 30, 2014 were comprised of two significant customers (66% and 11% of total revenue). The Company had two significant customers with outstanding receivable balances of $77,000 and $31,000 (68% and 28% of accounts receivable, net) as of June 30, 2015. The Company had three significant customers with outstanding receivable balances of $375,000, $365,000, and $188,000 (35%, 35%, and 18% of accounts receivable, net) as of June 30, 2014. |
Engineering and Development Revenues | We assess whether a substantive milestone exists at the inception of our agreements. In evaluating if a milestone is substantive we consider whether: · Substantive uncertainty exists as to the achievement of the milestone event at the inception of the arrangement; · The achievement of the milestone involves substantive effort and can only be achieved based in whole or in part on our performance or the occurrence of a specific outcome resulting from our performance; · The amount of the milestone payment appears reasonable either in relation to the effort expended or the enhancement of the value of the delivered item(s); · There is no future performance required to earn the milestone; and · The consideration is reasonable relative to all deliverables and payment terms in the arrangement. If any of these conditions are not met, we do not consider the milestone to be substantive and we defer recognition of the milestone payment and recognize it as revenue over the estimated period of performance, if any. On December 13, 2011, the Company entered into a joint development and license agreement with a global technology company to jointly develop flow batteries. The objective of the joint development agreement was to develop low cost, high energy density grid scale flow battery stacks and systems that could lead to a significant cost reduction for grid level storage. The Company recognized revenue under this agreement upon achievement of certain performance milestones. The Company recognized $0 of revenue under this agreement for the year ended June 30, 2015 and $200,000 for the year ended June 30, 2014. On April 8, 2011, the Company entered into a Collaboration Agreement (the Collaboration Agreement) with Honam Petrochemical Corporation, now known as Lotte Chemical Corporation (Lotte), pursuant to which the Company and Lotte collaborated on the technical development of the Companys third generation Zinc Bromide flow battery module (the Version 3 Battery Module) and Lotte received a fully paid-up, exclusive and royalty-free license to sell and manufacture the Version 3 Battery Module in South Korea and a non-exclusive royalty-bearing license to sell the Version 3 Battery Module in Japan, Thailand, Taiwan, Malaysia, Vietnam and Singapore. On December 16, 2013, the Company and Lotte entered into a Research and Development Agreement (the R&D Agreement) pursuant to which the Company has agreed to develop and provide to Lotte a Zinc Bromide chemical flow battery system, including a Zinc Bromide chemical flow battery module and related software (the Product), on the terms and conditions set forth in the R&D Agreement (the Project). The Project is scheduled to continue until December 16, 2015, unless extended by the mutual agreement of the Company and Lotte. Subject to the satisfaction of certain specified milestones, Lotte is required to make payments to the Company under the R&D Agreement totaling $3,000,000 over the term of the Project. We recognize revenue based upon a Performance Based Method pursuant to the model described in FASB ASC 980-605-25, where revenue is recognized based on the lesser of the amount of nonrefundable cash received or the amounts due based on the proportional amount of the total effort expected to be expended on the contract that has been provided to date as there does not exist substantial doubt that the milestones will be achieved. The Company recognized $755,000 of revenue under this agreement for the year ended June 30, 2015, and $1,125,000 of revenue under this agreement for the year ended June 30, 2014. Additionally, on December 16, 2013, the Company and Lotte entered into an Amended License Agreement (the Amended License). Pursuant to the Amended License Agreement, the Company granted to Lotte, (1) an exclusive and royalty-free limited license in South Korea to use the Companys Zinc Bromide flow battery module, Zinc Bromide flow battery stack and the technical information and know how related to the intellectual property arising from the Project (collectively, the Technology) to manufacture or sell a Zinc Bromide flow battery (the Lotte Product) in South Korea and (2) a non-exclusive (a) royalty-free limited license for Lotte and its affiliates to use the Technology internally in all locations other than China and South Korea to manufacture the Lotte Product and (b) royalty-bearing limited license to sell the Lotte Product in all locations other than China, the United States and South Korea. Lotte is required to pay the Company a total license fee of $3,000,000 under the Amended License Agreement plus up to an additional $1,000,000 if certain specific milestones are successfully achieved. In addition, Lotte is required to make ongoing royalty payments to the Company equal to a single digit percentage of Lottes sales of the Lotte Product outside of South