Document Information Statement
Document Information Statement - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Aug. 16, 2021 | Dec. 31, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jun. 30, 2021 | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Transition Report | false | ||
Entity File Number | 0-3295 | ||
Entity Registrant Name | KOSS CORPORATION | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 4129 North Port Washington Avenue | ||
Entity Address, City or Town | Milwaukee | ||
Entity Address, State or Province | WI | ||
Entity Tax Identification Number | 39-1168275 | ||
Entity Address, Postal Zip Code | 53212 | ||
City Area Code | 414 | ||
Local Phone Number | 964-5000 | ||
Title of 12(b) Security | Common Stock, $0.005 par value per share | ||
Trading Symbol | KOSS | ||
Security Exchange Name | NASDAQ | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 15,072,897 | ||
Entity Common Stock, Shares Outstanding | 8,673,706 | ||
Documents Incorporated by Reference [Text Block] | Part III of this Form 10-K incorporates by reference certain information from Koss Corporation’s Proxy Statement for its 2021 Annual Meeting of Stockholders to be filed with the Commission under Regulation 14A within 120 days of the end of the fiscal year covered by this Form 10-K. | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000056701 | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 6,950,215 | $ 3,999,409 |
Accounts receivable, less allowance for doubtful accounts of $41,500 and $74,082, respectively | 2,240,785 | 2,317,064 |
Inventories | 5,901,512 | 5,538,794 |
Prepaid expenses and other current assets | 456,004 | 267,647 |
Income taxes receivable | 14,622 | |
Total current assets | 15,548,516 | 12,137,536 |
Equipment and leasehold improvements, net | 1,281,180 | 983,641 |
Other assets: | ||
Operating lease right-of-use assets | 2,305,455 | 2,582,402 |
Cash surrender value of life insurance | 7,188,994 | 6,876,827 |
Total other assets | 9,494,449 | 9,459,229 |
Total assets | 26,324,145 | 22,580,406 |
Current liabilities: | ||
Accounts payable | 398,433 | 827,705 |
Accrued liabilities | 665,567 | 580,099 |
Deferred revenue | 694,632 | 423,639 |
Operating lease liability | 288,949 | 276,947 |
Income taxes payable | 4,543 | |
Short-term debt | 506,700 | |
Total current liabilities | 2,052,124 | 2,615,090 |
Long-term liabilities: | ||
Deferred compensation | 2,491,482 | 2,333,482 |
Deferred revenue | 188,932 | 170,281 |
Operating lease liability | 2,016,506 | 2,305,455 |
Total long-term liabilities | 4,696,920 | 4,809,218 |
Total liabilities | 6,749,044 | 7,424,308 |
Stockholders' equity: | ||
Common stock, $0.005 par value, authorized 20,000,000 shares; issued and outstanding 8,608,706 and 7,404,831 shares, respectively | 43,044 | 37,024 |
Paid in capital | 10,802,118 | 6,882,729 |
Retained earnings | 8,729,939 | 8,236,345 |
Total stockholders' equity | 19,575,101 | 15,156,098 |
Total liabilities and stockholders' equity | $ 26,324,145 | $ 22,580,406 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Consolidated Balance Sheets [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 41,500 | $ 74,082 |
Common stock, par value (in dollars per share) | $ 0.005 | $ 0.005 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 8,608,706 | 7,404,831 |
Common stock, shares outstanding (in shares) | 8,608,706 | 7,404,831 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Consolidated Statements of Operations [Abstract] | ||
Net sales | $ 19,546,008 | $ 18,311,830 |
Cost of goods sold | 12,813,873 | 12,649,222 |
Gross profit | 6,732,135 | 5,662,608 |
Selling, general and administrative expenses | 7,122,627 | 6,146,650 |
(Loss) from operations | (390,492) | (484,042) |
Other income | 885,505 | |
Interest income | 2,706 | 20,185 |
Income (loss) before income tax provision | 497,719 | (463,857) |
Income tax provision | 4,125 | 1,740 |
Net income (loss) | $ 493,594 | $ (465,597) |
Income (loss) per common share: | ||
Basic (in dollars per share) | $ 0.06 | $ (0.06) |
Diluted (in dollars per share) | $ 0.05 | $ (0.06) |
Weighted-average number of shares: | ||
Basic (in shares) | 7,864,688 | 7,404,831 |
Diluted (in shares) | 9,639,273 | 7,404,831 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Operating activities: | ||
Net income (loss) | $ 493,594 | $ (465,597) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
(Recovery of) provision for doubtful accounts of accounts receivable | (9,226) | 56,386 |
Depreciation of equipment and leasehold improvements | 302,616 | 330,629 |
Stock-based compensation expense | 619,137 | 549,594 |
Deferred income taxes | 13,276 | |
Change in cash surrender value of life insurance | (208,116) | (194,083) |
Provision for deferred compensation | 308,000 | 63,520 |
Deferred compensation paid | (150,000) | (150,000) |
Other income - SBA loan forgiveness | (506,700) | |
Net changes in operating assets and liabilities: | ||
Accounts receivable | 85,505 | 1,281,693 |
Inventories | (362,718) | 1,312,654 |
Prepaid expenses and other current assets | (188,357) | (133,758) |
Income taxes receivable | 14,622 | 31,038 |
Income taxes payable | 4,543 | |
Accounts payable | (429,272) | (608,668) |
Accrued liabilities | 85,468 | (70,414) |
Deferred revenue | 289,644 | (214,568) |
Net cash provided by operating activities | 348,740 | 1,801,702 |
Investing activities: | ||
Purchase of equipment and leasehold improvements | (600,155) | (424,159) |
Life insurance premiums paid | (104,051) | (113,116) |
Net cash (used in) investing activities | (704,206) | (537,275) |
Financing activities: | ||
Proceeds from SBA loan | 506,700 | |
Proceeds from exercise of stock options | 3,306,272 | |
Net cash provided by financing activities | 3,306,272 | 506,700 |
Net increase in cash and cash equivalents | 2,950,806 | 1,771,127 |
Cash and cash equivalents at beginning of year | 3,999,409 | 2,228,282 |
Cash and cash equivalents at end of year | $ 6,950,215 | $ 3,999,409 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock [Member] | Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance (in shares) at Jun. 30, 2019 | 7,404,831 | |||
Balance at Jun. 30, 2019 | $ 37,024 | $ 6,333,135 | $ 8,701,942 | $ 15,072,101 |
Net income (loss) | (465,597) | (465,597) | ||
Stock-based compensation expense | 549,594 | 549,594 | ||
Balance at Jun. 30, 2020 | $ 37,024 | 6,882,729 | 8,236,345 | $ 15,156,098 |
Balance (in shares) at Jun. 30, 2020 | 7,404,831 | 7,404,831 | ||
Net income (loss) | 493,594 | $ 493,594 | ||
Stock-based compensation expense | 619,137 | $ 619,137 | ||
Exercise of common stock options (in shares) | 1,203,875 | 1,203,875 | ||
Exercise of common stock options | $ 6,020 | 3,300,252 | $ 3,306,272 | |
Balance at Jun. 30, 2021 | $ 43,044 | $ 10,802,118 | $ 8,729,939 | $ 19,575,101 |
Balance (in shares) at Jun. 30, 2021 | 8,608,706 | 8,608,706 |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2021 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | KOSS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS — Koss Corporation ("Koss"), a Delaware corporation, and its 100 %-owned subsidiaries (collectively the "Company"), reports its finances as a single reporting segment, as the Company’s only business line is the design, manufacture and sale of stereo headphones and related accessories. The Company leases its plant and office in Milwaukee, Wisconsin. The domestic market is served by domestic sales representatives and independent manufacturers' representatives working directly with certain retailers, distributors, and original equipment manufacturers. International markets are served by domestic sales representatives and sales personnel in the Netherlands and Russia which utilize independent distributors in several foreign countries. The Company has two subsidiaries, Koss Corp B.V. and Koss U.K. Limited ("Koss UK"), which were formed to comply with certain European Union ("EU") requirements. Koss Corp B.V. and Koss UK are non-operating and hold no assets. BASIS OF CONSOLIDATION — The Consolidated Financial Statements include the accounts of Koss and its subsidiaries, Koss Corp B.V. and Koss UK, which are 100 %-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. REVENUE RECOGNITION — Revenues from product sales are recognized when the customer obtains control of the product, which typically occurs upon shipment from the Company's facility. There are a very limited number of customers for which control does not pass until they have received the products at their facility. Revenue from product sales is adjusted for estimated warranty obligations and variable consideration, which are detailed below. The amount of revenue recognized is to reflect the consideration expected to be received for those goods or services. Warranties - The Company offers a lifetime warranty to consumers in the United States and certain other countries. This lifetime warranty creates a future performance obligation. The Company determines the standalone selling price for this performance obligation using the cost plus method. There are also certain foreign distributors that receive warranty repair parts and replacement headphones to satisfy warranty obligations in those countries. The Company defers revenue to recognize the future obligations related to these warranties. The deferred revenue is based on historical analysis of warranty claims relative to sales. This deferred revenue reflects the Company's best estimates of the amount of warranty returns and repairs it will experience during those future periods. If future warranty activity varies from the estimates, the Company will adjust the estimated deferred revenue, which would affect net sales and operating results in the period that such adjustment becomes known. The Company typically receives payment for product at the time of shipment or under normal collection terms, which are generally 30-60 days. The Company estimates that the warranty related performance obligation is satisfied within one to three years and therefore uses that same time frame for recognition of the deferred revenue, using amortization of 50 % in year 1 , 30 % in year 2 , and 20 % in year 3 for domestic sales. Export deferred revenue, where applicable, is recognized over a 12 month period from date of shipment. Reserves for Variable Consideration - Revenue from product sales is recorded at the net sales price, which includes estimates of variable consideration for which reserves are established and which result from returns, rebates, and co-pay assistance that are offered within contracts between the Company and its customers. