Cover
Cover - shares | 9 Months Ended | |
Mar. 31, 2021 | May 14, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Luvu Brands, Inc. | |
Entity Central Index Key | 0001374567 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | FL | |
Entity File Number | 000-53314 | |
Entity Common Stock, Shares Outstanding | 75,037,890 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 1,270 | $ 1,152 |
Accounts receivable, net | 1,158 | 1,135 |
Inventories, net | 2,920 | 1,985 |
Prepaid expenses | 91 | 55 |
Total current assets | 5,439 | 4,327 |
Equipment, property and leasehold improvements, net | 1,739 | 938 |
Finance lease assets | 29 | 0 |
Operating lease assets | 2,622 | 165 |
Other assets | 85 | 17 |
Total assets | 9,914 | 5,447 |
Current liabilities: | ||
Accounts payable | 2,647 | 2,435 |
Current debt | 2,204 | 2,007 |
Current portion of PPP loan | 0 | 482 |
Other accrued liabilities | 555 | 623 |
Operating lease liability | 229 | 199 |
Total current liabilities | 5,635 | 5,746 |
Noncurrent liabilities: | ||
Long-term debt | 754 | 361 |
PPP loan | 0 | 614 |
Long-term operating lease liability | 2,505 | 0 |
Total noncurrent liabilities | 3,259 | 975 |
Total liabilities | 8,894 | 6,721 |
Stockholders' equity (deficit): | ||
Preferred stock, 5,700,000 shares authorized, $0.0001 par value none issued and outstanding | 0 | 0 |
Series A Convertible Preferred stock, 4,300,000 shares authorized $0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $1,000 at March 31, 2021 and June 30, 2020 | 0 | 0 |
Common stock, $0.01 par value, 175,000,000 shares authorized, 75,037,890 and 73,452,596 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively | 750 | 735 |
Additional paid-in capital | 6,163 | 6,147 |
Accumulated deficit | (5,893) | (8,156) |
Total stockholders' equity (deficit) | 1,020 | (1,274) |
Total liabilities and stockholders' equity (deficit) | $ 9,914 | $ 5,447 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Preferred stock - par value | $ 0.0001 | $ 0.0001 |
Preferred stock - shares authorized | 5,700,000 | 5,700,000 |
Preferred stock - shares issued | 0 | 0 |
Preferred stock - shares outstanding | 0 | 0 |
Common stock- par value | $ 0.01 | $ 0.01 |
Common stock- shares authorized | 175,000,000 | 175,000,000 |
Common stock- shares issued | 75,037,890 | 73,452,596 |
Common stock- shares outstanding | 75,037,890 | 73,452,596 |
Series A Preferred Stock | ||
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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||||
Net Sales | $ 6,181 | $ 4,032 | $ 17,262 | $ 12,906 |
Cost of goods sold | 4,435 | 2,964 | 12,462 | 9,182 |
Gross profit | 1,746 | 1,068 | 4,800 | 3,724 |
Operating expenses: | ||||
Advertising and promotion | 180 | 117 | 369 | 313 |
Other selling and marketing | 260 | 324 | 797 | 957 |
General and administrative | 689 | 588 | 2,021 | 1,808 |
Depreciation and amortization | 54 | 38 | 157 | 117 |
Total operating expenses | 1,183 | 1,067 | 3,344 | 3,195 |
Income from operations | 563 | 1 | 1,456 | 529 |
Other Income (Expense): | ||||
Gain on forgiveness of PPP loan | 0 | 0 | 1,096 | 0 |
Interest expense and financing costs | (94) | (149) | (289) | (465) |
Total Other Income (Expense) | (94) | (149) | 807 | (465) |
Income before income taxes | 469 | (148) | 2,263 | 64 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net income (loss) | $ 469 | $ (148) | $ 2,263 | $ 64 |
Net income per share: Basic | $ 0.01 | $ 0 | $ 0.03 | $ 0 |
Net income per share: Diluted | $ 0.01 | $ 0 | $ 0.03 | $ 0 |
Shares used in computing net income (loss) per share: Basic | 75,037,890 | 73,452,596 | 74,050,524 | 73,452,596 |
Shares used in computing net income (loss) per share: Diluted | 76,286,902 | 73,452,596 | 75,264,336 | 74,395,294 |
Condensed Consolidated Statem_2
Condensed 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, 2019 | 4,300,000 | 73,452,596 | |||
Beginning Balance at Jun. 30, 2019 | $ 0 | $ 735 | $ 6,126 | $ (9,016) | $ (2,155) |
Stock-based compensation | 15 | 15 | |||
Net Income/(loss) | 64 | 64 | |||
Ending Balance (in shares) at Mar. 31, 2020 | 4,300,000 | 73,452,596 | |||
Ending Balance at Mar. 31, 2020 | $ 0 | $ 735 | 6,141 | (8,952) | (2,076) |
Beginning Balance (in shares) at Dec. 31, 2019 | 4,300,000 | 73,452,596 | |||
Beginning Balance at Dec. 31, 2019 | $ 0 | $ 735 | 6,137 | (8,804) | (1,932) |
Stock-based compensation | 4 | 4 | |||
Net Income/(loss) | (148) | (148) | |||
Ending Balance (in shares) at Mar. 31, 2020 | 4,300,000 | 73,452,596 | |||
Ending Balance at Mar. 31, 2020 | $ 0 | $ 735 | 6,141 | (8,952) | (2,076) |
Beginning Balance (in shares) at Jun. 30, 2020 | 4,300,000 | 73,452,596 | |||
Beginning Balance at Jun. 30, 2020 | $ 0 | $ 735 | 6,141 | (8,952) | (1,274) |
Stock-based compensation | 12 | $ 12 | |||
Stock option exercises (in shares) | 1,585,294 | (1,600,000) | |||
Stock option exercises | $ 15 | 4 | $ 19 | ||
Net Income/(loss) | 2,263 | 2,263 | |||
Ending Balance (in shares) at Mar. 31, 2021 | 4,300,000 | 75,037,890 | |||
Ending Balance at Mar. 31, 2021 | $ 0 | $ 750 | 6,163 | (5,893) | 1,020 |
Beginning Balance (in shares) at Dec. 31, 2020 | 4,300,000 | 75,037,890 | |||
Beginning Balance at Dec. 31, 2020 | $ 0 | $ 750 | 6,159 | (6,362) | 547 |
Stock-based compensation | 4 | 4 | |||
Net Income/(loss) | 469 | 469 | |||
Ending Balance (in shares) at Mar. 31, 2021 | 4,300,000 | 75,037,890 | |||
Ending Balance at Mar. 31, 2021 | $ 0 | $ 750 | $ 6,163 | $ (5,893) | $ 1,020 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
OPERATING ACTIVITIES: | ||
Net income | $ 2,263 | $ 64 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Forgiveness of PPP Loan | (1,096) | 0 |
Depreciation and amortization | 157 | 117 |
Stock based compensation expense | 12 | 15 |
Provision for bad debt | 1 | (2) |
Amortization of operating lease asset | 226 | 209 |
Change in operating assets and liabilities: | ||
Accounts receivable | (24) | 88 |
Inventories | (936) | (234) |
Prepaid expenses and other assets | (103) | (31) |
Accounts payable | 212 | 191 |
Accrued compensation | (87) | (85) |
Accrued expenses and interest | 29 | (49) |
Operating lease liability | (149) | (254) |
Net cash provided by (used in) operating activities | 505 | 29 |
INVESTING ACTIVITIES: | ||
Investment in equipment and leasehold improvements | (164) | (35) |
Net cash used in investing activities | (164) | (35) |
FINANCING ACTIVITIES: | ||
Repayment of term note-shareholder | 0 | (49) |
Repayment of unsecured note payable | (289) | (662) |
Proceeds from unsecured note payable | 0 | 600 |
Net cash provided by line of credit | 245 | (1) |
Borrowings of credit card advance | 0 | 450 |
Repayment of credit card advance | (56) | (442) |
Proceeds from secured notes payable | 200 | 233 |
Repayments of secured notes payable | (195) | (348) |
Repayment of unsecured line of credit | (8) | 25 |
Proceeds from exercise of stock options | 9 | 0 |
Payments on equipment notes | (123) | (100) |
Principal payments on lease payable | (6) | (8) |
Net cash (used in) provided by financing activities | (223) | (302) |
Net decrease in cash and cash equivalents | 118 | (308) |
Cash and cash equivalents at beginning of period | 1,152 | 649 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 1,270 | 341 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Purchases of equipment with equipment notes | 788 | 0 |
Finance lease asset obligation in exchange for lease payable | 35 | 0 |
Accrued interest converted for exercise of options | 10 | 0 |
Operating lease asset obtained in exchange for operating lease liability | 2,684 | 448 |
Cash paid during the period for: Interest | 286 | 461 |
Cash paid during the period for: Income taxes | $ 0 | $ 0 |
Organization and Nature of busi
Organization and Nature of business | 9 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Organization and Nature of business | Luvu Brands, Inc. (the “Company” or “Luvu”) 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”). All operations of the Company are currently conducted by OneUp. The Company is an Atlanta, Georgia based designer, manufacturer and marketer of a portfolio of consumer lifestyle brands including: Liberator®, a brand category of iconic products for enhancing sexual performance; Avana® inclined bed therapy products, assistive in relieving medical conditions associated with acid reflux, surgery recovery and chronic pain; and Jaxx®, a diverse range of casual fashion daybeds, sofas and beanbags made from polyurethane foam and repurposed polyurethane foam trim. These products are sold through the Company’s websites, online mass merchants and retail stores worldwide. Many of our products are offered flat-packed and either roll or vacuum compressed to save on shipping and reduce our carbon footprint. Sales are generated through internet and print advertisements and social marketing. 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 typically experience higher sales in our second and third fiscal quarters. The accompanying unaudited condensed consolidated financial statements of the Company and all of its wholly-owned subsidiaries included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles of the United States of America ("GAAP") have been condensed or omitted pursuant to applicable rules and regulations. In the opinion of management, all adjustments considered necessary for fair presentation have been included. The year-end condensed balance sheet data were derived from audited consolidated financial statements but do not include all disclosures required by GAAP. The results of operations for the nine months ended March 31, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2020 as filed with the Securities and Exchange Commission (the “SEC”) on October 1, 2020 (the “2020 10-K”). |
Going Concern