Korea until December 31, 2019. The license fees are subject to a 16.5% non-refundable Korea withholding tax. Overall since the agreement date, through June 30, 2015 there were $5,250,000 of payments received and $4,880,178 of revenue recognized under the Lotte agreements. Included in engineering and development revenues were $755,000 and $1,325,000 for the years ended June 30, 2015 and June 30, 2014, respectively, related to collaborative agreements. Engineering and development costs related to the collaboration agreements totaled $267,000 and $206,000 for the years ended June 30, 2015 and June 20, 2014, respectively. As of June 30, 2015 and June 30, 2014, the Company had no unbilled amounts from engineering and development contracts in process. The Company had received $370,000 and $0 in customer payments for engineering and development contracts, representing deposits in advance of performance of the contracted work, as of June 30, 2015, and June 30, 2014, respectively. |
Advanced Engineering and Development Expenses | In accordance with FASB ASC Topic 730, Research and Development, the Company expenses advanced engineering and development costs as incurred. These costs consist primarily of materials, labor, and allocable indirect costs incurred to design, build, and test prototype units, as well as the development of manufacturing processes for these units. Advanced engineering and development costs also include consulting fees and other costs. To the extent these costs are separately identifiable, incurred and funded by advanced engineering and development type agreements with outside parties, they are shown separately on the consolidated statements of operations as a Cost of engineering and development. |
Stock-Based Compensation | The Company measures all Share-Based Payments," including grants of stock options, restricted shares and restricted stock units in its consolidated statement of operations based on their fair values on the grant date, which is consistent with FASB ASC Topic 718, Stock Compensation, guidelines. Accordingly, the Company measures share-based compensation cost for all share-based awards at the fair value on the grant date and recognizes share-based compensation over the service period for awards that are expected to vest. The fair value of stock options is determined based on the number of shares granted and the price of the shares at grant, and calculated based on the Black-Scholes valuation model. The Company compensates its outside directors primarily with restricted stock units (RSUs) rather than cash. The grant date fair value of the restricted stock unit awards is determined using the closing stock price of the Companys common stock on the day prior to the date of the grant, with the compensation expense amortized over the vesting period of restricted stock unit awards, net of estimated forfeitures. The Company only recognizes expense for those options or shares that are expected ultimately to vest, using two attribution methods to record expense, the straight-line method for grants with only service-based vesting or the graded-vesting method, which considers each performance period, for all other awards. See further discussion of stock-based compensation in Note 9. |
Advertising Expense | Advertising costs of $44,176 and $66,086 for the years ended June 30, 2015 and June 30, 2014, respectively, were charged to selling, general, and administrative expenses as incurred. |
Income Taxes | The Company records deferred income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes. FASB ASC Topic 740 requires recognition of deferred income tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred income tax assets to the amount expected to be realized. There were no net deferred income tax assets recorded as of June 30, 2015 and June 30, 2014. The Company applies a more-likely-than-not recognition threshold for all tax uncertainties as required under FASB ASC Topic 740, which only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. The Companys U.S. Federal income tax returns for the years ended June 30, 2011 through June 30, 2014 and the Companys Wisconsin and Australian income tax returns for the years ended June 30, 2010 through June 30, 2014 are subject to examination by taxing authorities. As of June 30, 2015, there were no examinations in progress. |
Foreign Currency | The Company uses the United States dollar as its functional and reporting currency, while the Australian dollar and Hong Kong dollar are the functional currencies of its foreign subsidiaries. Assets and liabilities of the Companys foreign subsidiaries are translated into United States dollars at exchange rates that are in effect at the balance sheet date while equity accounts are translated at historical exchange rates. Income and expense items are translated at average exchange rates which were applicable during the reporting period. Translation adjustments are recorded in accumulated other comprehensive loss as a separate component of equity in the consolidated balance sheets. |
