Document_and_Entity_Informatio
Document and Entity Information Document (USD $) | 3 Months Ended | ||
Sep. 30, 2014 | Oct. 27, 2014 | Dec. 31, 2013 | |
Document and Entity Information [Abstract] | ' | ' | ' |
Entity Registrant Name | 'KOSS CORP | ' | ' |
Entity Central Index Key | '0000056701 | ' | ' |
Current Fiscal Year End Date | '--06-30 | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Document Type | '10-Q | ' | ' |
Document Period End Date | 30-Sep-14 | ' | ' |
Document Fiscal Year Focus | '2015 | ' | ' |
Document Fiscal Period Focus | 'Q1 | ' | ' |
Amendment Flag | 'false | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 7,382,706 | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Public Float | ' | ' | $13,728,925 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Net sales | $5,469,486 | $6,824,339 |
Cost of goods sold | 3,626,769 | 4,512,694 |
Gross profit | 1,842,717 | 2,311,645 |
Operating expenses: | ' | ' |
Selling, general and administrative expenses | 1,938,993 | 2,884,481 |
Unauthorized transaction related costs and (recoveries), net | 52,492 | -708,716 |
Total operating expenses | 1,991,485 | 2,175,765 |
Income (loss) from operations | -148,768 | 135,880 |
Other expense: | ' | ' |
Interest expense | 4,333 | 7,606 |
Income (loss) before income tax provision (benefit) | -153,101 | 128,274 |
Income tax provision (benefit) | -58,103 | 48,872 |
Net income (loss) | ($94,998) | $79,402 |
Income (loss) per common share: | ' | ' |
Basic (in dollars per share) | ($0.01) | $0.01 |
Diluted (in dollars per share) | ($0.01) | $0.01 |
Dividends declared per common share (in dollars per share) | $0 | $0.06 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
Current assets: | ' | ' |
Cash and cash equivalents | $125,404 | $1,899,411 |
Accounts receivable, less allowance for doubtful accounts of $28,560 and $20,501, respectively | 2,770,956 | 3,160,887 |
Inventories | 7,178,995 | 7,054,932 |
Prepaid expenses and other current assets | 267,570 | 148,200 |
Income taxes receivable | 1,264,281 | 1,109,276 |
Deferred income taxes | 2,414,152 | 2,576,023 |
Total current assets | 14,021,358 | 15,948,729 |
Equipment and leasehold improvements, net | 1,856,016 | 1,840,491 |
Other assets: | ' | ' |
Deferred income taxes | 1,688,298 | 1,623,329 |
Cash surrender value of life insurance | 5,315,751 | 4,977,409 |
Total other assets | 7,004,049 | 6,600,738 |
Total assets | 22,881,423 | 24,389,958 |
Current liabilities: | ' | ' |
Accounts payable | 1,510,474 | 2,464,755 |
Accrued liabilities | 1,975,376 | 3,853,473 |
Income taxes payable | 175,000 | 175,000 |
Line of credit facility | 1,300,000 | 0 |
Total current liabilities | 4,960,850 | 6,493,228 |
Long-term liabilities: | ' | ' |
Deferred compensation | 2,320,826 | 2,320,091 |
Other liabilities | 292,291 | 336,772 |
Total long-term liabilities | 2,613,117 | 2,656,863 |
Total liabilities | 7,573,967 | 9,150,091 |
Stockholders' equity: | ' | ' |
Common stock, $0.005 par value, authorized 20,000,000 shares; issued and outstanding 7,382,706 shares | 36,914 | 36,914 |
Paid in capital | 4,158,829 | 3,996,242 |
Retained earnings | 11,111,713 | 11,206,711 |
Total stockholders' equity | 15,307,456 | 15,239,867 |
Total liabilities and stockholders' equity | $22,881,423 | $24,389,958 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
Allowance for doubtful accounts | $28,560 | $20,501 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 7,382,706 | 7,382,706 |
Common stock, shares outstanding | 7,382,706 | 7,382,706 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Operating activities: | ' | ' |
Net income (loss) | ($94,998) | $79,402 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ' | ' |
Provision for (recoveries of previously written off) doubtful accounts | 11,023 | -100,060 |
Loss on disposals of fixed assets | -3,359 | 0 |
Depreciation of equipment and leasehold improvements | 161,653 | 209,819 |
Amortization of product software development expenditures | 0 | 364,539 |
Stock-based compensation expense | 162,587 | 172,530 |
Deferred income taxes | 96,902 | 70,962 |
Change in cash surrender value of life insurance | -106,884 | -81,741 |
Deferred compensation | 735 | -81,482 |
Net changes in operating assets and liabilities (see note 11) | -2,896,388 | 3,881,553 |
Cash provided by (used in) operating activities | -2,662,011 | 4,515,522 |
Investing activities: | ' | ' |
Life insurance premiums paid | -231,458 | -242,016 |