Going Concern | 9 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP, which contemplates continuation of the Company as a going concern. As of March 31, 2021 the Company has an accumulated deficit of approximately $5.9 million and a working capital deficit of approximately $196,000. This raises 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 Company’s ability to meet its financing requirements, and the success of its future operations. Management believes that actions presently being taken to revise the Company’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 evaluated various options for increasing the throughput of our compressed foam products and during the second quarter of fiscal 2021, we purchased new foam contouring equipment for installation during the third quarter of fiscal 2021. We also placed an order for a larger roll compression machine which should be operational during the fourth quarter of fiscal 2021. These actions should yield higher factory throughput at a lower cost of goods sold. However, these operational improvements may be more than offset by rising wages, rising raw material costs and shortages. We have increased prices on certain products and plan to raise our selling prices on additional products to offset some of the labor and raw material cost increases. We estimate that the operational and strategic growth plans we have identified over the next twelve months will, at a minimum, require approximately $250,000 of funding, 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. Although we have three separate brands with diverse channels of distribution, the continued COVID-19 pandemic may negatively impact our business operations and the operations of our suppliers and customers as a result of quarantines, facility closures and travel and logistics restrictions. There is substantial uncertainty regarding the duration and degree of COVID-19’s continued effects over time. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic or recurrence thereof, timing of development and deployment of an effective vaccine, governmental, business and individuals' actions in response to the pandemic and the impact on economic activity including the possibility of recession or financial market instability. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
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 condensed financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These consolidated condensed financial statements and notes should be read in conjunction with the Company’s consolidated financial statements contained in the Company’s 2020 10-K. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP 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 record revenue based on the five-step model which includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when the performance obligations are satisfied. Substantially all of our revenue is generated by fulfilling orders for the purchase of manufactured products and product purchased for resale to retailers, wholesalers, or direct to consumers via online channels, with each order considered to be a distinct performance obligation. These orders may be formal purchase orders, verbal phone orders, e-mail orders or orders received online. Shipping and handling activities for which we are responsible under the terms and conditions of the order are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill our promise to transfer the goods and are expensed when revenue is recognized. The impact of this policy election is insignificant as it aligns with our current practice. Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling a performance obligation. We have elected to exclude sales, use and similar taxes from the measurement of the transaction price. The impact of this policy election is insignificant, as it aligns with our current practice. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, which includes costs for trade promotion programs, coupons, returns and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the end of each reporting period and the impact of any adjustments are recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, we consider the customer's ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on the date of transfer of control of the products to the customer. Revenue is recognized at the point in time that control of the ordered products is transferred to the customer. Generally, this occurs when the product is delivered, or in some cases, picked up from one of our distribution centers by the customer. Deferred revenues Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. Deferred revenues primarily relate to gift cards purchased, but not used, prior to the end of the fiscal period. Our total deferred revenue as of June 30, 2020 was $14,898 and was included in “Other accrued liabilities” on our consolidated balance sheets. The deferred revenue balance as of March 31, 2021 was $16,854. Cost of Goods Sold Cost of goods sold includes raw materials, labor, manufacturing overhead, and royalty expense. 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 We maintain an allowance for doubtful accounts to reflect our estimate of current and past due receivable balances that may not be collected. The allowance for doubtful accounts is based upon our assessment of the collectability of specific customer accounts, the aging of accounts receivable and our history of bad debts. We believe that the allowance for doubtful accounts is adequate to cover anticipated losses in the receivable balance under current conditions. However, significant deterioration in the financial condition of our customers, resulting in an impairment of their ability to make payments, could materially change these expectations and an additional allowance may be required. The following is a summary of Accounts Receivable as of March 31, 2021 and June 30, 2020. March 31,2021 June 30,2020 (unaudited) (in thousands) Accounts receivable $ 1,187 $ 1,135 Allowance for doubtful accounts (1 ) — Allowance for discounts and returns (28 ) — Total accounts receivable, net $ 1,158 $ 1,135 Inventories and Inventory Reserves Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method. Net realizable value 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 net realizable value 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 bank balances on deposit at March 31, 2021 that exceeded the balance insured by the FDIC by $1,093,900. During the three and nine months ended March 31, 2021, we purchased 33% and 33% respectively, of total inventory purchases from one vendor. During the fiscal year ended June 30, 2020, we purchased 33 % of total inventory purchases from one vendor. As of March 31, 2021, one of the Company’s customers represents 55% of the total accounts receivables, respectively. As of June 30, 2020, three of the Company’s customers represents 38%, 16% and 16% of the total accounts receivables, respectively. For the three and nine months ended March 31, 2021, sales to and through Amazon accounted for 33% and 30% of our net sales, respectively. Fair Value of Financial Instruments At March 31, 2021 and June 30, 2020, 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 Accounting Standards Codification (“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 $6,900 at March 31, 2021 and $5,000 at June 30, 2020. Advertising expense for the three months ended March 31, 2021 and 2020 was $180,128 and $117,449, respectively. Advertising expense for the nine months ended March 31, 2021 and 2020 was $369,113 and $313,132, respectively. Research and Development Research and development expenses for new products are expensed as they are incurred. Expenses for new product development totaled $24,236 and $26,501 for the three months ended March 31, 2021 and 2020, respectively. Expenses for new product development totaled $80,754 and $81,353 for the nine months ended March 31, 2021 and 2020, respectively. Research and development costs are included in general and administrative expense. 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 that 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. Impairment or Disposal of Long Lived Assets Long-lived assets to be held are reviewed for events or changes in circumstances which indicate that their carrying value may not be recoverable. They are tested for recoverability using undiscounted cash flows to determine whether or not impairment to such value has occurred as required by Financial Accounting Standards Board (“ FASB”) ASC Topic No. 360, Property, Plant, and Equipment 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 amended the lease to expire on December 31, 2020. The rent expense under this lease for the three months ended March 31, 2020 was $88,120. The rent expense under this lease for the nine months ended March 31, 2020 was $264,359. On November 2, 2020, the Company entered into an agreement with its landlord on a new lease for the current facilities for six years and two months, beginning January 1, 2021. The new lease includes two months of rent abatement totaling $103,230. Under the new lease, the monthly rent on the facility is $51,615 with annual escalations of 3% with the final two months of rent at $61,605. In addition, the Company will pay the landlord a 2% property management fee. The rent expense for the three months ended March 31, 2021 was $162,053. The rent expense for the nine months ended March 31, 2021 (under the previous lease and the new lease) was $338,292. Under ASC 842, which was adopted July 1, 2019, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company elected not to recognize leases with a term less than one year on its balance sheet. Operating lease right-of-use (ROU) assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.) Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, the Company elected the practical expedient to not separate lease and non-lease components. The lease component results in an operating right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense. See Note 16 for details. Under prior guidance ASC 840, rent expense and lease incentives from operating leases were recognized on a straight-line basis over the lease term. The difference between rent expense recognized and rental payments was recorded as deferred rent in the accompanying consolidated balance sheets. 