Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Sep. 26, 2016 | Dec. 31, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Luvu Brands, Inc. | ||
Entity Central Index Key | 1,374,567 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2016 | ||
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 | $ 458,996 | ||
Entity Common Stock, Shares Outstanding | 71,452,596 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 545 | $ 492 |
Accounts receivable, net of allowance for doubtful accounts of $24 in 2016 and $22 in 2015 | 794 | 748 |
Inventories, net of allowance for inventory reserve of $60 in 2016 and $26 in 2015 | 1,444 | 1,303 |
Prepaid expenses | 96 | 98 |
Total current assets | 2,879 | 2,641 |
Equipment and leasehold improvements, net | 870 | 628 |
Other assets | 3 | 3 |
Total assets | 3,752 | 3,272 |
Current liabilities: | ||
Accounts payable | 2,363 | 2,094 |
Current debt | 2,397 | 1,855 |
Other accrued liabilities | 477 | 456 |
Total current liabilities | 5,237 | 4,405 |
Noncurrent liabilities: | ||
Long-term debt | 853 | 977 |
Deferred rent payable | 188 | 215 |
Total noncurrent liabilities | 1,041 | 1,192 |
Total liabilities | 6,278 | 5,597 |
Commitments and contingencies (See Note 15) | ||
Stockholders' deficit: | ||
Common stock | 715 | 707 |
Additional paid-in capital | 5,968 | 5,865 |
Accumulated deficit | (9,209) | (8,897) |
Total stockholders' deficit | (2,526) | (2,325) |
Total liabilities and stockholders' deficit | 3,752 | 3,272 |
Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock | ||
Series A Convertible Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Allowance for doubtful accounts | $ 24 | $ 22 |
Inventory reserve | $ 60 | $ 26 |
Preferred stock - shares authorized | 10,000,000 | |
Common stock- par value | $ 0.01 | $ 0.01 |
Common stock- shares authorized | 175,000,000 | 175,000,000 |
Common stock- shares issued | 71,452,596 | 70,702,596 |
Common stock- shares outstanding | 71,452,596 | 70,702,596 |
Preferred Stock [Member] | ||
Preferred stock - par value | $ 0.0001 | $ 0.0001 |
Preferred stock - shares authorized | 5,700,000 | 5,700,000 |
Preferred stock - shares issued | ||
Preferred stock - shares outstanding | ||
Series A Convertible Preferred Stock [Member] | ||
Preferred stock - par value | $ 0.0001 | $ 0.0001 |
Preferred stock - shares authorized | 4,300,000 | 4,300,000 |
Preferred stock - shares issued | 4,300,000 | 4,300,000 |
Preferred stock - shares outstanding | 4,300,000 | 4,300,000 |
Preferred stock - liquidation preference | $ 1 | $ 1 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||
Net Sales | $ 16,826 | $ 15,554 |
Cost of goods sold | 12,598 | 11,798 |
Gross profit | 4,228 | 3,756 |
Operating expenses: | ||
Advertising and promotion | 345 | 412 |
Other selling and marketing | 1,254 | 1,266 |
General and administrative | 2,257 | 1,929 |
Depreciation | 225 | 219 |
Total operating expenses | 4,081 | 3,826 |
Operating income (loss) | 147 | (70) |
Other expense: | ||
Loss on disposal of assets | (9) | |
Interest expense and financing costs | (459) | (395) |
Total other expense | (459) | (404) |
Loss from operations before income taxes | (312) | (474) |
Provision for income taxes | ||
Net loss | $ (312) | $ (474) |
Net loss per share: Basic and diluted | $ 0 | $ (0.01) |
Shares used in calculation of net loss per share: Basic and diluted | 71,190,301 | 70,702,596 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Deficit - USD ($) $ in Thousands | Series A Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance (in shares) at Jun. 30, 2014 | 4,300,000 | 70,702,596 | |||
Beginning Balance at Jun. 30, 2014 | $ 707 | $ 5,823 | $ (8,423) | $ (1,893) | |
Stock-based compensation | 42 | 42 | |||
Common stock issued for cash | |||||
Net Loss | (474) | (474) | |||
Ending Balance (in shares) at Jun. 30, 2015 | 4,300,000 | 70,702,596 | |||
Ending Balance at Jun. 30, 2015 | $ 707 | 5,865 | (8,897) | (2,325) | |
Stock-based compensation | 36 | 36 | |||
Common stock issued for cash (in shares) | 750,000 | ||||
Common stock issued for cash | $ 8 | 67 | 75 | ||
Net Loss | (312) | (312) | |||
Ending Balance (in shares) at Jun. 30, 2016 | 4,300,000 | 71,452,596 | |||
Ending Balance at Jun. 30, 2016 | $ 715 | $ 5,968 | $ (9,209) | $ (2,526) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (312) | $ (474) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 225 | 219 |
Stock-based compensation expense | 36 | 42 |
Loss on disposal of fixed assets | 9 | |
Provision for bad debt | 13 | 13 |
Provision for inventory reserve | 34 | 26 |
Deferred rent payable | (16) | 106 |
Change in operating assets and liabilities: | ||
Accounts receivable | (60) | (145) |
Inventory | (175) | 43 |
Prepaid expenses and other assets | 2 | (1) |
Accounts payable | 270 | 443 |
Accrued expenses and interest | (39) | 33 |
Accrued payroll and related | 48 | 52 |
Net cash provided by operating activities | 26 | 366 |
INVESTING ACTIVITIES: | ||
Investment in equipment and leasehold improvements | (212) | (60) |
Net cash used in investing activities | (212) | (60) |
FINANCING ACTIVITIES: | ||
Issuance of common stock | 75 | |
Net cash provided by line of credit | 17 | 22 |
Borrowing (repayment) of unsecured line of credit | (14) | 40 |
Proceeds from credit card advance | 500 | 400 |
Repayment of credit card advance | (585) | (449) |
Proceeds from unsecured notes payable | 950 | |
Repayment of unsecured notes payable | (486) | (305) |
Repayment of term note - shareholder | (108) | (70) |
Payments on equipment notes | (46) | |
Principle payments on capital leases | (64) | (44) |
Net cash provided by (used in) financing activities | 239 | (406) |
Net increase (decrease) in cash and cash equivalents | 53 | (100) |
Cash and cash equivalents at beginning of period | 492 | 592 |
Cash and cash equivalents at end of period | 545 | 492 |
Supplemental Disclosure of Cash Flow Information: | ||
Additions to capital leases/equipment notes | 255 | 166 |
Conversion of principal and interest on convertible notes payable - shareholder | 700 | |
Forgiveness of interest on convertible notes payable - shareholder | 21 | |
Cash paid during the year for: Interest | 462 | 408 |
Cash paid during the year for: Income taxes |
Organization and Nature of Busi
Organization and Nature of Business | 12 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Business | NOTE 1. ORGANIZATION AND NATURE OF BUSINESS Luvu Brands, Inc. (the “Company” or Liberator) was incorporated in the State of Florida on February 25, 1999. References to the “Company” in these notes include the Company and its wholly owned subsidiaries, OneUp Innovations, Inc. (“OneUp”), and Foam Labs, Inc. (“Foam Labs”). The Company is primarily a designer and manufacturer of various specialty furnishings for the sexual wellness, lifestyle and casual furniture and seating market. The Company has also become an online retailer of products for the sexual wellness market. All of the Company’s operations are located in the same facility in Atlanta, Georgia, including product development, sales, manufacturing and administration. Sales are generated through internet and print advertisements. We have a diversified customer base with only one customer accounting for 10% or more of consolidated net sales in the current and prior fiscal year and no particular concentration of credit risk in one economic sector. Foreign operations and foreign net sales are not material. Our business is seasonal and as a result we experience higher sales in the second and third fiscal quarters. |
Going Concern
Going Concern | 12 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2. GOING CONCERN The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. The Company incurred a net loss of approximately $312,000 and $474,000 for the years ended June 30, 2016 and 2015, respectively and as of June 30, 2016 the Company has an accumulated deficit of approximately $9.2 million and a working capital deficit of approximately $2.4 million. This raises substantial doubt about its ability to continue as a going concern. In view of these matters, realization of a major portion of the assets in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the CompanyÂ’s ability to meet its financing requirements, and the success of its future operations. Management believes that actions presently being taken to revise the CompanyÂ’s operating and financial requirements provide the opportunity for the Company to continue as a going concern. These actions include an ongoing initiative to increase sales, gross profits and our gross profit margin. To that end, we continued to make improvements to our e-commerce sites during fiscal 2015 and 2016. We also installed new equipment during fiscal 2015 to increase the efficiency and capacity of our foam repurposing operation. At the end of fiscal 2015 we ordered new equipment to increase our fabric cutting capacity; this equipment was delivered and installed during the first quarter of fiscal 2016. At the end of fiscal 2016, we evaluated various options for increasing the throughput of our compressed foam products and during the first quarter of fiscal 2017, we purchased new equipment for installation during the second quarter of fiscal 2017. These actions should yield higher sales at a lower cost of goods sold. We also plan to continue to manage discretionary expense levels to be better aligned with current and expected revenue levels. We estimate that the operational and strategic growth plans we have identified will require approximately $250,000 of funding, of which we estimate will be provided by debt financing and, to a lesser extent, cash flow from operations as well as cash on hand. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. However, management cannot provide any assurances that the Company will be successful in accomplishing these plans. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements include the accounts and operations of our wholly owned operating subsidiaries, OneUp and Foam Labs. Intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates in these consolidated financial statements include estimates of: income taxes; tax valuation reserves; allowances for doubtful accounts; inventory valuation and reserves, share-based compensation; and useful lives for depreciation and amortization. Actual results could differ materially from these estimates. Revenue Recognition We recognize revenues as goods are shipped to customers and title is transferred. The criteria for recognition of revenue are when persuasive evidence that an arrangement exists and both title and risk of loss have passed to the customer, the price is fixed or determinable, and collectability is reasonably assured. Sales returns and allowances are estimated and recorded as a reduction to sales in the period in which sales are recorded. The Company records product sales net of estimated product returns and discounts from the list prices for its products. The amounts of product returns and the discount amounts have not been material to date. The Company includes shipping and handling costs in cost of product sales. Cash and Cash Equivalents For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Allowance for Doubtful Accounts The allowance for doubtful accounts reflects management's best estimate of probable credit losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specifically identified nonpaying accounts and other currently available evidence. The Company reviews its allowance for doubtful accounts monthly with a focus on significant individual past due balances over 90 days. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. The following is a summary of Accounts Receivable as of June 30, 2016 and June 30, 2015. June 30, June 30, (in thousands) Accounts receivable $ 842 $ 783 Allowance for doubtful accounts (24 ) (22 ) Allowance for discounts and returns (24 ) (13 ) Total accounts receivable, net $ 794 $ 748 Inventories and Inventory Reserves Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Market is defined as sales price less cost to dispose and a normal profit margin. Inventory costs include materials, labor, depreciation and overhead. The company establishes reserves for excess and obsolete inventory, based on prevailing circumstances and judgment for consideration of current events, such as economic conditions, that may affect inventory. The reserve required to record inventory at lower of cost or market may be adjusted in response to changing conditions. Concentration of Credit Risk The Company maintains its cash accounts with banks located in Georgia. The total cash balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per bank. The Company had cash balances on deposit at June 30, 2016 and 2015 that exceeded the balance insured by the FDIC by $282,910 and $242,448, respectively. During 2016, we purchased 21% and 15% of total inventory purchases from two vendors. During 2015, we purchased 27% and 13% of total inventory purchases from two vendors. As of June 30, 2016 and 2015, one of the Company’s customers (Amazon) represents 32% and 32% of the total accounts receivables, respectively. Sales to (and through) Amazon accounted for 28% of our net sales during the year ended June 30, 2016 and 26% of our sales for the year ended June 30, 2015. Fair Value of Financial Instruments At June 30, 2016 and 2015, our financial instruments included cash and cash equivalents, accounts receivable, accounts payable, short-term debt, and other long-term debt. The fair values of these financial instruments approximated their carrying values based on either their short maturity or current terms for similar instruments. The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: · Level 1 · Level 2 · Level 3 The valuation techniques that may be used to measure fair value are as follows: A. Market approach B. Income approach C. Cost approach Advertising Costs Advertising costs are expensed in the period when the advertisements are first aired or distributed to the public. Prepaid advertising (included in prepaid expenses) was $19,946 at June 30, 2016 and $25,937 at June 30, 2015. Advertising expense for the years ended June 30, 2016 and 2015 was $345,393 and $411,469, respectively. Research and Development Research and development expenses for new products are expensed as they are incurred. Expenses for new product development (included in general and administrative expense) totaled $169,500 for the year ended June 30, 2016 and $124,674 for the year ended June 30, 2015. Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over estimated service lives for financial reporting purposes of 2-10 years. Expenditures for major renewals and betterments which extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. When properties are disposed of, the related costs and accumulated depreciation are removed from the respective accounts, and any gain or loss is recognized currently. Operating Leases On July 23, 2014, the Company entered into an agreement with its landlord to extend the facilities lease by five years. The previous ten year lease was to expire on December 31, 2015. The agreement amends the lease to expire on December 31, 2020. The lease amendment was effective August 1, 2014 and included a four-month rental abatement in the amount of $117,660. In exchange for the rental abatement, the Company agreed to make improvements to the facility totaling $123,505 within six months of August 1, 2014. As of June 30, 2016, the Company has completed $65,224 of the leasehold improvements. In addition, the monthly rent on the facility decreased from the current rent of $33,139 to $29,415 per month, beginning on December 1, 2014. Beginning January 1, 2015, the monthly rent is on an escalating schedule with the final year of the lease at $35,123 per month. The rent expense under this lease for the years ended June 30, 2016 and 2015 was $352,479 and $350,082, respectively. The Company also leases certain equipment under operating leases, as more fully described in Note 15 - Commitments and Contingencies Segment Information We have identified three reportable sales channels: Direct, Wholesale Other Direct Wholesale Wholesale Other Direct The following is a summary of sales results for the Direct, Wholesale Other Year Ended Year Ended % (in thousands) Net Sales by Channel: Direct $ 5,089 $ 5,260 (3 )% Wholesale $ 11,284 $ 9,835 15 % Other $ 453 $ 459 (1 )% Total Net Sales $ 16,826 $ 15,554 8 % Year Ended Margin Year Ended Margin % June 30, 2016 % June 30, 2015 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 2,470 49 % $ 2,361 45 % 5 % Wholesale $ 2,277 20 % $ 1,863 19 % 22 % Other $ (519 ) (115 )% $ (468 ) (102 )% (11 )% Total Gross Profit $ 4,228 25 % $ 3,756 24 % 13 % Recent Accounting Pronouncements In March 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-09, “ Compensation – Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting” (“ ”) In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842)” (“ In November 2015, the FASB issued ASU No. 2015-17, “ Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” In July 2015, the FASB issued ASU No. 2015-11,” Inventory: Simplifying the Measurement of Inventory” In April 2015, the FASB issued ASU No. 2015-03, “ Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. Net Loss Per Share In accordance with FASB Accounting Standards Codification No. 260 (“FASB ASC 260”), “Earnings Per Share”, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares outstanding as of June 30, 2016 and 2015, which consist of options, warrants, and convertible notes, have been excluded from the diluted net loss per common share calculations because they are anti-dilutive. The total potential anti-dilutive securities as of June 30, 2016 and 2015 are as follows: 2016 2015 Convertible Preferred Stock 4,300,000 4,300,000 Stock options 6,870,000 4,160,500 Convertible debt — — Total 11,170,000 8,460,500 Income Taxes We utilize the asset and liability method of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. If we determine in the future that it is more likely than not that we will realize all or a portion of our deferred tax assets, we will adjust our valuation allowance in the period we make the determination. We expect to provide a full valuation allowance on our future tax benefits until we can sustain a level of profitability that demonstrates our ability to realize these assets. At June 30, 2016, we carried a valuation allowance of $2.8 million against our net deferred tax assets. Stock Based Compensation We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. We measure the cost of each stock option and restricted stock award at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period. Stock Issued for Services to other than Employees Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, as required by FASB ASC 505, which is measured as of the date required by FASB ASC 505, “Equity – Based Payments to Non-Employees”. In accordance with FASB ASC 505, the stock options or common stock warrants are valued using the Black-Scholes option pricing model on the basis of the market price of the underlying common stock on the “valuation date”, which for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes option pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock up through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs. |
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment of Long-Lived Assets | NOTE 4. IMPAIRMENT OF LONG-LIVED ASSETS We follow Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 360, Property, Plant, and Equipment, regarding impairment of our other long-lived assets (property, plant and equipment). Our policy is to assess our long-lived assets for impairment annually in the fourth quarter of each year or more frequently if events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. An impairment loss is recognized only if the carrying value of a long-lived asset is not recoverable and is measured as the excess of its carrying value over its fair value. The carrying amount of a long-lived asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of long-lived asset. Assets to be disposed of and related liabilities would be separately presented in the consolidated balance sheet. Assets to be disposed of would be reported at the lower of the carrying value or fair value less costs to sell and would not be depreciated. There was no impairment as of June 30, 2016 or 2015. |
Inventories
Inventories | 12 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 5. INVENTORIES All inventories are stated at the lower of cost or market using the first-in, first-out method of valuation. The CompanyÂ’s inventories consist of the following components at June 30, 2016 and 2015: 2016 2015 (in thousands) Raw materials $ 659 $ 554 Work in process 182 160 Finished goods 663 615 Total inventories 1,504 1,329 Allowance for inventory reserves (60 ) (26 ) Total inventories, net of allowance $ 1,444 $ 1,303 |
Equipment and Leasehold Improve
Equipment and Leasehold Improvements, Net | 12 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Equipment and Leasehold Improvements, Net | NOTE 6. EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET Property and equipment at June 30, 2016 and 2015 consisted of the following: 2016 2015 Estimated (in thousands) Factory equipment $ 2,231 $ 1,910 2-10 years Computer equipment and software 1,049 909 5-7 years Office equipment and furniture 167 167 5-7 years Leasehold improvements 408 402 10 years Subtotal 3,855 3,388 Accumulated depreciation (2,985 ) (2,760 ) Equipment and leasehold improvements, net $ 870 $ 628 Depreciation expense was $225,312 and $219,168 for the years ended June 30, 2016 and 2015, respectively. |
Other Accrued Liabilities
Other Accrued Liabilities | 12 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities | NOTE 7. OTHER ACCRUED LIABILITIES Other accrued liabilities at June 30, 2016 and 2015 consisted of the following: 2016 2015 (in thousands) Accrued compensation $ 314 $ 266 Accrued expenses and interest 135 174 Current portion of deferred rent payable 28 16 Other accrued liabilities $ 477 $ 456 |
Current and Long- term Debt Sum
Current and Long- term Debt Summary | 12 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Current and Long- term Debt Summary | NOTE 8. CURRENT AND LONG-TERM DEBT SUMMARY Current and long-term debt at June 30, 2016 and 2015 consisted of the following: 2016 2015 Current debt: (in thousands) Unsecured lines of credit (Note 14) 27 41 Line of credit (Note 13) 737 720 Short-term unsecured notes payable (Note 9) 1,047 483 Current portion of term note payable – shareholder (Note 11) 130 108 Current portion of equipment notes payable (Note 15) 52 — Current portion of leases payable (Note 15) 57 71 Credit card advance (net of discount) (Note 12) 231 316 Notes payable – related party (Note 10) 116 116 Total current debt 2,397 1,855 Long-term debt: Leases payable (Note 15) 76 155 Unsecured notes payable (Note 9) 200 300 Equipment note payable (Note 15) 185 — Term note payable – shareholder (Note 11) 392 522 Total long-term debt $ 853 $ 977 |
Unsecured Notes Payable
Unsecured Notes Payable | 12 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Unsecured Notes Payable | NOTE 9. UNSECURED NOTES PAYABLE Unsecured notes payable at June 30, 2016 and 2015 consisted of the following: 2016 2015 (in thousands) Unsecured note payable for $400,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing August 28, 2015. Personally guaranteed by principal stockholder. $ — $ 83 Unsecured note payable for $150,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing December 12, 2016. $72,951 from the proceeds of the $300,000 unsecured note payable (described below) was used to retire this note. — — Unsecured note payable for $300,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing June 30, 2017. Personally guaranteed by principal stockholder. $72,951 of the proceeds from this note was used to retire the balance of the unsecured note listed above. Personally guaranteed by principal stockholder. 300 — Unsecured note payable for $200,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing August 30, 2016. $81,671 from the proceeds of the $300,000 unsecured note payable (described below) was used to retire this note. — — Unsecured note payable for $300,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing April 7 2017. Personally guaranteed by principal stockholder. $81,671 from the proceeds of this unsecured note payable was used to retire the balance of the unsecured note listed above. Personally guaranteed by principal stockholder. 247 — Unsecured note payable for $100,000 to an individual with interest at 20% payable monthly; principal originally due in full on October 31, 2014; extended to October 31, 2015. Subsequent to September 30, 2015, the due date on this note was extended by the holder to October 31, 2017 with interest payable monthly and principal due on maturity. Personally guaranteed by principal stockholder. 100 100 Unsecured note payable for $100,000 to an individual, with interest at 20% payable monthly; principal due in full on July 31, 2013. Subsequent to June 30, 2013, the due date on this note was extended by the holder to July 31, 2015. Subsequent to June 30, 2015, the due date on this note was extended by the holder to July 31, 2017. Personally guaranteed by principal stockholder. 100 100 Unsecured note payable for $300,000 to an individual, with interest at 20%, principal and interest originally due in full on January 3, 2013; extended to January 4, 2016 with interest payable monthly and principal due on maturity. Personally guaranteed by principal stockholder. Subsequent to December 31, 2015, the due date on this note was extended by the holder to January 2, 2017. 300 300 Unsecured note payable for $200,000 to an individual, with interest payable monthly at 20%, the principal was due in full on May 1, 2013; extended to May 1, 2015 by the note holder. Subsequent to May 1, 2015, the due date on this note was extended by the holder to May 1, 2017. Personally guaranteed by principal stockholder. 200 200 Total unsecured notes payable $ 1,247 $ 783 Less: current portion (1,047 ) (483 ) Long-term unsecured notes payable $ 200 $ 300 |