Purchase of equipment and leasehold improvements | -180,538 | -235,201 |
Cash used in investing activities | -411,996 | -477,217 |
Financing activities: | ' | ' |
Net proceeds from line of credit facility | 1,300,000 | 0 |
Dividends paid to stockholders | 0 | -442,962 |
Cash provided by (used in) financing activities | 1,300,000 | -442,962 |
Net increase (decrease) in cash and cash equivalents | -1,774,007 | 3,595,343 |
Cash and cash equivalents at beginning of period | 1,899,411 | 859,636 |
Cash and cash equivalents at end of period | $125,404 | $4,454,979 |
CONDENSED_CONSOLIDATED_FINANCI
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Condensed Consolidated Financial Statements | ' |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | |
The condensed consolidated balance sheet of Koss Corporation (the "Company") as of June 30, 2014 has been derived from audited financial statements. The unaudited condensed consolidated financial statements presented herein are based on interim amounts. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made. The operating results for the three months ended September 30, 2014 are not necessarily indicative of the operating results that may be experienced for the full fiscal year ending June 30, 2015. | |
In the three months ended December 31, 2013, the Company formed Koss U.K. Limited to comply with certain European Union (EU) requirements. The entity is non-operating and holds no assets. | |
These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014. |
UNAUTHORIZED_TRANSACTION_RELAT
UNAUTHORIZED TRANSACTION RELATED COSTS AND RECOVERIES (Notes) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Unauthorized Transactions, Costs and Related Recoveries, Net [Abstract] | ' | ||||||||
Unauthorized Transaction Related Costs and Recoveries | ' | ||||||||
UNAUTHORIZED TRANSACTION RELATED COSTS AND RECOVERIES | |||||||||
In December 2009, the Company learned of significant unauthorized transactions as previously reported. The Company has ongoing costs and recoveries associated with the unauthorized transactions. For the three months ended September 30, 2014 and 2013, the costs incurred were for legal fees related to claims initiated against third parties (see Note 13). The Company has received recoveries related to the unauthorized transactions, which are summarized below. The Company will continue to incur legal fees for the claims initiated against third parties. The Company expects to receive additional forfeiture related funds in the fiscal year ended June 30, 2015. However, the remaining amounts to be received are not expected to be significant. For the three months ended September 30, 2014 and 2013, the costs and recoveries were as follows: | |||||||||
Three Months Ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Legal fees incurred | $ | 52,492 | $ | 107,813 | |||||
Proceeds from asset forfeitures | — | (816,529 | ) | ||||||
Unauthorized transaction related costs and (recoveries), net | $ | 52,492 | $ | (708,716 | ) | ||||
INVENTORIES_Notes
INVENTORIES (Notes) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
INVENTORIES | |||||||||
The components of inventories at September 30, 2014 and June 30, 2014 were as follows: | |||||||||
September 30, 2014 | June 30, 2014 | ||||||||
Raw materials | $ | 5,394,907 | $ | 5,593,159 | |||||
Work-in process | 6,841 | — | |||||||
Finished goods | 6,577,205 | 6,327,221 | |||||||
11,978,953 | 11,920,380 | ||||||||
Allowance for obsolete inventory | (4,799,958 | ) | (4,865,448 | ) | |||||
Total inventories | $ | 7,178,995 | $ | 7,054,932 | |||||
PRODUCT_SOFTWARE_DEVELOPMENT_E
PRODUCT SOFTWARE DEVELOPMENT EXPENDITURES (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Capitalized Computer Software, Net [Abstract] | ' |
Product Software Development Expenditures | ' |
PRODUCT SOFTWARE DEVELOPMENT EXPENDITURES | |
The Company follows the guidance of ASC 985-20 “Costs of Software to be Sold, Leased, or Marketed” when capitalizing software development costs associated with software embedded in or to be incorporated into its products. The cost of purchased software technology is capitalized and stated at the lower of unamortized cost or expected net realizable value. Software is subject to rapid technological obsolescence and future revenue estimates supporting the capitalized software cost can be negatively affected based upon competitive products, services and pricing. Such adverse developments could reduce the estimated net realizable value of our product software development costs and could result in impairment or a shorter estimated life. Such events would require us to take a charge in the period in which the event occurs or to increase the amortization expense in future periods and would have a negative effect on our results of operations. At a minimum, we review for impairment on a quarterly basis. | |