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the contract. If actual results in the future vary from the estimates, the Company will adjust these estimates, which would affect net sales and operating results in the period such variances become known. Product Returns - The Company generally offers customers a limited right of return. The Company estimates the amount of product sales that may be returned by its customers and records the estimate as a reduction of revenue in the period the related product revenue is recognized. Product return liabilities are estimated using historical sales and returns information. If actual results in the future vary from the estimates, the Company will adjust these estimates, which would affect net sales and operating results in the period such variances become known. Volume Rebates - The Company offers volume rebates to certain customers in the United States and certain foreign distributors. These volume rebates are tied to sales volume within specified periods. The amount of revenue is reduced for variable consideration related to customer rebates, which are calculated using expected values and is based on program specific factors such as expected rebate percentages and expected volumes. Changes in such accruals may be required if actual sales volume differs from estimated sales volume, which would affect net sales and operating results in the period such variances become known. Sales Commissions - The Company has elected the practical expedient of not capitalizing sales commissions. RESEARCH AND DEVELOPMENT — Research and development is primarily comprised of product prototypes and testing. These activities, charged to operations as a component of selling, general and administrative expenses in the accompanying Consolidated Statements of Operations, amounted to $ 410,602 and $ 397,360 in 2021 and 2020, respectively. ADVERTISING COSTS — Advertising costs included within selling, general and administrative expenses in the accompanying Consolidated Statements of Operations were $ 33,976 in 2021 and $ 54,592 in 2020. Such costs are expensed as incurred. INCOME TAXES — The Company operates as a C Corporation under the Internal Revenue Code (the "Code"). Amounts provided for income tax expense are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable under tax laws. Deferred income tax assets and liabilities are computed annually for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. As changes in tax laws or rates are enacted, deferred income tax assets and liabilities are adjusted through the provision for income taxes. The differences relate principally to different methods used for depreciation and amortization for income tax purposes, net operating loss carryforwards, capitalization requirements of the Code, allowances for doubtful accounts, provisions for excess and obsolete inventory, stock-based compensation, warranty reserves, and other income tax related carryforwards. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount that is more likely than not to be realized. PATENT COSTS — The Company incurs on-going legal fees and filing costs related to the patent portfolio. These costs are expensed in the period they are incurred since no patent legal costs were probable to provide a future economic benefit. INCOME (LOSS) PER COMMON AND COMMON STOCK EQUIVALENT SHARE — Income (loss) per common and common stock equivalent share is calculated under the provisions of Topic 260 in the Accounting Standards Codification ("ASC") which provides for calculation of “basic” and “diluted” income (loss) per share. Basic income (loss) per common and common stock equivalent share includes no dilution and is computed by dividing net income (loss) by the weighted average common shares outstanding for the period. Diluted income (loss) per common and common stock equivalent share reflects the potential dilution of securities that could share in the earnings of an entity. See Note 10 for additional information on income (loss) per common and common stock equivalent share. CASH AND CASH EQUIVALENTS — The Company considers depository accounts and investments with a maturity at the date of acquisition and expected usage of three months or less to be cash and cash equivalents. The Company maintains its cash on deposit at a commercial bank located in the United States of America. The Company periodically has cash balances in excess of insured amounts. The Company has not experienced, and does not expect to incur, any losses on these deposits. ACCOUNTS RECEIVABLE — Accounts receivable consists of unsecured trade receivables due from customers. An allowance for doubtful accounts is recorded for significant past due receivable balances based on a review of the past due item and general economic conditions. INVENTORIES — As of June 30, 2021 and 2020, the Company’s inventory was recorded using standard cost which approximates the lower of first in first out (“FIFO”) cost or net realizable value. The carrying value of inventory is reviewed for impairment on at least a quarterly basis, or more frequently if warranted due to changes in market conditions. See Note 4 for additional information on inventory. EQUIPMENT AND LEASEHOLD IMPROVEMENTS — Equipment and leasehold improvements are stated at cost. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Major expenditures for property and equipment and significant renewals are capitalized. Maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation and amortization are removed from the accounts and any resulting gains or losses are included in operations. See Note 5 for additional information on equipment and leasehold improvements. LEASES — The Company determines if a contract is a lease at the date of inception. The Company leases its facility in Milwaukee, Wisconsin from Koss Holdings, LLC, which is wholly-owned by the Company’s former chairman, and is an operating lease. Operating leases are reported on the Company's Consolidated Balance Sheets as operating lease right-of-use ("ROU") assets and operating lease liabilities. Operating lease ROU assets and liabilities are valued at the present value of the future lease payment obligations. Operating lease expense is recorded on a straightline basis over the life of the lease taking into account expected renewal periods. LIFE INSURANCE POLICIES — Life insurance policies are stated at cash surrender value or at the amount the Company would receive in the case of split-dollar arrangements. Increases in cash surrender value are included in selling, general and administrative expenses in the Consolidated Statements of Operations, net of annual premiums paid. DEFERRED COMPENSATION — The Company’s deferred compensation liabilities are for a current and former officer and are calculated based on various assumptions which may include compensation, years of service, expected retirement date, discount rates, and mortality tables. The related expense is calculated using the net present value of the expected payments and is included in selling, general and administrative expenses in the Consolidated Statements of Operations. See Note 9 for additional information on deferred compensation. FAIR VALUE OF FINANCIAL INSTRUMENTS — Cash equivalents, accounts receivable, accounts payable and short-term debt approximate fair value based on the short maturity of these instruments. IMPAIRMENT OF LONG-LIVED ASSETS — The Company evaluates the recoverability of the carrying amount of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company evaluates the recoverability of equipment and leasehold improvements annually, or more frequently if events or circumstances indicate that an asset might be impaired. If an asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. Management determines fair value using an undiscounted future cash flow analysis or other accepted valuation techniques. No impairments of the Company's long-lived assets were recorded in the years ended June 30, 2021 or 2020. LEGAL COSTS — All legal costs related to litigation, for which the Company is liable, are charged to operations as incurred, except settlements, which are expensed when a claim is probable and can be reasonably estimated. Recoveries of legal costs are recorded when the amount and items to be paid are confirmed by the third party. Proceeds from the settlement of legal disputes are recorded in income when the amounts are determinable and the collection is certain. STOCK-BASED COMPENSATION — The Company has a stock-based employee compensation plan, which is described more fully in Note 11. The Company accounts for stock-based compensation in accordance with ASC 718 "Compensation - Stock Compensation". Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. OTHER INCOME — On November 3, 2020, the Company was notified that the full $ 506,700 of the SBA Loan (see Note 7) was forgiven. The loan forgiveness has been treated as other income and shown as a separate line on the Consolidated Statements of Operations. The Company followed the debt and debt extinguishment accounting model for the SBA Loan forgiveness. Other income also includes $ 378,805 received from a director in settlement of a short sale under Rule 144 during the year ended June 30, 2021. USE OF ESTIMATES — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates. |
New Accounting Pronouncements
New Accounting Pronouncements | 12 Months Ended |
Jun. 30, 2021 | |
New Accounting Pronouncements [Abstract] | |
New Accounting Pronouncements | 2. NEW ACCOUNTING PRONOUNCEMENTS In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)", which removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This guidance is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2020 with early adoption permitted. Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings in the period of adoption. The Company is currently evaluating the impacts the adoption of this guidance will have on its Consolidated Financial Statements. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Jun. 30, 2021 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | 3. REVENUE RECOGNITION The Company disaggregates it's net sales by geographical location as it believes it best depicts how the nature, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table summarizes net sales by geographical location: 2021 2020 United States $ 14,298,358 $ 15,161,311 Export 5,247,650 3,150,519 Net Sales $ 19,546,008 $ 18,311,830 Deferred revenue relates primarily to consumer and customer warranties. These constitute future performance obligations and the Company defers revenue related to these future performance obligations. The Company recognized revenue, which was included in the deferred revenue liability at the beginning of the periods, of $ 325,962 and $ 427,193 in the years ended June 30, 2021 and 2020, respectively, for performance obligations related to consumer and customer warranties. The deferred revenue liability was $ 808,488 as of June 30, 2019 . The Company estimates that the deferred revenue performance obligations are satisfied within 1 to 3 years and therefore uses the same time frame for recognition of the deferred revenue. |