Notes Payable-Related Party
Notes Payable-Related Party | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Notes Payable-Related Party | NOTE 10. NOTES PAYABLE- RELATED PARTY Related party notes payable at June 30, 2016 and 2015 consisted of the following: 2016 2015 (in thousands) Unsecured note payable to an officer, with interest at 3.25%, due on demand $ 40 $ 40 Unsecured note payable to an officer, with interest at 3.25%, due on demand $ 76 $ 76 Total unsecured notes payable $ 116 $ 116 Less: current portion (116 ) (116 ) Long-term unsecured notes payable $ — $ — |
Term Notes Payable Shareholder
Term Notes Payable Shareholder | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Term Notes Payable Shareholder | NOTE 11. TERM NOTES PAYABLE - SHAREHOLDER On September 5, 2014, the Company amended and restated its outstanding 3% Convertible Note in the original principal amount of $375,000 issued by the Company to Hope Capital, Inc. (“HCI”) on June 24, 2009, as amended (the “June 2009 Note”), and the 3% Convertible Note in the original principal amount of $250,000 issued by the Company to HCI on September 2, 2009, as amended (the “September 2009 Note”), the June 2009 Note and September 2009 Note collectively referred to as the “Original Notes”, to provide for a 3% unsecured promissory note in the principal amount of $700,000 (the “Note”) to HCI. The Note is due on or before August 31, 2019 and bears interest at the rate of 3% per annum. Principal and interest payments under the Note shall be made on a monthly basis, starting on October 1, 2014 and continuing on the first day of each month thereafter for 60 monthly payments. The first 12 payments are $9,405.60 each and increase 15% each year, with 12 payments of $16,450.45 during year five. In the event the Company fails to make a monthly payment under the Note or the Company is subject to an bankruptcy event (as defined under the Note), subject to the Company’s ability to cure such default, HCI may convert all or any portion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable under the Note into shares of our common stock at a conversion price equal to $0.10 per share. Conversion is subject to HCI not being able to beneficially own more than 9.99% of our outstanding common stock upon any conversion, subject to waiver by HCI. The Company has the right to prepay the Note, in whole or in part, subject to notice to HCI, without penalty. As of June 30, 2016 the principal balance under this Note was $522,324. The principal payments required at maturity under the Company’s outstanding short term notes, secured line of credit, unsecured line of credit, credit cards loans, short term related party notes and term note payable at June 30, 2016 are as follows: Fiscal Years Ending June 30, (in thousands) 2017 $ 2,288 2018 358 2019 184 2020 50 Total $ 2,880 |
Credit Card Advance
Credit Card Advance | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Credit Card Advance | NOTE 12. CREDIT CARD ADVANCES On April 24, 2015, the Company entered into an agreement with Power Up Lending Group, Ltd. (“Power Up”) whereby Power Up agreed to loan OneUp and Foam Labs a total of $400,000. The loan was secured by OneUp’s and Foam Lab’s existing and future credit card collections. Terms of the loan called for a repayment of $448,000, which included a one-time finance charge of $48,000, approximately ten months after the funding date. This loan was repaid in full on February 18, 2016 and was guaranteed by the Company and personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman (see Note 16). On October 1, 2015 the Company borrowed an additional $100,000 from Power Up. Terms for this additional amount call for a repayment of $119,000, which includes a one-time finance charge of $19,000, approximately ten months after the funding date. This will be accomplished by Power Up withholding a fixed amount each business day of $566.67 from OneUp’s credit card receipts until full repayment is made. This loan is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman (see Note 16). On February 22, 2016 the Company received another loan that calls for a repayment of $448,000, which includes a one-time finance charge of $48,000, approximately ten months after the funding date. This loan is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman (see Note 16). As of June 30, 2016, the principle amount of the credit card advances totaled $230,798, net of a discount of $30,700. On August 4, 2016, the Company borrowed an additional amount of $150,000 from Power Up. The loan calls for a repayment of $168,000, which includes a one-time finance charge of $18,000, approximately ten months after the funding date. This loan is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman (see Note 16). On September 22, the Company borrowed an additional amount of $400,000 from Power Up. The loan calls for a repayment of $452,000, which includes a one-time finance charge of $52,000, approximately ten months after the funding date. The balance of the February 22, 2016 credit card loan was deducted from this loan and the Company received net proceeds of approximately $270,000. This loan is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman (see Note 16). |
Line of Credit
Line of Credit | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Line of Credit | NOTE 13. LINE OF CREDIT On May 24, 2011, the CompanyÂ’s wholly owned subsidiary, OneUp and OneUpÂ’s wholly owned subsidiary, Foam Labs entered into a credit facility with a finance company, Advance Financial Corporation, to provide it with an asset based line of credit of up to $750,000 against 85% of eligible accounts receivable (as defined in the agreement) for the purpose of improving working capital. The term of the agreement was one year, renewable for additional one-year terms unless either party provides written notice of non-renewal at least 90 days prior to the end of the current financing period. The credit facility was secured by our accounts receivable and other rights to payment, general intangibles, inventory and equipment, and are subject to eligibility requirements for current accounts receivable. Advances under the agreement were charged interest at a rate of 2.5% over the lenders Index Rate. In addition there was a Monthly Service Fee (as defined in the agreement) of up to 1.25% per month. On September 4, 2013, the credit agreement with Advance Financial Corporation was amended and restated to increase the asset based line of credit to $1,000,000 to include an Inventory Advance (as defined in the amended and restated receivable financing agreement) of up to the lesser of $300,000 or 75% of the eligible accounts receivable loan. In addition, the amended and restated agreement changed the interest calculation to prime rate plus 3% (as of June 30, 2016, the interest rate was 6.5%) and the Monthly Service Fee was changed to .5% per month. On December 9, 2015, the credit agreement with Advance Financial Corporation was amended to increase the asset based line of credit to $1,200,000 to include an Inventory Advance (as defined in the amended and restated receivable financing agreement) of up to the lesser of $300,000 or 75% of the eligible accounts receivable loan. All other terms of the credit facility remain the same. The CompanyÂ’s CEO, Louis Friedman, has personally guaranteed the repayment of the facility. In addition, Luvu Brands has provided its corporate guarantee of the credit facility (see Note 16). On June 30, 2016, the balance owed under this line of credit was $737,264. As of June 30, 2016, we were current and in compliance with all terms and conditions of this line of credit. Management believes cash flows generated from operations, along with current cash and investments as well as borrowing capacity under the line of credit should be sufficient to finance capital requirements required by operations. If new business opportunities do arise, additional outside funding may be required. |
Unsecured Lines of Credit
Unsecured Lines of Credit | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Unsecured Lines of Credit | NOTE 14. UNSECURED LINES OF CREDIT The Company has drawn a cash advance on one unsecured lines of credit that is in the name of the Company and Louis S. Friedman (see Note 16). The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 8%. The aggregate amount owed on the unsecured line of credit was $ 27,188 at June 30, 2016 and $40,731 at June 30, 2015. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 15. COMMITMENTS AND CONTINGENCIES Operating Leases On July 23, 2014, the Company entered into an agreement with its landlord to extend the facilities lease by five years. The previous ten year lease was to expire on December 31, 2015. The agreement amends the lease to expire on December 31, 2020. The lease amendment was effective August 1, 2014 and included a four month rental abatement in the amount of $117,660. In exchange for the rental abatement, the Company agreed to make improvements to the facility totaling $123,505 within six months of August 1, 2014. As of June 30, 2016, the Company has completed $65,224 of the leasehold improvements. In addition, the monthly rent on the facility decreased from the current rent of $33,139 to $29,415 per month, beginning on December 1, 2014. Beginning January 1, 2015, the monthly rent is on an escalating schedule with the final year of the lease at $35,123 per month. The rent expense under this lease for the years ended June 30, 2016 and 2015 was $352,479 and $350,082, respectively. The Company also leases certain postage equipment under an operating lease. The monthly lease is $104 per month and expires January 2017. The Company entered into an operating lease for certain material handling equipment in September 2010. The monthly lease amount is $1,587 per month and expired in September 2015. Subsequent to September 2015, this operating lease was extended to September 2016 with the monthly lease amount at $1,602. Future minimum lease payments under non-cancelable operating leases at June 30, 2016 are as follows: Years ending June 30, (in thousands) 2017 384 2018 392 2019 403 2020 415 Thereafter through 2021 211 Total minimum lease payments $ 1,805 Capital Leases The Company has acquired equipment under the provisions of long-term leases. For financial reporting purposes, minimum lease payments relating to the equipment have been capitalized. The leased properties under these capital leases have a total cost of $287,104. These assets are included in the fixed assets listed in Note 6 and include computers, software, furniture, and equipment. The capital leases have stated or imputed interest rates ranging from 7% to 21%. The following is an analysis of the minimum future lease payments subsequent to the year ended June 30, 2016: Years ending June 30, (in thousands) 2017 68 2018 45 2019 29 2020 8 Future Minimum Lease Payments $ 150 Less Amount Representing Interest (17 ) Present Value of Minimum Lease Payments 133 Less Current Portion (57 ) Long-Term Obligations under Leases Payable $ 76 Equipment Notes Payable The Company has acquired equipment under the provisions of long-term equipment notes. For financial reporting purposes, minimum note payments relating to the equipment have been capitalized. The equipment acquired with these equipment notes has a total cost of $283,218. These assets are included in the fixed assets listed in Note 6 - Equipment and Leasehold Improvements The following is an analysis of the minimum future equipment note payable payments subsequent to June 30, 2016: Year ending June 30, (in thousands) 2017 $ 75 2018 75 2019 72 2020 61 2021 8 Future Minimum Note Payable Payments $ 291 Less Amount Representing Interest (54 ) Present Value of Minimum Note Payable Payments 237 Less Current Portion (52 ) Long-Term Obligations under Equipment Notes Payable $ 185 Employment Agreements The Company has entered into an employment agreement with Louis Friedman, President and Chief Executive Officer. The agreement provides for an annual base salary of $150,000 and eligibility to receive a bonus. In certain termination situations, the Company is liable to pay severance compensation to Mr. Friedman for up to nine months at his current salary. Legal Proceedings As of the date of this Annual Report, there are no material pending legal or governmental proceedings relating to our company or properties to which we are a party, and to our knowledge there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which have a material interest adverse to us. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Parties | NOTE 16. RELATED PARTY TRANSACTIONS The Company has a subordinated note payable to the wife of the Company’s CEO (Louis Friedman) and majority shareholder in the amount of $76,000. Interest on the note during the year ended June 30, 2016 was accrued by the Company at the prevailing prime rate (which is currently 3.5%) and totaled $2,579. The accrued interest on the note as of June 30, 2016 was $17,570. This note is subordinate to all other credit facilities currently in place. On October 30, 2010, Mr. Friedman, loaned the Company $40,000. Interest on the note during the year ended June 30, 2016 was accrued by the Company at the prevailing prime rate (which is currently 3.5%) and totaled $1,358. The accrued interest on the note as of June 30, 2016 was $3,302. This note is subordinate to all other credit facilities currently in place. On January 3, 2011, an individual loaned the Company $300,000 with an interest rate of 20%. Interest on the loan is being paid monthly, with the principal due in full on January 3, 2012; extended to January 3, 2013; then extended to January 3, 2015; then extended to January 2, 2017 with the principle due on maturity (see Note 9). Mr. Friedman personally guaranteed the repayment of the loan obligation. The Company’s CEO, Louis Friedman, has personally guaranteed the repayment of the loan obligation to Advance Financial Corporation (see Note 13 – Line of Credit). In addition, Luvu Brands has provided its corporate guarantees of the credit facility. On June 30, 2016, the balance owed under this line of credit was $737,264. On July 20, 2011, the Company issued an unsecured promissory note to an individual for $100,000. Terms of the promissory note call for monthly interest payments of $1,667 (equal to interest at 20% per annum), with the principal amount due in full on July 31, 2012. On July 31, 2012, the note was extended to July 31, 2013 under the same terms. Prior to June 30, 2013, the note was extended to July 31, 2015 under the same terms. Subsequent to June 30, 2015, the note was extended to July 31, 2017 under the same terms (see Note 9). Repayment of the promissory note is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman. On October 31, 2013, the Company issued an unsecured promissory note to an individual for $100,000. Terms of the promissory note call for monthly interest payments of $1,667 (equal to interest at 20% per annum) beginning on November 30, 2013, with the principal amount due in full on or before October 31, 2014. Prior to October 31, 2014, the note was extended to October 31, 2015 under the same terms. Prior to October 31, 2015, the note was extended to October 31, 2017 under the same terms (see Note 9). Repayment of the promissory note is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. On May 1, 2012, an individual loaned the Company $200,000 with an interest rate of 20%. Interest on the loan is being paid monthly, with the principal due in full on May 1, 2013; then extended to May 1, 2015; then extended to May 1, 2017 with the principle due on maturity (see Note 9). Mr. Friedman personally guaranteed the repayment of the loan obligation. The loans from Power Up Lending Group, Ltd. (see Note 12) are guaranteed by the Company (including OneUp and Foam Labs) and are personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. Power Up Lending Group, Ltd. is controlled by Curt Kramer, who also controls Hope Capital. As last reported to us, Hope Capital, Inc. owns 7.5% of our common stock. On August 26, 2014, the Company issued an unsecured promissory note for $400,000 to two individual shareholders. Proceeds from the promissory note were used to retire three other notes held by the two individual shareholders including the $250,000 note dated December 19, 2013 with a balance of $92,228; the $250,000 note dated January 20, 2014 with a balance of $111,874 and the $130,000 note dated April 4, 2014 with a balance of $87,899 (collectively the “Prior Notes”). The remaining balance, after paying the balance on the Prior Notes, of $107,999 was received in cash by the Company. Terms of the $400,000 note are 26 bi-weekly payments of principal and interest of $17,033 (see Note 9). At June 30, 2015, the principal balance of this note was $83,235 and was repaid in full on August 28, 2015. On April 11, 2016, the Company borrowed $300,000 from two individual shareholders with interest at 20% on an unsecured note payment, principal and interest paid bi-weekly with the final payment due April 7, 2017. The balance due on the $200,000 unsecured note payable due August 30, 2016 was paid in full and the Company received net proceeds of $218,329 after the repayment of the September 1, 2015 loan. At June 30, 2016, the principal balance of this note was $246,852. The loan is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. On June 29, 2016, the Company borrowed $300,000 from two individual shareholders with interest at 20% on an unsecured note payment, principal and interest paid bi-weekly with the final payment due June 30, 2017. The balance due on the $150,000 unsecured note payable due December 14, 2016 was paid in full and the Company received net proceeds of $227,049 after the repayment of the December 12, 2015 loan. At June 30, 2016, the principal balance of this note was $300,000. The loan is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. The Company has drawn a cash advance on one unsecured lines of credit that is in the name of the Company and Louis S. Friedman. The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 8%. The aggregate amount owed on the unsecured line of credit was $27,188 at June 30, 2016 and $40,731 at June 30, 2015. The loan is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. On September 5, 2014, the Company amended and restated its outstanding 3% Convertible Note in the original principal amount of $375,000 issued by the Company to Hope Capital, Inc. (“HCI”) on June 24, 2009, as amended (the “June 2009 Note”), and the 3% Convertible Note in the original principal amount of $250,000 issued by the Company to HCI on September 2, 2009, as amended (the “September 2009 Note”), the June 2009 Note and September 2009 Note collectively referred to as the “Original Notes”, to provide for a 3% unsecured promissory note in the principal amount of $700,000 (the “Note”) to HCI. The Note is due on or before August 31, 2019 and bears interest at the rate of 3% per annum. Principal and interest payments under the Note shall be made on a monthly basis, starting on October 1, 2014 and continuing on the first day of each month thereafter for 60 monthly payments. The first 12 payments are $9,405.60 each and increase 15% every year, with 12 payments of $16,450.45 during year five. In the event the Company fails to make a monthly payment under the Note or the Company is subject to an bankruptcy event (as defined under the Note), subject to the Company’s ability to cure such default, HCI may convert all or any portion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable under the Note into shares of our common stock at a conversion price equal to $0.10 per share. Conversion is subject to HCI not being able to beneficially own more than 9.99% of our outstanding common stock upon any conversion, subject to waiver by HCI. The Company has the right to prepay the Note, in whole or in part, subject to notice to HCI, without penalty. At June 30, 2016, the principal balance under the Note was $522,324. On November 6, 2015, the Company sold 750,000 shares of restricted common stock to the Company’s President and CEO, Louis Friedman, for $75,000. We relied upon the exemption from registration as set forth in Section 4(a)(2) of the Securities Act of 1933, as amended, for the issuance of these securities as the transaction was by the issuer and did not involve any public offering. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 17. STOCKHOLDERS’ EQUITY Options At June 30, 2016, the Company had the 2009 and 2015 Stock Option Plans (the “Plans”), which are shareholder-approved and under which 4,170,000 shares are reserved for issuance under the 2009 Plan until that Plan terminates on October 20, 2019 and 5,000,000 shares are reserved for issuance under the 2015 Plan until that Plan terminates on August 31, 2025. Under the Plans, eligible employees and certain independent consultants may be granted options to purchase shares of the Company’s common stock. The shares issuable under the Plan will either be shares of the Company’s authorized but previously unissued common stock or shares reacquired by the Company, including shares purchased on the open market. As of June 30, 2016, the number of shares available for issuance under the 2015 Plan was 2,300,000. There are no shares available for issuance under the 2009 Plan, other than the 4,170,000 stock options that have already been granted. All stock option grants made under the Plan were at exercise prices no less than the Company’s closing stock price on the date of grant. Options under the Plan were determined by the board of directors in accordance with the provisions of the plan. The terms of each option grant include vesting, exercise, and other conditions are set forth in a Stock Option Agreement evidencing each grant. No option can have a life in excess of ten (10) years. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. The model requires various assumptions, including a risk-free interest rate, the expected term of the options, the expected stock price volatility over the expected term of the options, and the expected dividend yield. Compensation expense for employee stock options is recognized ratably over the vesting term. The Company has no awards with market or performance conditions. The following table summarizes stock-based compensation expense by line item in the consolidated statements of operations, all relating to employee stock plans: Twelve Months Ended June 30, 2016 2015 (in thousands) Cost of Goods Sold $ 7 $ 12 Other Selling and Marketing 8 6 General and Administrative 21 24 Total $ 36 $ 42 Stock-based compensation expense recognized in the consolidated statements of operations for each of the twelve month period ended June 30, 2016 and 2015 is based on awards ultimately expected to vest. A summary of option activity under the Company’s stock plan for the year ended June 30, 2016 and 2015 is presented below: Option Activity Shares Weighted Weighted Average Remaining Contractual Term Aggregate Outstanding at June 30, 2014 4,270,500 $ .09 3.2 years $ -0- Granted 350,000 $ .03 Exercised — $ — Forfeited or Expired (460,000 ) $ .04 Outstanding at June 30, 2015 4,160,500 $ .07 2.2 years -0- Granted 3,700,000 $ — Exercised — $ — Forfeited or Expired (990,500 ) $ .08 Outstanding at June 30, 2016 6,870,000 $ .04 3.0 years $ 16,900 Exercisable at June 30, 2016 2,504,500 $ .08 1.5 years $ 270 The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price of $.0183 for such day. A summary of the Company’s non-vested options for the year ended June 30, 2016 is presented below: Non-vested Options Shares Weighted Average Grant-Date Fair Value Non-vested at June 30, 2015 2,080,500 $ .08 Granted 3,700,000 .02 Vested (784,500 ) .05 Forfeited (630,500 ) .08 Non-vested at June 30, 2016 4,365,500 $ .02 The weighted average grant-date fair value of stock options granted during fiscal years 2016 and 2015 were $54,940 and $10,395, respectively. The total grant-date fair values of stock options that vested during fiscal years 2016 and 2015 were $40,979 and $69,492, respectively. The following table summarizes the weighted average characteristics of outstanding stock options as of June 30, 2016: Outstanding Options Exercisable Options Exercise Prices Number Remaining Weighted Number of Weighted $ .02 to .03 3,700,000 4.4 $ .02 125,000 $.02 $ .05 to .09 2,638,000 1.7 $ .06 1,847,500 $.06 $ .16 532,000 .7 $ .16 532,000 $.16 Total stock options 6,870,000 3.0 $ .04 2,504,500 $.08 The range of fair value assumptions related to options granted during the years ended June 30, 2016 and 2015 were as follows: 2016 2015 Exercise Price: $ .01 - .03 $ 0.03 Volatility: 259% - 320% 259% Risk Free Rate: 1.23% - 1.6% 1.09% to 1.11% Vesting Period: 4 years 4 years Forfeiture Rate: 0% 0% Expected Life 4.1 years 4.1 years Dividend Rate 0% 0% As of June 30, 2016, total unrecognized stock-based compensation expense related