The Company launched a new product offering in 2012 and began amortization of the related capitalized software. Amortization was being recorded over a three year period or a fixed amount per unit sold, whichever is greater. In the three months ended December 31, 2013, the Company determined that the capitalized software needed to be replaced by a new architecture under development. As a result, the remaining asset value of $2,308,752 was expensed during the three months ended December 31, 2013 (charged to the Condensed Consolidated Statements of Operations line item titled "Impairment of capitalized software, inventory and related items"). The Company continues to believe in the viability of this technology but has temporarily suspended its research and development effort until the base business is restored to more profitable levels. Software development costs expended to develop future Wi-Fi based products will be expensed as incurred and charged to research and development. | |
Capitalized software amortization recorded in Cost of Goods Sold in the three months ended September 30, 2013 totaled $364,539. |
INCOME_TAXES_Notes
INCOME TAXES (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
INCOME TAXES | |
For the three months ended September 30, 2014, the company recorded an income tax benefit of $58,103, compared to an income tax expense of $48,872 for the three months ended September 30, 2013. The decrease in the company's tax expense for the three months ended September 30, 2014 relative to the prior year resulted from pre-tax book losses. The Company files income tax returns in the United States federal jurisdiction and in several state jurisdictions. The Company’s federal tax returns through tax year June 30, 2010 are settled and the income tax returns for tax years beginning July 1, 2010 are open. For states in which the Company files state income tax returns, the statue of limitations is generally open for tax years ended June 30, 2010 and forward. The Company's Federal return for the fiscal year ended June 30, 2013 is currently under examination. | |
The Company’s unrecognized tax benefits, excluding interest and penalties, were $175,000 as of September 30, 2014 and as of June 30, 2014. All of the Company’s unrecognized tax benefits as of September 30, 2014, if recognized, would impact the effective tax rate. |
CREDIT_FACILITY_Notes
CREDIT FACILITY (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Debt Disclosure [Abstract] | ' |
Credit Facility | ' |
CREDIT FACILITY | |
On May 12, 2010, the Company entered into a secured credit facility with JPMorgan Chase Bank, N.A. (“Lender”). The Credit Agreement dated May 12, 2010 between the Company and the Lender (“Credit Agreement”) provided for an $8,000,000 revolving secured credit facility with interest rates either ranging from 0.0% to 0.75% over the Lender’s most recently publicly announced prime rate or 2.0% to 3.0% over LIBOR, depending on the Company’s leverage ratio. The Company pays a fee of 0.3% to 0.45% for unused amounts committed in the credit facility. On July 24, 2013, the Credit Agreement was amended to extend the expiration to July 31, 2015. On July 23, 2014 the Credit Agreement was amended to reduce the facility to $5,000,000 and to amend certain financial covenants. In addition to the revolving loans, the Credit Agreement also provides that the Company may, from time to time, request the Lender to issue letters of credit for the benefit of the Company of up to a sublimit of $2,000,000 and subject to certain other limitations. The loans may be used only for general corporate purposes of the Company. | |
The Credit Agreement contains certain affirmative, negative and financial covenants customary for financings of this type. The negative covenants include restrictions on other indebtedness, liens, fundamental changes, certain investments, asset sales, sale and leaseback transactions and transactions with affiliates, among other restrictions. The financial covenants include minimum EBITDA and minimum tangible net worth requirements. The Company and the Lender also entered into the Pledge and Security Agreement dated May 12, 2010 under which the Company granted the Lender a security interest in substantially all of the Company’s assets in connection with the Company’s obligations under the Credit Agreement. The balance on this facility was $1,300,000 as of September 30, 2014 and $0 as of June 30, 2014. |