Inventories
Inventories | 12 Months Ended |
Jun. 30, 2021 | |
Inventories [Abstract] | |
Inventories | 4. INVENTORIES The components of inventories at June 30, 2021 and 2020 were as follows: 2021 2020 Raw materials $ 2,067,572 $ 1,953,031 Finished goods 5,621,228 5,149,200 Inventories, gross 7,688,800 7,102,231 Reserve for obsolete inventory ( 1,787,288 ) ( 1,563,437 ) Inventories, net $ 5,901,512 $ 5,538,794 |
Equipment and Leasehold Improve
Equipment and Leasehold Improvements | 12 Months Ended |
Jun. 30, 2021 | |
Equipment and Leasehold Improvements [Abstract] | |
Equipment and Leasehold Improvements | 5. EQUIPMENT AND LEASEHOLD IMPROVEMENTS The major categories of equipment and leasehold improvements at June 30, 2021 and 2020 are summarized as follows: Estimated useful lives (in years) 2021 2020 Machinery and equipment 5 - 10 $ 593,595 $ 593,595 Furniture and office equipment 5 - 10 357,351 357,351 Tooling 5 4,407,535 4,310,917 Computer & technology equipment 3 - 5 821,371 658,028 Leasehold improvements 3 - 10 3,074,421 2,682,933 Assets in progress N/A 276,054 327,348 9,530,327 8,930,172 Less: accumulated depreciation and amortization 8,249,147 7,946,531 Equipment and leasehold improvements, net $ 1,281,180 $ 983,641 |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2021 | |
Income Taxes [Abstract] | |
Income Taxes | 6. INCOME TAXES The Company utilizes the liability method of accounting for income taxes. The liability method measures the expected income tax impact of future taxable income and deductions implicit in the Consolidated Balance Sheets. The income tax provision in 2021 and 2020 consisted of the following: Year Ended June 30, 2021 2020 Current: Federal $ — $ ( 15,037 ) State 4,125 3,501 Deferred — 13,276 Total income tax provision $ 4,125 $ 1,740 The 2021 and 2020 tax results in an effective rate different than the federal statutory rate because of the following: Year Ended June 30, 2021 2020 Federal income tax liability (benefit) at statutory rate $ 104,522 $ ( 97,409 ) State income tax liability, net of federal income tax effect 3,259 2,765 Increase in valuation allowance 7,741,570 61,948 Stock option (deduction) addback ( 8,326,662 ) 86,541 Non-deductible offier's compensation 657,464 — All other permanent items ( 172,863 ) ( 50,610 ) R&D credit ( 30,000 ) ( 22,568 ) Return-to-provision ( 3,303 ) ( 30,040 ) Expiration of stock options and tax credits 40,572 44,790 State tax rate change ( 30,887 ) 18,962 Other 20,453 ( 12,639 ) Total income tax provision $ 4,125 $ 1,740 Temporary differences which give rise to deferred income tax assets and liabilities at June 30, 2021 and June 30, 2020 include: 2021 2020 Deferred income tax assets: Deferred compensation $ 664,705 $ 614,018 Stock-based compensation 116,582 249,313 Accrued expenses and reserves 543,940 479,112 Deferred revenue 222,341 146,841 Federal and state net operating loss carryforwards 8,333,391 606,730 Credit carryforwards 252,192 216,484 Equipment and leasehold improvements 57,639 134,045 Lease liability 580,053 638,472 Valuation allowance ( 10,185,605 ) ( 2,444,035 ) Total deferred income tax assets 585,238 640,980 Deferred income tax liabilities: ROU asset ( 580,053 ) ( 638,472 ) Other ( 5,185 ) ( 2,508 ) Net deferred income tax assets $ - $ - Deferred income tax balances reflect the effects of temporary differences between the tax bases of assets and liabilities and their carrying amounts. These differences are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. The recognition of these deferred tax balances will be realized through normal recurring operations and, as such, the Company has recorded the value of such expected benefits. The Company has federal net operating loss carryforwards of approximately $ 352,000 which expire in fiscal year 2037 and approximately $ 31,310,000 which can be carried forward indefinitely. The Company has state net operating loss carryforwards totaling approximately $ 15,153,000 in Wisconsin, which expire in fiscal years 2025 through 2040, and approximately $ 13,499,000 in other states. In the year ended June 30, 2021, the Company generated federal net operating losses of approximately $ 30,777,000 . At the state level, the fiscal 2021 net operating loss generated in Wisconsin was approximately $ 8,795,000 and approximately $ 11,855,000 in all other states combined. Generally accepted accounting principles in the United States (“GAAP”) prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. There were no additional significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded on the Company’s Consolidated Financial Statements for the years ended June 30, 2021 and 2020. Additionally, GAAP provides guidance on the recognition of interest and penalties related to income taxes. No interest or penalties related to income taxes has been accrued or recognized as of and for the years ended June 30, 2021 or 2020. The Company records interest related to unrecognized tax benefits in interest expense. The Company does not believe it has any unrecognized tax benefits as of June 30, 2021 or 2020. Any changes to the Company's unrecognized tax benefits during the fiscal years ended June 30, 2021 and 2020 would have impacted the effective tax rate. The Company files income tax returns in the United States federal jurisdiction and in several state jurisdictions. The Company’s federal tax returns for tax years and state income tax returns are open for the standard regulatory period. The following are the changes in the valuation allowance: Balance, Decrease (Increase) beginning in valuation Balance, Year Ended June 30, of year allowance end of year 2021 $ ( 2,444,035 ) $ ( 7,741,570 ) $ ( 10,185,605 ) 2020 $ ( 2,382,087 ) $ ( 61,948 ) $ ( 2,444,035 ) |
Credit Facility and SBA Loan
Credit Facility and SBA Loan | 12 Months Ended |
Jun. 30, 2021 | |
Credit Facility and SBA Loan [Abstract] | |
Credit Facility and SBA Loan | 7. CREDIT FACILITY AND SBA LOAN On May 14, 2019, the Company entered into a secured credit facility ("Credit Agreement") with Town Bank (“Lender”) for a two year term expiring on May 14, 2021. The Credit Agreement provides for a $ 5,000,000 revolving secured credit facility with an interest rate of 1.50 % over LIBOR. The Credit Agreement also provides for letters of credit for the benefit of the Company of up to a sublimit of $ 1,000,000 . There are no unused line fees in the credit facility. On January 28, 2021, the Credit Agreement was amended to extend the expiration to October 31, 2022, and to change the interest rate to Wall Street Journal Prime less 1.50 %. The Company and the Lender also entered into a General Business Security Agreement dated May 14, 2019 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 Credit Agreement contains certain affirmative and negative covenants customary for financings of this type. The negative covenants include restrictions on other indebtedness, liens, fundamental changes, certain investments, disposition of assets, mergers and liquidations, among other restrictions. As of June 30, 2021, the Company was in compliance with all covenants related to the Credit Agreement. As of June 30, 2021, and June 30, 2020, there were no outstanding borrowings on the facility. On April 13, 2020, the Company received an unsecured loan (the "SBA Loan") for $ 506,700 under the Small Business Administration ("SBA") Paycheck Protection Program (the “PPP”) of the CARES Act through Town Bank. On November 3, 2020, the Company was notified that the full principal amount of $ 506,700 has been forgiven and is recorded as other income in the 2021 Consolidated Statement of Operations. The Company incurs interest expense primarily related to its secured credit facility. There was no interest expense for the years ended June 30, 2021 or 2020. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Jun. 30, 2021 | |
Accrued Liabilities [Abstract] | |
Accrued Liabilities | 8. ACCRUED LIABILITIES Accrued liabilities as of June 30, 2021 and 2020 were as follows: 2021 2020 Cooperative advertising and promotion allowances $ 201,006 $ 158,770 Customer credit balances 1,008 16,363 Current deferred compensation 150,000 150,000 Employee benefits 83,463 80,399 Legal and professional fees 73,200 68,200 Bonus and profit-sharing 38,199 8,098 Sales commissions and bonuses 70,175 53,647 Other 48,516 44,622 Total accrued liabilities $ 665,567 $ 580,099 |
Deferred Compensation
Deferred Compensation | 12 Months Ended |
Jun. 30, 2021 | |
Deferred Compensation [Abstract] | |
Deferred Compensation | 9. DEFERRED COMPENSATION The Company has deferred compensation agreements with a former and current officer. The related expense is calculated using the net present value of the expected payments and is included in selling, general and administrative expenses in the Consolidated Statements of Operations. The Company's current and non-current deferred compensation obligations are included in accrued liabilities and deferred compensation, respectively, in the Consolidated Balance Sheets. The net present value was calculated for the former officer using a discount factor of 0.92 % as of June 30, 2021 and 1.00 % as of June 30, 2020. The net present value was calculated for the current officer using a discount factor of 3.29 % at June 30, 2021 and 3.10 % as of June 30, 2020. The life expectancies used in the calculation of net present value for the former officer were 3.25 and 2.83 years for fiscal years ended June 30, 2021 and 2020, respectively. The Board of Directors entered into an agreement to continue the 1991 base salary of the Company’s former chairman for the remainder of his life. These payments began in the fiscal year ended June 30, 2015, and payments of $ 150,000 were made under this arrangement for the years ended June 30, 2021 and 2020. The Company has a deferred compensation liability of $ 472,883 and $ 416,883 recorded as of June 30, 2021 and 2020, respectively. Deferred compensation expense of $ 206,000 and $ 26,504 was recognized under this arrangement in 2021 and 2020, respectively. The Board of Directors has approved a supplemental retirement plan for an officer that calls for annual cash compensation following retirement from the Company in an amount equal to 2 % of base salary, as defined in the agreement, multiplied by the number of years of service to the Company. The retirement payments are to be paid monthly to the officer until his death and then to his surviving spouse monthly until her death. The Company has a deferred compensation liability of $ 2,168,599 and $ 2,066,599 recorded as of June 30, 2021 and 2020, respectively. Deferred compensation expense of $ 102,000 and $ 37,016 was recognized under this arrangement in 2021 and 2020, respectively. The current officer's retirement date is estimated to be no earlier than October 2029. |