to all unvested stock options was $62,412, which is expected to be expensed over a weighted average period of 3.4 years. Share Purchase Warrants As of June 30, 2016 and 2015, there were no share purchase warrants outstanding. Common Stock The Company’s authorized common stock was 175,000,000 shares at June 30, 2016 and 2015. Common shareholders are entitled to dividends if and when declared by the Company’s Board of Directors, subject to preferred stockholder dividend rights. At June 30, 2016, the Company had reserved the following shares of common stock for issuance: June 30, 2016 Shares of common stock reserved for issuance under the 2009 Stock Option Plan 4,170,000 Shares of common stock reserved for issuance under the 2015 Stock Option Plan 5,000,000 Shares of common stock issuable upon conversion of the Preferred Stock 4,300,000 Total shares of common stock equivalents 13,470,000 On November 6, 2015, the Company sold 750,000 shares of restricted common stock to the Company’s President and CEO, Louis Friedman, for $75,000. We relied upon the exemption from registration as set forth in Section 4(a)(2) of the Securities Act of 1933, as amended, for the issuance of these securities as the transaction was by the issuer and did not involve any public offering (see Note 16). Preferred Stock On February 18, 2011, the Company filed an amendment to its Articles of Incorporation, effective February 9, 2011, authorizing the issuance of preferred stock and the Company now has 10,000,000 authorized shares of preferred stock, par value $.0001 per share, of which 4,300,000 shares have been designated and issued as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into one share of common stock and has a liquidation preference of $.2325 ($1,000,000 in the aggregate). Liquidation payments to the preferred holders have priority and are made in preference to any payments to the holders of common stock. In addition, each share of Series A Convertible Preferred Stock is entitled to the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Shares issued and outstanding at the time of such vote. At each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors, holders of Series A Convertible Preferred Shares shall vote together with the holders of common shares as a single class. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 18. INCOME TAXES Deferred tax assets and liabilities are computed by applying the effective U.S. federal income tax rate to the gross amounts of temporary differences and other tax attributes. Deferred tax assets and liabilities relating to state income taxes are not material. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, 2016 and 2015, the Company believed it was more likely than not that future tax benefits from net operating loss carryforwards and other deferred tax assets would not be realizable through generation of future taxable income; therefore, they were fully reserved. The components of deferred tax assets and liabilities at June 30, 2016 and 2015 are approximately as follows: 2016 2015 (in thousands) Deferred tax assets: Inventory reserves $ 13 $ — Allowance for doubtful accounts 13 8 Stock-based compensation 61 48 Net operating loss carry-forwards 2,714 2,626 Valuation allowance (2,801 ) (2,682 ) Net deferred tax assets $ — $ — The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 38% to pretax loss from operations for the years ended June 30, 2016 and 2015 due to the following: 2016 2015 Net loss $ 88 $ 159 Temporary differences 31 21 Valuation (allowance) (119 ) (180 ) Net tax benefit $ — $ — At June 30, 2016, the Company had net operating loss (NOL) carryforwards of approximately $7.2 million that may be offset against future taxable income. During 2016 and 2015, the total increase in the valuation allowance was $118,549 and $179,834, respectively. The Company’s ability to use its NOL carryforwards may be substantially limited due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOL that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50.0% of the outstanding stock of a company by certain stockholders or public groups. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company became a “loss corporation” under the definition of Section 382. If the Company has experienced an ownership change, utilization of the NOL carryforwards would be subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL carryforwards before utilization. Further, until a study is completed and any limitation known, no positions related to limitations are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on the results of operations or financial position of the Company. The NOL carryforwards expire in the years 2025 through 2036. The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2010 through 2016. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 19. – SUBSEQUENT EVENTS On August 4, 2016, the Company borrowed $150,000 from Power Up. The loan calls for a repayment of $168,000, which includes a one-time finance charge of $18,000, approximately ten months after the funding date. This loan is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman (see Note 12). On September 22, 2016, the company borrowed an additional $400,000 from Power Up. Terms for this additional amount call for a repayment of $452,000, which includes a one-time finance charge of $52,000, approximately ten months after the funding date. This will be accomplished by Power Up withholding a fixed amount each business day of $2,152 from OneUp’s credit card receipts until full repayment is made. The balance of the February 22, 2016 credit card loan was deducted from this loan and the Company received net proceeds from Power Up of approximately $270,000.This loan is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman (see Note 12). |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These consolidated financial statements include the accounts and operations of our wholly owned operating subsidiaries, OneUp and Foam Labs. Intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates in these consolidated financial statements include estimates of: income taxes; tax valuation reserves; allowances for doubtful accounts; inventory valuation and reserves, share-based compensation; and useful lives for depreciation and amortization. Actual results could differ materially from these estimates. |
Revenue Recognition | Revenue Recognition We recognize revenues as goods are shipped to customers and title is transferred. The criteria for recognition of revenue are when persuasive evidence that an arrangement exists and both title and risk of loss have passed to the customer, the price is fixed or determinable, and collectability is reasonably assured. Sales returns and allowances are estimated and recorded as a reduction to sales in the period in which sales are recorded. The Company records product sales net of estimated product returns and discounts from the list prices for its products. The amounts of product returns and the discount amounts have not been material to date. The Company includes shipping and handling costs in cost of product sales. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The allowance for doubtful accounts reflects management's best estimate of probable credit losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specifically identified nonpaying accounts and other currently available evidence. The Company reviews its allowance for doubtful accounts monthly with a focus on significant individual past due balances over 90 days. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. The following is a summary of Accounts Receivable as of June 30, 2016 and June 30, 2015. June 30, June 30, (in thousands) Accounts receivable $ 842 $ 783 Allowance for doubtful accounts (24 ) (22 ) Allowance for discounts and returns (24 ) (13 ) Total accounts receivable, net $ 794 $ 748 |
Inventories and Inventory Reserves | Inventories and Inventory Reserves Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Market is defined as sales price less cost to dispose and a normal profit margin. Inventory costs include materials, labor, depreciation and overhead. The company establishes reserves for excess and obsolete inventory, based on prevailing circumstances and judgment for consideration of current events, such as economic conditions, that may affect inventory. The reserve required to record inventory at lower of cost or market may be adjusted in response to changing conditions. |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains its cash accounts with banks located in Georgia. The total cash balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per bank. The Company had cash balances on deposit at June 30, 2016 and 2015 that exceeded the balance insured by the FDIC by $282,910 and $242,448, respectively. During 2016, we purchased 21% and 15% of total inventory purchases from two vendors. During 2015, we purchased 27% and 13% of total inventory purchases from two vendors. As of June 30, 2016 and 2015, one of the Company’s customers (Amazon) represents 32% and 32% of the total accounts receivables, respectively. Sales to (and through) Amazon accounted for 28% of our net sales during the year ended June 30, 2016 and 26% of our sales for the year ended June 30, 2015. |
Fair Value of Financial and Derivative Instruments | Fair Value of Financial Instruments At June 30, 2016 and 2015, our financial instruments included cash and cash equivalents, accounts receivable, accounts payable, short-term debt, and other long-term debt. The fair values of these financial instruments approximated their carrying values based on either their short maturity or current terms for similar instruments. The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: · Level 1 · Level 2 · Level 3 The valuation techniques that may be used to measure fair value are as follows: A. Market approach B. Income approach C. Cost approach |
Advertising Costs | Advertising Costs Advertising costs are expensed in the period when the advertisements are first aired or distributed to the public. Prepaid advertising (included in prepaid expenses) was $19,946 at June 30, 2016 and $25,937 at June 30, 2015. Advertising expense for the years ended June 30, 2016 and 2015 was $345,393 and $411,469, respectively. |
Research and Development | Research and Development Research and development expenses for new products are expensed as they are incurred. Expenses for new product development (included in general and administrative expense) totaled $169,500 for the year ended June 30, 2016 and $124,674 for the year ended June 30, 2015. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over estimated service lives for financial reporting purposes of 2-10 years. Expenditures for major renewals and betterments which extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. When properties are disposed of, the related costs and accumulated depreciation are removed from the respective accounts, and any gain or loss is recognized currently. |
Operating Leases | Operating Leases On July 23, 2014, the Company entered into an agreement with its landlord to extend the facilities lease by five years. The previous ten year lease was to expire on December 31, 2015. The agreement amends the lease to expire on December 31, 2020. The lease amendment was effective August 1, 2014 and included a four-month rental abatement in the amount of $117,660. In exchange for the rental abatement, the Company agreed to make improvements to the facility totaling $123,505 within six months of August 1, 2014. As of June 30, 2016, the Company has completed $65,224 of the leasehold improvements. In addition, the monthly rent on the facility decreased from the current rent of $33,139 to $29,415 per month, beginning on December 1, 2014. Beginning January 1, 2015, the monthly rent is on an escalating schedule with the final year of the lease at $35,123 per month. The rent expense under this lease for the years ended June 30, 2016 and 2015 was $352,479 and $350,082, respectively. The Company also leases certain equipment under operating leases, as more fully described in Note 15 - Commitments and Contingencies |
Segment Information | Segment Information We have identified three reportable sales channels: Direct, Wholesale Other Direct Wholesale Wholesale Other Direct The following is a summary of sales results for the Direct, Wholesale Other Year Ended Year Ended % (in thousands) Net Sales by Channel: Direct $ 5,089 $ 5,260 (3 )% Wholesale $ 11,284 $ 9,835 15 % Other $ 453 $ 459 (1 )% Total Net Sales $ 16,826 $ 15,554 8 % Year Ended Margin Year Ended Margin % June 30, 2016 % June 30, 2015 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 2,470 49 % $ 2,361 45 % 5 % Wholesale $ 2,277 20 % $ 1,863 19 % 22 % Other $ (519 ) (115 )% $ (468 ) (102 )% (11 )% Total Gross Profit $ 4,228 25 % $ 3,756 24 % 13 % |
