Cover
Cover - shares | 6 Months Ended | |
Dec. 31, 2021 | Feb. 15, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | Luvu Brands, Inc. | |
Entity Central Index Key | 0001374567 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Dec. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2022 | |
Entity Common Stock Shares Outstanding | 75,941,860 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-53314 | |
Entity Incorporation State Country Code | FL | |
Entity Interactive Data Current | Yes | |
Entity Tax Identification Number | 59-3581576 | |
Entity Address Address Line 1 | 2745 Bankers Industrial Drive | |
Entity Address City Or Town | Atlanta | |
Entity Address State Or Province | GA | |
Entity Address Postal Zip Code | 30360 | |
Local Phone Number | 246-6400 | |
City Area Code | 770 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,081,000 | $ 977,000 |
Accounts receivable, net | 920,000 | 1,134,000 |
Inventories, net | 3,456,000 | 3,391,000 |
Prepaid expenses | 168,000 | 145,000 |
Total current assets | 5,625,000 | 5,647,000 |
Equipment, property and leasehold improvements, net | 1,863,000 | 1,934,000 |
Finance lease assets | 23,000 | 27,000 |
Operating lease assets | 2,409,000 | 2,554,000 |
Other assets | 100,000 | 84,000 |
Total assets | 10,020,000 | 10,246,000 |
Current liabilities: | ||
Accounts payable | 2,597,000 | 2,669,000 |
Current debt | 1,361,000 | 1,599,000 |
Other accrued liabilities | 528,000 | 694,000 |
Operating lease liability | 290,000 | 250,000 |
Total current liabilities | 4,776,000 | 5,212,000 |
Noncurrent liabilities: | ||
Long-term debt | 1,258,000 | 1,288,000 |
Long-term operating lease liability | 2,256,000 | 2,423,000 |
Total noncurrent liabilities | 3,514,000 | 3,711,000 |
Total liabilities | 8,290,000 | 8,923,000 |
Commitments and contingencies (See Note 15) | 0 | 0 |
Stockholders' equity: | ||
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 December 31, 2021 and June 30, 2021 | 0 | 0 |
Common stock, $0.01 par value, 175,000,000 shares authorized, 75,260,433 and 75,037,890 shares issued and outstanding at December 31, 2021 and June 30, 2021, respectively | 752,000 | 750,000 |
Additional paid-in capital | 6,177,000 | 6,166,000 |
Accumulated deficit | (5,199,000) | (5,593,000) |
Total stockholders' equity | 1,730,000 | 1,323,000 |
Total liabilities and stockholders' equity | $ 10,020,000 | $ 10,246,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
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 | 75,260,433 | 75,037,890 |
Common stock- shares outstanding | 75,260,433 | 75,037,890 |
Series A Preferred Stock Shares | ||
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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Condensed Consolidated Statements of Operations | ||||
Net Sales | $ 7,186,000 | $ 5,714,000 | $ 13,411,000 | $ 11,081,000 |
Cost of goods sold | 5,609,000 | 4,148,000 | 10,335,000 | 8,027,000 |
Gross profit | 1,577,000 | 1,566,000 | 3,076,000 | 3,054,000 |
Operating expenses | ||||
Advertising and promotion | 155,000 | 120,000 | 287,000 | 189,000 |
Other selling and marketing | 321,000 | 270,000 | 581,000 | 537,000 |
General and administrative | 772,000 | 668,000 | 1,485,000 | 1,332,000 |
Depreciation and amortization | 78,000 | 51,000 | 149,000 | 103,000 |
Total operating expenses | 1,326,000 | 1,109,000 | 2,502,000 | 2,161,000 |
Income from operations | 251,000 | 457,000 | 574,000 | 893,000 |
Other Income (Expense): | ||||
Gain on forgiveness of SBA loan | 0 | 1,096,000 | 0 | 1,096,000 |
Interest expense and financing costs | (84,000) | (88,000) | (180,000) | (195,000) |
Total Other Income (Expense) | (84,000) | 1,008,000 | (180,000) | 901,000 |
Income before income taxes | 167,000 | 1,465,000 | 394,000 | 1,794,000 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net income | $ 167,000 | $ 1,465,000 | $ 394,000 | $ 1,794,000 |
Net income per share: | ||||
Basic | $ 0 | $ 0.02 | $ 0.01 | $ 0.02 |
Diluted | $ 0 | $ 0.02 | $ 0.01 | $ 0.02 |
Shares used in computing net income per share: | ||||
Basic | 75,139,516 | 73,682,551 | 75,088,425 | 73,567,574 |
Diluted | 76,613,472 | 74,050,847 | 76,594,991 | 74,550,249 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders Deficit - USD ($) | Total | Series A, Preferred Shares | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance, shares at Jun. 30, 2020 | 4,300,000 | 73,452,596 | |||
Balance, amount at Jun. 30, 2020 | $ (1,274,000) | $ 0 | $ 735,000 | $ 6,147,000 | $ (8,156,000) |
Stock-based compensation expense | 8,000 | 8,000 | 0 | ||
Stock option exercises, shares | 1,585,294 | ||||
Stock option exercises, amount | 19,000 | $ 0 | $ 15,000 | 4,000 | 0 |
Net income for the six months ended December 31, 2020 | 1,794,000 | 0 | 1,794,000 | ||
Balance, shares at Dec. 31, 2020 | 4,300,000 | 75,037,890 | |||
Balance, amount at Dec. 31, 2020 | 547,000 | $ 0 | $ 750,000 | 6,159,000 | (6,362,000) |
Balance, shares at Sep. 30, 2020 | 4,300,000 | 73,452,596 | |||
Balance, amount at Sep. 30, 2020 | (939,000) | $ 0 | $ 735,000 | 6,153,000 | (7,827,000) |
Stock-based compensation expense | 2,000 | 2,000 | 0 | ||
Stock option exercises, shares | 1,585,294 | ||||
Stock option exercises, amount | 19,000 | $ 0 | $ 15,000 | 4,000 | 0 |
Net income for the six months ended December 31, 2020 | 1,465,000 | 0 | 1,465,000 | ||
Balance, shares at Dec. 31, 2020 | 4,300,000 | 75,037,890 | |||
Balance, amount at Dec. 31, 2020 | 547,000 | $ 0 | $ 750,000 | 6,159,000 | (6,362,000) |
Balance, shares at Jun. 30, 2021 | 4,300,000 | 75,037,890 | |||
Balance, amount at Jun. 30, 2021 | 1,323,000 | $ 0 | $ 750,000 | 6,166,000 | (5,593,000) |
Stock-based compensation expense | 10,000 | 10,000 | 0 | ||
Stock option exercises, shares | 222,543 | ||||
Stock option exercises, amount | 3,000 | $ 0 | $ 2,000 | 1,000 | 0 |
Net income for the six months ended December 31, 2020 | 394,000 | 0 | 394,000 | ||
Balance, shares at Dec. 31, 2021 | 4,300,000 | 75,260,433 | |||
Balance, amount at Dec. 31, 2021 | 1,730,000 | $ 0 | $ 752,000 | 6,177,000 | (5,199,000) |
Balance, shares at Sep. 30, 2021 | 4,300,000 | 75,037,890 | |||
Balance, amount at Sep. 30, 2021 | 1,554,000 | $ 0 | $ 750,000 | 6,170,000 | (5,366,000) |
Stock-based compensation expense | 6,000 | 6,000 | 0 | ||
Stock option exercises, shares | 222,543 | ||||
Stock option exercises, amount | 3,000 | $ 0 | $ 2,000 | 1,000 | |
Net income for the six months ended December 31, 2020 | 167,000 | 167,000 | |||
Balance, shares at Dec. 31, 2021 | 4,300,000 | 75,260,433 | |||
Balance, amount at Dec. 31, 2021 | $ 1,730,000 | $ 0 | $ 752,000 | $ 6,177,000 | $ (5,199,000) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
OPERATING ACTIVITIES: | ||
Net income | $ 394,000 | $ 1,794,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Forgiveness of SBA Loan | 0 | (1,096,000) |
Depreciation and amortization | 149,000 | 103,000 |
Stock based compensation expense | 10,000 | 8,000 |
Provision for bad debt | 1,000 | 1,000 |