Income (Loss) Per Common and Co
Income (Loss) Per Common and Common Stock Equivalent Share | 12 Months Ended |
Jun. 30, 2021 | |
Income (Loss) Per Common and Common Stock Equivalent Share [Abstract] | |
Income (Loss) Per Common and Common Stock Equivalent Share | 10. 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. Diluted income (loss) per common share is calculated assuming the exercise of stock options except where the result would be anti-dilutive. The following table reconciles the numerator and denominator used to calculate basic and diluted income per share: Year Ended 2021 2020 Numerator Net income (loss) $ 493,594 $ ( 465,597 ) Denominator Weighted average shares, basic 7,864,688 7,404,831 Dilutive effect of stock compensation awards (1) 1,774,585 - Diluted shares 9,639,273 7,404,831 Net income (loss) attributable to common shareholders per share: Basic $ 0.06 $ ( 0.06 ) Diluted $ 0.05 $ ( 0.06 ) (1) Excludes 0 and 2,786,225 weighted average stock options for the years ended June 30, 2021 and 2020, respectively, as the impact of such awards was anti-dilutive. |
Stock Options
Stock Options | 12 Months Ended |
Jun. 30, 2021 | |
Stock Options [Abstract] | |
Stock Options | 11. STOCK OPTIONS In 2012, pursuant to the recommendation of the Board of Directors, the stockholders ratified the creation of the Company’s 2012 Omnibus Incentive Plan (the “2012 Plan”), which superseded the 1990 Flexible Incentive Plan (the "1990 Plan"). The 2012 Plan is administered by a committee of the Board of Directors and provides for granting of various stock-based awards including stock options to eligible participants, primarily officers and certain key employees. A total of 2,000,000 shares of common stock were available under the terms of the 2012 Plan plus shares outstanding under the 1990 Plan that expired or were otherwise forfeited, canceled or terminated after July 25, 2012, the Effective Date of the 2012 Plan. As of June 30, 2021, there were 540,308 options available for future grants. Options vest over a 3 to 5 year period from the date of grant, with a maximum term of 5 to 10 years. The Company's policy is to issue new shares when stock options are exercised. The fair value of each stock option grant was estimated as of the date of grant using the Black-Scholes pricing model. The resulting compensation cost for fixed awards with graded vesting schedules is amortized on a straight-line basis over the vesting period for the entire award. Forfeitures are accounted for as they occur. The expected term of awards granted is determined based on historical experience with similar awards, giving consideration to the expected term and vesting schedules. The expected volatility is determined based on the Company’s historical stock prices over the most recent period commensurate with the expected term of the award. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term commensurate with the expected term of the award. As of June 30, 2021, there was $ 1,223,200 of total unrecognized compensation cost related to stock options granted under the 2012 Plan. This cost is expected to be recognized over a weighted average period of 2.72 years. The Company recognized stock-based compensation expense of $ 619,137 and $ 549,594 in 2021 and 2020, respectively. These expenses were included in selling, general and administrative expenses. Options are granted at a price equal to or greater than the market value of the common stock on the date of grant. The per share weighted average fair value of the stock options granted during the years ended June 30, 2021 and 2020 were $ 1.12 and $ 1.26 , respectively. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. For the options granted in 2021 and 2020, the Company used the following weighted-average assumptions: 2021 2020 Expected stock price volatility 77 % 74 % Risk free interest rate 0.34 % 1.87 % Expected dividend yield —% —% Expected life of options (years) 6.0 6.1 The following table identifies options granted, exercised, canceled, or available for exercise pursuant to the 1990 Plan and the 2012 Plan: Aggregate Weighted Intrinsic Weighted Average Value of Stock Average Remaining In-The- Number of Options Exercise Contractual Money Shares Price Range Price Life - Years Options Shares under option at June 30, 2019 2,592,875 $ 1.77 - $ 6.28 $ 2.96 4.23 $ 48,280 Granted 555,000 $ 1.97 - $ 2.17 $ 2.08 Exercised — — — Expired ( 362,000 ) $ 2.20 - $ 6.28 $ 3.53 Forfeited ( 64,000 ) $ 1.77 - $ 2.65 $ 2.15 Shares under option at June 30, 2020 2,721,875 $ 1.77 - $ 6.00 $ 2.73 4.82 $ — Granted 615,000 $ 1.73 - $ 2.11 $ 1.84 Exercised ( 1,203,875 ) $ 1.77 - $ 6.00 $ 2.75 Expired ( 385,000 ) $ 1.77 - $ 5.24 $ 3.24 Forfeited — — — Shares under option at June 30, 2021 1,748,000 $ 1.73 - $ 6.00 $ 2.29 4.86 $ 36,594,280 Exercisable as of June 30, 2020 1,408,709 $ 1.77 - $ 6.00 $ 3.12 2.61 $ — Exercisable as of June 30, 2021 288,000 $ 1.73 - $ 6.00 $ 3.19 2.81 $ 5,767,425 The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of the Company's stock on any given date and the exercise price, multiplied by the number of in-the-money outstanding and exercisable stock options. A summary of intrinsic value and cash received from stock option exercises and fair value of vested stock options for the fiscal years ended June 30, 2021 and 2020 is as follows: 2021 2020 Total intrinsic value of stock options exercised $ 31,877,285 $ — Cash received from stock option exercises $ 3,306,272 $ — Total fair value of stock options vested $ 550,093 $ 483,461 Total recognized tax benefit $ 6,545,430 $ — Weighted Average Grant Date Shares Fair Value Non-vested as of June 30, 2019 1,272,584 1.19 Granted 555,000 1.26 Vested ( 450,418 ) 1.07 Forfeited ( 64,000 ) 1.39 Non-vested as of June 30, 2020 1,313,166 1.26 Granted 615,000 1.12 Vested ( 468,166 ) 1.17 Forfeited - 0 Non-vested as of June 30, 2021 1,460,000 1.23 |
Stock Repurchase Program
Stock Repurchase Program | 12 Months Ended |
Jun. 30, 2021 | |
Stock Repurchase Program [Abstract] | |
Stock Repurchase Program | 12. STOCK REPURCHASE PROGRAM In April 1995, the Board of Directors approved a stock repurchase program authorizing the Company to purchase from time to time up to $ 2,000,000 of its common stock for its own account. Subsequently, the Board of Directors periodically has approved increases in the amount authorized for repurchase under the program. As of June 30, 2021, the repurchase of an aggregate of $ 45,500,000 of common stock was authorized under the stock repurchase program, of which $ 43,360,247 had been expended. No shares were repurchased in fiscal year 2021 or 2020. The Company has an agreement with its former chairman, 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 of June 30, 2020 and June 30, 2021, the estate of the former chairman does not hold a material amount of Company stock. As such, there is no exposure that the executor of the former chairman's estate may require the Company to repurchase a material amount of stock in the event of his death. 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 his 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 at the prime rate of interest for the balance payable over four years . The Company maintains approximately $ 2,000,000 of life insurance policies to fund a substantial portion of this obligation. |
Leases
Leases | 12 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | 13. LEASES The Company leases its facility in Milwaukee, Wisconsin from Koss Holdings, LLC, which is wholly-owned by the Company’s former Chairman. On January 5, 2017, the lease was renewed for a period of five years, ending June 30, 2023, and is being accounted for as an operating lease. The lease extension maintained the rent at a fixed rate of $ 380,000 per year and included an option to renew at the same rate for an additional five years ending June 30, 2028. The Company is responsible for all property maintenance, insurance, taxes and other normal expenses related to ownership. The Company used its incremental borrowing rate as of July 1, 2017, the retrospective date of adoption of ASU 2016-02 (Topic 842) Leases, to calculate the net present value of the operating lease ROU asset and liability. The five year renewal option was included in the calculation of the ROU asset and liability as the Company believes it is reasonably certain to exercise its right to renew. The non-lease components of the agreement related to common area maintenance charges are accounted for separately. Supplemental information related to lease expense and valuation of the ROU asset and liability was as follows: Year Ended 2021 2020 Operating lease cost $ 380,000 $ 380,000 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ ( 380,000 ) $ ( 380,000 ) Weighted-average remaining lease term (in years) 7 8 Weighted-average discount rate 4.25 % 4.25 % The maturity schedule of future minimum lease payments and reconciliation to the operating lease liabilities reported on the 2021 Consolidated Balance Sheet is as follows: Year Ending June 30, 2022 $ 380,000 2023 380,000 2024 380,000 2025 380,000 2026 380,000 Thereafter 760,000 Total lease payments 2,660,000 Present value adjustment ( 354,545 ) Total lease liabilities $ 2,305,455 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Jun. 30, 2021 | |
Employee Benefit Plans [Abstract] | |
Employee Benefit Plans | 14. EMPLOYEE BENEFIT PLANS Substantially all domestic employees are participants in the Koss Employee Stock Ownership Trust ("KESOT") under which an annual contribution in either cash or common stock may be made at the discretion of the Board of Directors. No contributions were made for the fiscal years 2021 or 2020. The Company maintains a retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan covers all employees of the Company who have completed one full fiscal quarter of service. Matching contributions can be made at the discretion of the Board of Directors. For fiscal years 2021 and 2020, the matching contribution was 25 % and 75 % of employee contributions to the plan, respectively. Vesting of Company contributions occurs immediately. Company contributions were $ 79,481 and $ 252,293 during 2021 and 2020, respectively. |
Concentrations
Concentrations | 12 Months Ended |
Jun. 30, 2021 | |
Concentrations [Abstract] | |