Recently Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-09, “ Compensation – Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting” (“ ”) In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842)” (“ In November 2015, the FASB issued ASU No. 2015-17, “ Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” In July 2015, the FASB issued ASU No. 2015-11,” Inventory: Simplifying the Measurement of Inventory” In April 2015, the FASB issued ASU No. 2015-03, “ Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. |
Net Income Per Share | Net Loss Per Share In accordance with FASB Accounting Standards Codification No. 260 (“FASB ASC 260”), “Earnings Per Share”, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares outstanding as of June 30, 2016 and 2015, which consist of options, warrants, and convertible notes, have been excluded from the diluted net loss per common share calculations because they are anti-dilutive. The total potential anti-dilutive securities as of June 30, 2016 and 2015 are as follows: 2016 2015 Convertible Preferred Stock 4,300,000 4,300,000 Stock options 6,870,000 4,160,500 Convertible debt — — Total 11,170,000 8,460,500 |
Income Taxes | Income Taxes We utilize the asset and liability method of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. If we determine in the future that it is more likely than not that we will realize all or a portion of our deferred tax assets, we will adjust our valuation allowance in the period we make the determination. We expect to provide a full valuation allowance on our future tax benefits until we can sustain a level of profitability that demonstrates our ability to realize these assets. At June 30, 2016, we carried a valuation allowance of $2.8 million against our net deferred tax assets. |
Stock based Compensation | Stock Based Compensation We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. We measure the cost of each stock option and restricted stock award at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period. |
Stock Issued for Services to other than Employees | Stock Issued for Services to other than Employees Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, as required by FASB ASC 505, which is measured as of the date required by FASB ASC 505, “Equity – Based Payments to Non-Employees”. In accordance with FASB ASC 505, the stock options or common stock warrants are valued using the Black-Scholes option pricing model on the basis of the market price of the underlying common stock on the “valuation date”, which for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes option pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock up through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Accounts Receivable | June 30, June 30, (in thousands) Accounts receivable $ 842 $ 783 Allowance for doubtful accounts (24 ) (22 ) Allowance for discounts and returns (24 ) (13 ) Total accounts receivable, net $ 794 $ 748 |
Summary of sales | Year Ended Year Ended % (in thousands) Net Sales by Channel: Direct $ 5,089 $ 5,260 (3 )% Wholesale $ 11,284 $ 9,835 15 % Other $ 453 $ 459 (1 )% Total Net Sales $ 16,826 $ 15,554 8 % Year Ended Margin Year Ended Margin % June 30, 2016 % June 30, 2015 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 2,470 49 % $ 2,361 45 % 5 % Wholesale $ 2,277 20 % $ 1,863 19 % 22 % Other $ (519 ) (115 )% $ (468 ) (102 )% (11 )% Total Gross Profit $ 4,228 25 % $ 3,756 24 % 13 % |
Anti-dilutive securities | 2016 2015 Convertible Preferred Stock 4,300,000 4,300,000 Stock options 6,870,000 4,160,500 Convertible debt — — Total 11,170,000 8,460,500 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | 2016 2015 (in thousands) Raw materials $ 659 $ 554 Work in process 182 160 Finished goods 663 615 Total inventories 1,504 1,329 Allowance for inventory reserves (60 ) (26 ) Total inventories, net of allowance $ 1,444 $ 1,303 |
Equipment and Leasehold Impro29
Equipment and Leasehold Improvements, Net (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Equipment and Leasehold Improvements, Net | 2016 2015 Estimated (in thousands) Factory equipment $ 2,231 $ 1,910 2-10 years Computer equipment and software 1,049 909 5-7 years Office equipment and furniture 167 167 5-7 years Leasehold improvements 408 402 10 years Subtotal 3,855 3,388 Accumulated depreciation (2,985 ) (2,760 ) Equipment and leasehold improvements, net $ 870 $ 628 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities | 2016 2015 (in thousands) Accrued compensation $ 314 $ 266 Accrued expenses and interest 135 174 Current portion of deferred rent payable 28 16 Other accrued liabilities $ 477 $ 456 |
Current and Long- term Debt S31
Current and Long- term Debt Summary (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Current and Long-term Debt Summary | 2016 2015 Current debt: (in thousands) Unsecured lines of credit (Note 14) 27 41 Line of credit (Note 13) 737 720 Short-term unsecured notes payable (Note 9) 1,047 483 Current portion of term note payable – shareholder (Note 11) 130 108 Current portion of equipment notes payable (Note 15) 52 — Current portion of leases payable (Note 15) 57 71 Credit card advance (net of discount) (Note 12) 231 316 Notes payable – related party (Note 10) 116 116 Total current debt 2,397 1,855 Long-term debt: Leases payable (Note 15) 76 155 Unsecured notes payable (Note 9) 200 300 Equipment note payable (Note 15) 185 — Term note payable – shareholder (Note 11) 392 522 Total long-term debt $ 853 $ 977 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Unsecured Notes Payable | 2016 2015 (in thousands) Unsecured note payable for $400,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing August 28, 2015. Personally guaranteed by principal stockholder. $ — $ 83 Unsecured note payable for $150,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing December 12, 2016. $72,951 from the proceeds of the $300,000 unsecured note payable (described below) was used to retire this note. — — Unsecured note payable for $300,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing June 30, 2017. Personally guaranteed by principal stockholder. $72,951 of the proceeds from this note was used to retire the balance of the unsecured note listed above. Personally guaranteed by principal stockholder. 300 — Unsecured note payable for $200,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing August 30, 2016. $81,671 from the proceeds of the $300,000 unsecured note payable (described below) was used to retire this note. — — Unsecured note payable for $300,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing April 7 2017. Personally guaranteed by principal stockholder. $81,671 from the proceeds of this unsecured note payable was used to retire the balance of the unsecured note listed above. Personally guaranteed by principal stockholder. 247 — Unsecured note payable for $100,000 to an individual with interest at 20% payable monthly; principal originally due in full on October 31, 2014; extended to October 31, 2015. Subsequent to September 30, 2015, the due date on this note was extended by the holder to October 31, 2017 with interest payable monthly and principal due on maturity. Personally guaranteed by principal stockholder. 100 100 Unsecured note payable for $100,000 to an individual, with interest at 20% payable monthly; principal due in full on July 31, 2013. Subsequent to June 30, 2013, the due date on this note was extended by the holder to July 31, 2015. Subsequent to June 30, 2015, the due date on this note was extended by the holder to July 31, 2017. Personally guaranteed by principal stockholder. 100 100 Unsecured note payable for $300,000 to an individual, with interest at 20%, principal and interest originally due in full on January 3, 2013; extended to January 4, 2016 with interest payable monthly and principal due on maturity. Personally guaranteed by principal stockholder. Subsequent to December 31, 2015, the due date on this note was extended by the holder to January 2, 2017. 300 300 Unsecured note payable for $200,000 to an individual, with interest payable monthly at 20%, the principal was due in full on May 1, 2013; extended to May 1, 2015 by the note holder. Subsequent to May 1, 2015, the due date on this note was extended by the holder to May 1, 2017. Personally guaranteed by principal stockholder. 200 200 Total unsecured notes payable $ 1,247 $ 783 Less: current portion (1,047 ) (483 ) Long-term unsecured notes payable $ 200 $ 300 |
Notes Payable-Related Party (Ta
Notes Payable-Related Party (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Notes Payable - Related Party | 2016 2015 (in thousands) Unsecured note payable to an officer, with interest at 3.25%, due on demand $ 40 $ 40 Unsecured note payable to an officer, with interest at 3.25%, due on demand $ 76 $ 76 Total unsecured notes payable $ 116 $ 116 Less: current portion (116 ) (116 ) Long-term unsecured notes payable $ — $ — |
Term Notes Payable Shareholder
Term Notes Payable Shareholder (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Term Notes Payable Shareholder Tables | |
Term Notes Payable Shareholder | Fiscal Years Ending June 30, (in thousands) 2017 $ 2,288 2018 358 2019 184 2020 50 Total $ 2,880 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum operating lease payments | Years ending June 30, (in thousands) 2017 384 2018 392 2019 403 2020 415 Thereafter through 2021 211 Total minimum lease payments $ 1,805 |
Future minimum capital lease payments | Years ending June 30, (in thousands) 2017 68 2018 45 2019 29 2020 8 Future Minimum Lease Payments $ 150 Less Amount Representing Interest (17 ) Present Value of Minimum Lease Payments 133 Less Current Portion (57 ) Long-Term Obligations under Leases Payable $ 76 |
Equipment lease payments | Year ending June 30, (in thousands) 2017 $ 75 2018 75 2019 72 2020 61 2021 8 Future Minimum Note Payable Payments $ 291 Less Amount Representing Interest (54 ) Present Value of Minimum Note Payable Payments 237 Less Current Portion (52 ) Long-Term Obligations under Equipment Notes Payable $ 185 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Stock option compensation expense | Twelve Months Ended June 30, 2016 2015 (in thousands) Cost of Goods Sold $ 7 $ 12 Other Selling and Marketing 8 6 General and Administrative 21 24 Total $ 36 $ 42 |
Summary of Option Activity | Option Activity Shares Weighted Weighted Average Remaining Contractual Term Aggregate Outstanding at June 30, 2014 4,270,500 $ .09 3.2 years $ -0- Granted 350,000 $ .03 Exercised — $ — Forfeited or Expired (460,000 ) $ .04 Outstanding at June 30, 2015 4,160,500 $ .07 2.2 years -0- Granted 3,700,000 $ — Exercised — $ — Forfeited or Expired (990,500 ) $ .08 Outstanding at June 30, 2016 6,870,000 $ .04 3.0 years $ 16,900 Exercisable at June 30, 2016 2,504,500 $ .08 1.5 years $ 270 |
Summary of non-vested options | Non-vested Options Shares Weighted Average Grant-Date Fair Value Non-vested at June 30, 2015 2,080,500 $ .08 Granted 3,700,000 .02 Vested (784,500 ) .05 Forfeited (630,500 ) .08 Non-vested at June 30, 2016 4,365,500 $ .02 |
Outstanding stock options | Outstanding Options Exercisable Options Exercise Prices Number Remaining Weighted Number of Weighted $ .02 to .03 3,700,000 4.4 $ .02 125,000 $.02 $ .05 to .09 2,638,000 1.7 $ .06 1,847,500 $.06 $ .16 532,000 .7 $ .16 532,000 $.16 Total stock options 6,870,000 3.0 $ .04 2,504,500 $.08 |
Assumptions | 2016 2015 Exercise Price: $ .01 - .03 $ 0.03 Volatility: 259% - 320% 259% Risk Free Rate: 1.23% - 1.6% 1.09% to 1.11% Vesting Period: 4 years 4 years Forfeiture Rate: 0% 0% Expected Life 4.1 years 4.1 years Dividend Rate 0% 0% |
Common stock for issuance | June 30, 2016 Shares of common stock reserved for issuance under the 2009 Stock Option Plan 4,170,000 Shares of common stock reserved for issuance under the 2015 Stock Option Plan 5,000,000 Shares of common stock issuable upon conversion of the Preferred Stock 4,300,000 Total shares of common stock equivalents 13,470,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Income Taxes Tables | |
Components of deferred tax assets and liabilities | 2016 2015 (in thousands) Deferred tax assets: Inventory reserves $ 13 $ — Allowance for doubtful accounts 13 8 Stock-based compensation 61 48 Net operating loss carry-forwards 2,714 2,626 Valuation allowance (2,801 ) (2,682 ) Net deferred tax assets $ — $ — |
Income tax provision | 2016 2015 Net loss $ 88 $ 159 Temporary differences 31 21 Valuation (allowance) (119 ) (180 ) Net tax benefit $ — $ — |
Nature of Business (Details Nar
Nature of Business (Details Narrative) | 12 Months Ended |
Jun. 30, 2016 | |
Amazon [Member] | |
Concentration Risk (percent) | 10.00% |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Going Concern | ||