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 Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 %Change (in thousands) Net Sales by Channel: Direct $ 2,004 $ 1,068 88 % Wholesale $ 4,023 $ 2,889 39 % Other $ 154 $ 75 105 % Total Net Sales $ 6,181 $ 4,032 53 % Three Months Ended Margin Three Months Ended Margin % March 31, 2021 % March 31, 2020 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 1,005 50 % $ 482 45 % 109 % Wholesale $ 1,099 27 % $ 775 27 % 42 % Other $ (358 ) – % $ (189 ) – % 89 % Total Gross Profit $ 1,746 28 % $ 1,068 26 % 63 % Nine Months Ended March 31, 2021 Nine Months Ended March 31, 2020 % Change (in thousands) Net Sales by Channel: Direct $ 5,371 $ 3,489 54 % Wholesale $ 11,476 $ 9,185 25 % Other $ 415 $ 232 79 % Total Net Sales $ 17,262 $ 12,906 34 % Nine Months Ended Margin Nine Months Ended Margin % March 31, 2021 % March 31, 2020 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 2,706 50 % $ 1,684 48 % 61 % Wholesale $ 3,047 27 % $ 2,596 28 % 17 % Other $ (953 ) – % (556 ) – % 71 % Total Gross Profit $ 4,800 28 % $ 3,724 29 % 29 % Recent accounting pronouncements From time to time, new accounting pronouncements are issued by FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Recently adopted In August 2018, the FASB issued updated guidance (ASU 2018-13) as part of the disclosure framework project, which focuses on improving the effectiveness of disclosures in the notes to the financial statements. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (the Company’s fiscal 2021), with early adoption permitted. We adopted ASU 2018-13 effective July 1, 2020. The impact of adoption of this standard on our condensed consolidated financial statements was not material. Not yet adopted In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. Net Income (Loss) Per Share In accordance with ASC 260, “Earnings Per Share”, basic net income per share is computed by dividing the net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common and common equivalent shares outstanding during the period plus the effect of stock options using the treasury stock method. As of March 31, 2021 and 2020, the common stock equivalents did not have any effect on net income (loss) per share. March 31, 2021 2020 Common stock options – 2015 Plan 2,400,000 4,000,000 Convertible preferred stock 4,300,000 4,300,000 Total 6,700,000 8,300,000 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. Stock Based Compensation We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. |
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets | 9 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Impairment of Long-Lived Assets | We follow FASB ASC 360, Property, Plant, and Equipment 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 a 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 March 31, 2021 or June 30, 2020. |
Inventories, net
Inventories, net | 9 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories, net | Inventories are stated at the lower of cost (which approximates first-in, first-out) or net realizable value. Net realizable value is defined as sales price less cost to dispose and a normal profit margin. Inventories consisted of the following: March 31, 2021 June 30, 2020 (unaudited) (in thousands) Raw materials $ 1,502 $ 992 Work in process 367 234 Finished goods 1,192 900 Total inventories 3,061 2,126 Allowance for inventory reserves (141 ) (141 ) Total inventories, net of allowance $ 2,920 $ 1,985 |
Equipment and Leasehold Improve
Equipment and Leasehold Improvements | 9 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Equipment and Leasehold Improvements | Equipment and leasehold improvements are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives for equipment and furniture and fixtures, or the shorter of the remaining lease term or estimated useful lives for leasehold improvements. Equipment and leasehold improvements consisted of the following: March 31, 2021 June 30, 2020 Estimated Useful Life (unaudited) (in thousands) Factory equipment $ 3,125 $ 2,646 2-10 years Computer equipment and software 1,143 1,087 5-7 years Office equipment and furniture 205 205 5-7 years Leasehold improvements 467 463 6 years Project in process 421 3 Subtotal 5,361 4,404 Accumulated depreciation (3,622 ) (3,466 ) Equipment and leasehold improvements, net $ 1,739 $ 938 Depreciation expense was $53,618 and $38,206 for the three months ended March 31, 2021 and 2020, respectively. For the nine months ended March 31, 2021 and 2020, depreciation expense was $153,313 and $117,258, respectively. Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amount to forecasted undiscounted future cash flows expected to be generated by the asset. If the carrying amount exceeds its estimated future cash flows, then an impairment charge is recognized to the extent that the carrying amount exceeds the asset’s fair value. Management has determined no asset impairment occurred during the nine months ended March 31, 2021. |
Other Accrued Liabilities
Other Accrued Liabilities | 9 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities | Other accrued liabilities at March 31, 2021 and June 30, 2020: March 31, 2021 June 30, 2020 (unaudited) (in thousands) Accrued compensation $ 382 $ 468 Accrued expenses and interest 173 155 Other accrued liabilities $ 555 $ 623 |
Current and Long-term Debt Summ
Current and Long-term Debt Summary | 9 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Current and Long-term Debt Summary | March 31, 2021 June 30, 2020 (unaudited) Current debt: (in thousands) Unsecured lines of credit (Note 13) $ 40 $ 48 Line of credit (Note 12) 1,250 1,005 Short-term unsecured notes payable (Note 9) 400 489 Current portion of equipment notes payable (Note 16) 195 102 Current portion secured notes payable (Note 14) 195 191 Current portion of leases payable 8 – Credit card advance (net of discount) (Note 11) – 56 Notes payable – related party (Note 10) 116 116 Total current debt 2,204 2,007 Long-term debt: Unsecured notes payable (Note 9) – 200 Equipment lease payable 21 – Equipment notes payable (Note 16) 733 161 Total long-term debt $ 754 $ 361 |
Unsecured Notes Payable
Unsecured Notes Payable | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Unsecured Notes Payable | Unsecured notes payable at March 31, 2021 and June 30, 2020 consisted of the following: March 31, 2021 June 30, 2020 (unaudited) Current debt: (in thousands) 20% Unsecured note, bi-weekly principal and interest, due September 18, 2020 (1) $ – $ 75 20% Unsecured note, bi-weekly principal and interest, due February 19, 2021 (2) – 214 20% Unsecured note, interest only, due May 1, 2021 (3) 200 200 20% Unsecured note, interest only, due July 31, 2021 (5) 100 – 20% Unsecured note, interest only, due October 31, 2021 (4) 100 – Total current debt 400 489 Long-term debt: 20% Unsecured note, interest only, due October 31, 2021 (4) – 100 20% Unsecured note, interest only, due July 31, 2021 (5) – 100 Total long-term debt – 200 Total unsecured notes payable $ 400 $ 689 (1) Unsecured note payable for $300,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing September 18, 2020. This note was repaid in full on September 18, 2020. Personally guaranteed by principal stockholder. (2) Unsecured note payable for $300,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing February 19, 2021. $12,678 from the proceeds of this unsecured note payable was used to retire the balance of the unsecured note maturing on February 28, 2020. This note was repaid in full in February 19, 2021. Personally guaranteed by principal stockholder. (3) (4) Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on October 31, 2014, extended to October 31, 2019, then extended to October 31, 2021. Personally guaranteed by principal stockholder. (5) |
Note Payable - Related Party
Note Payable - Related Party | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Note Payable - Related Party | Related party notes payable at March 31, 2021 and June 30, 2020 consisted of the following: March 31, 2021 June 30, 2020 (unaudited) (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 $ - $ - |
Credit Card Advances
Credit Card Advances | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Credit Card Advances | On August 28, 2019, the Company borrowed an additional $250,000 from Power Up against its future credit card receivables. Terms for this loan calls for a repayment of $290,000 which includes a one-time finance charge of $40,000, approximately ten months after the funding date. A 1% loan origination fee was deducted, and the Company received net proceeds of $247,500. This loan was repaid in full on September 16, 2020. This loan was guaranteed by the Company and was personally guaranteed by the Company’s CEO and controlling shareholder (see Note 17). |
Line of Credit
Line of Credit | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Line of Credit | On May 24, 2011, the Company’s wholly owned subsidiary, OneUp and OneUp’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% 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. On November 27, 2018, the credit agreement with Advance Financial Corporation was amended to increase the Inventory Advance (as defined in the amended and restated receivable financing agreement) of up to the lesser of $500,000 or 125% of the eligible accounts receivable loan. All other terms of the credit facility remain the same. On December 1, 2020, the credit agreement with Advance Financial Corporation was amended to reduce the interest calculation to prime rate plus 2% and the Monthly Service Fee was unchanged at .5% per month. As of March 31, 2021, the interest rate was 5.25%. All other terms of the credit facility remain the same. The Company’s CEO, Louis Friedman, has personally guaranteed the repayment of the facility. In addition, the Company has provided its corporate guarantee of the credit facility (see Note 17). On March 31, 2021, the balance owed under this line of credit was $1,249,913. As of March 31, 2021, 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 Line of Credit
Unsecured Line of Credit | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Unsecured Line of Credit | The Company has drawn a cash advance on one unsecured line 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 $39,501 at March 31, 2021 and $47,619 at June 30, 2020. |
Secured Note Payable