Loss per Share | The Company follows the FASB ASC Topic 260, Earnings per Share, provisions which require the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (net loss) per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with the FASB ASC Topic 260, any anti-dilutive effects on net income (loss) per share are excluded. For the years ended June 30, 2015 and June 30, 2014 there were 9,663,729 and 8,618,574 shares of common stock underlying convertible preferred stock, options, restricted stock units and warrants that are excluded, respectively. |
Concentrations of Credit Risk | Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains significant cash deposits primarily with two financial institutions. The Company has not previously experienced any losses on such deposits. Additionally, the Company performs periodic evaluations of the relative credit ratings of these institutions as part of its banking strategy. Concentrations of credit risk with respect to accounts receivable are limited due to accelerated payment terms in current customer contracts and creditworthiness of the current customer base. |
Reclassifications | Certain amounts previously reported have been reclassified to conform to the current presentation. |
Segment Information | The Company has determined that it operates as one reportable segment. |
Recent Accounting Pronouncements | From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective and not included below will not have a material impact on our financial position or results of operations upon adoption. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment defers the effective date of Update 2014-09 for all entities by one year. Public business entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods with that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In July 2015, the FASB issued ASU 2015-11 Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendment was issued to modify the process in which entities measure inventory. The amendment does not apply to inventory measured using last-in, first-out (LIFO) or the retail inventory method. This amendment requires entities to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments are effective for fiscal years beginning after December 31, 2016, including interim periods within those fiscal years on a prospective basis with earlier application permitted as of the beginning of an interim or annual reporting period. The Company does not expect adoption of this guidance to have a significant impact on its consolidated financial statements. In February 2015, the FASB issued ASU 2015-02 Consolidation (Topic 810): Amendments to the Consolidation Analysis. The amendment is intended to improve certain areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The amendment simplifies reporting requirements by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE), and changing consolidation conclusions for public companies in several industries that typically make use of limited partnerships or VIEs. The amendment is effective for fiscal years beginning after December 31, 2015. Early adoption is permitted. The Company does not expect adoption of this guidance to have a significant impact on its consolidated financial statements. In January 2015, the FASB issued ASU 2015-01 Income Statement Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The amendment was issued to reduce complexity in the accounting standards by eliminating the concept of extraordinary items from US GAAP. The amendment is effective for annual periods ending after December 15, 2015. The change may be applied prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company does not expect adoption of this guidance to have a significant impact on its consolidated financial statements. In August 2014, the FASB issued ASU 2014-15 Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (Subtopic 205-40). The update requires management to perform a going concern assessment if there is substantial doubt about an entitys ability to continue as a going concern within one year of the financial statement issuance date. Under the new standard, the definition of substantial doubt incorporates a likeliness threshold of probable that is consistent with the current use of the term defined in US GAAP for loss contingencies (Topic 450 Contingencies). Management will need to consider conditions that are known and reasonably knowable at the financial statement issuance date and determine whether the entity will be able to meet its obligations within the one-year period. Additional disclosures are required if it is probable that the entity will be unable to meet its current obligations. The amendments in this ASU will be effective for annual periods ending after December 15, 2016. Early adoption is permitted. The Company does not expect adoption of this guidance to have a significant impact on its consolidated financial statements. In June 2014, the FASB issued ASU 2014-12 - Compensation Stock Compensation (Topic 718). The amendment requires that entities treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting and, accordingly, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation expense should be recognized in the period in which it becomes probable that the performance target will be achieved. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 . In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers (Topic 606). The amendment outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract and recognizes revenue when the entity satisfies a performance obligation. ASU 2014-09, also includes additional disclosure requirements regarding revenue, cash flows and obligations related to contracts with customers. See ASU 2015-14 above for applicable effective date of ASU 2014-09. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The Company is currently evaluating the effect that implementation of this update will have on its consolidated financial position and results of operations upon adoption. In April 2014, the FASB issued ASU 2014-08 - In July 2013, the FASB issued ASU 2013-11 Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, similar tax loss, or a tax credit carryforward. To the extent the tax benefit is not available at the reporting date under the governing tax law or if the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented as a liability and not combined with deferred tax assets. ASU 2013-11 is effective for annual periods, and interim periods within those years, beginning after December 15, 2013. The amendments are to be applied to all unrecognized tax benefits that exist as of the effective date and may be applied retrospectively to each prior reporting period presented. The adoption of this pronouncement did not have a material impact on the Companys consolidated financial statements. In April 2013, the FASB issued ASU 2013-07 Presentation of Financial Statements (Topic 205) Liquidation Basis of Accounting. The amendments require an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is imminent when the likelihood is remote that the entity will return from liquidation and either (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties or (b) a plan for liquidation is being imposed by other forces (for example, involuntary bankruptcy). If a plan for liquidation was specified in the entitys governing documents from the entitys inception (for example, limited-life entities), the entity should apply the liquidation basis of accounting only if the approved plan for liquidation differs from the plan for liquidation that was specified at the entitys inception. The amendments require financial statements prepared using the liquidation basis of accounting to present relevant information about an entitys expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The entity should include in its presentation of assets any items it had not previously recognized under US GAAP but that it expects to either sell in liquidation or use in settling liabilities (for example, trademarks). The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption was permitted. The adoption did not have an impact on the Companys consolidated financial statements in its present condition. In March 2013, the FASB issued ASU 2013-05 Foreign Currency Matters (Topic 830) Parents Accounting for the Cumulative Translation Adjustment upon derecognition of Certain Subsidiaries or Group of Assets within a Foreign Entity or of an Investment in a Foreign Entity. These amendments provide guidance on releasing cumulative translation adjustments when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or a group of assets that is a non-profit activity or a business within a foreign entity. In addition, these amendments provide guidance on the release of cumulative translation adjustments in partial sales of equity method investments and in step acquisitions. The amendments are effective for fiscal years and interim reporting periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. Early adoption was permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entitys fiscal year of adoption. The Company was required to adopt this standard beginning July 1, 2014. The adoption of this pronouncement did not have a material impact on the Companys consolidated financial statements. In February 2013, the FASB issued ASU 2013-04 Liabilities (Topic 405) Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date. The amendment provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing guidance in US GAAP. Examples of obligations within this guidance are debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendment shall be applied retrospectively to all prior periods presented for those obligations within the scope of this Subtopic that exist at the beginning of an entitys fiscal year of adoption. Early adoption was permitted. The adoption of this pronouncement did not have a material impact on the Companys consolidated financial statements. |
1. SUMMARY OF SIGNIFICANT ACC25
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Schedule of Accounts Receivable | Year ended June 30, 2015 2014 Current $ 4,291 $ 902,545 30-60 days - - 60-90 days 3,555 - Over 90 days 105,248 148,479 Total $ 113,093 $ 1,051,024 |
Estimated Useful Lives Used For Each Class of Depreciable Assets | Estimated Useful Lives Manufacturing equipment 3 - 7 years Office equipment 3 - 7 years Building and improvements 7 - 40 years |
Schedule Of Accrued Warranty Liability | Year ended June 30, 2015 2014 Beginning balance $ 731,910 $ 479,873 Accruals for warranties during the period 167,901 741,412 Settlements during the period (480,683 ) (673,588 ) Adjustments relating to preexisting warranties (242,161 ) 184,213 Ending balance $ 176,967 $ 731,910 |
2. CHINA JOINT VENTURE (Tables)