INTEREST_EXPENSE_Notes
INTEREST EXPENSE (Notes) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Interest Expense [Abstract] | ' | ||||||||
Interest Expense | ' | ||||||||
INTEREST EXPENSE | |||||||||
The Company incurs interest expense primarily related to its secured credit facility (see Note 6) and to its liabilities for its tax positions related to the unauthorized transactions. As the tax returns have been settled and statute of limitations have expired, the accrued interest expense on certain items has been reversed. Interest expense detail was as follows for the three months ended September 30, 2014 and 2013, respectively: | |||||||||
Three Months Ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Interest (expense) benefit on secured credit facility | $ | (4,333 | ) | $ | 587 | ||||
Interest expense for tax positions related to unauthorized transactions | — | (8,193 | ) | ||||||
Interest expense | $ | (4,333 | ) | $ | (7,606 | ) |
INCOME_LOSS_PER_COMMON_AND_COM
INCOME (LOSS) PER COMMON AND COMMON STOCK EQUIVALENT SHARE (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Earnings Per Share, Basic and Diluted [Abstract] | ' |
Income (Loss) Per Common and Common Stock Equivalent Share | ' |
INCOME (LOSS) PER COMMON AND COMMON STOCK EQUIVALENT SHARE | |
Basic income (loss) per share is computed based on the weighted-average number of common shares outstanding. The weighted-average number of common shares outstanding was 7,382,706 for the quarters ended September 30, 2014 and 2013. When dilutive, stock options are included in income (loss) per share as share equivalents using the treasury stock method. For the periods ended September 30, 2014 and 2013, there were no common stock equivalents related to stock option grants that were included in the computation of the weighted-average number of shares outstanding for diluted income (loss) per share. Shares issuable upon the exercise of outstanding options of 2,411,000 and 2,186,000 were excluded from the diluted weighted-average common shares outstanding for the periods ended September 30, 2014 and 2013, respectively, as they would be anti-dilutive. |
STOCK_OPTIONS_Notes
STOCK OPTIONS (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Stock Options | ' |
STOCK OPTIONS | |
The Company recognizes stock-based compensation expense for options granted under both the 1990 Flexible Incentive Plan and the 2012 Omnibus Incentive Plan. The stock-based compensation relates to stock options granted to employees, non-employee directors and non-employee consultants. In the three months ended September 30, 2014, options to purchase 445,000 shares were granted under the 2012 Omnibus Incentive Plan at a weighted average exercise price of $3.19. In the three months ended September 30, 2013, options to purchase 445,000 shares were granted under the 2012 Omnibus Incentive Plan at a weighted average exercise price of $5.64. Stock-based compensation expense during the three months ended September 30, 2014 and 2013 was $162,587 and $172,530, respectively. |
STOCK_PURCHASE_AGREEMENTS_Note
STOCK PURCHASE AGREEMENTS (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' |
Stock Purchase Agreements | ' |
STOCK PURCHASE AGREEMENTS | |
The Company has an agreement with its Chairman, John C. Koss, in the event of his death, at the request of the executor of his estate, to repurchase his Company common stock from his estate. The Company does not have the right to require the estate to sell stock to the Company. As such, this arrangement is accounted for as a written put option with the fair value of the put option recorded as a derivative liability. | |