Net loss | $ (312,000) | $ (474,000) |
Accumulated deficit | (9,209,000) | $ (8,897,000) |
Working Capital Deficit | (2,400,000) | |
Operational and Strategic growth plans | ||
Finances required | $ 250,000 |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Allowance for Doubtful Accounts | ||
Accounts Receivable | $ 842 | $ 783 |
Allowance for doubtful accounts | (24) | (22) |
Allowance for discounts and returns | (24) | (13) |
Accounts receivable, net | $ 794 | $ 748 |
Concentrations (Details Narrati
Concentrations (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Concentration Risk [Line Items] | ||
FDIC Insured | $ 250,000 | |
Exceed FDIC | $ 282,910 | $ 242,448 |
Supplier Concentration Risk [Member] | Suppliers #1[Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk Supplier | 2 | 2 |
Concentration Risk (percent) | 21.00% | 27.00% |
Supplier Concentration Risk [Member] | Suppliers #2[Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk (percent) | 15.00% | 13.00% |
Customer Concentration Risk [Member] | Amazon [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk Customer | 0.32 | 0.32 |
Concentration Risk (percent) | 28.00% | 26.00% |
Advertising Costs (Details Narr
Advertising Costs (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Marketing and Advertising Expense [Abstract] | ||
Prepaid Advertising | $ 19,946 | $ 25,937 |
Advertising Expense | $ 411,469 | $ 345,393 |
Research and development (Detai
Research and development (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Research and Development [Abstract] | ||
Research and development | $ 169,500 | $ 124,674 |
Opearting Leases (Details Narra
Opearting Leases (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Operating Leased Assets [Line Items] | ||
Rental abatement | $ 117,660 | |
Capital lease improvements | 123,505 | |
Current monthly rent | 33,139 | |
New monthly rent | 29,415 | |
Facility [Member] | ||
Operating Leased Assets [Line Items] | ||
Capital lease improvement completed | 65,224 | |
Monthly rental, final year on lease | 35,123 | |
Rent Expense | $ 352,479 | $ 350,082 |
Results of Reporting Lines (Det
Results of Reporting Lines (Details Narrative) (USD $) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Segment Reporting Information [Line Items] | ||
Net Sales | $ 16,826 | $ 15,554 |
Change in sales | 8.00% | |
Gross margin | $ 4,228 | $ 3,756 |
Gross profit Margin | 25.00% | 24.00% |
Change in gross profit margin | 13.00% | |
Direct [Member] | ||
Segment Reporting Information [Line Items] | ||
Net Sales | $ 5,089 | $ 5,260 |
Change in sales | (3.00%) | |
Gross margin | $ 2,470 | $ 2,361 |
Gross profit Margin | 49.00% | 45.00% |
Change in gross profit margin | 5.00% | |
Wholesale [Member] | ||
Segment Reporting Information [Line Items] | ||
Net Sales | $ 11,284 | $ 9,835 |
Change in sales | 15.00% | |
Gross margin | $ 2,277 | $ 1,863 |
Gross profit Margin | 20.00% | 19.00% |
Change in gross profit margin | 22.00% | |
Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Net Sales | $ 453 | $ 459 |
Change in sales | (1.00%) | |
Gross margin | $ (519) | $ (468) |
Gross profit Margin | (115.00%) | (102.00%) |
Change in gross profit margin | (11.00%) |
Net Income (Loss) per share(Det
Net Income (Loss) per share(Details Narrative) - shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive Securities | 11,170,000 | 8,460,500 |
Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive Securities | 4,300,000 | 4,300,000 |
Stock Options - 2009 [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive Securities | 6,870,000 | 4,160,500 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 659 | $ 554 |
Work in Process | 182 | 160 |
Finished Goods | 663 | 615 |
Total inventories | 1,504 | 1,329 |
Allowance for inventory reserves | 60 | 26 |
Total inventories, net of allowance | $ 1,444 | $ 1,303 |
Equipment and Leasehold Impro48
Equipment and Leasehold Improvements, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | $ 3,855 | $ 3,388 |
Accumulated depreciation | (2,985) | (2,760) |
Property and Equipment, net | 870 | 628 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | 2,231 | 1,910 |
Computer equipment and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | 1,049 | 909 |
Office equipment and furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | 167 | 167 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | $ 408 | $ 402 |
Equipment and Leasehold Impro49
Equipment and Leasehold Improvements, Net (Details Narrative) | 12 Months Ended |
Jun. 30, 2016 | |
Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation life | 2 |
Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation life | 10 |
Computer equipment and software [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation life | 5 |
Computer equipment and software [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation life | 7 |
Office equipment and furniture [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation life | 5 |
Office equipment and furniture [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation life | 7 |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation life | 10 |
Other Accrued Liabilities (Deta
Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Accounts Payable and Accrued Liabilities, Current [Abstract] | ||
Accrued compensation | $ 314 | $ 266 |
Accrued expenses and interest | 135 | 174 |
Current portion of deferred rent payable | 28 | 16 |
Other accrued liabilities | $ 477 | $ 456 |
Current and Long- term Debt S51
Current and Long- term Debt Summary - Current and Long-term Debt Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Current debt: | ||
Unsecured lines of credit (Note 14) | $ 27 | $ 41 |
Line of credit (Note 13) | 737 | 720 |
Short-term unsecured notes payable (Note 9) | 1,047 | 483 |
Current portion of term note payable- shareholder (Note 11) | 130 | 108 |
Current portion of equipment notes payable (Note 15) | 52 | |
Current portion of leases payable (Note 15) | 57 | 71 |
Credit card advance (net of discount) (Note 12) | 231 | 316 |
Notes payable- related party (Note 10) | 116 | 116 |
Total current debt | 2,397 | 1,855 |
Long-term debt: | ||
Leases payable (Note 15) | 76 | 155 |
Unsecured notes payable (Note 9) | 200 | 300 |
Equipment note payable (Note 15) | 185 | |
Term note payable- shareholder (Note 11) | 392 | 522 |
Total long-term debt | $ 853 | $ 977 |
Unsecured Notes Payable (Detail
Unsecured Notes Payable (Details Narrative) (USD $) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Debt Instrument [Line Items] | ||
Short-term unsecured notes payable | $ 1,247 | $ 783 |
Current portion | (1,047) | (483) |
Long-term unsecured notes payable | 200 | 300 |
Note 1 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 400 | |
Interest Rate | 20.00% | |
Date of Maturity | Aug. 28, 2015 | |
Short-term unsecured notes payable | 83 | |
Note 2 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 150 | |
Interest Rate | 20.00% | |
Date Repaid | Dec. 12, 2016 | |
Short-term unsecured notes payable | ||
Note 3 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 300 | |
Interest Rate | 20.00% | |
Date of Maturity | Jun. 30, 2017 | |
Short-term unsecured notes payable | $ 300 | |
Note 4 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 200 | |
Interest Rate | 20.00% | |
Date of Maturity | Aug. 30, 2016 | |
Note 5 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 300 | |
Interest Rate | 20.00% | |
Date of Maturity | Apr. 7, 2017 | |
Short-term unsecured notes payable | $ 247 | |
Note 6 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 100 | |
Interest Rate | 20.00% | |
Date of Maturity | Oct. 31, 2014 | |
Extended Date of Maturity | Oct. 31, 2017 | |
Short-term unsecured notes payable | $ 100 | 100 |
Note 7 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 100 | |
Interest Rate | 20.00% | |
Date of Maturity | Jul. 31, 2013 | |
Extended Date of Maturity | Jul. 31, 2017 | |
Short-term unsecured notes payable | $ 100 | 100 |
Note 8 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 300 | |
Interest Rate | 20.00% | |
Date of Maturity | Jan. 3, 2015 | |
Extended Date of Maturity | Jan. 4, 2017 | |
Short-term unsecured notes payable | $ 300 | 300 |
Note 9 [Member] | ||
Debt Instrument [Line Items] | ||
Note Face Amount | $ 200 | |
Interest Rate | 20.00% | |
Date of Maturity | May 1, 2013 | |
Extended Date of Maturity | May 1, 2017 | |
Short-term unsecured notes payable | $ 200 | $ 200 |
Unsecured Notes Payable (Deta53
Unsecured Notes Payable (Details Narrative) (USD $) (Parenthetical) | 12 Months Ended |
Jun. 30, 2016USD ($) | |
Note 2 [Member] | |
Debt repaid | $ 72,951 |
Note 3 [Member] | |
Proceeds used to payoff other debts | 72,951 |
Note 4 [Member] | |
Guarante of debt | 81,671 |
Note 5 [Member] | |
Guarante of debt | $ 81,671 |
Short-term Notes Payable-Relate
Short-term Notes Payable-Related Party (Details Narrative) (USD $) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Short-term Debt [Line Items] | ||
Unsecured notes payable | $ 116 | $ 116 |
Note 1 [Member] | ||
Short-term Debt [Line Items] | ||
Interest Rate | 3.25% | |
Unsecured notes payable | 40 | $ 40 |
Note 2 [Member] | ||
Short-term Debt [Line Items] | ||
Interest Rate | 3.25% | |
Unsecured notes payable | $ 76 | $ 76 |
Term Notes Payable Shareholde55
Term Notes Payable Shareholder (Details Narrative) - USD ($) | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Debt Conversion [Line Items] | ||||
Note Payable - Shareholder | $ 522,324 | |||
Convertible Notes #1 [Member] | ||||
Debt Conversion [Line Items] | ||||
Date issued | Jun. 24, 2009 | |||
Note Face Amount | $ 375,000 | |||
Interest Rate | 3.00% | |||
Convertible Notes #2 [Member] | ||||
Debt Conversion [Line Items] | ||||
Date issued | Feb. 2, 2009 | |||
Note Face Amount | $ 250,000 | |||
Interest Rate | 3.00% | |||
New Convertible Notes #1 [Member] | ||||
Debt Conversion [Line Items] | ||||
Note Face Amount | $ 700,000 | |||
Interest Rate | [1] | 3.00% | ||
Date of Maturity | Aug. 31, 2019 | |||
Payments | $ 16,450 | $ 9,405 | ||
Frequency of payments | monthly | monthly | ||
[1] | Upon maturity, the Company has the option to either repay the note plus accrued interest in cash or issue the equivalent number of shares of common stock at $.10 per share, unless such conversion would force the holders' total ownership of common stock of the Company to exceed 9.9% of the total shares outstanding. |
Term Notes Payable Shareholde56
Term Notes Payable Shareholder (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2016 | |
Principal payments | $ 50 | $ 184 | $ 358 | $ 2,288 | |
Total Debt [Member] | |||||
Principal payments | $ 2,880 |
Credit Card Advance (Details Na
Credit Card Advance (Details Narrative) - USD ($) | Sep. 22, 2016 | Aug. 04, 2016 | Feb. 22, 2016 | Oct. 02, 2015 | Apr. 24, 2015 | Jun. 30, 2016 |
Credit Card Advance, gross | $ 230,798 | |||||
Discount on cash advance | $ 30,700 | |||||
Credit Card Advance [Member] | ||||||
Credit Card Advance | $ 400,000 | $ 150,000 | $ 100,000 | $ 400,000 | ||
Repayment Amount | 452,000 | 168,000 | $ 448,000 | 119,000 | 448,000 | |
Finance charge | 52,000 | $ 18,000 | $ 48,000 | 19,000 | $ 48,000 | |
Periodic payment | $ 566 | |||||
Net proceeds from advance | $ 270,000 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Dec. 09, 2015 | Sep. 04, 2013 | May 24, 2011 | Jun. 30, 2016 | Jun. 30, 2015 |
Line of Credit Facility [Line Items] | |||||
Line of credit | $ 737,000 | $ 720,000 | |||
Line of Credit [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Date issued | May 24, 2011 | ||||
Line of credit, limit | $ 1,200,000 | $ 1,000,000 | $ 750,000 | ||
Collateral | an Inventory Advance (as defined in the amended and restated receivable financing agreement) of up to the lesser of $300,000 or 75% of the eligible accounts receivable loan. In addition, the amended and restated agreement changed the interest calculation to prime rate plus 3% (as of June 30, 2016, the interest rate was 6.5%) and the Monthly Service Fee was changed to .5% per month. | lesser of $300,000 or 75% of the eligible accounts receivable loan | 85% of eligible accounts receivable | ||
Interest Rate Description | prime rate plus 3% | 2.5% over the lenders Index Rate | |||
Lenders Index Rate | 6.50% | ||||
Monthly Service Fee | 0.50% | 1.25% |
Unsecured Lines of Credit (Deta
Unsecured Lines of Credit (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Line of Credit Facility [Abstract] | ||
Unsecured lines of credit | $ 27 | $ 41 |
Interest rate | 8.00% |
Commitments and Contingencies -
Commitments and Contingencies - Operating Leases (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Capital Leases | ||
Capital lease | $ 287,104 | |
Employment Agreements | ||
Officer Salary | $ 150,000 | |
Minimum [Member] | ||
Capital Leases | ||
Interest rates | 7.00% | |