2. CHINA JOINT VENTURE (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Operating results for Meineng | Year ended June 30, 2015 2014 Revenues $ 588,190 $ 285,631 Gross Profit (loss) (197,957 ) (309,406 ) Income (loss) from operations (2,095,980 ) (3,002,192 ) Net Income (loss) (2,046,548 ) (3,038,432 ) |
4. INVENTORIES (Tables)
4. INVENTORIES (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | As of June 30, 2015 2014 Raw materials $ 1,125,251 $ 1,054,197 Work in progress 72,866 298,773 Finished goods - - Total $ 1,198,117 $ 1,352,970 |
6. PROPERTY, PLANT & EQUIPMENT
6. PROPERTY, PLANT & EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, plant, and equipment | As of June 30, 2015 2014 Land $ 217,000 $ 217,000 Building and improvements 3,532,375 3,520,872 Manufacturing equipment 3,965,750 3,710,127 Office equipment 407,191 399,583 Construction in process 35,700 - Total, at cost 8,158,016 7,847,582 Less: accumulated depreciation (3,993,104 ) (3,465,379 ) Property, plant and equipment, net $ 4,164,912 $ 4,382,203 |
8. BANK LOANS AND NOTES PAYAB29
8. BANK LOANS AND NOTES PAYABLE (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Company's debt | As of June 30, 2015 2014 Bank loans and notes payable-current $ 324,626 $ 351,142 Bank loans and notes payable-long term 1,053,581 2,045,127 Total $ 1,378,207 $ 2,396,269 |
Bank loans and notes payable | As of June 30, 2015 2014 Note payable to Wisconsin Econcomic Development Corporation payable in monthly installments of $23,685, including interest at 2%, with the final payment due May 1, 2018; collateralized by equipment purchased with the loan proceeds and substantially all assets of the Company not otherwise collateralized. The Company is required to maintain and increase a specified number of employees, and the interest rate is increased in certain cases for failure to meet this requirement. $ 804,550 $ 1,069,793 Bank loan payable in fixed monthly payments of $6,800 of principal and interest at a rate of 0.25% below prime, as defined, subject to a floor of 5% with any principal due at maturity on June 1, 2018; collateralized by the building and land. 573,657 624,760 Note payable in fixed monthly installments of $6,610 of principal and interest at a rate of 5.5% with any principal due at maturity on May 1, 2028; collateralized by the building and land; paid in full during fiscal year 2015. - 701,716 $ 1,378,207 $ 2,396,269 |
Maximum aggregate annual principal payments for fiscal periods | 2016 $ 324,626 2017 332,970 2018 720,611 $ 1,378,207 |
9. EMPLOYEE AND DIRECTOR EQUI30
9. EMPLOYEE AND DIRECTOR EQUITY INCENTIVE PLANS (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Assumptions were used to estimate the fair value of options | Year ended June 30, 2015 2014 Expected life of option (years) 4 4 Risk-free interest rate 1.07 - 1.42% 0.95 - 1.20% Assumed volatility 99.43 - 103.90% 94.35 - 154.68% Expected dividend rate 0% 0% Expected forfeiture rate 5.00 - 6.32% 4.91 - 5.62% |
Stock option activity under the employee and director plans | Number of Options Weighted Average Exercise Price Average Remaining Contractual Life (in years) Balance at June 30, 2013 785,284 $ 5.78 Options granted 699,850 1.33 Options forfeited (66,066 ) 13.23 Balance at June 30, 2014 1,419,068 3.23 6.09 Options granted 423,000 0.85 Options forfeited (264,290 ) 3.22 Balance at June 30, 2015 1,577,778 $ 2.60 5.74 |
Stock options outstanding | Outstanding Exercisable Range of Exercise Prices Number of Options Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number of Options Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 0.48 to $1.00 389,500 6.83 $ 0.69 157,600 6.81 $ 0.68 $ 1.01 to $2.50 750,528 6.75 1.51 205,903 6.15 1.82 $ 2.51 to $5.00 98,900 3.99 3.94 98,900 3.99 3.94 $ 5.01 to $7.50 323,850 2.86 6.28 323,850 2.86 6.28 $ 7.51 to $17.95 15,000 0.58 17.95 15,000 0.58 17.95 Balance at June 30, 2015 1,577,778 5.74 $ 2.60 801,253 4.58 $ 3.96 |
Summary of the status of unvested employee stock options | Number of Options Weighted Average Grant Date Fair Value Per Share Average Remaining Contractual Life (in years) Balance at June 30, 2013 262,668 $ 3.44 Options granted 699,850 1.33 Options vested (127,586 ) 3.55 Options forfeited (12,463 ) 3.38 Balance at June 30, 2014 822,469 1.63 Options granted 423,000 0.85 Options vested (347,328 ) 1.42 Options forfeited (121,616 ) 2.31 Balance at June 30, 2015 776,525 $ 1.19 6.94 |
Status of restricted stock unit balances | Number of Restricted Stock Units Weighted Average Valuation Price Per Unit Balance at June 30, 2013 1,131,687 $ 2.30 RSUs granted 1,660,696 0.99 RSUs forfeited (1,200,000 ) 1.10 Shares issued (245,570 ) 1.61 Balance at June 30, 2014 1,346,813 1.87 RSUs granted 922,500 1.05 RSUs forfeited (103,334 ) 1.69 Shares issued (229,944 ) 0.80 Balance at June 30, 2015 1,936,035 $ 1.53 |
10. WARRANTS (Tables)
10. WARRANTS (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Warrant balances | Number of Warrants Weighted Average Exercise Price Per Share Balance at June 30, 2013 1,421,806 $ 3.15 Warrants granted 3,239,474 0.95 Warrants expired (8,000 ) 2.80 Warrants exercised (1,719,528 ) 1.18 Balance at June 30, 2014 2,933,752 1.88 Warrants granted - - Warrants expired (5,800 ) 5.00 Warrants exercised - - Balance at June 30, 2015 2,927,952 $ 1.88 |
11. BASIC AND DILUTED NET LOS32
11. BASIC AND DILUTED NET LOSS PER SHARE (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Basic And Diluted Net Loss Per Share Tables | |