As of September 30, 2014, John C. Koss did not hold a material amount of Company stock. As such, there is no exposure that the executor of John C. Koss' estate may require the Company to repurchase a material amount of stock in the event of his death. The fair value of the written put option was $0 at September 30, 2014 and at June 30, 2014. The repurchase price is 95% of the fair market value of the common stock on the date that notice to repurchase is provided to the Company. The total number of shares to be repurchased will be sufficient to provide proceeds which are the lesser of $2,500,000 or the amount of estate taxes and administrative expenses incurred by the Chairman’s estate. The Company may elect to pay the purchase price in cash or may elect to pay cash equal to 25% of the total amount due and to execute a promissory note for the balance, payable over four years, at the prime rate of interest. The Company maintains a $1,150,000 life insurance policy to fund a substantial portion of this obligation. |
ADDITIONAL_CASH_FLOW_INFORMATI
ADDITIONAL CASH FLOW INFORMATION (Notes) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Supplemental Cash Flow Elements [Abstract] | ' | ||||||||
Additional Cash Flow Information | ' | ||||||||
ADDITIONAL CASH FLOW INFORMATION | |||||||||
The net changes in cash as a result of changes in operating assets and liabilities consist of the following: | |||||||||
Three Months Ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 378,909 | $ | 8,874,879 | |||||
Inventories | (124,063 | ) | 740,363 | ||||||
Income taxes receivable | (155,005 | ) | — | ||||||
Prepaid expenses and other current assets | (119,370 | ) | (80,744 | ) | |||||
Income taxes payable | — | (2,035,090 | ) | ||||||
Accounts payable | (954,281 | ) | (926,014 | ) | |||||
Accrued liabilities | (1,878,097 | ) | (2,691,841 | ) | |||||
Other liabilities | (44,481 | ) | — | ||||||
Net change | $ | (2,896,388 | ) | $ | 3,881,553 | ||||
Net cash paid during the period for: | |||||||||
Income taxes | $ | 10,510 | $ | 2,013,000 | |||||
Interest | $ | 1,011 | $ | 2,185 | |||||
STOCKHOLDERS_EQUITY_Notes
STOCKHOLDERS' EQUITY (Notes) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Stockholders' Equity Attributable to Parent [Abstract] | ' | ||||||||
Stockholders' Equity | ' | ||||||||
STOCKHOLDERS' EQUITY | |||||||||
The following table summarizes the changes in stockholders’ equity for the three months ended September 30, 2014 and 2013: | |||||||||
Three Months Ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Net income (loss) | $ | (94,998 | ) | $ | 79,402 | ||||
Dividends declared | — | (442,962 | ) | ||||||
Stock-based compensation expense | 162,587 | 172,530 | |||||||
Income tax benefit from dividends paid to employee stock ownership plan | — | 12,432 | |||||||
Increase (decrease) in stockholders' equity | $ | 67,589 | $ | (178,598 | ) | ||||
LEGAL_MATTERS_Notes
LEGAL MATTERS (Notes) | 3 Months Ended | |
Sep. 30, 2014 | ||
Commitments and Contingencies Disclosure [Abstract] | ' | |
Legal Matters | ' | |
LEGAL MATTERS | ||
As of September 30, 2014, the Company is party to the matters related to the unauthorized transactions and the termination of a vendor contract described below: | ||
• | On February 18, 2010, the Company filed an action against American Express Company, American Express Travel Related Services Company, Inc., AMEX Card Services Company, Decision Science, and Pamela S. Hopkins in Superior Court of Maricopa County, Arizona, case no. CV2010-006631. The claims alleged include aiding and abetting breach of fiduciary duty, aiding and abetting fraud, and conversion relating to the unauthorized transactions. The case is proceeding in the Superior Court with respect to those claims. | |
• | On December 17, 2010, the Company filed an action against Park Bank in Circuit Court of Milwaukee County, Wisconsin alleging claims of negligence and breach of fiduciary duty relating to the unauthorized transactions. The Company voluntarily dismissed the negligence claim and the case is proceeding in the Circuit Court. | |
• | On March 6, 2014, the Company filed an action against Red Fusion Studios, Inc. ("Red Fusion") in Circuit Court of Milwaukee County, Wisconsin, Case No. 14CV001885, seeking the return of the Company's property and damages following the termination of the agreement that the Company had with Red Fusion for the development of the Company's Striva Technology. Red Fusion filed counterclaims relating to fees that Red Fusion alleges it is owed as a result of the termination. The case is proceeding in the Circuit Court. | |
The ultimate resolution of these matters is not determinable unless otherwise noted. |
UNAUTHORIZED_TRANSACTION_RELAT1
UNAUTHORIZED TRANSACTION RELATED COSTS AND RECOVERIES (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Unauthorized Transactions, Costs and Related Recoveries, Net [Abstract] | ' | ||||||||