Concentrations | 15. CONCENTRATIONS In the year ended June 30, 2021, the Company’s largest customer was Ingram Micro. In the year ended June 30, 2020, the largest customer was Walmart. The Company’s sales to Ingram Micro, were approximately 18 % and 10 % of net sales in fiscal year 2021 and 2020, respectively. Walmart sales were approximately 6 % and 18 % of net sales in fiscal year 2021 and 2020, respectively. Amazon, the second largest customer in 2021 and 2020, was approximately 10 % and 11 % of net sales in fiscal years 2021 and 2020, respectively. The five largest customers of the Company (including Ingram Micro and Amazon in both years) accounted for approximately 48 % of net sales in both fiscal years 2021 and 2020. Accounts receivable from Ingram Micro as of June 30, 2021 and June 30, 2020, represented approximately 24 % and 9 % of trade account receivables, respectively. Amazon accounts receivable as of June 30, 2021 and June 30, 2020, were 19 % and 17 % of trade accounts receivables, respectively. Accounts receivable from Walmart as of June 30, 2021 and 2020, represented approximately 1 % and 8 %, respectively. The majority of international customers, outside of Canada, purchase products on a cash against documents or cash in advance basis. Approximately 6 % and 11 % of the Company's trade accounts receivable at June 30, 2021 and 2020, were foreign receivables denominated in U.S. dollars. The Company uses contract manufacturing facilities in the People’s Republic of China. The majority of the contract manufacturing is done by four vendors with one vendor representing approximately 52 % and 70 % of the manufacturing costs in fiscal years 2021 and 2020, repsectively. The Company has a long-term relationship with this vendor. However, increased costs from the vendor or an interruption of supply from this vendor could have a material adverse effect on the Company's profit margins and profitability. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. SUBSEQUENT EVENTS In July 2021, the Company entered into a license agreement with a headphone manufacturer. Under the terms of the license agreement, the licensee has rights to use certain intellectual property in headphones that are soon to be released.. The licensee proactively sought a license for use of the intellectual property, based on knowledge of the Company’s enforcement campaign, because they believed their products may potentially infringe on the Company’s intellectual property. The licensee is not part of the Company’s current lawsuits. The agreement included a one-time license fee reflecting an early adopter discount, which was fully paid in July 2021. The Company now has two licenses in place for various patents in the portfolio. |
Legal Matters
Legal Matters | 12 Months Ended |
Jun. 30, 2021 | |
Legal Matters [Abstract] | |
Legal Matters | 17. LEGAL MATTERS As of June 30, 2021, the Company is involved in the following matters described below: As previously reported, the Company has launched a program focused on enforcing its intellectual property and, in particular, certain of its patent portfolio. The Company has continued to enforce its intellectual property by filing complaints against certain parties alleging infringement on the Company’s patents relating to its wireless audio technology. In the year ended June 30, 2020, the Company recovered approximately $ 385,000 of fees and costs that were involved with the underlying efforts to enforce this portfolio. These costs primarily relate to legal fees, expenses, time and effort of its management team, and other costs involved with the underlying efforts to enforce certain aspects of its portfolio. In the event that a monetary award or judgment is received by the Company in connection with these complaints, all or portions of such amounts may be due to third parties. The Company does not expect to incur additional fees and costs related to these lawsuits that will have a material impact to its financial statements. Depending on the response to and the underlying results of the enforcement program, the Company may continue to litigate its claims, enter into licensing arrangements or reach some other outcome potentially advantageous to its competitive position. The Company was notified by One-E-Way, Inc. that some of the Company's wireless products may infringe on certain One-E-Way patents. No lawsuits involving these allegations have yet been filed and served on the Company. The Company is currently investigating whether these allegations have any merit. Depending on the results of the investigation and the defense of these allegations, the ultimate resolution of this matter may have a material effect on the Company's financial statements. The Company estimates that this matter will ultimately be resolved at a cost of approximately $ 41,000 to $ 140,000 and has accrued the lower amount as of June 30, 2021 and 2020. The ultimate resolution of these matters is not determinable unless otherwise noted. We also are subject to a variety of other claims and suits that arise from time to time in the ordinary course of our business. Although management currently believes that resolving these claims against us, individually or in aggregate, will not have a material adverse impact on our Consolidated Financial Statements, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2021 | |
Significant Accounting Policies [Abstract] | |
Nature of Business | NATURE OF BUSINESS — Koss Corporation ("Koss"), a Delaware corporation, and its 100 %-owned subsidiaries (collectively the "Company"), reports its finances as a single reporting segment, as the Company’s only business line is the design, manufacture and sale of stereo headphones and related accessories. The Company leases its plant and office in Milwaukee, Wisconsin. The domestic market is served by domestic sales representatives and independent manufacturers' representatives working directly with certain retailers, distributors, and original equipment manufacturers. International markets are served by domestic sales representatives and sales personnel in the Netherlands and Russia which utilize independent distributors in several foreign countries. The Company has two subsidiaries, Koss Corp B.V. and Koss U.K. Limited ("Koss UK"), which were formed to comply with certain European Union ("EU") requirements. Koss Corp B.V. and Koss UK are non-operating and hold no assets. |
Basis of Consolidation | BASIS OF CONSOLIDATION — The Consolidated Financial Statements include the accounts of Koss and its subsidiaries, Koss Corp B.V. and Koss UK, which are 100 %-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
Revenue Recognition | REVENUE RECOGNITION — Revenues from product sales are recognized when the customer obtains control of the product, which typically occurs upon shipment from the Company's facility. There are a very limited number of customers for which control does not pass until they have received the products at their facility. Revenue from product sales is adjusted for estimated warranty obligations and variable consideration, which are detailed below. The amount of revenue recognized is to reflect the consideration expected to be received for those goods or services. Warranties - The Company offers a lifetime warranty to consumers in the United States and certain other countries. This lifetime warranty creates a future performance obligation. The Company determines the standalone selling price for this performance obligation using the cost plus method. There are also certain foreign distributors that receive warranty repair parts and replacement headphones to satisfy warranty obligations in those countries. The Company defers revenue to recognize the future obligations related to these warranties. The deferred revenue is based on historical analysis of warranty claims relative to sales. This deferred revenue reflects the Company's best estimates of the amount of warranty returns and repairs it will experience during those future periods. If future warranty activity varies from the estimates, the Company will adjust the estimated deferred revenue, which would affect net sales and operating results in the period that such adjustment becomes known. The Company typically receives payment for product at the time of shipment or under normal collection terms, which are generally 30-60 days. The Company estimates that the warranty related performance obligation is satisfied within one to three years and therefore uses that same time frame for recognition of the deferred revenue, using amortization of 50 % in year 1 , 30 % in year 2 , and 20 % in year 3 for domestic sales. Export deferred revenue, where applicable, is recognized over a 12 month period from date of shipment. Reserves for Variable Consideration - Revenue from product sales is recorded at the net sales price, which includes estimates of variable consideration for which reserves are established and which result from returns, rebates, and co-pay assistance that are offered within contracts between the Company and its customers. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the contract. If actual results in the future vary from the estimates, the Company will adjust these estimates, which would affect net sales and operating results in the period such variances become known. Product Returns - The Company generally offers customers a limited right of return. The Company estimates the amount of product sales that may be returned by its customers and records the estimate as a reduction of revenue in the period the related product revenue is recognized. Product return liabilities are estimated using historical sales and returns information. If actual results in the future vary from the estimates, the Company will adjust these estimates, which would affect net sales and operating results in the period such variances become known. Volume Rebates - The Company offers volume rebates to certain customers in the United States and certain foreign distributors. These volume rebates are tied to sales volume within specified periods. The amount of revenue is reduced for variable consideration related to customer rebates, which are calculated using expected values and is based on program specific factors such as expected rebate percentages and expected volumes. Changes in such accruals may be required if actual sales volume differs from estimated sales volume, which would affect net sales and operating results in the period such variances become known. Sales Commissions - The Company has elected the practical expedient of not capitalizing sales commissions. |
Research and Development | RESEARCH AND DEVELOPMENT — Research and development is primarily comprised of product prototypes and testing. These activities, charged to operations as a component of selling, general and administrative expenses in the accompanying Consolidated Statements of Operations, amounted to $ 410,602 and $ 397,360 in 2021 and 2020, respectively. |