Amortization of operating lease asset | 144,000 | 164,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 213,000 | 219,000 |
Inventories | (65,000) | (505,000) |
Prepaid expenses and other assets | (38,000) | (39,000) |
Accounts payable | (71,000) | 90,000 |
Accrued compensation | (204,000) | (190,000) |
Accrued expenses and interest | 39,000 | 46,000 |
Operating lease liability | (128,000) | (199,000) |
Net cash provided by operating activities | 444,000 | 396,000 |
INVESTING ACTIVITIES: | ||
Investment in equipment and leasehold improvements | (46,000) | (81,000) |
Net cash used in investing activities | (46,000) | (81,000) |
FINANCING ACTIVITIES: | ||
Repayment of unsecured notes payable | (200,000) | (239,000) |
Proceeds from unsecured notes payable | 200,000 | 0 |
Net cash provided by (repaid to) line of credit | (49,000) | 63,000 |
Repayment of credit card advance | 0 | (56,000) |
Repayments of secured notes payable | (117,000) | (151,000) |
Repayment of unsecured line of credit | (6,000) | (5,000) |
Proceeds from exercise of stock options | 3,000 | 9,000 |
Payments on equipment notes | (121,000) | (69,000) |
Principal payments on leases payable | (4,000) | (4,000) |
Net cash used in financing activities | (294,000) | (452,000) |
Net increase (decrease) in cash and cash equivalents | 104,000 | (137,000) |
Cash and cash equivalents at beginning of period | 977,000 | 1,152,000 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 1,081,000 | 1,015,000 |
Non cash item: | ||
Purchases of equipment with equipment notes | 28,000 | 357,000 |
Finance lease asset obligation in exchange for lease payable | 0 | 35,000 |
Accrued interest converted for exercise of options | 0 | 10,000 |
Operating lease asset obtained in exchange for operating lease liability | 0 | 2,684,000 |
Cash paid during the period for: | ||
Interest | 179,000 | 193,000 |
Income taxes | $ 0 | $ 0 |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS | 6 Months Ended |
Dec. 31, 2021 | |
ORGANIZATION AND NATURE OF BUSINESS | |
ORGANIZATION AND NATURE OF BUSINESS | NOTE 1. 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 ® ® ® 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 six months ended December 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, 2021 as filed with the Securities and Exchange Commission (the “SEC”) on September 28, 2021 (the “2021 10-K”). |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. 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 2021 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, 2021 was $16,965 and was included in “Other accrued liabilities” on our consolidated balance sheets. The deferred revenue balance as of December 31, 2021 was $17,665. 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 December 31, 2021 and June 30, 2021. December 31, June 30, (unaudited) (in thousands) Accounts receivable $ 956 $ 1,189 Allowance for doubtful accounts (1 ) (1 ) Allowance for discounts and returns (35 ) (54 ) Total accounts receivable, net $ 920 $ 1,134 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 December 31, 2021 that exceeded the balance insured by the FDIC by $1,134,840. Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in North America and Europe. During the three and six months ended December 31, 2021, we purchased 35% and 36% respectively, of total inventory purchases from one vendor. During the fiscal year ended June 30, 2021, we purchased 34% of total inventory purchases from one vendor. As of December 31, 2021, two of the Company’s customers represents 30% and 19% of the total accounts receivables, respectively. As of June 30, 2021, two of the Company’s customers represents 40% and 14% of the total accounts receivables, respectively. For the three and six months ended December 31, 2021, sales to and through Amazon accounted for 32% and 31% of our net sales, respectively. Fair Value of Financial Instruments At December 31, 2021 and June 30, 2021, 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 $1,050 at December 31, 2021 and $5,000 at June 30, 2021. Advertising expense for the three months ended December 31, 2021 and 2020 was $154,876 and $120,455, respectively. Advertising expense for the six months ended December 31, 2021 and 2020 was $286,766 and $188,985, respectively. Research and Development Research and development expenses for new products are expensed as they are incurred. Expenses for new product development totaled $32,482 and $27,294 for the three months ended December 31, 2021 and 2020, respectively. Expenses for new product development totaled $60,805 and $56,519 for the six months ended December 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 December 31, 2020 was $88,120. The rent expense under this lease for the six months ended December 31, 2020 was $176,239. 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 December 31, 2021 was $163,188. The rent expense for the six months ended December 31, 2021 was $326,376. 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 Six Months Ended Six Months Ended % (in thousands) Net Sales by Channel: Direct $ 3,921 $ 3,367 16 % Wholesale $ 9,143 $ 7,454 23 % Other $ 347 $ 260 33 % Total Net Sales $ 13,411 $ 11,081 21 % Three Months Ended 2021 Three Months Ended 2020 % (in thousands) Net Sales by Channel: Direct $ 2,174 $ 1,910 14 % Wholesale $ 4,827 $ 3,670 32 % Other $ 185 $ 134 38 % Total Net Sales $ 7,186 $ 5,714 26 % Three Months Ended December 31, 2021 Margin % Three Months Ended December 31, 2020 Margin % % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 990 46 % $ 940 49 % 5 % Wholesale $ 987 20 % $ 967 26 % 2 % Other $ (400 ) — % $ (341 ) — % (17 )% Total Gross Profit $ 1,577 22 % $ 1,566 27 % 1 % Six Months Ended December 31, 2021 Margin % Six Months Ended December 31, 2020 Margin % % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 1,815 46 % $ 1,700 50 % 7 % Wholesale $ 1,963 21 % $ 1,949 26 % 1 % Other $ (702 ) (202 )% $ (595 ) (228 )% (18 )% Total Gross Profit $ 3,076 23 % $ 3,054 28 % 1 % 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. 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 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 December 31, 2021 and 2020, the common stock equivalents did not have any effect on net income per share. December 31, 2021 2020 Common stock options – 2015 Plan 2,150,000 2,300,000 Convertible preferred stock 4,300,000 4,300,000 Total 6,450,000 6,600,000 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 LONGLIVED ASSETS
IMPAIRMENT OF LONGLIVED ASSETS | 6 Months Ended |
Dec. 31, 2021 | |
IMPAIRMENT OF LONGLIVED ASSETS | |
IMPAIRMENT OF LONGLIVED ASSETS | NOTE 3. 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 December 31, 2021 or June 30, 2021. |
INVENTORIES NET
INVENTORIES NET | 6 Months Ended |
Dec. 31, 2021 | |
INVENTORIES NET | |