Secured Note Payable | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Secured Note Payable | On June 11, 2019, the Company entered into an agreement with a secured lender, whereby the lender agreed to loan OneUp a total of $150,000. After partial repayment of this loan, in November, 2019 the Company borrowed an additional $33,000. Repayment of this note is by 78 weekly payments of $2,298, beginning November 13, 2019. On March 31, 2021, the balance owed under this note payable was $11,319. This note payable is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman. On June 28, 2019, the Company entered into an agreement with Amazon.com, Inc. (“Amazon”), whereby Amazon agreed to loan OneUp a total of $302,000. Repayment of this note is by 12 monthly payments of $26,301, which includes interest at 8.22%. This loan was repaid in full on August 3, 2020. The Company had granted Amazon a security interest in certain assets of the Company. On November 27, 2019 the Company entered into an agreement with OnDeck, whereby OnDeck agreed to loan OneUp a total of $200,000. Terms for this loan calls for a repayment of $234,000 which includes a one-time finance charge of $34,000, approximately nine months after the funding date. A 1% loan origination fee was deducted, and the Company received net proceeds of $198,000. This note payable was fully paid in August 2020. This loan is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder. On February 17, 2021, the Company entered into an agreement with Amazon, whereby Amazon agreed to loan OneUp a total of $200,000. Repayment of this note is by 12 monthly payments of $17,675, which includes interest at 10.99%. On March 31, 2021, the balance owed under this note payable was $184,156. The Company has granted Amazon a security interest in certain assets of the Company. |
PPP Loan
PPP Loan | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
PPP Loan | On April 26, 2020, the Company entered into a promissory note (the “PPP Note”) evidencing an unsecured loan in the amount of $1,096,200 made to the Company under the Payroll Protection Plan ("PPP"). The PPP is a liquidity facility program established by the U.S. government as part of the CARES Act in response to the negative economic impact of the COVID-19 outbreak. The PPP Loan to the Company was being administered by Ameris Bank. The PPP Loan had a two-year term with interest at a rate of 1.0% per annum. Monthly principal and interest payments were deferred for six months. Beginning November 26, 2020, seven months from the date of the PPP Note, the Company was required to make monthly payments of principal and interest in the amount of $61,691. The PPP Loan is a forgivable loan to the extent proceeds are used to cover qualified documented payroll, mortgage interest, rent, and utility costs over a 24-week measurement period (as amended) following loan funding. For the loan to be forgiven, the Company is required to formally apply for forgiveness, and potentially, required to pass an audit that it met the eligibility qualifications of the loan. Within 150 days from the application, the Company will be notified whether or not the loan is forgiven. On December 18, 2020, the Company was informed by Ameris Bank that the PPP Note had been forgiven by the U.S. Small Business Administration. In accounting for the terms of the PPP Loan, the Company is guided by ASC 470 Debt Gain contingency |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Operating Leases The Company leases it facilities under non-cancelable operating leases which now expires February 28, 2027. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and liabilities for the lease renewal were recognized at the inception date which is November 2, 2020 based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate based on the information available. At March 31, 2021, the weighted average remaining lease term for the lease renewal is 6 years and the weighted average discount rate is 14.49%. Supplemental balance sheet information related to leases at March 31, 2021 is as follows: Operating leases Balance Sheet Classification (in thousands) Right-of-use assets Operating lease right-of-use assets, net $ 2,625 Current lease liabilities Operating lease liabilities $ 229 Non-current lease liabilities Long-term operating lease liabilities 2,505 Total lease liabilities $ 2,734 Maturities of lease liabilities at March 31, 2021 are as follows: Payments (in thousands) 2021 (three months) $ 146 2022 604 2023 642 2024 680 2025 and thereafter 2,011 Total undiscounted lease payments 4,083 Less: present value discount (1,349 ) Total operating lease liability balance $ 2,734 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 $1,318,419. 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 March 31, 2021: Years ending June 30, (in thousands) 2021 (three months) $ 77 2022 272 2023 251 2024 230 2025 184 2026 76 Future Minimum Note Payable Payments $ 1,090 Less Amount Representing Interest (162 ) Present Value of Minimum Note Payable Payments 928 Less Current Portion (195 ) Long-Term Obligations under Equipment Notes Payable $ 733 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 Quarterly 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 Transaction
Related Party Transaction | 9 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | 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 three months ended March 31, 2021 was accrued by the Company at the prevailing prime rate (which is currently 3.25%) and totaled $609. On December 21, 2020, the note holder used $3,750 of the accrued interest to exercise stock options that were granted on December 29, 2015. The accrued interest on the note as of March 31, 2021 was $29,533. 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 three months ended March 31, 2021 was accrued by the Company at the prevailing prime rate (which is currently 3.25%) and totaled $321. On December 21, 2020, the note holder used $6,875 of the accrued interest to exercise stock options that were granted on December 29, 2015. The accrued interest on the note as of March 31, 2021 was $5,191. This note is subordinate to all other credit facilities currently in place. The Company’s CEO, Louis Friedman, has personally guaranteed the repayment of the loan obligation to Advance Financial Corporation (see Note 12 – Line of Credit). In addition, Luvu Brands has provided its corporate guarantees of the credit facility. On March 31, 2021, the balance owed under this line of credit was $1,249,913. 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; extended by the holder to July 31, 2021 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 extended by the holder to October 31, 2021 (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, 2021 (see Note 9). This loan was repaid in full on May 1, 2021. Mr. Friedman personally guaranteed the repayment of the loan obligation. The loans from Power Up (see Note 11) to OneUp were guaranteed by the Company (including OneUp and Foam Labs) and were personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. Power Up is controlled by Curt Kramer, who also controls Hope Capital, Inc.(“HCI”). As last reported to us, HCI owns 7.5% of our common stock. 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 $39,501 at March 31, 2021 and $47,619 at June 30, 2020. The loan is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. On June 11, 2019, the Company entered into an agreement with a secured lender, whereby the lender agreed to loan OneUp a total of $150,000. After partial repayment of this loan, in November, 2019 the Company borrowed an additional $33,000. Repayment of this note is by 78 weekly payments of $2,298, beginning November 13, 2019. On March 31, 2021, the balance owed under this note payable was $11,319. This note payable is guaranteed by the Company and is personally guaranteed by the Company’s CEO and controlling shareholder, Louis S. Friedman. On September 23, 2019, the Company borrowed $300,000 from two individual shareholders with interest at 20% on an unsecured note payable, principal and interest paid bi-weekly with the final payment due September 18, 2020. This loan was repaid in full September 18, 2020. The loan was personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. On November 27, 2019 the Company entered into an agreement with OnDeck, whereby OnDeck agreed to loan OneUp a total of $200,000. Terms for this loan calls for a repayment of $234,000 which includes a one-time finance charge of $34,000, approximately nine months after the funding date. A 1% loan origination fee was deducted, and the Company received net proceeds of $198,000. This note payable was fully paid in August 2020. This loan was guaranteed by the Company and was personally guaranteed by the Company’s CEO and controlling shareholder. On February 21, 2020, the Company borrowed $300,000 from two individual shareholders with interest at 20% on an unsecured note payable, principal and interest paid bi-weekly with the final payment due February 19, 2021. The lenders deducted an original issue discount of 2% and the balance due on the March 1, 2019 note payable of $12,677 and the remaining proceeds of $281,323 are for working capital purposes. This note payable was fully repaid on February 19, 2021. The loan was personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. |
Stockholders Equity