Potential common shares not included in calculating diluted net loss per share | As of June 30, 2015 2014 Stock options and restricted stock units 3,513,813 2,765,880 Stock warrants 2,927,952 2,933,752 Series B preferred shares 3,221,964 2,918,942 Total 9,663,729 8,618,574 |
13. COMMITMENTS (Tables)
13. COMMITMENTS (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future payments required under the terms of the leases for fiscal periods | 2016 $ 81,376 2017 27,125 $ 108,502 |
15. INCOME TAXES (Tables)
15. INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Provision (benefit) for income taxes | Year ended June 30, 2015 2014 Current $ (86,455 ) $ (82,411 ) Deferred - - Provision (benefit) for income taxes $ (86,455 ) $ (82,411 ) |
Effective income tax rate reconciliation | Year ended June 30, 2015 2014 Income tax expense/(benefit) computed at the U.S. federal statutory rate -34 % -34 % Settlement of uncertain tax positions -1 % 0 % Foreign tax expense/(benefit) 0 % -1 % Write-off of expired net operating loss carryforwards 68 % 0 % Change in valuation allowance -34 % 34 % Total -1 % -1 % |
Significant components of the Company's net deferred income tax assets | As of June 30, 2015 2014 Federal net operating loss carryforwards $ 11,780,604 $ 22,238,624 Federal - other 2,783,304 2,737,404 Wisconsin net operating loss carryforwards 1,748,976 2,747,275 Australia net operating loss carryforwards 1,497,779 1,497,779 Deferred income tax asset valuation allowance (17,810,663 ) (29,221,082 ) Total deferred income tax assets $ - $ - |
Reconciliation of the beginning and ending balance of unrecognized income tax benefits | As of June 30, 2015 2014 Beginning balance $ 196,583 $ 193,097 Lapses of statutes of limitations $ (161,344 ) $ - Effect of foreign currency translation (35,239 ) 3,486 Ending balance $ - $ 196,583 |
1. SUMMARY OF SIGNIFICANT ACC35
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Summary Of Significant Accounting Policies Details | ||
Current | $ 4,291 | $ 902,545 |
30-60 days | 0 | 0 |
60-90 days | 3,555 | 0 |
Over 90 days | 105,248 | 148,479 |
Total | $ 113,093 | $ 1,051,024 |
1. SUMMARY OF SIGNIFICANT ACC36
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 12 Months Ended |
Jun. 30, 2015 | |
Minimum [Member] | ManufacturingEquipment [Member] | |
Estimated Useful Lives of Property, Plant and Equipment | 3 years |
Minimum [Member] | OfficeEquipment [Member] | |
Estimated Useful Lives of Property, Plant and Equipment | 3 years |
Minimum [Member] | BuildingAndImprovementsMember | |
Estimated Useful Lives of Property, Plant and Equipment | 7 years |
Maximum [Member] | ManufacturingEquipment [Member] | |
Estimated Useful Lives of Property, Plant and Equipment | 7 years |
Maximum [Member] | OfficeEquipment [Member] | |
Estimated Useful Lives of Property, Plant and Equipment | 7 years |
Maximum [Member] | BuildingAndImprovementsMember | |
Estimated Useful Lives of Property, Plant and Equipment | 40 years |
1. SUMMARY OF SIGNIFICANT ACC37
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Notes to Financial Statements | ||
Beginning balance | $ 731,910 | $ 479,873 |
Accruals for warranties during the period | 167,901 | 404,096 |
Settlements during the perioid | (480,683) | (95,543) |
Adjustments relating to preexisting warranties | (242,161) | (247,237) |
Ending balance | $ 176,967 | $ 731,910 |
2. CHINA JOINT VENTURE (Details
2. CHINA JOINT VENTURE (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
China Joint Venture Details | ||
Revenues | $ 588,190 | $ 285,631 |
Gross Profit (loss) | (197,957) | (309,406) |
Income (loss) from operations | (2,095,980) | (3,002,192) |
Net Income (loss) | $ 2,046,548 | $ 3,038,432 |
2. CHINA JOINT VENTURE (Detai39
2. CHINA JOINT VENTURE (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
China Joint Venture Details Narrative | ||
Net loss | $ 2,046,548 | $ 3,038,432 |
Product sales | $ 70,328 | $ 853,663 |
3. MANAGEMENT'S PLANS AND FUTUR
3. MANAGEMENT'S PLANS AND FUTURE OPERATIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Managements Plans And Future Operations Details Narrative | ||
Net loss | $ 12,885,808 | $ 8,855,418 |
Accumulated deficit | (102,674,049) | (89,788,242) |
EnSync, Inc. equity | 13,941,035 | 11,863,187 |
Total liabilities | $ 4,976,623 | $ 6,543,716 |
4. INVENTORIES (Details)
4. INVENTORIES (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,125,251 | $ 1,054,197 |
Work in progress | 72,866 | 298,773 |
Finished goods | 0 | 0 |
Total | $ 1,198,117 | $ 1,352,970 |
6. PROPERTY, PLANT & EQUIPMEN42
6. PROPERTY, PLANT & EQUIPMENT (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 217,000 | $ 217,000 |
Building and improvements | 3,532,375 | 3,520,872 |
Manufacturing equipment | 3,965,750 | 3,710,127 |
Office equipment | 407,191 | 399,583 |
Construction in process | 35,700 | 0 |
Total, at cost | 8,158,016 | 7,847,582 |
Less, accumulated depreciation | (3,993,104) | (3,465,379) |
Property, Plant & Equipment, Net | $ 4,164,912 | $ 4,382,203 |
7. GOODWILL (Details Narrative)
7. GOODWILL (Details Narrative) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Goodwill Details Narrative | ||
Net goodwill amount | $ 803,079 | $ 803,079 |
8. BANK LOANS AND NOTES PAYAB44