INVENTORIES NET | NOTE 4. 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: December 31, 2021 June 30, 2021 (unaudited) (in thousands) Raw materials $ 1,833 $ 1,637 Work in process 425 396 Finished goods 1,371 1,531 Total inventories 3,629 3,564 Allowance for inventory reserves (173 ) (173 ) Total inventories, net of allowance $ 3,456 $ 3,391 |
EQUIPMENT AND LEASEHOLD IMPROVE
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 6 Months Ended |
Dec. 31, 2021 | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | NOTE 5. 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: December 31, 2021 June 30, 2021 Estimated Useful Life (unaudited) (in thousands) Factory equipment $ 3,837 $ 3,567 2-10 years Computer equipment and software 1,166 1,146 5-7 years Office equipment and furniture 205 205 5-7 years Leasehold improvements 480 480 6 years Project in process 10 222 Subtotal 5,698 5,620 Accumulated depreciation (3,835 ) (3,686 ) Equipment and leasehold improvements, net $ 1,863 $ 1,934 Depreciation expense was $77,825 and $51,024 for the three months ended December 31, 2021 and 2020, respectively. For the six months ended December 31, 2021 and 2020, depreciation expense was $148,513 and $103,476, 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 six months ended December 31, 2021. |
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITIES | 6 Months Ended |
Dec. 31, 2021 | |
OTHER ACCRUED LIABILITIES | |
OTHER ACCRUED LIABILITIES | NOTE 6. OTHER ACCRUED LIABILITIES Other accrued liabilities at December 31, 2021 and June 30, 2021: December 31, 2021 June 30, 2021 (unaudited) (in thousands) Accrued compensation $ 304 $ 509 Accrued expenses and interest 224 185 Other accrued liabilities $ 528 $ 694 |
CURRENT AND LONGTERM DEBT SUMMA
CURRENT AND LONGTERM DEBT SUMMARY | 6 Months Ended |
Dec. 31, 2021 | |
CURRENT AND LONGTERM DEBT SUMMARY | |
CURRENT AND LONGTERM DEBT SUMMARY | NOTE 7. CURRENT AND LONG-TERM DEBT SUMMARY December 31, 2021 June 30, 2021 (unaudited) Current debt: (in thousands) Unsecured lines of credit (Note 12) $ 31 $ 37 Line of credit (Note 11) 1,034 1,083 Short-term unsecured notes payable (Note 8) - 100 Current portion of equipment notes payable (Note 15) 252 219 Current portion secured notes payable (Note 13) 35 152 Current portion of leases payable 9 8 Total current debt 1,361 1,599 Long-term debt: Unsecured notes payable (Note 8) 400 300 Leases payable 14 19 Equipment notes payable (Note 15) 728 853 Notes payable – related party (Note 9) 116 116 Total long-term debt $ 1,258 $ 1,288 |
UNSECURED NOTES PAYABLE
UNSECURED NOTES PAYABLE | 6 Months Ended |
Dec. 31, 2021 | |
UNSECURED NOTES PAYABLE | |
UNSECURED NOTES PAYABLE | NOTE 8. UNSECURED NOTES PAYABLE Unsecured notes payable at December 31, 2021 and June 30, 2021 consisted of the following: December 31, 2021 June 30, 2021 (unaudited) Current unsecured notes payable: (in thousands) 20% Unsecured note, interest only, due October 31, 2021 (1) $ - $ 100 Total current unsecured notes payable - 100 Long-term unsecured notes payable: 13.5% Unsecured note, interest only, due May 1, 2023 (2) 200 200 20% Unsecured note, interest only, due July 31, 2021 (3) - 100 13.5% Unsecured note, interest only, due October 31, 2023 (1) 100 - 13.5% Unsecured note, interest only, due July 31, 2023 (3) 100 - Total long-term unsecured notes payable 400 300 Total unsecured notes payable $ 400 $ 400 __________ (1) 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. This note was repaid in full on October 1, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2023. Personally guaranteed by principal stockholder. (2) 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 April 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2023. Personally guaranteed by principal stockholder. (3) Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on July 31, 2013, extended to July 31, 2019, then extended to July 31, 2021. This note was repaid in full on July 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2023. Personally guaranteed by principal stockholder. |
NOTES PAYABLE RELATED PARTY
NOTES PAYABLE RELATED PARTY | 6 Months Ended |
Dec. 31, 2021 | |
NOTES PAYABLE RELATED PARTY | |
NOTES PAYABLE RELATED PARTY | NOTE 9. NOTES PAYABLE - RELATED PARTY Related party notes payable at December 31, 2021 and June 30, 2021 consisted of the following: December 31, 2021 June 30, 2021 (unaudited) (in thousands) Unsecured note payable to an officer, with interest at 3.25%, due on July 1, 2023 $ 40 $ 40 Unsecured note payable to an officer, with interest at 3.25%, due on July 1, 2023 76 76 Total unsecured notes payable 116 116 Less: current portion - - Long-term unsecured notes payable $ 116 $ 116 |
CREDIT CARD ADVANCES
CREDIT CARD ADVANCES | 6 Months Ended |
Dec. 31, 2021 | |
CREDIT CARD ADVANCES | |
CREDIT CARD ADVANCES | NOTE 10. CREDIT CARD ADVANCES On August 28, 2019, the Company borrowed $250,000 from Power Up against its future credit card receivables. Terms for this loan called for a repayment of $290,000 which included 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. |
LINE OF CREDIT
LINE OF CREDIT | 6 Months Ended |
Dec. 31, 2021 | |
LINE OF CREDIT | |
LINE OF CREDIT | NOTE 11. 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 December 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 16). On December 31, 2021, the balance owed under this line of credit was $1,034,072. As of December 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 | 6 Months Ended |
Dec. 31, 2021 | |
UNSECURED LINE OF CREDIT | |
UNSECURED LINE OF CREDIT | NOTE 12. 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 $30,882 at December 31, 2021 and $36,680 at June 30, 2021. |
SECURED NOTE PAYABLE
SECURED NOTE PAYABLE | 6 Months Ended |
Dec. 31, 2021 | |
SECURED NOTE PAYABLE | |
SECURED NOTE PAYABLE | NOTE 13. SECURED NOTE PAYABLE 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 December 31, 2021, the balance owed under this note payable was $34,871. The Company has granted Amazon a security interest in certain assets of the Company. |
PPP LOAN
PPP LOAN | 6 Months Ended |
Dec. 31, 2021 | |
PPP LOAN | |
PPP LOAN | NOTE 14. 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. 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 | 6 Months Ended |
Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 15. 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 December 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 December 31, 2021 is as follows: Operating leases Balance Sheet Classification (in thousands) Right-of-use assets Operating lease right-of-use assets, net $ 2,409 Current lease liabilities Operating lease liabilities $ 290 Non-current lease liabilities Long-term operating lease liabilities 2,256 Total lease liabilities $ 2,546 Maturities of lease liabilities at December 31, 2021 are as follows: Payments (in thousands) 2022 $ 312 2023 642 2024 680 2025 721 2026 and thereafter 1,290 Total undiscounted lease payments 3,645 Less: Present value discount (1,099 ) Total lease liability balance $ 2,546 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 $1,463,893. These assets are included in the fixed assets listed in Note 5 - Equipment and Leasehold Improvements The following is an analysis of the minimum future equipment note payable payments subsequent to December 31, 2021: Years ending June 30, (in thousands) 2022 $ 163 2023 311 2024 290 2025 245 2026 127 Future Minimum Note Payable Payments 1,136 Less Amount Representing Interest (156 ) Present Value of Minimum Note Payable Payments 980 Less Current Portion (252 ) Long-Term Obligations under Equipment Notes Payable $ 728 Employment Agreements The Company has entered into an employment agreement with Louis Friedman, President and Chief Executive Officer (CEO). 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 TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 16. RELATED PARTY TRANSACTIONS The Company has a subordinated note payable to the wife of the Company’s CEO and majority shareholder in the amount of $76,000. Interest on the note during the three months ended December 31, 2021 was accrued by the Company at the prevailing prime rate (which is currently 3.25%) and totaled $623. 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 December 31, 2021 was $31,394. This note is subordinate to all other credit facilities currently in place. On October 30, 2010, the Company’s CEO, loaned the Company $40,000. Interest on the note during the three months ended December 31, 2021 was accrued by the Company at the prevailing prime rate (which is currently 3.25%) and totaled $328. 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 December 31, 2021 was $6,170. This note is subordinate to all other credit facilities currently in place. The Company’s CEO 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 December 31, 2021, the balance owed under this line of credit was $1,034,072. 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. This note was repaid in full on July 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2023 terms (see Note 8). Repayment of the promissory note is personally guaranteed by the Company’s CEO. 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 This note was repaid in full on October 1, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2023 (see Note 8). Repayment of the promissory note is personally guaranteed by the Company’s CEO. 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. This note was repaid in full on April 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2023 (see Note 8). The Company’s CEO personally guaranteed the repayment of the loan obligation. 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 $30,882 at December 31, 2021 and $36,680 at June 30, 2021. The loan is personally guaranteed by the Company’s CEO. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 6 Months Ended |
Dec. 31, 2021 | |
Stockholders' equity: | |
STOCKHOLDERS EQUITY | NOTE 17. STOCKHOLDERS’ EQUITY Options At December 31, 2021, the Company had the 2015 Stock Option Plan (the “2015 Plan”), which is a shareholder-approved and under which 3,150,000 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 December 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 six months ended December 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, 2021 2,500,000 1.9 $ .04 $ 974,300 Granted 50,000 4.6 $ .30 ̶ Exercised (250,000 ) $ .04 ̶ Forfeited or expired (150,000 ) 3.1 $ .03 ̶ Options outstanding as of December 31, 2021 2,150,000 1.4 $ .05 $ 565,200 Options exercisable as of December 31, 2021 1,625,000 .75 $ .03 $ 456,300 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 $0.31 for such day. There were 250,000 stock options exercised during the six months ended December 31, 2021 and a total of 1,600,000 during the six months ended December 31, 2020 in exchange for various consideration including cash, accrued interest and on a cashless basis. There were 50,000 stock options granted during the six months ended December 31, 2021 and 150,000 stock options granted during the six months ended December 31, 2020. The value assumptions related to options granted during the six months ended December 31, 2020, were as follows: Six Months December 31, 2021 Six Months December 31, 2020 Exercise Price: $.30 $.15 - $.17 Volatility: 500% 469% - 470% Risk Free Rate: .65% .25% Vesting Period: 4 years 4 years Forfeiture Rate: 0% 0% Expected Life 4.1 years 4.1 years Dividend Rate 0% 0% Outstanding Options Exercisable Options Exercise Prices Number Remaining Weighted Number of Weighted $ .028 to $.03 1,850,000 1.0 $ .03 1,625,000 $ .03 $.05 50,000 1.5 $ .05 – $ – $ .13 to $.17 200,000 4.5 $ .15 – $ – $.30 50,000 4.6 $ .30 – – Total stock options 2,150,000 1.4 $ .05 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 six month periods ended December 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 December 31, 2021, the Company’s total unrecognized compensation cost was $44,158 which will be recognized over the weighted average vesting period of approximately five months. Three Months Six Months 2021 2020 2021 2020 ($ in thousands) Cost of Goods Sold $ 1 $ - $ 1 $ - Other Selling and Marketing 2 1 4 2 General and Administrative 3 1 5 6 Total Stock-based Compensation Expense $ 6 $ 2 $ 10 $ 8 Share Purchase Warrants As of December 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 December 31, 2021 and June 30, 2021. Common shareholders are entitled to dividends if and when declared by the Company’s Board of Directors, subject to preferred stockholder dividend rights. At December 31, 2021, the Company had reserved the following shares of common stock for issuance: December 31, 2021 Shares of common stock reserved for issuance under the 2015 Plan 3,150,000 Shares of common stock issuable upon conversion of the Preferred Stock 4,300,000 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 | 6 Months Ended |
Dec. 31, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18. – SUBSEQUENT EVENTS On February 10, 2022, 681,427 shares of common stock were issued for the exercise of 800,000 stock options by affiliates and a non-affiliate employee of the Company on a cashless basis at prices ranging from $.03 per share to $.033 per share. These options were granted under the 2015 Plan on February 13, 2017 with an expiration date of February 12, 2022. Subsequent to December 31, 2021, the Company entered into an equipment finance agreement for the purchase of a new unit production system from a foreign supplier. At a total cost of $297,500, the equipment finance agreement calls for 60 payments of $5,915 to the finance company. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies (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 2021 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, 2021 was $16,965 and was included in “Other accrued liabilities” on our consolidated balance sheets. The deferred revenue balance as of December 31, 2021 was $17,665. |