Stockholders Equity | 9 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Stockholders Equity | Options At March 31, 2021, the Company had the 2015 Stock Option Plan (the “2015 Plan”), which is a shareholder-approved and under which 3,400,000 shares are reserved for issuance under the 2015 Plan until such Plan terminates on August 31, 2025. Under the 2015 Plan, eligible employees and certain independent consultants may be granted options to purchase shares of the Company’s common stock. The shares issuable under the 2015 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 March 31, 2021, the number of shares available for issuance under the 2015 Plan was 1,000,000. The following table summarizes the Company’s stock option activities during the nine months ended March 31, 2021: Number of Shares Underlying Outstanding Options Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Intrinsic Value Options outstanding as of June 30, 2020 4,250,000 1.7 years $ .02 $ 624,700 Granted 250,000 4.5 years .16 - Exercised (1,600,000 ) - .01 - Forfeited or expired (500,000 ) - - - Options outstanding as of March 31, 2021 2,400,000 2.0 years .04 $ 277,300 Options exercisable as of March 31, 2021 1,625,000 1.4 years .03 $ 194,625 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 $0.15 for such day. During the nine months ended March 31, 2021, a total of 1,600,000 stock options were exercised in exchange for various consideration including cash, accrued interest and on a cashless basis. There were 250,000 stock options granted during the nine months ended March 31, 2021 and 300,000 stock options granted during the nine months ended March 31, 2020. The value assumptions related to options granted during the nine months ended March 31, 2021, were as follows: Nine Months Ended March 31, 2021 Nine Months Ended March 31, 2020 Exercise Price: $ .13 - $.17 $ .02 - $.03 Volatility: 469% - 489% 405% - 407% Risk Free Rate: .25% - .49% 1.6% - 1.81% Vesting Period: 4 years 4 years Forfeiture Rate: 0 % 0 % Expected Life 4.1 years 4.1 years Dividend Rate 0 % 0 % The following table summarizes the weighted average characteristics of outstanding stock options as of March 31, 2021: Outstanding Options Exercisable Options Exercise Prices Numberof Shares RemainingLife (Years) WeightedAverage Price Number ofShares WeightedAverage Price $ .02 to .03 2,100,000 1.8 $ .03 1,525,000 $ .03 $ .05 200,000 2.3 $ .05 100,000 $ .05 $ .13 100,000 4.9 $ .13 – $ – Total stock options 2,400,000 2.0 $ .04 1,625,000 $ .03 Stock-based compensation We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation Stock option-based compensation expense recognized in the condensed consolidated statements of operations for the three and nine month periods ended March 31, 2021 and 2020 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures. The following table summarizes stock option-based compensation expense by line item in the Condensed Consolidated Statements of Operations, all relating to the Plans: As of March 31, 2021, the Company’s total unrecognized compensation cost was $28,987 which will be recognized over the weighted average vesting period of two years. Three Months Ended March 31, Nine Months Ended March 31, 2021 2020 2021 2020 ($ in thousands) Other Selling and Marketing 1 1 3 12 General and Administrative 3 3 9 3 Total Stock-based Compensation Expense 4 4 12 15 Share Purchase Warrants As of March 31, 2021 and 2020, there were no share purchase warrants outstanding. Common Stock The Company’s authorized common stock was 175,000,000 shares at March 31, 2021 and June 30, 2020. Common shareholders are entitled to dividends if and when declared by the Company’s Board of Directors, subject to preferred stockholder dividend rights. At March 31, 2021, the Company had reserved the following shares of common stock for issuance: March 31, 2021 Shares of common stock reserved for issuance under the 2015 Plan 3,400,000 Shares of common stock issuable upon conversion of the Preferred Stock 4,300,000 Total shares of common stock equivalents 7,700,000 During the nine months ended March 31, 2021, 1,585,294 shares of common stock were issued for the exercise of 1.6 million stock options by affiliates and non-affiliate employees of the Company in exchange for various consideration including cash, accrued interest and a cashless basis at prices ranging from $.0125 per share to $.01375 per share. These options were granted under the 2015 Plan on December 29, 2015 with an expiration date of December 29, 2020. 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. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | On May 1, 2021, the unsecured note payable for $200,000 was repaid in full. On May 10, 2021, the Company entered into an equipment finance agreement for the purchase of a new fabric cutting machine and cutting table from a European supplier. At a total cost of $210,828, the equipment finance agreement calls for 60 payments of $4,256 to the finance company. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
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 condensed financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These consolidated condensed financial statements and notes should be read in conjunction with the Company’s consolidated financial statements contained in the Company’s 2020 10-K. |
Use of Estimates | The preparation of the consolidated financial statements in conformity with GAAP 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 record revenue based on the five-step model which includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when the performance obligations are satisfied. Substantially all of our revenue is generated by fulfilling orders for the purchase of manufactured products and product purchased for resale to retailers, wholesalers, or direct to consumers via online channels, with each order considered to be a distinct performance obligation. These orders may be formal purchase orders, verbal phone orders, e-mail orders or orders received online. Shipping and handling activities for which we are responsible under the terms and conditions of the order are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill our promise to transfer the goods and are expensed when revenue is recognized. The impact of this policy election is insignificant as it aligns with our current practice. Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling a performance obligation. We have elected to exclude sales, use and similar taxes from the measurement of the transaction price. The impact of this policy election is insignificant, as it aligns with our current practice. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, which includes costs for trade promotion programs, coupons, returns and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the end of each reporting period and the impact of any adjustments are recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, we consider the customer's ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on the date of transfer of control of the products to the customer. Revenue is recognized at the point in time that control of the ordered products is transferred to the customer. Generally, this occurs when the product is delivered, or in some cases, picked up from one of our distribution centers by the customer. |
Deferred revenues | Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. Deferred revenues primarily relate to gift cards purchased, but not used, prior to the end of the fiscal period. Our total deferred revenue as of June 30, 2020 was $14,898 and was included in “Other accrued liabilities” on our consolidated balance sheets. The deferred revenue balance as of March 31, 2021 was $16,854. |
Cost of Goods Sold | Cost of goods sold includes raw materials, labor, manufacturing overhead, and royalty expense. |
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 | We maintain an allowance for doubtful accounts to reflect our estimate of current and past due receivable balances that may not be collected. The allowance for doubtful accounts is based upon our assessment of the collectability of specific customer accounts, the aging of accounts receivable and our history of bad debts. We believe that the allowance for doubtful accounts is adequate to cover anticipated losses in the receivable balance under current conditions. However, significant deterioration in the financial condition of our customers, resulting in an impairment of their ability to make payments, could materially change these expectations and an additional allowance may be required. The following is a summary of Accounts Receivable as of March 31, 2021 and June 30, 2020. March 31,2021 June 30,2020 (unaudited) (in thousands) Accounts receivable $ 1,187 $ 1,135 Allowance for doubtful accounts (1 ) — Allowance for discounts and returns (28 ) — Total accounts receivable, net $ 1,158 $ 1,135 |
Inventories and Inventory Reserves | Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method. Net realizable value 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 net realizable value 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 bank balances on deposit at March 31, 2021 that exceeded the balance insured by the FDIC by $1,093,900. During the three and nine months ended March 31, 2021, we purchased 33% and 33% respectively, of total inventory purchases from one vendor. During the fiscal year ended June 30, 2020, we purchased 33 % of total inventory purchases from one vendor. As of March 31, 2021, one of the Company’s customers represents 55% of the total accounts receivables, respectively. As of June 30, 2020, three of the Company’s customers represents 38%, 16% and 16% of the total accounts receivables, respectively. For the three and nine months ended March 31, 2021, sales to and through Amazon accounted for 33% and 30% of our net sales, respectively. |
Fair Value of Financial Instruments | At March 31, 2021 and June 30, 2020, 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 Accounting Standards Codification (“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 $6,900 at March 31, 2021 and $5,000 at June 30, 2020. Advertising expense for the three months ended March 31, 2021 and 2020 was $180,128 and $117,449, respectively. Advertising expense for the nine months ended March 31, 2021 and 2020 was $369,113 and $313,132, respectively. |
Research and Development | Research and development expenses for new products are expensed as they are incurred. Expenses for new product development totaled $24,236 and $26,501 for the three months ended March 31, 2021 and 2020, respectively. Expenses for new product development totaled $80,754 and $81,353 for the nine months ended March 31, 2021 and 2020, respectively. Research and development costs are included in general and administrative expense. |
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 that 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. |