8. BANK LOANS AND NOTES PAYABLE (Details) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Bank Loans And Notes Payable Details | ||
Bank loans and notes payable-current | $ 324,626 | $ 351,142 |
Bank loans and notes payable-long term | 1,053,581 | 2,045,127 |
Bank loans and notes payable | $ 1,378,207 | $ 2,396,269 |
8. BANK LOANS AND NOTES PAYAB45
8. BANK LOANS AND NOTES PAYABLE (Details 1) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Bank Loans And Notes Payable Details 1 | ||
Note payable in fixed monthly installments of $6,610 of principal and interest at a rate of 5.5% with any principal due at maturity on May 1, 2028; collateralized by the building and land; paid in full during fiscal year 2015. | $ 804,550 | $ 1,069,793 |
Bank loan payable in fixed monthly payments of $6,800 of principal and interest at a rate of .25% below prime, as defined, subject to a floor of 5% with any principal due at maturity on June 1, 2018; collateralized by the building and land. | 573,657 | 624,760 |
Note payable in fixed monthly installments of $6,610 of principal and interest at a rate of 5.5% with any principal due at maturity on May 1, 2028; collateralized by the building and land; paid in full during fiscal year 2015. | 0 | 701,716 |
Total | $ 1,378,207 | $ 2,396,269 |
8. BANK LOANS AND NOTES PAYAB46
8. BANK LOANS AND NOTES PAYABLE (Details 2) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Bank Loans And Notes Payable Details 2 | ||
2,016 | $ 324,626 | |
2,017 | 332,970 | |
2,018 | 720,611 | |
Total | $ 1,378,207 | $ 2,396,269 |
9. EMPLOYEE_DIRECTOR EQUITY INC
9. EMPLOYEE/DIRECTOR EQUITY INCENTIVE PLANS (Details) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Employeedirector Equity Incentive Plans Details | ||
Expected life of option (years) | 4 years | 4 years |
Risk-free interest rate, minimum | 1.07% | 0.95% |
Risk-free interest rate, maximum | 1.42% | 1.20% |
Assumed volatility, minimum | 99.43% | 94.35% |
Assumed volatility, maximum | 103.90% | 154.68% |
Expected dividend rate | 0.00% | 0.00% |
Expected forfeiture rate, minimum | 5.00% | 4.19% |
Expected forfeiture rate, maximum | 6.32% | 5.62% |
9. EMPLOYEE_DIRECTOR EQUITY I48
9. EMPLOYEE/DIRECTOR EQUITY INCENTIVE PLANS (Details 1) - $ / shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Employeedirector Equity Incentive Plans Details 1 | ||
Options outstanding, beginning | 1,419,068 | 785,284 |
Options granted | 423,000 | 699,850 |
Options forfeited | (264,290) | (66,066) |
Options outstanding, ending | 1,577,778 | 1,419,068 |
Outstanding beginning, Weighted-Average Exercise Price | $ 3.23 | $ 5.78 |
Options granted, Weighted-Average Exercise Price | .85 | 1.33 |
Options forfeited, Weighted-Average Exercise Price | 3.22 | 13.23 |
Outstanding, ending, Weighted-Average Exercise Price | $ 2.60 | $ 3.23 |
Average remaining contractual life (in years) | 5 years 8 months 27 days | 6 years 1 month 2 days |
9. EMPLOYEE_DIRECTOR EQUITY I49
9. EMPLOYEE/DIRECTOR EQUITY INCENTIVE PLANS (Details 2) - $ / shares | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2013 | |
Outstanding Number of Options | 1,577,778 | 1,419,068 | 785,284 |
Outstanding Number of Options Average Remaining Contractual Life (in years) | 5 years 8 months 27 days | ||
Outstanding, ending, Weighted-Average Exercise Price | $ 2.60 | ||
Exercisable Number of Options | 801,253 | ||
Exercisable Average Remaining Contractual Life (in years) | 4 years 6 months 29 days | ||
Exercisable Weighted Average Exercise Price | $ 3.96 | ||
Range 0.48 to 1.00 | |||
Outstanding Number of Options | 389,500 | ||
Outstanding Number of Options Average Remaining Contractual Life (in years) | 6 years 9 months 29 days | ||
Outstanding, ending, Weighted-Average Exercise Price | $ .69 | ||
Exercisable Number of Options | 157,600 | ||
Exercisable Average Remaining Contractual Life (in years) | 6 years 9 months 22 days | ||
Exercisable Weighted Average Exercise Price | $ 0.68 | ||
Range 1.01 to 2.50 | |||
Outstanding Number of Options | 750,528 | ||
Outstanding Number of Options Average Remaining Contractual Life (in years) | 6 years 9 months | ||
Outstanding, ending, Weighted-Average Exercise Price | $ 1.51 | ||
Exercisable Number of Options | 205,903 | ||
Exercisable Average Remaining Contractual Life (in years) | 6 years 1 month 24 days | ||
Exercisable Weighted Average Exercise Price | $ 1.82 | ||
Range 2.51 to 5.00 | |||
Outstanding Number of Options | 98,900 | ||
Outstanding Number of Options Average Remaining Contractual Life (in years) | 3 years 11 months 26 days | ||
Outstanding, ending, Weighted-Average Exercise Price | $ 3.94 | ||
Exercisable Number of Options | 98,900 | ||
Exercisable Average Remaining Contractual Life (in years) | 3 years 11 months 26 days | ||
Exercisable Weighted Average Exercise Price | $ 3.94 | ||
Range 5.01 to 7.50 | |||
Outstanding Number of Options | 323,850 | ||
Outstanding Number of Options Average Remaining Contractual Life (in years) | 2 years 10 months 10 days | ||
Outstanding, ending, Weighted-Average Exercise Price | $ 6.28 | ||
Exercisable Number of Options | 323,850 | ||
Exercisable Average Remaining Contractual Life (in years) | 2 years 10 months 10 days | ||
Exercisable Weighted Average Exercise Price | $ 6.28 | ||
Range 7.51 to 17.95 | |||
Outstanding Number of Options | 15,000 | ||