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 December 31, 2021 and June 30, 2021. December 31, June 30, (unaudited) (in thousands) Accounts receivable $ 956 $ 1,189 Allowance for doubtful accounts (1 ) (1 ) Allowance for discounts and returns (35 ) (54 ) Total accounts receivable, net $ 920 $ 1,134 |
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 December 31, 2021 that exceeded the balance insured by the FDIC by $1,134,840. Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in North America and Europe. During the three and six months ended December 31, 2021, we purchased 35% and 36% respectively, of total inventory purchases from one vendor. During the fiscal year ended June 30, 2021, we purchased 34% of total inventory purchases from one vendor. As of December 31, 2021, two of the Company’s customers represents 30% and 19% of the total accounts receivables, respectively. As of June 30, 2021, two of the Company’s customers represents 40% and 14% of the total accounts receivables, respectively. For the three and six months ended December 31, 2021, sales to and through Amazon accounted for 32% and 31% of our net sales, respectively. |
Fair Value of Financial Instruments | At December 31, 2021 and June 30, 2021, 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 $1,050 at December 31, 2021 and $5,000 at June 30, 2021. Advertising expense for the three months ended December 31, 2021 and 2020 was $154,876 and $120,455, respectively. Advertising expense for the six months ended December 31, 2021 and 2020 was $286,766 and $188,985, respectively. |
Research and Development | Research and development expenses for new products are expensed as they are incurred. Expenses for new product development totaled $32,482 and $27,294 for the three months ended December 31, 2021 and 2020, respectively. Expenses for new product development totaled $60,805 and $56,519 for the six months ended December 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 December 31, 2020 was $88,120. The rent expense under this lease for the six months ended December 31, 2020 was $176,239. 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 December 31, 2021 was $163,188. The rent expense for the six months ended December 31, 2021 was $326,376. 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 Six Months Ended Six Months Ended % (in thousands) Net Sales by Channel: Direct $ 3,921 $ 3,367 16 % Wholesale $ 9,143 $ 7,454 23 % Other $ 347 $ 260 33 % Total Net Sales $ 13,411 $ 11,081 21 % Three Months Ended 2021 Three Months Ended 2020 % (in thousands) Net Sales by Channel: Direct $ 2,174 $ 1,910 14 % Wholesale $ 4,827 $ 3,670 32 % Other $ 185 $ 134 38 % Total Net Sales $ 7,186 $ 5,714 26 % Three Months Ended December 31, 2021 Margin % Three Months Ended December 31, 2020 Margin % % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 990 46 % $ 940 49 % 5 % Wholesale $ 987 20 % $ 967 26 % 2 % Other $ (400 ) — % $ (341 ) — % (17 )% Total Gross Profit $ 1,577 22 % $ 1,566 27 % 1 % Six Months Ended December 31, 2021 Margin % Six Months Ended December 31, 2020 Margin % % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 1,815 46 % $ 1,700 50 % 7 % Wholesale $ 1,963 21 % $ 1,949 26 % 1 % Other $ (702 ) (202 )% $ (595 ) (228 )% (18 )% Total Gross Profit $ 3,076 23 % $ 3,054 28 % 1 % |
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. 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 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 December 31, 2021 and 2020, the common stock equivalents did not have any effect on net income per share. December 31, 2021 2020 Common stock options – 2015 Plan 2,150,000 2,300,000 Convertible preferred stock 4,300,000 4,300,000 Total 6,450,000 6,600,000 |
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) | 6 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies (Policies) | |
Allowance for Doubtful Accounts | |
Segment Information | Six Months Ended Six Months Ended % (in thousands) Net Sales by Channel: Direct $ 3,921 $ 3,367 16 % Wholesale $ 9,143 $ 7,454 23 % Other $ 347 $ 260 33 % Total Net Sales $ 13,411 $ 11,081 21 % Three Months Ended 2021 Three Months Ended 2020 % (in thousands) Net Sales by Channel: Direct $ 2,174 $ 1,910 14 % Wholesale $ 4,827 $ 3,670 32 % Other $ 185 $ 134 38 % Total Net Sales $ 7,186 $ 5,714 26 % Three Months Ended December 31, 2021 Margin % Three Months Ended December 31, 2020 Margin % % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 990 46 % $ 940 49 % 5 % Wholesale $ 987 20 % $ 967 26 % 2 % Other $ (400 ) — % $ (341 ) — % (17 )% Total Gross Profit $ 1,577 22 % $ 1,566 27 % 1 % Six Months Ended December 31, 2021 Margin % Six Months Ended December 31, 2020 Margin % % Change (in thousands) (in thousands) Gross Profit by Channel: Direct $ 1,815 46 % $ 1,700 50 % 7 % Wholesale $ 1,963 21 % $ 1,949 26 % 1 % Other $ (702 ) (202 )% $ (595 ) (228 )% (18 )% Total Gross Profit $ 3,076 23 % $ 3,054 28 % 1 % |
Net Income per share | December 31, 2021 2020 Common stock options – 2015 Plan 2,150,000 2,300,000 Convertible preferred stock 4,300,000 4,300,000 Total 6,450,000 6,600,000 |
Inventories, net (Tables)
Inventories, net (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Inventories, net (Tables) | |
Inventories | December 31, 2021 June 30, 2021 (unaudited) (in thousands) Raw materials $ 1,833 $ 1,637 Work in process 425 396 Finished goods 1,371 1,531 Total inventories 3,629 3,564 Allowance for inventory reserves (173 ) (173 ) Total inventories, net of allowance $ 3,456 $ 3,391 |
Equipment and Leasehold Impro_2
Equipment and Leasehold Improvements (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Equipment and Leasehold Improvements (Tables) | |
Equipment and Leasehold Improvements | December 31, 2021 June 30, 2021 Estimated Useful Life (unaudited) (in thousands) Factory equipment $ 3,837 $ 3,567 2-10 years Computer equipment and software 1,166 1,146 5-7 years Office equipment and furniture 205 205 5-7 years Leasehold improvements 480 480 6 years Project in process 10 222 Subtotal 5,698 5,620 Accumulated depreciation (3,835 ) (3,686 ) Equipment and leasehold improvements, net $ 1,863 $ 1,934 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Other Accrued Liabilities (Tables) | |
Accrued Liabilities | December 31, 2021 June 30, 2021 (unaudited) (in thousands) Accrued compensation $ 304 $ 509 Accrued expenses and interest 224 185 Other accrued liabilities $ 528 $ 694 |
Current and Long-term Debt Summ
Current and Long-term Debt Summary (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Current and Long-term Debt Summary (Tables) | |
Current and Long-term Debt Summary | December 31, 2021 June 30, 2021 (unaudited) Current debt: (in thousands) Unsecured lines of credit (Note 12) $ 31 $ 37 Line of credit (Note 11) 1,034 1,083 Short-term unsecured notes payable (Note 8) - 100 Current portion of equipment notes payable (Note 15) 252 219 Current portion secured notes payable (Note 13) 35 152 Current portion of leases payable 9 8 Total current debt 1,361 1,599 Long-term debt: Unsecured notes payable (Note 8) 400 300 Leases payable 14 19 Equipment notes payable (Note 15) 728 853 Notes payable – related party (Note 9) 116 116 Total long-term debt $ 1,258 $ 1,288 |