Impairment or Disposal of Long Lived Assets | Long-lived assets to be held are reviewed for events or changes in circumstances which indicate that their carrying value may not be recoverable. They are tested for recoverability using undiscounted cash flows to determine whether or not impairment to such value has occurred as required by Financial Accounting Standards Board (“ FASB”) ASC Topic No. 360, Property, Plant, and Equipment |
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 amended the lease to expire on December 31, 2020. The rent expense under this lease for the three months ended March 31, 2020 was $88,120. The rent expense under this lease for the nine months ended March 31, 2020 was $264,359. On November 2, 2020, the Company entered into an agreement with its landlord on a new lease for the current facilities for six years and two months, beginning January 1, 2021. The new lease includes two months of rent abatement totaling $103,230. Under the new lease, the monthly rent on the facility is $51,615 with annual escalations of 3% with the final two months of rent at $61,605. In addition, the Company will pay the landlord a 2% property management fee. The rent expense for the three months ended March 31, 2021 was $162,053. The rent expense for the nine months ended March 31, 2021 (under the previous lease and the new lease) was $338,292. Under ASC 842, which was adopted July 1, 2019, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company elected not to recognize leases with a term less than one year on its balance sheet. Operating lease right-of-use (ROU) assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.) Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, the Company elected the practical expedient to not separate lease and non-lease components. The lease component results in an operating right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense. See Note 16 for details. Under prior guidance ASC 840, rent expense and lease incentives from operating leases were recognized on a straight-line basis over the lease term. The difference between rent expense recognized and rental payments was recorded as deferred rent in the accompanying consolidated balance sheets. |
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 Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 %Change (in thousands) Net Sales by Channel: Direct $ 2,004 $ 1,068 88 % Wholesale $ 4,023 $ 2,889 39 % Other $ 154 $ 75 105 % Total Net Sales $ 6,181 $ 4,032 53 % Three Months Ended Margin Three Months Ended Margin % March 31, 2021 % March 31, 2020 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 1,005 50 % $ 482 45 % 109 % Wholesale $ 1,099 27 % $ 775 27 % 42 % Other $ (358 ) – % $ (189 ) – % 89 % Total Gross Profit $ 1,746 28 % $ 1,068 26 % 63 % Nine Months Ended March 31, 2021 Nine Months Ended March 31, 2020 % Change (in thousands) Net Sales by Channel: Direct $ 5,371 $ 3,489 54 % Wholesale $ 11,476 $ 9,185 25 % Other $ 415 $ 232 79 % Total Net Sales $ 17,262 $ 12,906 34 % Nine Months Ended Margin Nine Months Ended Margin % March 31, 2021 % March 31, 2020 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 2,706 50 % $ 1,684 48 % 61 % Wholesale $ 3,047 27 % $ 2,596 28 % 17 % Other $ (953 ) – % (556 ) – % 71 % Total Gross Profit $ 4,800 28 % $ 3,724 29 % 29 % |
Recent accounting pronouncements | From time to time, new accounting pronouncements are issued by FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Recently adopted In August 2018, the FASB issued updated guidance (ASU 2018-13) as part of the disclosure framework project, which focuses on improving the effectiveness of disclosures in the notes to the financial statements. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (the Company’s fiscal 2021), with early adoption permitted. We adopted ASU 2018-13 effective July 1, 2020. The impact of adoption of this standard on our condensed consolidated financial statements was not material. Not yet adopted In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. |
Net Income (Loss) Per Share | In accordance with ASC 260, “Earnings Per Share”, basic net income per share is computed by dividing the net income available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income available to common stockholders by the weighted average number of common and common equivalent shares outstanding during the period plus the effect of stock options using the treasury stock method. As of March 31, 2021 and 2020, the common stock equivalents did not have any effect on net income per share. March 31, 2021 2020 Common stock options – 2015 Plan 2,400,000 4,000,000 Convertible preferred stock 4,300,000 4,300,000 Total 6,700,000 8,300,000 |
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. |
Stock Based Compensation | We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Allowance for Doubtful Accounts | March 31,2021 June 30,2020 (unaudited) (in thousands) Accounts receivable $ 1,187 $ 1,135 Allowance for doubtful accounts (1 ) — Allowance for discounts and returns (28 ) — Total accounts receivable, net $ 1,158 $ 1,135 |
Segment Information | Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 %Change (in thousands) Net Sales by Channel: Direct $ 2,004 $ 1,068 88 % Wholesale $ 4,023 $ 2,889 39 % Other $ 154 $ 75 105 % Total Net Sales $ 6,181 $ 4,032 53 % Three Months Ended Margin Three Months Ended Margin % March 31, 2021 % March 31, 2020 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 1,005 50 % $ 482 45 % 109 % Wholesale $ 1,099 27 % $ 775 27 % 42 % Other $ (358 ) – % $ (189 ) – % 89 % Total Gross Profit $ 1,746 28 % $ 1,068 26 % 63 % Nine Months Ended March 31, 2021 Nine Months Ended March 31, 2020 % Change (in thousands) Net Sales by Channel: Direct $ 5,371 $ 3,489 54 % Wholesale $ 11,476 $ 9,185 25 % Other $ 415 $ 232 79 % Total Net Sales $ 17,262 $ 12,906 34 % Nine Months Ended Margin Nine Months Ended Margin % March 31, 2021 % March 31, 2020 % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 2,706 50 % $ 1,684 48 % 61 % Wholesale $ 3,047 27 % $ 2,596 28 % 17 % Other $ (953 ) – % (556 ) – % 71 % Total Gross Profit $ 4,800 28 % $ 3,724 29 % 29 % |
Net Income (Loss) per share | March 31, 2021 2020 Common stock options – 2015 Plan 2,400,000 4,000,000 Convertible preferred stock 4,300,000 4,300,000 Total 6,700,000 8,300,000 |
Inventories, net (Tables)
Inventories, net (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | March 31, 2021 June 30, 2020 (unaudited) (in thousands) Raw materials $ 1,502 $ 992 Work in process 367 234 Finished goods 1,192 900 Total inventories 3,061 2,126 Allowance for inventory reserves (141 ) (141 ) Total inventories, net of allowance $ 2,920 $ 1,985 |
Equipment and Leasehold Impro_2
Equipment and Leasehold Improvements (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Equipment and Leasehold Improvements | March 31, 2021 June 30, 2020 Estimated Useful Life (unaudited) (in thousands) Factory equipment $ 3,125 $ 2,646 2-10 years Computer equipment and software 1,143 1,087 5-7 years Office equipment and furniture 205 205 5-7 years Leasehold improvements 467 463 6 years Project in process 421 3 Subtotal 5,361 4,404 Accumulated depreciation (3,622 ) (3,466 ) Equipment and leasehold improvements, net $ 1,739 $ 938 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | March 31, 2021 June 30, 2020 (unaudited) (in thousands) Accrued compensation $ 382 $ 468 Accrued expenses and interest 173 155 Other accrued liabilities $ 555 $ 623 |
Current and Long-term Debt Su_2
Current and Long-term Debt Summary (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Current and Long-term Debt Summary | March 31, 2021 June 30, 2020 (unaudited) Current debt: (in thousands) Unsecured lines of credit (Note 13) $ 40 $ 48 Line of credit (Note 12) 1,250 1,005 Short-term unsecured notes payable (Note 9) 400 489 Current portion of equipment notes payable (Note 16) 195 102 Current portion secured notes payable (Note 14) 195 191 Current portion of leases payable 8 – Credit card advance (net of discount) (Note 11) – 56 Notes payable – related party (Note 10) 116 116 Total current debt 2,204 2,007 Long-term debt: Unsecured notes payable (Note 9) – 200 Equipment lease payable 21 – Equipment notes payable (Note 16) 733 161 Total long-term debt $ 754 $ 361 |
Unsecured Notes Payable (Tables
Unsecured Notes Payable (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Unsecured Notes Payable | March 31, 2021 June 30, 2020 (unaudited) Current debt: (in thousands) 20% Unsecured note, bi-weekly principal and interest, due September 18, 2020 (1) $ – $ 75 20% Unsecured note, bi-weekly principal and interest, due February 19, 2021 (2) – 214 20% Unsecured note, interest only, due May 1, 2021 (3) 200 200 20% Unsecured note, interest only, due July 31, 2021 (5) 100 – 20% Unsecured note, interest only, due October 31, 2021 (4) 100 – Total current debt 400 489 Long-term debt: 20% Unsecured note, interest only, due October 31, 2021 (4) – 100 20% Unsecured note, interest only, due July 31, 2021 (5) – 100 Total long-term debt – 200 Total unsecured notes payable $ 400 $ 689 |
Note Payable - Related Party (T
Note Payable - Related Party (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Notes to Financial Statements | |
Note Payable - Related Party | March 31, 2021 June 30, 2020 (unaudited) (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 $ - $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Leases | Operating leases Balance Sheet Classification (in thousands) Right-of-use assets Operating lease right-of-use assets, net $ 2,625 Current lease liabilities Operating lease liabilities $ 229 Non-current lease liabilities Long-term operating lease liabilities 2,505 Total lease liabilities $ 2,734 Maturities of lease liabilities at March 31, 2021 are as follows: Payments (in thousands) 2021 (three months) $ 146 2022 604 2023 642 2024 680 2025 and thereafter 2,011 Total undiscounted lease payments 4,083 Less: present value discount (1,349 ) Total operating lease liability balance $ 2,734 |