Advertising Costs | ADVERTISING COSTS — Advertising costs included within selling, general and administrative expenses in the accompanying Consolidated Statements of Operations were $ 33,976 in 2021 and $ 54,592 in 2020. Such costs are expensed as incurred. |
Income Taxes | INCOME TAXES — The Company operates as a C Corporation under the Internal Revenue Code (the "Code"). Amounts provided for income tax expense are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable under tax laws. Deferred income tax assets and liabilities are computed annually for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. As changes in tax laws or rates are enacted, deferred income tax assets and liabilities are adjusted through the provision for income taxes. The differences relate principally to different methods used for depreciation and amortization for income tax purposes, net operating loss carryforwards, capitalization requirements of the Code, allowances for doubtful accounts, provisions for excess and obsolete inventory, stock-based compensation, warranty reserves, and other income tax related carryforwards. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount that is more likely than not to be realized. |
Patent Costs | PATENT COSTS — The Company incurs on-going legal fees and filing costs related to the patent portfolio. These costs are expensed in the period they are incurred since no patent legal costs were probable to provide a future economic benefit. |
Income (Loss) Per Common And Common Stock Equivalent Share | INCOME (LOSS) PER COMMON AND COMMON STOCK EQUIVALENT SHARE — Income (loss) per common and common stock equivalent share is calculated under the provisions of Topic 260 in the Accounting Standards Codification ("ASC") which provides for calculation of “basic” and “diluted” income (loss) per share. Basic income (loss) per common and common stock equivalent share includes no dilution and is computed by dividing net income (loss) by the weighted average common shares outstanding for the period. Diluted income (loss) per common and common stock equivalent share reflects the potential dilution of securities that could share in the earnings of an entity. See Note 10 for additional information on income (loss) per common and common stock equivalent share. |
Cash and Cash Equivalents | CASH AND CASH EQUIVALENTS — The Company considers depository accounts and investments with a maturity at the date of acquisition and expected usage of three months or less to be cash and cash equivalents. The Company maintains its cash on deposit at a commercial bank located in the United States of America. The Company periodically has cash balances in excess of insured amounts. The Company has not experienced, and does not expect to incur, any losses on these deposits. |
Accounts Receivable | ACCOUNTS RECEIVABLE — Accounts receivable consists of unsecured trade receivables due from customers. An allowance for doubtful accounts is recorded for significant past due receivable balances based on a review of the past due item and general economic conditions. |
Inventories | INVENTORIES — As of June 30, 2021 and 2020, the Company’s inventory was recorded using standard cost which approximates the lower of first in first out (“FIFO”) cost or net realizable value. The carrying value of inventory is reviewed for impairment on at least a quarterly basis, or more frequently if warranted due to changes in market conditions. See Note 4 for additional information on inventory. |
Equipment and Leasehold Improvements | EQUIPMENT AND LEASEHOLD IMPROVEMENTS — Equipment and leasehold improvements are stated at cost. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Major expenditures for property and equipment and significant renewals are capitalized. Maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation and amortization are removed from the accounts and any resulting gains or losses are included in operations. See Note 5 for additional information on equipment and leasehold improvements. |
Leases | LEASES — The Company determines if a contract is a lease at the date of inception. The Company leases its facility in Milwaukee, Wisconsin from Koss Holdings, LLC, which is wholly-owned by the Company’s former chairman, and is an operating lease. Operating leases are reported on the Company's Consolidated Balance Sheets as operating lease right-of-use ("ROU") assets and operating lease liabilities. Operating lease ROU assets and liabilities are valued at the present value of the future lease payment obligations. Operating lease expense is recorded on a straightline basis over the life of the lease taking into account expected renewal periods. |
Life Insurance Policies | LIFE INSURANCE POLICIES — Life insurance policies are stated at cash surrender value or at the amount the Company would receive in the case of split-dollar arrangements. Increases in cash surrender value are included in selling, general and administrative expenses in the Consolidated Statements of Operations, net of annual premiums paid. |
Deferred Compensation | DEFERRED COMPENSATION — The Company’s deferred compensation liabilities are for a current and former officer and are calculated based on various assumptions which may include compensation, years of service, expected retirement date, discount rates, and mortality tables. The related expense is calculated using the net present value of the expected payments and is included in selling, general and administrative expenses in the Consolidated Statements of Operations. See Note 9 for additional information on deferred compensation. |
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS — Cash equivalents, accounts receivable, accounts payable and short-term debt approximate fair value based on the short maturity of these instruments. |
Impairment of Long-Lived Assets | IMPAIRMENT OF LONG-LIVED ASSETS — The Company evaluates the recoverability of the carrying amount of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company evaluates the recoverability of equipment and leasehold improvements annually, or more frequently if events or circumstances indicate that an asset might be impaired. If an asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. Management determines fair value using an undiscounted future cash flow analysis or other accepted valuation techniques. No impairments of the Company's long-lived assets were recorded in the years ended June 30, 2021 or 2020. |
Legal Costs | LEGAL COSTS — All legal costs related to litigation, for which the Company is liable, are charged to operations as incurred, except settlements, which are expensed when a claim is probable and can be reasonably estimated. Recoveries of legal costs are recorded when the amount and items to be paid are confirmed by the third party. Proceeds from the settlement of legal disputes are recorded in income when the amounts are determinable and the collection is certain. |
Stock-Based Compensation | STOCK-BASED COMPENSATION — The Company has a stock-based employee compensation plan, which is described more fully in Note 11. The Company accounts for stock-based compensation in accordance with ASC 718 "Compensation - Stock Compensation". Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. |
Other Income | OTHER INCOME — On November 3, 2020, the Company was notified that the full $ 506,700 of the SBA Loan (see Note 7) was forgiven. The loan forgiveness has been treated as other income and shown as a separate line on the Consolidated Statements of Operations. The Company followed the debt and debt extinguishment accounting model for the SBA Loan forgiveness. Other income also includes $ 378,805 received from a director in settlement of a short sale under Rule 144 during the year ended June 30, 2021. |
Use of Estimates | USE OF ESTIMATES — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Revenue Recognition [Abstract] | |
Disaggregation of Revenue | 2021 2020 United States $ 14,298,358 $ 15,161,311 Export 5,247,650 3,150,519 Net Sales $ 19,546,008 $ 18,311,830 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Inventories [Abstract] | |
Components of Inventories | 2021 2020 Raw materials $ 2,067,572 $ 1,953,031 Finished goods 5,621,228 5,149,200 Inventories, gross 7,688,800 7,102,231 Reserve for obsolete inventory ( 1,787,288 ) ( 1,563,437 ) Inventories, net $ 5,901,512 $ 5,538,794 |
Equipment and Leasehold Impro_2
Equipment and Leasehold Improvements (Table) | 12 Months Ended |
Jun. 30, 2021 | |
Equipment and Leasehold Improvements [Abstract] | |
Summary of Major Categories of Equipment and Leasehold Improvements | Estimated useful lives (in years) 2021 2020 Machinery and equipment 5 - 10 $ 593,595 $ 593,595 Furniture and office equipment 5 - 10 357,351 357,351 Tooling 5 4,407,535 4,310,917 Computer & technology equipment 3 - 5 821,371 658,028 Leasehold improvements 3 - 10 3,074,421 2,682,933 Assets in progress N/A 276,054 327,348 9,530,327 8,930,172 Less: accumulated depreciation and amortization 8,249,147 7,946,531 Equipment and leasehold improvements, net $ 1,281,180 $ 983,641 |
Income Taxes (Table)
Income Taxes (Table) | 12 Months Ended |
Jun. 30, 2021 | |
Income Taxes [Abstract] | |
Components of Income Tax (Benefit) Provision | Year Ended June 30, 2021 2020 Current: Federal $ — $ ( 15,037 ) State 4,125 3,501 Deferred — 13,276 Total income tax provision $ 4,125 $ 1,740 |
Effective Income Tax Rate Reconciliation | Year Ended June 30, 2021 2020 Federal income tax liability (benefit) at statutory rate $ 104,522 $ ( 97,409 ) State income tax liability, net of federal income tax effect 3,259 2,765 Increase in valuation allowance 7,741,570 61,948 Stock option (deduction) addback ( 8,326,662 ) 86,541 Non-deductible offier's compensation 657,464 — All other permanent items ( 172,863 ) ( 50,610 ) R&D credit ( 30,000 ) ( 22,568 ) Return-to-provision ( 3,303 ) ( 30,040 ) Expiration of stock options and tax credits 40,572 44,790 State tax rate change ( 30,887 ) 18,962 Other 20,453 ( 12,639 ) Total income tax provision $ 4,125 $ 1,740 |
Schedule of Deferred Income Tax Assets and Liabilities | 2021 2020 Deferred income tax assets: Deferred compensation $ 664,705 $ 614,018 Stock-based compensation 116,582 249,313 Accrued expenses and reserves 543,940 479,112 Deferred revenue 222,341 146,841 Federal and state net operating loss carryforwards 8,333,391 606,730 Credit carryforwards 252,192 216,484 Equipment and leasehold improvements 57,639 134,045 Lease liability 580,053 638,472 Valuation allowance ( 10,185,605 ) ( 2,444,035 ) Total deferred income tax assets 585,238 640,980 Deferred income tax liabilities: ROU asset ( 580,053 ) ( 638,472 ) Other ( 5,185 ) ( 2,508 ) Net deferred income tax assets $ - $ - |