Unsecured Notes Payable (Tables
Unsecured Notes Payable (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Unsecured Notes Payable (Tables) | |
Unsecured Notes Payable | December 31, 2021 June 30, 2021 (unaudited) Current unsecured notes payable: (in thousands) 20% Unsecured note, interest only, due October 31, 2021 (1) $ - $ 100 Total current unsecured notes payable - 100 Long-term unsecured notes payable: 13.5% Unsecured note, interest only, due May 1, 2023 (2) 200 200 20% Unsecured note, interest only, due July 31, 2021 (3) - 100 13.5% Unsecured note, interest only, due October 31, 2023 (1) 100 - 13.5% Unsecured note, interest only, due July 31, 2023 (3) 100 - Total long-term unsecured notes payable 400 300 Total unsecured notes payable $ 400 $ 400 |
Note Payable Related Party (Tab
Note Payable Related Party (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Unsecured Notes Payable (Tables) | |
Note Payable - Related Party | December 31, 2021 June 30, 2021 (unaudited) (in thousands) Unsecured note payable to an officer, with interest at 3.25%, due on July 1, 2023 $ 40 $ 40 Unsecured note payable to an officer, with interest at 3.25%, due on July 1, 2023 76 76 Total unsecured notes payable 116 116 Less: current portion - - Long-term unsecured notes payable $ 116 $ 116 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies (Tables) | |
Operating Leases | Operating leases Balance Sheet Classification (in thousands) Right-of-use assets Operating lease right-of-use assets, net $ 2,409 Current lease liabilities Operating lease liabilities $ 290 Non-current lease liabilities Long-term operating lease liabilities 2,256 Total lease liabilities $ 2,546 Payments (in thousands) 2022 $ 312 2023 642 2024 680 2025 721 2026 and thereafter 1,290 Total undiscounted lease payments 3,645 Less: Present value discount (1,099 ) Total lease liability balance $ 2,546 |
Equipment Notes Payable | Years ending June 30, (in thousands) 2022 $ 163 2023 311 2024 290 2025 245 2026 127 Future Minimum Note Payable Payments 1,136 Less Amount Representing Interest (156 ) Present Value of Minimum Note Payable Payments 980 Less Current Portion (252 ) Long-Term Obligations under Equipment Notes Payable $ 728 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Stockholders Equity (Tables) | |
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, 2021 2,500,000 1.9 $ .04 $ 974,300 Granted 50,000 4.6 $ .30 ̶ Exercised (250,000 ) $ .04 ̶ Forfeited or expired (150,000 ) 3.1 $ .03 ̶ Options outstanding as of December 31, 2021 2,150,000 1.4 $ .05 $ 565,200 Options exercisable as of December 31, 2021 1,625,000 .75 $ .03 $ 456,300 |
Assumptions | Six Months December 31, 2021 Six Months December 31, 2020 Exercise Price: $.30 $.15 - $.17 Volatility: 500% 469% - 470% Risk Free Rate: .65% .25% 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 Number Remaining Weighted Number of Weighted $ .028 to $.03 1,850,000 1.0 $ .03 1,625,000 $ .03 $.05 50,000 1.5 $ .05 – $ – $ .13 to $.17 200,000 4.5 $ .15 – $ – $.30 50,000 4.6 $ .30 – – Total stock options 2,150,000 1.4 $ .05 1,625,000 $ .03 |
Stock options compensation expense | Three Months Six Months 2021 2020 2021 2020 ($ in thousands) Cost of Goods Sold $ 1 $ - $ 1 $ - Other Selling and Marketing 2 1 4 2 General and Administrative 3 1 5 6 Total Stock-based Compensation Expense $ 6 $ 2 $ 10 $ 8 |
Common stock equivalents | December 31, 2021 Shares of common stock reserved for issuance under the 2015 Plan 3,150,000 Shares of common stock issuable upon conversion of the Preferred Stock 4,300,000 |
ORGANIZATION AND NATURE OF BU_2
ORGANIZATION AND NATURE OF BUSINESS (Details Narrative) | 6 Months Ended |
Dec. 31, 2021 | |
One Customer | |
Concentration Risk (percent) | 10.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Deferred Revenue | $ 17,665,000 | $ 17,665,000 | $ 16,965,000 | ||
Total cash at banks | 250,000 | 250,000 | |||
FDIC balance limit excess | 1,134,840,000 | 1,134,840,000 | |||
Prepaid Advertising | 1,050,000 | 1,050,000 | $ 5,000,000 | ||
Advertising Expense | 154,876,000 | $ 120,455,000 | 286,766,000 | $ 188,985,000 | |
New product development | 32,482,000 | 27,294,000 | 60,805,000 | 56,519,000 | |
Rent Expense | 163,188,000 | $ 88,120,000 | 326,376,000 | $ 176,239,000 | |
Rental abatement | 103,230,000 | 103,230,000 | |||
Final two months rent | 61,605 | ||||
New monthly rent | $ 51,615,000 | $ 51,615,000 | |||
Sales | Amazon | |||||
Concetration percentage | 32.00% | 31.00% | |||
One Vendor | Inventory Purchases | |||||
Concetration percentage | 35.00% | 36.00% | 34.00% | ||
Customer 1 | Accounts Receivable | |||||
Concetration percentage | 30.00% | 40.00% | |||
Customer 2 | Accounts Receivable | |||||
Concetration percentage | 19.00% | 14.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Summary of Significant Accounting Policies (Policies) | ||
Accounts receivable | $ 956 | $ 1,189 |
Allowance for doubtful accounts receivables | (1) | (1) |
Allowance for discounts and returns | (35) | (54) |
Accounts receivable, net | $ 920 | $ 1,134 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Sales | $ 7,186 | $ 5,714 | $ 13,411 | $ 11,081 |
Gross profit | $ 1,577 | $ 1,566 | $ 3,076 | $ 3,054 |
% Change in Sales | 26.00% | 26.00% | 21.00% | 21.00% |
Gross Profit Margin | 22.00% | 27.00% | 23.00% | 28.00% |
% Change in Gross Profit | 1.00% | 1.00% | 1.00% | 1.00% |
Direct [member] | ||||
Net Sales | $ 2,174 | $ 1,910 | $ 3,921 | $ 3,367 |
Gross profit | $ 990 | $ 940 | $ 1,815 | $ 1,700 |
% Change in Sales | 14.00% | 14.00% | 16.00% | 16.00% |
Gross Profit Margin | 46.00% | 49.00% | 46.00% | 50.00% |
% Change in Gross Profit | 5.00% | 5.00% | 7.00% | 7.00% |
Wholesale [member] | ||||
Net Sales | $ 4,827 | $ 3,670 | $ 9,143 | $ 7,454 |
Gross profit | $ 987 | $ 967 | $ 1,963 | $ 1,949 |
% Change in Sales | 32.00% | 32.00% | 23.00% | 23.00% |
Gross Profit Margin | 20.00% | 26.00% | 21.00% | 26.00% |
% Change in Gross Profit | 2.00% | 2.00% | 1.00% | 1.00% |
Other [Member] | ||||
Net Sales | $ 185 | $ 134 | $ 347 | $ 260 |
Gross profit | $ (400) | $ (341) | $ (702) | $ (595) |
% Change in Sales | 38.00% | 38.00% | 33.00% | 33.00% |
Gross Profit Margin | 0.00% | 0.00% | (202.00%) | (228.00%) |
% Change in Gross Profit | (17.00%) | (17.00%) | (18.00%) | (18.00%) |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - shares | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Anti-dilutive Securities | 6,450,000 | 6,600,000 |
Common stock options - 2015 Plan [Member] | ||
Anti-dilutive Securities | 2,150,000 | 2,300,000 |
Convertible Preferred Stock [Member] | ||
Anti-dilutive Securities | 4,300,000 | 4,300,000 |
INVENTORIES NET (Details)
INVENTORIES NET (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Inventories, net (Tables) | ||
Raw materials | $ 1,833 | $ 1,637 |