Equipment Notes Payable | Years ending June 30, (in thousands) 2021 (three months) $ 77 2022 272 2023 251 2024 230 2025 184 2026 76 Future Minimum Note Payable Payments $ 1,090 Less Amount Representing Interest (162 ) Present Value of Minimum Note Payable Payments 928 Less Current Portion (195 ) Long-Term Obligations under Equipment Notes Payable $ 733 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Stock option activites | Number of Shares Underlying Outstanding Options Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Intrinsic Value Options outstanding as of June 30, 2020 4,250,000 1.7 years $ .02 $ 624,700 Granted 250,000 4.5 years .16 - Exercised (1,600,000 ) - .01 - Forfeited or expired (500,000 ) - - - Options outstanding as of March 31, 2021 2,400,000 2.0 years .04 $ 277,300 Options exercisable as of March 31, 2021 1,625,000 1.4 years .03 $ 194,625 |
Assumptions | Nine Months Ended March 31, 2021 Nine Months Ended March 31, 2020 Exercise Price: $ .13 - $.17 $ .02 - $.03 Volatility: 469% - 489% 405% - 407% Risk Free Rate: .25% - .49% 1.6% - 1.81% Vesting Period: 4 years 4 years Forfeiture Rate: 0 % 0 % Expected Life 4.1 years 4.1 years Dividend Rate 0 % 0 % |
Weighted average stock options | Outstanding Options Exercisable Options Exercise Prices Numberof Shares RemainingLife (Years) WeightedAverage Price Number ofShares WeightedAverage Price $ .02 to .03 2,100,000 1.8 $ .03 1,525,000 $ .03 $ .05 200,000 2.3 $ .05 100,000 $ .05 $ .13 100,000 4.9 $ .13 – $ – Total stock options 2,400,000 2.0 $ .04 1,625,000 $ .03 |
Stock options compensation expense | Three Months Ended March 31, Nine Months Ended March 31, 2021 2020 2021 2020 ($ in thousands) Other Selling and Marketing 1 1 3 12 General and Administrative 3 3 9 3 Total Stock-based Compensation Expense 4 4 12 15 |
Common stock equivalents | March 31, 2021 Shares of common stock reserved for issuance under the 2015 Plan 3,400,000 Shares of common stock issuable upon conversion of the Preferred Stock 4,300,000 Total shares of common stock equivalents 7,700,000 |
Organization and Nature of Bu_2
Organization and Nature of Business (Details Narrative) | 9 Months Ended |
Mar. 31, 2021 | |
One Customer | |
Concentration Risk (percent) | 10.00% |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (5,893) | $ (8,156) |
Working Capital Deficit | (196) | |
Operational and Strategic growth plans | ||
Finances required | $ 250 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Accounting Policies [Abstract] | ||
Accounts receivable | $ 1,187 | $ 1,135 |
Allowance for doubtful accounts | (1) | 0 |
Allowance for discounts and returns | (28) | 0 |
Accounts receivable, net | $ 1,158 | $ 1,135 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Net Sales | $ 6,181 | $ 4,032 | $ 17,262 | $ 12,906 |
Gross profit | $ 1,746 | $ 1,068 | $ 4,800 | $ 3,724 |
% Change in Sales | 53.00% | 34.00% | ||
Gross Profit Margin | 28.00% | 26.00% | 28.00% | 29.00% |
% Change in Gross Profit | 63.00% | 29.00% | ||
Other | ||||
Net Sales | $ 2,004 | $ 1,068 | $ 5,371 | $ 3,489 |
Gross profit | $ 1,005 | $ 482 | $ 2,706 | $ 1,684 |
% Change in Sales | 88.00% | 54.00% | ||
Gross Profit Margin | 50.00% | 45.00% | 50.00% | 48.00% |
% Change in Gross Profit | 109.00% | 61.00% | ||
Direct | ||||
Net Sales | $ 4,023 | $ 2,889 | $ 11,476 | $ 9,185 |
Gross profit | $ 1,099 | $ 775 | $ 3,047 | $ 2,596 |
% Change in Sales | 39.00% | 25.00% | ||
Gross Profit Margin | 27.00% | 27.00% | 27.00% | 28.00% |
% Change in Gross Profit | 42.00% | 17.00% | ||
Wholesale | ||||
Net Sales | $ 154 | $ 75 | $ 415 | $ 232 |
Gross profit | $ (358) | $ (189) | $ (953) | $ (556) |
% Change in Sales | 105.00% | 79.00% | ||
Gross Profit Margin | 0.00% | 0.00% | 0.00% | 0.00% |
% Change in Gross Profit | 89.00% | 71.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - shares | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Anti-dilutive Securities | 6,700,000 | 8,300,000 |
Stock options - 2015 | ||
Anti-dilutive Securities | 2,400,000 | 4,000,000 |
Convertible Preferred Stock | ||
Anti-dilutive Securities | 4,300,000 | 4,300,000 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Deferred Revenue | $ 16,854 | $ 16,854 | $ 14,898 | ||
FDIC balance limit excess | 1,093,900 | 1,093,900 | |||
Prepaid Advertising | 6,900 | 6,900 | $ 5,000 | ||
Advertising Expense | 180,128 | $ 117,449 | 369,113 | $ 313,132 | |
New product development | 24,236 | 26,501 | 80,754 | 81,353 | |
Operating Lease 1 | |||||
Rent Expense | 0 | $ 88,120 | 0 | $ 264,359 | |
Operating Lease 2 | |||||
Rental abatement | 103,230 | 103,230 | |||
New monthly rent | $ 51,615 | 51,615 | |||
Monthly rental, final year on lease | $ 61,605 | ||||
Inventory Purchases | One Vendor | |||||
Concetration percentage | 33.00% | 33.00% | 33.00% | ||
Accounts Receivable | Customer 1 | |||||
Concetration percentage | 55.00% | 38.00% | |||
Accounts Receivable | Customer 2 | |||||
Concetration percentage | 16.00% | ||||
Accounts Receivable | Customer 3 | |||||
Concetration percentage | 16.00% | ||||
Sales | Amazon | |||||
Concetration percentage | 33.00% | 30.00% |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,502 | $ 992 |
Work in Process | 367 | 234 |
Finished Goods | 1,192 | 900 |
Total inventories | 3,061 | 2,126 |
Allowance for inventory reserves | (141) | (141) |
Total inventories, net of allowance | $ 2,920 | $ 1,985 |
Equipment and Leasehold Impro_3
Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Jun. 30, 2020 | |
Property and Equipment, gross | $ 5,361 | $ 4,404 |
Accumulated depreciation | 3,622 | 3,466 |
Property and Equipment, net | 1,739 | 938 |
Equipment | ||
Property and Equipment, gross | $ 3,125 | 2,646 |
Equipment | Minimum | ||
Depreciation life | 2 years | |
Equipment | Maximum | ||
Depreciation life | 10 years | |
Computer equipment and software | ||
Property and Equipment, gross | $ 1,143 | 1,087 |
Computer equipment and software | Minimum | ||
Depreciation life | 5 years | |
Computer equipment and software | Maximum | ||
Depreciation life | 7 years | |
Office equipment and furniture | ||
Property and Equipment, gross | $ 205 | 205 |
Office equipment and furniture | Minimum | ||
Depreciation life | 5 years | |
Office equipment and furniture | Maximum | ||
Depreciation life | 7 years | |
Leasehold Improvements | ||
Property and Equipment, gross | $ 467 | 463 |
Depreciation life | 6 years | |
Projects in process | ||
Property and Equipment, gross | $ 421 | $ 3 |
Equipment and Leasehold Impro_4
Equipment and Leasehold Improvements (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 53,618 | $ 38,206 | $ 153,313 | $ 117,258 |
Other Accrued Liabilities (Deta
Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 382 | $ 468 |
Accrued expenses and interest | 173 | 155 |
Other accrued liabilities | $ 555 | $ 623 |
Current and Long-term Debt Su_3
Current and Long-term Debt Summary (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Current debt: | ||
Unsecured lines of credit (Note 13) | $ 40 | $ 48 |
Line of credit (Note 12) | 1,250 | 1,005 |
Short-term unsecured notes payable (Note 9) | 400 | 489 |
Current portion of equipment notes payable (Note 16) | 195 | 102 |
Current portion secured notes payable (Note 14) | 195 | 191 |
Current portion of leases payable (Note 16) | 8 | 0 |
Credit card advance (net of discount) (Note 11) | 0 | 56 |
Notes payable- related party (Note 10) | 116 | 116 |
Total current debt | 2,204 | 2,007 |
Long-term debt: | ||
Unsecured notes payable (Note 9) | 0 | 200 |
Equipment lease payable | 21 | 0 |
Equipment note payable (Note 16) | 733 | 161 |
Total long-term debt | $ 754 | $ 361 |
Unsecured Notes Payable (Detail
Unsecured Notes Payable (Details Narrative) (USD $) - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 31, 2021 | Jun. 30, 2020 | ||
Debt Instrument [Line Items] | |||
Short-term unsecured notes payable | $ 400 | $ 489 | |
Long-term unsecured notes payable | 0 | 200 | |
Unsecured notes payable | 400 | 689 | |
Note 1 | |||
Debt Instrument [Line Items] | |||
Short-term unsecured notes payable | $ 0 | [1] | 75 |
Interest Rate | 20.00% | ||
Date of Maturity | Sep. 18, 2020 | ||
Long-term unsecured notes payable | |||
Note 2 | |||
Debt Instrument [Line Items] | |||
Short-term unsecured notes payable | $ 0 | [2] | 214 |
Interest Rate | 20.00% | ||
Date of Maturity | Feb. 19, 2021 | ||
Long-term unsecured notes payable | |||
Note 3 | |||
Debt Instrument [Line Items] | |||
Short-term unsecured notes payable | $ 200 | [3] | 200 |
Interest Rate | 20.00% | ||
Date of Maturity | May 1, 2021 | ||
Long-term unsecured notes payable | |||
Note 4 | |||
Debt Instrument [Line Items] | |||
Short-term unsecured notes payable | $ 100 | [4] | 0 |
Interest Rate | 20.00% | ||
Date of Maturity | Jul. 31, 2021 | ||
Long-term unsecured notes payable | $ 0 | [5] | 100 |
Note 5 | |||
Debt Instrument [Line Items] | |||
Short-term unsecured notes payable | $ 100 | [5] | 0 |
Interest Rate | 20.00% | ||
Date of Maturity | Oct. 31, 2021 | ||
Long-term unsecured notes payable | $ 0 | [4] | $ 100 |
Amazon | |||
Debt Instrument [Line Items] | |||
Interest Rate | 8.22% | ||
[1] | Unsecured note payable for $300,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing September 18, 2020. This note was repaid in full on September 18, 2020. Personally guaranteed by principal stockholder. | ||
[2] | Unsecured note payable for $300,000 to two individual shareholders with interest at 20%, principal and interest paid bi-weekly, maturing February 19, 2021. $12,678 from the proceeds of this unsecured note payable was used to retire the balance of the unsecured note maturing on February 28, 2020. This note was repaid in full in February 19, 2021. Personally guaranteed by principal stockholder. | ||
[3] | Unsecured note payable for $200,000 to an individual with interest payable monthly at 20%, principal originally due in full on May 1, 2013, extended to May 1, 2019, then extended to May 1, 2021. This note was repaid in full on May 1, 2021. Personally guaranteed by principal stockholder. | ||
[4] | Unsecured note payable for $100,000 to an individual, with interest at 20% payable monthly; principal due in full on July 31, 2013; extended to July 31, 2019; then extended by the holder to July 31, 2021. Personally guaranteed by principal stockholder. | ||
[5] | Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on October 31, 2014, extended to October 31, 2019, then extended to October 31, 2021. Personally guaranteed by principal stockholder. |
Notes Payable-Related Party (De
Notes Payable-Related Party (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Short-term Debt [Line Items] | ||