Schedule of Change in Valuation Allowance | Balance, Decrease (Increase) beginning in valuation Balance, Year Ended June 30, of year allowance end of year 2021 $ ( 2,444,035 ) $ ( 7,741,570 ) $ ( 10,185,605 ) 2020 $ ( 2,382,087 ) $ ( 61,948 ) $ ( 2,444,035 ) |
Accrued Liabilities (Table)
Accrued Liabilities (Table) | 12 Months Ended |
Jun. 30, 2021 | |
Accrued Liabilities [Abstract] | |
Schedule of Accrued Liabilities | 2021 2020 Cooperative advertising and promotion allowances $ 201,006 $ 158,770 Customer credit balances 1,008 16,363 Current deferred compensation 150,000 150,000 Employee benefits 83,463 80,399 Legal and professional fees 73,200 68,200 Bonus and profit-sharing 38,199 8,098 Sales commissions and bonuses 70,175 53,647 Other 48,516 44,622 Total accrued liabilities $ 665,567 $ 580,099 |
Income (Loss) Per Common and _2
Income (Loss) Per Common and Common Stock Equivalent Share (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Income (Loss) Per Common and Common Stock Equivalent Share [Abstract] | |
(Loss) Income Per Common and Common Stock Equivalent Share | Year Ended 2021 2020 Numerator Net income (loss) $ 493,594 $ ( 465,597 ) Denominator Weighted average shares, basic 7,864,688 7,404,831 Dilutive effect of stock compensation awards (1) 1,774,585 - Diluted shares 9,639,273 7,404,831 Net income (loss) attributable to common shareholders per share: Basic $ 0.06 $ ( 0.06 ) Diluted $ 0.05 $ ( 0.06 ) (1) Excludes 0 and 2,786,225 weighted average stock options for the years ended June 30, 2021 and 2020, respectively, as the impact of such awards was anti-dilutive. |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Stock Options [Abstract] | |
Stock Options, Assumptions | 2021 2020 Expected stock price volatility 77 % 74 % Risk free interest rate 0.34 % 1.87 % Expected dividend yield —% —% Expected life of options (years) 6.0 6.1 |
Stock Option Activity | Aggregate Weighted Intrinsic Weighted Average Value of Stock Average Remaining In-The- Number of Options Exercise Contractual Money Shares Price Range Price Life - Years Options Shares under option at June 30, 2019 2,592,875 $ 1.77 - $ 6.28 $ 2.96 4.23 $ 48,280 Granted 555,000 $ 1.97 - $ 2.17 $ 2.08 Exercised — — — Expired ( 362,000 ) $ 2.20 - $ 6.28 $ 3.53 Forfeited ( 64,000 ) $ 1.77 - $ 2.65 $ 2.15 Shares under option at June 30, 2020 2,721,875 $ 1.77 - $ 6.00 $ 2.73 4.82 $ — Granted 615,000 $ 1.73 - $ 2.11 $ 1.84 Exercised ( 1,203,875 ) $ 1.77 - $ 6.00 $ 2.75 Expired ( 385,000 ) $ 1.77 - $ 5.24 $ 3.24 Forfeited — — — Shares under option at June 30, 2021 1,748,000 $ 1.73 - $ 6.00 $ 2.29 4.86 $ 36,594,280 Exercisable as of June 30, 2020 1,408,709 $ 1.77 - $ 6.00 $ 3.12 2.61 $ — Exercisable as of June 30, 2021 288,000 $ 1.73 - $ 6.00 $ 3.19 2.81 $ 5,767,425 |
Intrinsic Value | 2021 2020 Total intrinsic value of stock options exercised $ 31,877,285 $ — Cash received from stock option exercises $ 3,306,272 $ — Total fair value of stock options vested $ 550,093 $ 483,461 Total recognized tax benefit $ 6,545,430 $ — |
Nonvested Option Activity | Weighted Average Grant Date Shares Fair Value Non-vested as of June 30, 2019 1,272,584 1.19 Granted 555,000 1.26 Vested ( 450,418 ) 1.07 Forfeited ( 64,000 ) 1.39 Non-vested as of June 30, 2020 1,313,166 1.26 Granted 615,000 1.12 Vested ( 468,166 ) 1.17 Forfeited - 0 Non-vested as of June 30, 2021 1,460,000 1.23 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Lease Expense | Year Ended 2021 2020 Operating lease cost $ 380,000 $ 380,000 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ ( 380,000 ) $ ( 380,000 ) Weighted-average remaining lease term (in years) 7 8 Weighted-average discount rate 4.25 % 4.25 % |
Future Minimum Lease Payments | Year Ending June 30, 2022 $ 380,000 2023 380,000 2024 380,000 2025 380,000 2026 380,000 Thereafter 760,000 Total lease payments 2,660,000 Present value adjustment ( 354,545 ) Total lease liabilities $ 2,305,455 |
Significant Accounting Polici_3
Significant Accounting Policies (Narrative I) (Details) | Nov. 03, 2020USD ($) | Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($) |
Operating Loss Carryforwards [Line Items] | |||
Number Of Subsidiaries | item | 2 | ||
Research and Development Expense | $ 410,602 | $ 397,360 | |
Advertising Expense | 33,976 | 54,592 | |
Impairment of Long-Lived Assets Held-for-use | 0 | $ 0 | |
Other income | 885,505 | ||
Director [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Other income | $ 378,805 | ||
Koss Corp B.V. [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Ownership Percentage | 100.00% | ||
Koss UK [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Ownership Percentage | 100.00% | ||
SBA Loan [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Debt forgiven | $ 506,700 |
Significant Accounting Polici_4
Significant Accounting Policies (Narrative II) (Details) | Jun. 30, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Operating Loss Carryforwards [Line Items] | |
Revenue, Remaining Performance Obligation, Percentage | 50.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | |
Operating Loss Carryforwards [Line Items] | |
Revenue, Remaining Performance Obligation, Percentage | 30.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | |
Operating Loss Carryforwards [Line Items] | |
Revenue, Remaining Performance Obligation, Percentage | 20.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 years |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue recognized | $ 325,962 | $ 427,193 | |
Deferred revenue liability | $ 808,488 | ||
Minimum [Member] | |||
Contract with Customer, Liability, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year) | 1 year | ||
Maximum [Member] | |||
Contract with Customer, Liability, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year) | 3 years |
Revenue Recognition (Disaggrega
Revenue Recognition (Disaggregation of Revenue) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 19,546,008 | $ 18,311,830 |
United States [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | 14,298,358 | 15,161,311 |
Export [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net Sales | $ 5,247,650 | $ 3,150,519 |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Inventories [Abstract] | ||
Raw materials | $ 2,067,572 | $ 1,953,031 |
Finished goods | 5,621,228 | 5,149,200 |
Inventories, gross | 7,688,800 | 7,102,231 |
Reserve for obsolete inventory | (1,787,288) | (1,563,437) |
Inventories, net | $ 5,901,512 | $ 5,538,794 |
Equipment and Leasehold Impro_3
Equipment and Leasehold Improvements (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 9,530,327 | $ 8,930,172 |
Less: accumulated depreciation and amortization | 8,249,147 | 7,946,531 |
Equipment and leasehold improvements, net | 1,281,180 | 983,641 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 593,595 | 593,595 |
Machinery and Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 5 years | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 10 years | |
Furniture and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 357,351 | 357,351 |
Furniture and Office Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 5 years | |
Furniture and Office Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 10 years | |
Tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 5 years | |
Property, plant and equipment, gross | $ 4,407,535 | 4,310,917 |
Computer & Technology Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 821,371 | 658,028 |
Computer & Technology Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 3 years | |
Computer & Technology Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 5 years | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 3,074,421 | 2,682,933 |
Leasehold Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 3 years | |
Leasehold Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 10 years | |
Assets in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 276,054 | $ 327,348 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Disclosure [Line Items] | ||
Interest and penalties | $ 0 | $ 0 |
Unrecognized tax benefits | 0 | $ 0 |
Federal [Member] | ||
Income Tax Disclosure [Line Items] | ||
Operating loss carryforwards, subject to expiration | 352,000 | |
Operating loss carryforwards, not subject to expiration | 31,310,000 | |
Operating loss carryforwards | 30,777,000 | |
State and Local Jurisdiction [Member] | Wisconsin Department of Revenue [Member] | ||
Income Tax Disclosure [Line Items] | ||
Operating loss carryforwards, subject to expiration | 15,153,000 | |
Operating loss carryforwards | 8,795,000 | |
State and Local Jurisdiction [Member] | Other States [Member] | ||
Income Tax Disclosure [Line Items] | ||
Operating loss carryforwards, subject to expiration | 13,499,000 | |
Operating loss carryforwards | $ 11,855,000 |
Income Taxes (Components of Inc
Income Taxes (Components of Income Tax (Benefit) Provision) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Taxes [Abstract] | ||
Current: Federal | $ (15,037) | |
Current: State | $ 4,125 | 3,501 |
Deferred | 13,276 | |
Total income tax provision (benefit) | $ 4,125 | $ 1,740 |
Income Taxes (Effective Income
Income Taxes (Effective Income Tax Rate Reconciliation) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Taxes [Abstract] | ||
Federal income tax liability (benefit) at statutory rate | $ 104,522 | $ (97,409) |
State income tax liability, net of federal income tax effect | 3,259 | 2,765 |
Increase in valuation allowance | 7,741,570 | 61,948 |
Stock option (deduction) addback | (8,326,662) | 86,541 |
Non-deductible offier's compensation | 657,464 | |
All other permanent items | (172,863) | (50,610) |
R&D credit | (30,000) | (22,568) |
Return-to-provision | (3,303) | (30,040) |
Expiration of stock options and tax credits | 40,572 | 44,790 |
State tax rate change | (30,887) | 18,962 |
Other | 20,453 | (12,639) |
Total income tax provision (benefit) | $ 4,125 | $ 1,740 |
Income Taxes (Schedule of Defer
Income Taxes (Schedule of Deferred Income Tax Assets and Liabilities) (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 |
Income Taxes [Abstract] | |||
Deferred compensation | $ 664,705 | $ 614,018 | |
Stock-based compensation | 116,582 | 249,313 | |
Accrued expenses and reserves | 543,940 | 479,112 | |
Deferred revenue | 222,341 | 146,841 | |
Federal and state net operating loss carryforwards | 8,333,391 | 606,730 | |
Credit carryforwards | 252,192 | 216,484 | |
Equipment and leasehold improvements | 57,639 | 134,045 | |
Lease liability | 580,053 | 638,472 | |
Valuation allowance | (10,185,605) | (2,444,035) | $ (2,382,087) |
Total deferred income tax assets | 585,238 | 640,980 | |