Outstanding Number of Options Average Remaining Contractual Life (in years) | 6 months 29 days | ||
Outstanding, ending, Weighted-Average Exercise Price | $ 17.95 | ||
Exercisable Number of Options | 15,000 | ||
Exercisable Average Remaining Contractual Life (in years) | 6 months 29 days | ||
Exercisable Weighted Average Exercise Price | $ 17.95 |
9. EMPLOYEE_DIRECTOR EQUITY I50
9. EMPLOYEE/DIRECTOR EQUITY INCENTIVE PLANS (Details 3) - $ / shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Number of Options | ||
Beginning Balance, Number of Options | 822,469 | 262,668 |
Granted | 423,000 | 699,850 |
Vested | (347,328) | (127,586) |
Forfeited | (121,616) | (12,463) |
Ending Balance, number of options | 776,525 | 822,469 |
Weighted-Average Grant Date Fair Value Per Share | ||
Beginning Balance, grant date fair value | $ 1.63 | $ 3.44 |
Granted | .85 | 1.33 |
Vested | 1.42 | 3.55 |
Forfeited | 2.31 | 3.38 |
Ending Balance, grant date fair value | $ 1.19 | $ 1.63 |
Average remaining contractual life (in years) | 6 years 11 months 8 days |
9. EMPLOYEE_DIRECTOR EQUITY I51
9. EMPLOYEE/DIRECTOR EQUITY INCENTIVE PLANS (Details 4) - $ / shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Restricted Stock Units | ||
Beginning Balance | 1,346,813 | 1,131,687 |
RSUs granted | 1,660,696 | |
RSUs forfeited | (1,200,000) | |
Shares issued | (245,570) | |
Ending balance | 1,346,813 | |
Outstanding beginning, Weighted-Average Exercise Price | $ 1.87 | $ 2.30 |
Weighted-Average Valuation Price, granted | $ .99 | |
Weighted-Average Valuation Price, forfeited | 1.10 | |
Weighted-Average Valuation Price, shares issued | $ 1.61 | |
Outstanding, ending, Weighted-Average Exercise Price | $ 1.87 | |
Restricted Stock Units | ||
Beginning Balance | 1,346,813 | |
RSUs granted | 922,500 | |
RSUs forfeited | (103,334) | |
Shares issued | (229,944) | |
Ending balance | 1,936,035 | 1,346,813 |
Outstanding beginning, Weighted-Average Exercise Price | $ 1.87 | |
Weighted-Average Valuation Price, granted | $ 1.05 | |
Weighted-Average Valuation Price, forfeited | 1.69 | |
Weighted-Average Valuation Price, shares issued | $ .80 | |
Outstanding, ending, Weighted-Average Exercise Price | $ 1.53 | $ 1.87 |
10. WARRANTS (Details)
10. WARRANTS (Details) - WarrantMember - $ / shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Beginning Balance | 2,933,752 | 1,421,806 |
Warrants granted | 0 | 3,239,474 |
Warrants expired | (5,800) | (8,000) |
Warrants exercised | 0 | (1,719,528) |
Ending balance | 2,927,952 | 2,933,752 |
Warrants outstanding beginning weighted average exercise price | $ 1.88 | $ 3.15 |
Warrants granted weighted average exercise price | 0 | .95 |
Warrants expired weighted average exercise price | 5 | 2.80 |
Warrants exercised weighted average exercise price | 0 | 1.18 |
Warrants outstanding ending weighted average exercise price | $ 1.88 | $ 1.88 |
11. BASIC AND DILUTED NET LOS53
11. BASIC AND DILUTED NET LOSS PER SHARE (Details) - shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Basic And Diluted Net Loss Per Share Details | ||
Stock options and restricted stock units | 3,513,813 | 2,765,880 |
Stock warrants | 2,927,952 | 2,933,752 |
Series B preferred shares | 3,221,964 | 2,918,942 |
Total | 9,663,729 | 8,618,574 |
13. COMMITMENTS (Details)
13. COMMITMENTS (Details) | Jun. 30, 2015USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,016 | $ 81,376 |
2,017 | 27,125 |
Operating lease commitment | $ 108,502 |
13. COMMITMENTS (Details Narrat
13. COMMITMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Commitments Details Narrative | ||
Rent expense | $ 87,568 | $ 93,434 |
14. RETIREMENT PLANS (Details N
14. RETIREMENT PLANS (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Pension and Other Postretirement Benefit Expense [Abstract] | ||
Retirement plan expense | $ 108,044 | $ 134,831 |
14. INCOME TAXES (Details)
14. INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Taxes Details | ||
Current | $ (86,455) | $ (82,411) |
Deferred | 0 | 0 |
Provision (benefit) for income taxes | $ (86,455) | $ (82,411) |
15. INCOME TAXES (Details 1)
15. INCOME TAXES (Details 1) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Income tax expense/(benefit) computed at the U.S. federal statutory rate | (34.00%) | (34.00%) |
Settlement of uncertain tax positions | (1.00%) | 0.00% |
Foreign tax expense/(benefit) | 0.00% | (1.00%) |
Write-off of expired net operating loss carryforwards | 68.00% | 0.00% |
Change in valuation allowance | (34.00%) | 34.00% |
Total | (1.00%) | (1.00%) |
15. INCOME TAXES (Details 2)
15. INCOME TAXES (Details 2) - USD ($) | Jun. 30, 2015 | Jun. 30, 2014 |
Income Taxes Details 2 | ||
Federal net operating loss carryforwards | $ 11,780,604 | $ 22,238,624 |
Federal - other | 2,783,304 | 2,737,404 |
Wisconsin net operating loss carryforwards | 1,748,976 | 2,747,275 |
Australia net operating loss carryforwards | 1,497,779 | 1,497,779 |
Deferred income tax asset valuation allowance | (17,810,663) | (29,221,082) |
Net deferred income tax assets | $ 0 | $ 0 |
15. INCOME TAXES (Details 3)
15. INCOME TAXES (Details 3) - USD ($) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Taxes Details 3 | ||
Beginning balance | $ 196,583 | $ 193,097 |
Lapses of statutes of limitations | (161,344) | 0 |
Effect of foreign currency translation | (35,239) | 3,486 |
Ending balance | $ 0 | $ 196,583 |