Unsecured notes payable | $ 116 | $ 116 |
Less: current portion | (116) | (116) |
Long-term unsecured notes payable | $ 0 | 0 |
Related Party Note Payable 1 | ||
Short-term Debt [Line Items] | ||
Interest Rate | 3.25% | |
Unsecured notes payable | $ 40 | 40 |
Related Party Note Payable 2 | ||
Short-term Debt [Line Items] | ||
Interest Rate | 3.25% | |
Unsecured notes payable | $ 76 | $ 76 |
Credit Card Advance (Details Na
Credit Card Advance (Details Narrative) - USD ($) | 2 Months Ended | 9 Months Ended |
Aug. 29, 2019 | Mar. 31, 2021 | |
Credit Card Advance | ||
Credit Card Advance | $ 250,000 | |
Repayment Amount | 290,000 | |
Finance charge | 40,000 | |
Net proceeds from advance | $ 247,000 | |
OnDeck | ||
Finance charge | $ 34,000 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) $ in Thousands | Sep. 04, 2013 | Mar. 31, 2021 | Jun. 30, 2020 | Nov. 27, 2018 | Dec. 09, 2015 |
Line of Credit Facility [Line Items] | |||||
Line of credit, limit | $ 750 | ||||
Collateral | 85% of eligible accounts receivable | ||||
Interest Rate Description | 2.5% over the lenders Index Rate | ||||
Lenders Index Rate | 2.50% | ||||
Monthly Service Fee | 0.50% | ||||
Line of credit | $ 1,250 | $ 1,005 | |||
Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Monthly Service Fee | 0.50% | ||||
Line of credit | $ 1,000 | $ 1,200 | |||
Inventory advance | $ 300 | $ 300 | |||
Invetory Advance | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit | $ 500 | ||||
Advance Financial Corporation | |||||
Line of Credit Facility [Line Items] | |||||
Interest Rate | 5.25% | ||||
CEO, Louis Friedman | |||||
Line of Credit Facility [Line Items] | |||||
Balance owed | $ 1,250 |
Unsecured Line of Credit (Detai
Unsecured Line of Credit (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Notes to Financial Statements | ||
Unsecured lines of credit | $ 40 | $ 48 |
Interest rate | 8.00% |
Secured Note Payable (Details N
Secured Note Payable (Details Narrative) - USD ($) | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Proceeds from secured notes payable | $ 200,000 | $ 233,000 |
Secured Lender | ||
Note Face Amount | 150,000 | |
Payments | $ 2,298 | |
Frequency of payments | 78 weekly payments | |
Balance owed - note payable | $ 11,319 | |
Amazon | ||
Note Face Amount | $ 302,000 | |
Interest Rate | 8.22% | |
Payments | $ 26,301 | |
Frequency of payments | 12 monthly payments | |
OnDeck | ||
Note Face Amount | $ 200,000 | |
Finance charge | 34,000 | |
Proceeds from secured notes payable | 198,000 | |
Amazon Note 2 | ||
Note Face Amount | $ 200,000 | |
Interest Rate | 10.99% | |
Payments | $ 17,675 | |
Frequency of payments | 12 monthly payments | |
Balance owed - note payable | $ 184,156 |
PPP Loan (Details Narrative)
PPP Loan (Details Narrative) $ in Thousands | 9 Months Ended |
Mar. 31, 2021USD ($) | |
Banking and Thrift, Interest [Abstract] | |
Borrowings under PPP Loan | $ 1,096,200 |
Monthly payments | $ 61,691 |
Interest rate | 1.00% |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Operating Leases | ||
Operating lease assets | $ 2,622 | $ 165 |
Operating lease liability | 229 | 199 |
Long-term operating lease liability | 2,505 | $ 0 |
Total lease liabilities | $ 2,734 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2021 (three months) | $ 146 |
2022 | 604 |
2023 | 642 |
2024 | 680 |
2025 and thereafter | 2,011 |
Total undiscounted lease payments | 4,083 |
Less: present value discount | (1,349) |
Total minimum lease payments | $ 2,734 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Commitments And Contingencies - Future Minimum Equipment Lease Payments | ||
2021 (three months) | $ 77 | |
2022 | 272 | |
2023 | 251 | |
2024 | 230 | |
2025 | 184 | |
2026 | 76 | |
Future Minimum Lease Payments | 1,090 | |
Less Amount Representing Interest | (162) | |
Present Value of Minimum Lease Payments | 928 | |
Less Current Portion | (195) | $ (102) |
Long-Term Obligations under Leases Payable | $ 733 | $ 161 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | |
Mar. 31, 2021 | Jun. 30, 2020 | |
Related Party Transaction [Line Items] | ||
Convert to stock options | $ 19,000 | |
Note Payable to Wife of CEO | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | 76,000 | |
Acrrued Interest | 29,533 | |
October 30, 2010 Note | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | 40,000 | |
Acrrued Interest | 29,533 | |
July 20, 2011 Note | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | 100,000 | |
Interest Payment | $ 1,667 | |
Extended Date of Maturity | Jul. 31, 2021 | |
October 31, 2013 | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | $ 100,000 | |
Interest Payment | $ 1,667 | |
Extended Date of Maturity | Oct. 31, 2021 | |
May 1, 2012 Note | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | $ 200,000 | |
Interest Rate | 20.00% | |
Extended Date of Maturity | May 1, 2021 | |
Cash Advance from Company and CEO | ||
Related Party Transaction [Line Items] | ||
Interest Rate | 8.00% | |
Note payable-related party | $ 39,501 | $ 47,619 |
June 11, 2019 Note | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | $ 150,000 | |
Frequency | 78 weekly payments | |
Payments | $ 2,298 | |
Note payable-related party | 11,319 | |
September 23, 2019 Note | ||
Related Party Transaction [Line Items] | ||
Note Face Amount | $ 300,000 | |
OnDeck | ||
Related Party Transaction [Line Items] | ||
Issue Date | Nov. 27, 2019 | |
Note Face Amount | $ 200,000 | |
Finance charge | 34,000 | |
Proceeds from note payable - related party | $ 198,000 |
Stockholders Equity (Details)
Stockholders Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Number of Options | 4,250,000 | |
Options, Granted | 250,000 | 300,000 |
Options, Exercised | (1,600,000) | |
Options, Forefeited or expired | (500,000) | |
Number of Options | 2,400,000 | |
Ending,Number of Options, exercisable | 1,625,000 | |
Weighted Average Remaining Contractual Life (Years) | ||
Beginning, Weighted Average Remaining Contractual Life, outstanding | 1 year 8 months 12 days | |
Weighted Average Remaining Contractual Life, outstanding - granted | 4 years 6 months | |
Ending, Weighted Average Remaining Contractual Life, outstanding - granted | 2 years | |
Weighted Average Remaining Contractual Life, exercisable | 1 year 4 months 24 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Weighted Average Exercise Price, outstanding | $ .02 | |
Weighted Average Exercise Price, Granted | .16 | |
Weighted Average Exercise Price, Exercised | .01 | |
Weighted Average Exercise Price, Forfeited or expired | .00 | |
Weighted Average Exercise Price, outstanding | .04 | |
Weighted Average Exercise Price, exercisable | $ .03 | |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value, outstanding, beginning | $ 624,700 | |
Aggregate Intrinsic Value, granted | 0 | |
Aggregate Intrinsic Value, outstanding, ending | 277,300 | |
Aggregate Intrinsic Value, exercisable | $ 194,625 |
Stockholders Equity (Details 1)
Stockholders Equity (Details 1) - $ / shares | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Vesting Period | 4 years | 4 years |
Forfeiture Rate | 0.00% | 0.00% |
Expected Life | 4 years 1 month 6 days | 4 years 1 month 6 days |
Dividend Rate | 0.00% | 0.00% |
Minimum | ||
Exercise Price | $ .13 | $ .02 |
Volatility | 469.00% | 405.00% |
Risk Free Rate | 0.25% | 1.60% |
Maximum | ||
Exercise Price | $ .17 | $ .03 |
Volatility | 489.00% | 407.00% |
Risk Free Rate | 0.49% | 1.81% |
Stockholders Equity (Details 2)
Stockholders Equity (Details 2) - $ / shares | 9 Months Ended | |
Mar. 31, 2021 | Jun. 30, 2020 | |
Outstanding Options[Abstract] | ||
Number of shares | 2,400,000 | 4,250,000 |
Remaining Life (Years) | 2 years | |
Weighted Average Price | $ .04 | |
Exercisable Options [Abstract] | ||
Number of Shares | 1,625,000 | |
Weighted Average Exercise Price | $ .03 | |
.02 to .03 | ||
Outstanding Options[Abstract] | ||
Number of shares | 2,100,000 | |
Remaining Life (Years) | 1 year 9 months 18 days | |
Weighted Average Price | $ .03 | |
Exercisable Options [Abstract] | ||
Number of Shares | 1,525,000 | |
Weighted Average Exercise Price | $ .03 | |
.05 | ||
Outstanding Options[Abstract] | ||
Number of shares | 200,000 | |
Remaining Life (Years) | 2 years 3 months 18 days | |
Weighted Average Price | $ .05 | |
Exercisable Options [Abstract] | ||
Number of Shares | 100,000 | |
Weighted Average Exercise Price | $ .05 | |
.13 | ||
Outstanding Options[Abstract] | ||
Number of shares | 100,000 | |
Remaining Life (Years) | 4 years 10 months 24 days | |
Weighted Average Price | $ .13 | |
Exercisable Options [Abstract] | ||
Number of Shares | 0 | |
Weighted Average Exercise Price | $ .00 |
Stockholders Equity (Details 3)
Stockholders Equity (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 4 | $ 4 | $ 12 | $ 15 |
Unrecognized compensation costs | 28,987 | 28,987 | ||
Wieghted Average Vesting Period | 2 years | |||
Other Selling and Marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 1 | 1 | 3 | $ 12 |
General and Adminstrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 3 | $ 3 | $ 9 | $ 3 |
Stockholders Equity (Details 4)
Stockholders Equity (Details 4) | Mar. 31, 2021shares |
Equity [Abstract] | |
Shares of common stock reserved for issuance under the 2015 Plan | 3,400,000 |
Shares of common stock issuable upon conversion of the Preferred Stock | 4,300,000 |
Total shares of common stock equivalents | 7,700,000 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Shares of common stock reserved for issuance under the 2015 Plan | 3,400,000 | ||
Shares, available for issurance | 1,000,000 | ||
Closing stock price | $ .15 | ||
Stock options exercised | $ 1,600,000 | ||
Stock options granted | 250,000 | 300,000 | |
Preferred stock - par value | $ 0.0001 | $ 0.0001 | |
Preferred stock - shares authorized | 5,700,000 | 5,700,000 | |
Preferred stock - shares issued | 0 | 0 | |
Preferred stock - shares outstanding | 0 | 0 | |
Common stock- par value | $ 0.01 | $ 0.01 | |
Common stock- shares authorized | 175,000,000 | 175,000,000 | |
Common stock- shares issued | 75,037,890 | 73,452,596 | |
Common stock- shares outstanding | 75,037,890 | 73,452,596 | |
Series A Preferred Stock | |||
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 | $ 1,000 | $ 1,000 |