Work in Process | 425 | 396 |
Finished Goods | 1,371 | 1,531 |
Total inventories | 3,629 | 3,564 |
Allowance for inventory reserves | (173) | (173) |
Total inventories, net of allowance | $ 3,456 | $ 3,391 |
EQUIPMENT AND LEASEHOLD IMPRO_3
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2021 | Jun. 30, 2021 | |
Property and Equipment, gross | $ 5,698 | $ 5,620 |
Accumulated depreciation | (3,835) | (3,686) |
Property and Equipment, net | 1,863 | 1,934 |
Factory Equipment | ||
Property and Equipment, gross | $ 3,837 | 3,567 |
Factory Equipment | Minimum | ||
Depreciation life | 2 | |
Factory Equipment | Maximum | ||
Depreciation life | 10 | |
Computer equipment and software | ||
Property and Equipment, gross | $ 1,166 | 1,146 |
Computer equipment and software | Minimum | ||
Depreciation life | 5 | |
Computer equipment and software | Maximum | ||
Depreciation life | 7 | |
Office equipment and furniture | ||
Property and Equipment, gross | $ 205 | 205 |
Office equipment and furniture | Minimum | ||
Depreciation life | 5 | |
Office equipment and furniture | Maximum | ||
Depreciation life | 7 | |
Leasehold Improvements | ||
Property and Equipment, gross | $ 480 | 480 |
Depreciation life | 6 years | |
Projects in process | ||
Property and Equipment, gross | $ 10 | $ 222 |
EQUIPMENT AND LEASEHOLD IMPRO_4
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equipment and Leasehold Improvements (Tables) | ||||
Depreciation expense | $ 77,825 | $ 51,024 | $ 148,513 | $ 103,476 |
OTHER ACCRUED LIABILITIES (Deta
OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Other Accrued Liabilities (Tables) | ||
Accrued compensation | $ 304 | $ 509 |
Accrued expenses and interest | 224 | 185 |
Other accrued liabilities | $ 528 | $ 694 |
CURRENT AND LONGTERM DEBT SUM_2
CURRENT AND LONGTERM DEBT SUMMARY (Details) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
Current debt: | ||
Unsecured lines of credit (Note 12) | $ 31 | $ 37 |
Lines of credit (Note 11) | 1,034,000 | 1,083,000 |
Short-term unsecured notes payable (Note 8) | 0 | 100,000 |
Current portion of equipment notes payable (Note 15) | 252,000 | 219,000 |
Current portion secured notes payable (Note 13) | 35,000 | 152,000 |
Current portion of leases payable | 9,000 | 8,000 |
Total current debt | 1,361,000 | 1,599,000 |
Long-term debt: | ||
Unsecured notes payable (Note 8) | 400,000 | 300,000 |
Leases payable | 14,000 | 19,000 |
Equipment note payable (Note 15) | 728,000 | 853,000 |
Notes payable-related party (Note 9) | 116,000 | 116,000 |
Total long-term debt | $ 1,258,000 | $ 1,288,000 |
UNSECURED NOTES PAYABLE (Detail
UNSECURED NOTES PAYABLE (Details) (USD ) - USD ($) | 6 Months Ended | ||
Dec. 31, 2021 | Oct. 01, 2021 | Jun. 30, 2021 | |
Current unsecured notes payable | $ 0 | $ 100 | |
Long-term unsecured notes payable | 400,000 | 300,000 | |
Unsecured notes payable | 400,000 | 400,000 | |
Interest Rate | 2.00% | ||
Short-term unsecured notes payable | 0 | 100,000 | |
Note 4 | |||
Long-term unsecured notes payable | $ 100,000 | $ 0 | |
Interest Rate | 13.50% | ||
Date of Maturity | Jul. 31, 2023 | ||
Note 3 | |||
Long-term unsecured notes payable | $ 100,000 | ||
Interest Rate | 20.00% | ||
Date of Maturity | Oct. 31, 2023 | ||
Note 2 | |||
Long-term unsecured notes payable | $ 200,000 | $ 200,000 | |
Interest Rate | 13.50% | ||
Date of Maturity | May 1, 2023 | ||
Note 5 [Member] | |||
Long-term unsecured notes payable | $ 0 | $ 100,000 | |
Interest Rate | 20.00% | ||
Date of Maturity | Jul. 31, 2021 | ||
Note 1 | |||
Interest Rate | 20.00% | ||
Short-term unsecured notes payable | $ 0 | $ 100,000 | |
Date of Maturity | Oct. 31, 2021 |
NOTES PAYABLE RELATED PARTY (De
NOTES PAYABLE RELATED PARTY (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Oct. 01, 2021 | Jun. 30, 2021 |
Unsecured notes payable | $ 116 | $ 116 | |
Less: current portion | 0 | 0 | |
Long-term unsecured notes payable | 116 | 116 | |
Interest Rate | 2.00% | ||
Related Party Note Payable 1 | |||
Unsecured notes payable | $ 40 | $ 40 | |
Interest Rate | 3.25% | 3.25% | |
Related Party Note Payable 2 | |||
Unsecured notes payable | $ 76 | $ 76 | |
Interest Rate | 3.25% | 3.25% |
CREDIT CARD ADVANCES (Details N
CREDIT CARD ADVANCES (Details Narrative) - Power Up - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2021 | Aug. 28, 2019 | |
Finance charge | $ 40,000 | |
Loan fee | 1.00% | |
Credit Card Advance | $ 250,000 | |
Repayment Amount | $ 290,000 | |
Net proceeds from advance | $ 247,500 |
LINE OF CREDIT (Details Narrati
LINE OF CREDIT (Details Narrative) - USD ($) | Sep. 04, 2013 | Dec. 31, 2021 | Oct. 01, 2021 | Jun. 30, 2021 | Nov. 27, 2018 | Dec. 09, 2015 |
Line of credit, limit | $ 750,000 | |||||
Collateral | 85% of eligible accounts receivable (as defined in the agreement) for the purpose of improving working capital. | |||||
Interest Rate Description | 2.5% over the lenders Index Rate. | |||||
Lenders Index Rate | 2.50% | |||||
Monthly Service Fee | 1.25% | |||||
Interest Rate | 2.00% | |||||
Line of credit | $ 1,034,000 | $ 1,083,000 | ||||
Line of Credit | ||||||
Monthly Service Fee | 0.50% | |||||
Date issued | Sep. 4, 2013 | |||||
Line of credit | $ 1,000,000 | $ 1,200,000 | ||||
Inventory advance | $ 300,000 | $ 300,000 | ||||
Invetory Advance | ||||||
Line of credit | $ 500,000 | |||||
Advance Financial Corporation | ||||||
Interest Rate | 5.25% | |||||
CEO, Louis Friedman | ||||||
Balance owed | $ 1,034,072 |
UNSECURED LINES OF CREDIT (Deta
UNSECURED LINES OF CREDIT (Details Narrative) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
UNSECURED LINES OF CREDIT (Details Narrative) | ||
Amount owed | $ 30,882 | $ 36,680 |
Interest rate | 8.00% |
SECURED NOTE PAYABLE (Details N
SECURED NOTE PAYABLE (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2021 | Oct. 01, 2021 | |
Interest Rate | 2.00% | |
Amazon | ||
Note Face Amount | $ 200,000 | |
Interest Rate | 10.99% | |
Payments | $ 17,675 | |
Frequency of payments | 12 monthly payments | |
Balance owed - note payable | $ 34,871 |
PPP LOAN (Details Narrative)
PPP LOAN (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
PPP LOAN (Details Narrative) | ||
Borrowings under PPP Loan | $ 1,096,200,000 | |
Monthly payments | $ 61,691,000 | |
Interest rate | 1.00% | |
Gain on forgiveness of SBA loan | $ 1,096,200 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Operating Leases | ||
Operating lease right-of-use assets, net | $ 2,409 | |
Operating lease liability | 290 | $ 250 |
Long-term operating lease liability | 2,256 | $ 2,423 |
Total lease liabilities | $ 2,546 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) | Dec. 31, 2021USD ($) |
COMMITMENTS AND CONTINGENCIES (Details) | |
2022 | $ 312,000 |
2023 | 642,000 |
2024 | 680,000 |
2025 | 721,000 |
2026 and thereafter | 1,290,000 |
Total undiscounted lease payments | 3,645,000 |
Present value discount | (1,099) |