Unauthorized Transaction Related Costs and Recoveries | ' | ||||||||
For the three months ended September 30, 2014 and 2013, the costs and recoveries were as follows: | |||||||||
Three Months Ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Legal fees incurred | $ | 52,492 | $ | 107,813 | |||||
Proceeds from asset forfeitures | — | (816,529 | ) | ||||||
Unauthorized transaction related costs and (recoveries), net | $ | 52,492 | $ | (708,716 | ) | ||||
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
The components of inventories at September 30, 2014 and June 30, 2014 were as follows: | |||||||||
September 30, 2014 | June 30, 2014 | ||||||||
Raw materials | $ | 5,394,907 | $ | 5,593,159 | |||||
Work-in process | 6,841 | — | |||||||
Finished goods | 6,577,205 | 6,327,221 | |||||||
11,978,953 | 11,920,380 | ||||||||
Allowance for obsolete inventory | (4,799,958 | ) | (4,865,448 | ) | |||||
Total inventories | $ | 7,178,995 | $ | 7,054,932 | |||||
INTEREST_EXPENSE_Tables
INTEREST EXPENSE (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Interest Expense [Abstract] | ' | ||||||||
Interest Expense | ' | ||||||||
Interest expense detail was as follows for the three months ended September 30, 2014 and 2013, respectively: | |||||||||
Three Months Ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Interest (expense) benefit on secured credit facility | $ | (4,333 | ) | $ | 587 | ||||
Interest expense for tax positions related to unauthorized transactions | — | (8,193 | ) | ||||||
Interest expense | $ | (4,333 | ) | $ | (7,606 | ) |
ADDITIONAL_CASH_FLOW_INFORMATI1
ADDITIONAL CASH FLOW INFORMATION (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Supplemental Cash Flow Elements [Abstract] | ' | ||||||||
Additional Cash Flow Information | ' | ||||||||
The net changes in cash as a result of changes in operating assets and liabilities consist of the following: | |||||||||
Three Months Ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Accounts receivable | $ | 378,909 | $ | 8,874,879 | |||||
Inventories | (124,063 | ) | 740,363 | ||||||
Income taxes receivable | (155,005 | ) | — | ||||||
Prepaid expenses and other current assets | (119,370 | ) | (80,744 | ) | |||||
Income taxes payable | — | (2,035,090 | ) | ||||||
Accounts payable | (954,281 | ) | (926,014 | ) | |||||
Accrued liabilities | (1,878,097 | ) | (2,691,841 | ) | |||||
Other liabilities | (44,481 | ) | — | ||||||
Net change | $ | (2,896,388 | ) | $ | 3,881,553 | ||||
Net cash paid during the period for: | |||||||||
Income taxes | $ | 10,510 | $ | 2,013,000 | |||||
Interest | $ | 1,011 | $ | 2,185 | |||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Stockholders' Equity Attributable to Parent [Abstract] | ' | ||||||||
Stockholders' Equity | ' | ||||||||
The following table summarizes the changes in stockholders’ equity for the three months ended September 30, 2014 and 2013: | |||||||||
Three Months Ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Net income (loss) | $ | (94,998 | ) | $ | 79,402 | ||||
Dividends declared | — | (442,962 | ) | ||||||
Stock-based compensation expense | 162,587 | 172,530 | |||||||
Income tax benefit from dividends paid to employee stock ownership plan | — | 12,432 | |||||||
Increase (decrease) in stockholders' equity | $ | 67,589 | $ | (178,598 | ) | ||||
UNAUTHORIZED_TRANSACTION_RELAT2
UNAUTHORIZED TRANSACTION RELATED COSTS AND RECOVERIES (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Unauthorized Transactions, Costs and Related Recoveries, Net [Abstract] | ' | ' |
Legal fees incurred | $52,492 | $107,813 |
Proceeds from asset forfeitures | 0 | -816,529 |
Unauthorized transaction related costs and (recoveries), net | $52,492 | ($708,716) |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
Inventory Disclosure [Abstract] | ' | ' |
Raw materials | $5,394,907 | $5,593,159 |
Work-in process | 6,841 | 0 |
Finished goods | 6,577,205 | 6,327,221 |
Gross inventory | 11,978,953 | 11,920,380 |
Allowance for obsolete inventory | -4,799,958 | -4,865,448 |
Total inventories | $7,178,995 | $7,054,932 |
PRODUCT_SOFTWARE_DEVELOPMENT_E1
PRODUCT SOFTWARE DEVELOPMENT EXPENDITURES (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Capitalized Computer Software, Net [Abstract] | ' | ' |
Remaining 9/30/13 asset value charged to Statement of Operations line item titled Impairment of capitalized software, inventory and related items | ' | $2,308,752 |