Maximum [Member] | ||
Capital Leases | ||
Interest rates | 21.00% | |
Postage Equipment [Member] | ||
Operating Leases | ||
Monthly rental, final year | $ 104 | |
Term of lease | Expires January 2017 | |
Equipment [Member] | ||
Capital Leases | ||
Capital lease | $ 283,218 | |
Equipment [Member] | Minimum [Member] | ||
Capital Leases | ||
Interest rates | 10.50% | |
Equipment [Member] | Maximum [Member] | ||
Operating Leases | ||
Monthly rental, final year | $ 1,602 | |
Capital Leases | ||
Interest rates | 11.30% | |
Facility [Member] | ||
Operating Leases | ||
Rent Expense | $ 352,479 | $ 350,082 |
Monthly rental, final year | $ 35,123 | |
Term of lease | Signed in September 2005 and expires December 31, 2015 |
Commitments and Contingencies61
Commitments and Contingencies - Future minimum operarting lease payments (Details) (USD $) $ in Thousands | Jun. 30, 2016USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,017 | $ 384 |
2,018 | 392 |
2,019 | 403 |
2,020 | 415 |
Thereafter through 2021 | 211 |
Total minimum lease payments | $ 1,805 |
Commitments and Contingencies62
Commitments and Contingencies - Future minimum capital lease payments (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2,017 | $ 68 | |
2,018 | 45 | |
2,019 | 29 | |
2,020 | 8 | |
Future Minimum Lease Payments | 150 | |
Less Amount Representing Interest | (17) | |
Present Value of Minimum Lease Payments | 133 | |
Less Current Portion | (57) | $ (71) |
Long-Term Obligations under Leases Payable | $ 76 | $ 155 |
Commitments and Contingencies63
Commitments and Contingencies - Future minimum equipment lease payments (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Commitments And Contingencies - Future Minimum Equipment Lease Payments Details | ||
2,017 | $ 75 | |
2,018 | 75 | |
2,019 | 72 | |
2,020 | 61 | |
2,021 | 8 | |
Future Minimum Lease Payments | 291 | |
Less Amount Representing Interest | (54) | |
Present Value of Minimum Lease Payments | 237 | |
Less Current Portion | (52) | |
Long-Term Obligations under Leases Payable | $ 185 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Related Party Transaction [Line Items] | ||
Common stock issued for cash | $ (75,000) | |
Shareholder Wife Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Jun. 30, 2010 | |
Note Face Amount | $ 76,000 | |
Interest Rate | 3.50% | |
Acrrued Interest | $ 17 | |
Interest Expense | $ 2,579 | |
October 30, 2010 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Oct. 30, 2010 | |
Note Face Amount | $ 40,000 | |
Interest Rate | 3.50% | |
Acrrued Interest | $ 3,302 | |
Interest Expense | $ 1,358 | |
January 3, 2011 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Jan. 3, 2011 | |
Note Face Amount | $ 300,000 | |
Interest Rate | 20.00% | |
Date of Maturity | Jan. 3, 2012 | |
Extended Date of Maturity | Jan. 2, 2017 | |
July 20, 2011 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Jul. 20, 2011 | |
Note Face Amount | $ 100,000 | |
Interest Payment | $ 1,667 | |
Interest Rate | 20.00% | |
Date of Maturity | Jul. 31, 2012 | |
Extended Date of Maturity | Jul. 31, 2017 | |
October 31, 2013 [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Oct. 31, 2013 | |
Note Face Amount | $ 100,000 | |
Interest Payment | $ 1,667 | |
Frequency | monthly | |
Interest Rate | 20.00% | |
Date of Maturity | Oct. 31, 2014 | |
Extended Date of Maturity | Oct. 31, 2017 | |
May12, 2012 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | May 1, 2012 | |
Note Face Amount | $ 200,000 | |
Interest Rate | 20.00% | |
Date of Maturity | May 1, 2013 | |
Extended Date of Maturity | May 1, 2017 | |
Unsecured Promissory Note [Member] | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | $ 400,000 | |
Principal and interest payment | $ 17,033 | |
Frequency | bi-weekly | |
Proceeds from note payable - related party | $ 107,999 | |
Note payable-related party | $ 82,235 | |
December 19, 2013 [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Dec. 19, 2013 | |
Note Face Amount | $ 250,000 | |
Note payable-related party | $ 92,228 | |
January 20, 2014 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Jan. 20, 2014 | |
Note Face Amount | $ 250,000 | |
Note payable-related party | $ 111,874 | |
April 4, 2012 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Apr. 4, 2014 | |
Note Face Amount | $ 130,000 | |
Note payable-related party | 87,889 | |
September 5, 2014 [Member] | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | $ 700,000 | |
Conversion price | $ .10 | |
Note payable-related party | $ 550,713 | |
June 2009 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Jun. 24, 2009 | |
Note Face Amount | $ 375,000 | |
Interest Payment | $ 9,405 | |
Interest Rate | 3.00% | |
September 2009 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Sep. 2, 2009 | |
Note Face Amount | $ 250,000 | |
Interest Payment | $ 12,450 | |
Interest Rate | 3.00% | |
April 2016 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Apr. 11, 2016 | |
Note Face Amount | $ 300,000 | |
Interest Rate | 20.00% | |
Date of Maturity | Apr. 1, 2017 | |
Proceeds used to payoff other debts | $ 200,000 | |
Proceeds from note payable - related party | $ 218,329 | |
Note payable-related party | $ 246,852 | |
June 2016 Note [Member] | ||
Related Party Transaction [Line Items] | ||
Issue Date | Jun. 29, 2016 | |
Note Face Amount | $ 300,000 | |
Interest Rate | 20.00% | |
Proceeds used to payoff other debts | $ 150,000 | |
Proceeds from note payable - related party | 227,049 | |
Note payable-related party | $ 300,000 | |
President and CEO [Member] | ||
Related Party Transaction [Line Items] | ||
Common stock issued for cash (in shares) | 750,000 | |
Common stock issued for cash | $ 75,000 |
Stockholders' Equity_ Non-veste
Stockholders' Equity: Non-vested stock options Activity (Details 1) | Jun. 30, 2016USD ($) |
Stockholders Equity Non-vested Stock Options Activity Details 1 | |
Stock options, vested | $ 270 |
Stock-based Compensation (Detai
Stock-based Compensation (Details Narrative) - $ / shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based Goods and Nonemployee Services Transaction [Line Items] | ||
Options, authorized | 5,000,000 | |
Options, Granted | 3,700,000 | 350,000 |
Closing stock price | $ .0183 | |
Stock Options - 2009 [Member] | ||
Share-based Goods and Nonemployee Services Transaction [Line Items] | ||
Options, authorized | 4,170,000 | |
Options, available for issurance | ||
Stock Options - 2015 [Member] | ||
Share-based Goods and Nonemployee Services Transaction [Line Items] | ||
Options, authorized | 5,000,000 | |
Options, available for issurance | 2,300,000 |
Compensation Expense (Details)
Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | $ 36 | $ 42 |
Cost of Goods Sold [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | 7 | 12 |
Selling and Marketing[Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | 8 | 6 |
General and Administrative[Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | $ 21 | $ 24 |
Stock Options Activity (Details
Stock Options Activity (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Number of Options | 4,160,500 | 4,270,500 |
Options, Granted | 3,700,000 | 350,000 |
Options, Exercised | ||
Options, Forefeited or expired | (990,500) | (460,000) |
Number of Options | 6,870,000 | 4,160,500 |
Ending,Number of Options, exercisable | 2,504,500 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Weighted Average Exercise Price, outstanding | $ .07 | $ .09 |
Weighted Average Exercise Price, Granted | .03 | |
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Cancelled | .08 | .04 |
Weighted Average Exercise Price, outstanding | 0.08 | $ .07 |
Weighted Average Exercise Price, exercisable | $ .08 | |
Beginning, Weighted Average Remaining Contractual Life, outstanding | 2 years 2 months | 3 years 2 months |
Ending, Weighted Average Remaining Contractual Life, outstanding - granted | 3 years | 2 years 2 months |
Weighted Average Remaining Contractual Life, exercisable | 1 year 5 months | |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value, outstanding | $ 16,900 | |
Aggregate Intrinsic Value, exercisable | $ 270 |
Stockholders' Equity_ Non-ves69
Stockholders' Equity: Non-vested stock options Activity (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Stockholders Equity Non-vested Stock Options Activity Details | |||
Non-vested options,weighted average grant-date fair value, granted | $ 54,940 | $ 10,395 | |
Vested options,weighted average grant-date fair value, granted | $ 40,979 | $ 69,492 |
Weighted Average outstanding st
Weighted Average outstanding stock options (Details) - $ / shares | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Outstanding Options[Abstract] | |||
Number of shares | 6,870,000 | 4,160,500 | 4,270,500 |
Remaining Life (Years) | 3 years | ||
Weighted Average Price | $ 0.04 | ||
Exercisable Options [Abstract] | |||
Number of Shares | 2,504,500 | ||
Weighted Average Exercise Price | $ 0.08 | $ .07 | $ .09 |
$.02 to .03 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise price range, lower range (in dollars per share) | .02 | ||
Exercise price range, upper range (in dollars per share) | $ .03 | ||
Outstanding Options[Abstract] | |||
Number of shares | 3,700,000 | ||
Remaining Life (Years) | 4 years 4 months | ||
Weighted Average Price | $ 0.02 | ||
Exercisable Options [Abstract] | |||
Number of Shares | 125,000 | ||
Weighted Average Exercise Price | $ 0.02 | ||
$.05 to .09 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise price range, lower range (in dollars per share) | 0.05 | ||
Exercise price range, upper range (in dollars per share) | $ 0.09 | ||
Outstanding Options[Abstract] | |||
Number of shares | 2,638,000 | ||
Remaining Life (Years) | 1 year 7 months | ||
Weighted Average Price | $ 0.06 | ||
Exercisable Options [Abstract] | |||
Number of Shares | 1,847,500 | ||
Weighted Average Exercise Price | $ 0.06 | ||
$.16 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise price range, upper range (in dollars per share) | $ .16 | ||
Outstanding Options[Abstract] | |||
Number of shares | 532,000 | ||
Remaining Life (Years) | 7 months | ||
Weighted Average Price | $ 0.16 | ||
Exercisable Options [Abstract] | |||
Number of Shares | 532,000 | ||
Weighted Average Exercise Price | $ 0.16 |
Assumptions (Details)
Assumptions (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Volatility | 259.00% | |
Vesting Period | 4 years | 4 years |
Forfeiture Rate | 0.00% | 0.00% |
Expected Life | 4 years 1 month | 4 years 1 month |
Dividend Rate | 0.00% | 0.00% |
Stock compensation expense on unvested options | $ 62,412 | |
Weighted Average period | 3 years 4 months | |
Minimum [Member] | ||
Exercise Price | $ 0.01 | |
Volatility | 259.00% | |
Risk Free Rate | 1.23% | 1.11% |
Maximum [Member] | ||
Exercise Price | $ 0.03 | |
Volatility | 320.00% | |
Risk Free Rate | 1.60% | 101.00% |
Stockholders Equity (Details 1)
Stockholders Equity (Details 1) | Jun. 30, 2016shares |
Stockholders' deficit: | |
Shares of common stock reserved for issuance under the 2009 Stock Option Plan | 4,170,000 |
Shares of common stock reserved for issuance under the 2015 Stock Option Plan | 5,000,000 |
Options, Conversion of the Preferred Stock | 4,300,000 |
Common stock equivalents | 13,470,000 |
Stockholders Equity (Details 2)
Stockholders Equity (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Mar. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Common stock- shares authorized | 175,000,000 | 175,000,000 | |
Preferred stock - shares authorized | 10,000,000 | ||
Voting rights | (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Shares issued and outstanding at the time of such vote. | ||
Series A Convertible Preferred Stock [Member] | |||
Preferred stock - par value | $ 0.0001 | $ 0.0001 | |
Preferred stock - shares authorized | 4,300,000 | 4,300,000 | |
Preferred stock - liquidation preference, per share | $ .2325 | ||
Preferred stock - liquidation preference | $ 1 | $ 1 |
Income Taxes-Components of Defe
Income Taxes-Components of Deferred tax assets and liabilities (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Deferred tax assets: | ||
Inventory reserves | $ 13 | |
Allowance for doubtful accounts | 13 | 8 |
Stock-based compensation | 61 | 48 |
Net operating loss carry-forwards | 2,714 | 2,626 |
Valuation allowance | (2,801) | (2,682) |
Net deferred tax assets |
Income Taxes- Income Tax Provis
Income Taxes- Income Tax Provision (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Taxes- Income Tax Provision Details Narrative | ||
Net loss | $ 88 | $ 159 |
Temporary differences | 31 | 21 |
Valuation (allowance) | (119) | (180) |
Net tax benefit |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Taxes Details Narrative | ||
Tax effective rate | 38.00% | |
Net operating loss | $ 7,200,000 | |
Valuation allowance | $ 118,549 | $ 179,834 |