Total lease liability balance | $ (2,546,000) |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details 2) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
COMMITMENTS AND CONTINGENCIES (Details) | ||
2022 | $ 163,000 | |
2023 | 311,000 | |
2024 | 290,000 | |
2025 | 245,000 | |
2026 | 127,000 | |
Future Minimum Note Payable Payments | 1,136,000 | |
Less Amount Representing Interest | (156) | |
Present Value of Minimum Note Payable Payments | (980,000) | |
Less Current Portion | 252,000 | |
Long-Term Obligations under Equipment Notes Payable | $ 728,000 | $ 853,000 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 6 Months Ended |
Dec. 31, 2021USD ($) | |
Weighted average remaining lease term | 6 years |
Weighted average discount rate | 14.49% |
Equipment notes payable | $ 1,463,893 |
President and Chief Executive Officer | |
Annual base salary | $ 150,000 |
Minimum | |
Imputed interest rates | 8.90% |
Maximum | |
Imputed interest rates | 11.30% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Jun. 30, 2021 | Oct. 01, 2021 | |
Interest Rate | 2.00% | ||
Note Payable to Wife of CEO | |||
Note Face Amount | $ 76,000 | ||
Interest Payment | $ 3,750 | ||
Interest Rate | 3.25% | ||
Prevailing prime rate | $ 623 | ||
Acrrued Interest | 31,394 | ||
October 30, 2010 Note | |||
Note Face Amount | 40,000 | ||
Interest Payment | $ 6,875 | ||
Interest Rate | 3.25% | ||
Prevailing prime rate | $ 328 | ||
Acrrued Interest | 6,170 | ||
Line of credit | 1,034,072 | ||
July 20, 2011 Note | |||
Note Face Amount | 100,000 | ||
Interest Payment | $ 1,667 | ||
Interest Rate | 20.00% | ||
Date of Maturity | Jul. 31, 2012 | ||
Extended Date of Maturity | Jul. 31, 2021 | ||
October 31, 2013 | |||
Note Face Amount | $ 100,000 | ||
Interest Payment | $ 1,667 | ||
Interest Rate | 20.00% | ||
Date of Maturity | Oct. 31, 2014 | ||
Extended Date of Maturity | Oct. 31, 2021 | ||
May 1, 2012 Note | |||
Note Face Amount | $ 200,000 | ||
Interest Rate | 20.00% | ||
Date of Maturity | May 1, 2013 | ||
Extended Date of Maturity | May 1, 2021 | ||
Cash Advance from Company and CEO | |||
Note Face Amount | $ 30,882 | $ 36,680 | |
Interest Rate | 8.00% |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) - USD ($) | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
STOCKHOLDERS EQUITY (Details) | |||
Options Outstanding, Begining Balance | 2,500,000 | ||
Options, Granted | 50,000 | 150,000 | |
Options, Exercised | 250,000 | 1,600,000 | |
Options, Forfeited or expired | 150,000 | ||
Options Outstanding, Ending Balance | 2,150,000 | ||
Options Outstanding, Exercisable | 1,625,000 | ||
Weighted Average Remaining Contractual Life (Years) | |||
Weighted Average Remaining Contractual Life, Outstanding, Beginning Balance | 1 year 10 months 24 days | ||
Weighted Average Remaining Contractual Life, Granted | 4 years 7 months 6 days | ||
Weighted Average Remaining Contractual Life, Forfeited or expired | 3 years 1 month 6 days | ||
Weighted Average Remaining Contractual Life, Ending Balance | 1 year 4 months 24 days | ||
Weighted Average Remining Contractual Life, Exercisable | 9 months | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price, Outstanding, Begining Balance | $ 0.04 | ||
Weighted Average Exercise Price, Granted | 0.30 | ||
Weighted Average Exercise Price, Exercised | 0.04 | ||
Weighted Average Exercise Price, Forfeited or expired | 0.03 | ||
Weighted Average Exercise Price, Outstanding, Ending Balance | 0.05 | ||
Weighted Average Exercise Price, Outstanding, Exercisable | $ 0.03 | ||
Aggregate Intrinsic Value | |||
Aggregate Intrinsic Vale, Options Outstanding | $ 565,200 | $ 974,300 | |
Aggregate Intrinsic Vale, Options Exercisable | $ 456,300 |
STOCKHOLDERS EQUITY (Details 1)
STOCKHOLDERS EQUITY (Details 1) - $ / shares | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Exercise Price | $ 0.30 | |
Volatility | 500.00% | |
Risk Free Rate | 0.65% | 0.25% |
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 | $ 0.15 | |
Volatility | 469.00% | |
Maximum | ||
Exercise Price | $ 0.17 | |
Volatility | 470.00% |
STOCKHOLDERS EQUITY (Details 2)
STOCKHOLDERS EQUITY (Details 2) | 6 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Outstanding Options | |
Number of Options | shares | 2,150,000 |
Remaining Life (Years) | 1 year 4 months 24 days |
Weighted Average Price | $ / shares | $ 0.05 |
Number of Shares | shares | 1,625,000 |
Options Exercisable, Weighted Average Price | $ / shares | $ 0.03 |
.028 to $.03 | |
Outstanding Options | |
Number of Options | shares | 1,850,000 |
Remaining Life (Years) | 1 year |
Weighted Average Price | $ / shares | $ 0.03 |
Number of Shares | shares | 1,625,000 |
Options Exercisable, Weighted Average Price | $ / shares | $ 0.03 |
.05 | |
Outstanding Options | |
Number of Options | shares | 50,000 |
Remaining Life (Years) | 1 year 6 months |
Weighted Average Price | $ / shares | $ 0.05 |
.13 to .17 | |
Outstanding Options | |
Number of Options | shares | 200,000 |
Remaining Life (Years) | 4 years 6 months |
Weighted Average Price | $ / shares | $ 0.15 |
0.30 | |
Outstanding Options | |
Number of Options | shares | 50,000 |
Remaining Life (Years) | 4 years 7 months 6 days |
Weighted Average Price | $ / shares | $ 0.30 |
STOCKHOLDERS EQUITY (Details 3)
STOCKHOLDERS EQUITY (Details 3) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-based compensation expense | $ 6,000 | $ 2,000 | $ 10,000 | $ 8,000 | ||
Cost of good sold | $ 5,609,000 | 1,000 | $ 4,148,000 | 0 | 10,335,000 | 8,027,000 |
Other Selling and Marketing | ||||||
Stock-based compensation expense | 2,000 | 1,000 | 4,000 | 2,000 | ||
General and Adminstrative | ||||||
Stock-based compensation expense | $ 3,000 | $ 1,000 | $ 5,000 | $ 6,000 |
STOCKHOLDERS EQUITY (Details 4)
STOCKHOLDERS EQUITY (Details 4) | Dec. 31, 2021shares |
Stockholders Equity (Tables) | |
Shares of common stock reserved for issuance under the 2015 Plan | 3,150,000 |
Shares of common stock issuable upon conversion of the Preferred Stock | 4,300,000 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Unrecognized stock expense | $ 44,158 | ||
Shares of common stock reserved for issuance under the 2015 Plan | 3,150,000 | ||
Number of shares available for issuance under the 2015 Plan | 1,000,000 | ||
Stock options, exercised | 250,000 | 1,600,000 | |
Stock options granted | 50,000 | 150,000 | |
Closing stock price | $ 0.31 | ||
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 | |
Series A Preferred Stock Shares | |||
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 -designated shares authorized | 4,300,000 | ||
Preferred stock - liquidation preference | $ 1,000 | $ 1,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Feb. 10, 2022USD ($)$ / sharesshares |
Stock options were exercised for cash | shares | 800,000 |
Total payments | $ 60 |
Cost of equipment | $ 297,500 |
Expiry date | Feb. 12, 2022 |
Common stock shares issued | $ 681,427 |
Installments | $ 5,915 |
Minimum | |
Cash price per share | $ / shares | $ 0.03 |
Maximum | |
Cash price per share | $ / shares | $ 0.033 |