Capitalized software amortization recorded in Cost of Good Sold in the three months ended September 30, 2013 | $0 | $364,539 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' | ' | ' |
Income tax provision (benefit) | ($58,103) | $48,872 | ' |
Unrecognized tax benefits | 175,000 | ' | 175,000 |
Amount of the Companybs unrecognized tax benefits that if recognized, would impact the effective tax rate | $175,000 | ' | ' |
CREDIT_FACILITY_Details
CREDIT FACILITY (Details) (USD $) | Sep. 30, 2014 | Jul. 23, 2014 | Jun. 30, 2014 | 12-May-10 | 12-May-10 | 12-May-10 | 12-May-10 | 12-May-10 | 12-May-10 | 12-May-10 |
Minimum [Member] | Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | Maximum [Member] | |||||
Rate | Prime Rate [Member] | London Interbank Offered Rate (LIBOR) [Member] | Rate | Prime Rate [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Rate | Rate | Rate | Rate | |||||||
Line of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revolving secured credit facility, maximum borrowing available | ' | $5,000,000 | ' | $8,000,000 | ' | ' | ' | ' | ' | ' |
Interest rate, percentage spread, depending on Company's leverage ratio | ' | ' | ' | ' | ' | 0.00% | 2.00% | ' | 0.75% | 3.00% |
Unused capacity, commitment fee percentage | ' | ' | ' | ' | 0.30% | ' | ' | 0.45% | ' | ' |
Line of credit sublimit | ' | ' | ' | 2,000,000 | ' | ' | ' | ' | ' | ' |
Line of credit outstanding balance | $1,300,000 | ' | $0 | ' | ' | ' | ' | ' | ' | ' |
INTEREST_EXPENSE_Details
INTEREST EXPENSE (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Interest Expense [Abstract] | ' | ' |
Interest (expense) benefit on secured credit facility | ($4,333) | $587 |
Interest expense for tax positions related to unauthorized transactions | 0 | -8,193 |
Interest expense | ($4,333) | ($7,606) |
INCOME_LOSS_PER_COMMON_AND_COM1
INCOME (LOSS) PER COMMON AND COMMON STOCK EQUIVALENT SHARE (Details) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Earnings Per Share, Basic and Diluted [Abstract] | ' | ' |
Weighted average number of shares outstanding | 7,382,706 | 7,382,706 |
Common stock equivalents related to stock option grants that were included in the computation of the weighted-average number of shares outstanding | 0 | 0 |
Shares issuable upon the exercise of outstanding options, excluded from the diluted weighted-average common shares outstanding as they would be anti-dilutive | 2,411,000 | 2,186,000 |
STOCK_OPTIONS_Details
STOCK OPTIONS (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' |
Granted (in shares) | 445,000 | 445,000 |
Weighted average exercise price of shares granted in period | $3.19 | $5.64 |
Stock-based compensation expense | $162,587 | $172,530 |
STOCK_PURCHASE_AGREEMENTS_Deta
STOCK PURCHASE AGREEMENTS (Details) (USD $) | 3 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2014 | Jun. 30, 2014 | |
Rate | |||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ' | ' |
Fair value of written put option | ' | $0 | $0 |
Repurchase price, percent of fair market value | ' | 95.00% | ' |
Maximum proceeds from shares to be repurchased | ' | 2,500,000 | ' |
Minimum percent Company may elect to pay in cash upon exercise of put | ' | 25.00% | ' |
Years over which Company may execute a promissory note payable, for the balance, at the prime rate of interest | '4 years | ' | ' |
Death benefit of life insurance policy Company maintains to fund a substantial portion of the liability | ' | $1,150,000 | ' |
ADDITIONAL_CASH_FLOW_INFORMATI2
ADDITIONAL CASH FLOW INFORMATION (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Supplemental Cash Flow Elements [Abstract] | ' | ' |
Accounts receivable | $378,909 | $8,874,879 |
Inventories | -124,063 | 740,363 |
Income taxes receivable | 155,005 | 0 |
Prepaid expenses and other current assets | -119,370 | -80,744 |
Income taxes payable | 0 | -2,035,090 |
Accounts payable | -954,281 | -926,014 |
Accrued liabilities | -1,878,097 | -2,691,841 |
Other liabilities | -44,481 | 0 |
Net change | 2,896,388 | -3,881,553 |
Net cash paid during the period for: | ' | ' |
Income taxes | 10,510 | 2,013,000 |
Interest | $1,011 | $2,185 |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stockholders' Equity Attributable to Parent [Abstract] | ' | ' |
Net income (loss) | ($94,998) | $79,402 |
Dividends declared | 0 | -442,962 |
Stock-based compensation expense | 162,587 | 172,530 |
Income tax benefit from dividends paid to employee stock ownership plan | 0 | 12,432 |
Increase (decrease) in stockholders' equity | $67,589 | ($178,598) |