ROU asset | (580,053) | (638,472) | |
Other | (5,185) | (2,508) | |
Net deferred income tax assets |
Income Taxes (Schedule of Chang
Income Taxes (Schedule of Change in Valuation Allowance) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Taxes [Abstract] | ||
Balance, beginning of year | $ (2,444,035) | $ (2,382,087) |
Decrease (Increase) in valuation allowance | (7,741,570) | (61,948) |
Balance, end of year | $ (10,185,605) | $ (2,444,035) |
Credit Facility and SBA Loan (D
Credit Facility and SBA Loan (Details) - USD ($) | Nov. 03, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Line of Credit Facility [Line Items] | |||
Interest Expense, Debt | $ 0 | $ 0 | |
SBA Loan [Member] | |||
Line of Credit Facility [Line Items] | |||
Principal amount | $ 506,700 | ||
Debt forgiven | $ 506,700 | ||
Town Bank [Member] | Credit Agreement [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Term (Year) | 2 years | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000,000 | ||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.00% | ||
Long-term Line of Credit, Total | $ 0 | $ 0 | |
Town Bank [Member] | Credit Agreement [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||
Town Bank [Member] | Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000,000 | ||
Town Bank [Member] | Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | Prime Rate [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.50% |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Accrued Liabilities [Abstract] | ||
Cooperative advertising and promotion allowances | $ 201,006 | $ 158,770 |
Customer credit balances | 1,008 | 16,363 |
Current deferred compensation | 150,000 | 150,000 |
Employee benefits | 83,463 | 80,399 |
Legal and professional fees | 73,200 | 68,200 |
Bonus and profit-sharing | 38,199 | 8,098 |
Sales commissions and bonuses | 70,175 | 53,647 |
Other | 48,516 | 44,622 |
Total accrued liabilities | $ 665,567 | $ 580,099 |
Deferred Compensation (Details)
Deferred Compensation (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Deferred compensation paid | $ 150,000 | $ 150,000 |
Former Officer [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Discount factor | 0.92% | 1.00% |
Life expectancy | 3 years 3 months | 2 years 9 months 29 days |
Officer [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Discount factor | 3.29% | 3.10% |
Deferred compensation recorded liability | $ 2,168,599 | $ 2,066,599 |
Deferred compensation expense | $ 102,000 | 37,016 |
Cash compensation, percentage of base salary | 2.00% | |
Chairman [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Deferred compensation paid | $ 150,000 | 150,000 |
Deferred compensation recorded liability | 472,883 | 416,883 |
Deferred compensation expense | $ 206,000 | $ 26,504 |
Income (Loss) Per Common and _3
Income (Loss) Per Common and Common Stock Equivalent Share (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income (Loss) Per Common and Common Stock Equivalent Share [Abstract] | ||
Net (loss) income | $ 493,594 | $ (465,597) |
Weighted average shares, basic (in shares) | 7,864,688 | 7,404,831 |
Dilutive effect of stock compensation awards (in shares) | 1,774,585 | |
Diluted shares (in shares) | 9,639,273 | 7,404,831 |
Basic (in dollars per share) | $ 0.06 | $ (0.06) |
Diluted (in dollars per share) | $ 0.05 | $ (0.06) |
Anti-dilutive shares | 0 | 2,786,225 |
Stock Options (Narrative) (Deta
Stock Options (Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $ 1,223,200 | |
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year) | 2 years 8 months 19 days | |
Stock or Unit Option Plan Expense | $ 619,137 | $ 549,594 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) | $ 1.12 | $ 1.26 |
The 2012 Omnibus Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares) | 2,000,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares) | 540,308 | |
The 2012 Omnibus Incentive Plan [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) | 3 years | |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year) | 5 years | |
The 2012 Omnibus Incentive Plan [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) | 5 years | |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year) | 10 years |
Stock Options (Stock Options, A
Stock Options (Stock Options, Assumptions) (Details) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Options [Abstract] | ||
Expected stock price volatility | 77.00% | 74.00% |
Risk free interest rate | 0.34% | 1.87% |
Expected life of options (Year) | 6 years | 6 years 1 month 6 days |
Stock Options (Stock Option Act
Stock Options (Stock Option Activity) (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock Options [Abstract] | |||
Shares under option, number of shares (in shares) | 2,721,875 | 2,592,875 | |
Granted, number of shares (in shares) | 615,000 | 555,000 | |
Exercised, number of shares (in shares) | (1,203,875) | ||
Expired, number of shares (in shares) | (385,000) | (362,000) | |
Forfeited, number of shares (in shares) | (64,000) | ||
Shares under option, number of shares (in shares) | 1,748,000 | 2,721,875 | 2,592,875 |
Exercisable, number of shares (in shares) | 288,000 | 1,408,709 | |
Shares under option, stock options price range, lower limit (in dollars per share) | $ 1.77 | $ 1.77 | |
Shares under option, stock options price range, upper limit (in dollars per share) | 6 | 6.28 | |
Granted, stock options price range, lower limit (in dollars per share) | 1.73 | 1.97 | |
Granted, stock options price range, upper limit (in dollars per share) | 2.11 | 2.17 | |
Exercised, stock options price range, lower limit (in dollars per share) | 1.77 | ||
Exercised, stock options price range, upper limit (in dollars per share) | 6 | ||
Expired, stock options price range, lower limit (in dollars per share) | 1.77 | 2.20 | |
Expired, stock options price range, upper limit (in dollars per share) | 5.24 | 6.28 | |
Forfeited, stock options price range, lower limit (in dollars per share) | 1.77 | ||
Forfeited, stock options price range, upper limit (in dollars per share) | 2.65 | ||
Shares under option, stock options price range, lower limit (in dollars per share) | 1.73 | 1.77 | $ 1.77 |
Shares under option, stock options price range, upper limit (in dollars per share) | 6 | 6 | 6.28 |
Exercisable, stock options price range, lower limit (in dollars per share) | 1.73 | 1.77 | |
Exercisable, stock options price range, upper limit (in dollars per share) | 6 | 6 | |
Shares under option, weighted average exercise price (in dollars per share) | 2.73 | 2.96 | |
Granted, weighted average exercise price (in dollars per share) | 1.84 | 2.08 | |
Exercised, weighted average exercise price (in dollars per share) | 2.75 | ||
Expired, weighted average exercise price (in dollars per share) | 3.24 | 3.53 | |
Forfeited, weighted average exercise price (in dollars per share) | 2.15 | ||
Shares under option, weighted average exercise price (in dollars per share) | 2.29 | 2.73 | $ 2.96 |
Exercisable, weighted average exercise price (in dollars per share) | $ 3.19 | $ 3.12 | |
Shares under option, weighted average remaining contractual life (Year) | 4 years 10 months 9 days | 4 years 9 months 25 days | 4 years 2 months 23 days |
Exercisable, weighted average remaining contractual life (Year) | 2 years 9 months 21 days | 2 years 7 months 9 days | |
Shares under option, aggregate intrinsic value of in-the-money options | $ 36,594,280 | $ 48,280 | |
Exercisable, aggregate intrinsic value of in-the-money options | $ 5,767,425 |
Stock Options (Intrinsic Value)
Stock Options (Intrinsic Value) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Options [Abstract] | ||
Total intrinsic value of stock options exercised | $ 31,877,285 | |
Cash received from stock option exercises | 3,306,272 | |
Total fair value of stock options vested | 550,093 | $ 483,461 |
Total recognized tax benefit | $ 6,545,430 |
Stock Options (Nonvested Option
Stock Options (Nonvested Option Activity) (Details) - $ / shares | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Options [Abstract] | ||
Non-vested (in shares) | 1,313,166 | 1,272,584 |
Granted (in shares) | 615,000 | 555,000 |
Vested (in shares) | (468,166) | (450,418) |
Forfeited (in shares) | (64,000) | |
Non-vested (in shares) | 1,460,000 | 1,313,166 |
Non-vested, weighted average grant date fair value (in dollars per share) | $ 1.26 | $ 1.19 |
Granted, weighted average grant date fair value (in dollars per share) | 1.12 | 1.26 |
Vested, weighted average grant date fair value (in dollars per share) | 1.17 | 1.07 |
Forfeited, weighted average grant date fair value (in dollars per share) | 0 | 1.39 |
Non-vested, weighted average grant date fair value (in dollars per share) | $ 1.23 | $ 1.26 |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Equity, Class of Treasury Stock [Line Items] | ||
Treasury Stock, Repurchase Price, Percentage of Fair Value of Common Stock | 95.00% | |
Stock Repurchase Program, Amount to Provide Proceeds Limitation | $ 2,500,000 | |
Percentage of Promissory Note Due To Execute A | 25.00% | |
Contingent Promissory Note Term (Year) | 4 years | |
Life insurance policies | $ 2,000,000 | |
1995 Stock Repurchase Program [Member] | ||
Equity, Class of Treasury Stock [Line Items] | ||
Stock Repurchase Program, Authorized Amount | 2,000,000 | |
2021 Stock Repurchase Program B [Member] | ||
Equity, Class of Treasury Stock [Line Items] | ||
Stock Repurchase Program, Authorized Amount | 45,500,000 | |
Stock Repurchase Program, Additional Authorized Amount | $ 43,360,247 | |
Stock Repurchased and Retired During Period, Shares (in shares) | 0 | 0 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) | 12 Months Ended |
Jun. 30, 2021USD ($) | |
Note To Financial Statement Details Textual | |
Lease Extension Per Year | $ 380,000 |
Lessee, Operating Lease, Renewal Term (Year) | 5 years |
Leases (Lease Expense) (Details
Leases (Lease Expense) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 380,000 | $ 380,000 |
Operating cash flows from operating leases | $ (380,000) | $ (380,000) |
Weighted-average remaining lease term (in years) | 7 years | 8 years |
Weighted-average discount rate | 4.25% | 4.25% |
Leases (Future Minimum Lease Pa
Leases (Future Minimum Lease Payments) (Details) | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
2022 | $ 380,000 |
2023 | 380,000 |
2024 | 380,000 |
2025 | 380,000 |
2026 | 380,000 |
Thereafter | 760,000 |
Total lease payments | 2,660,000 |
Present value adjustment | (354,545) |
Total lease liabilities | $ 2,305,455 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Employee Benefit Plans [Abstract] | ||
Cash contributions | $ 0 | $ 0 |
Matching contributions, percent | 25.00% | 75.00% |
Company contributions | $ 79,481 | $ 252,293 |
Concentrations (Details)
Concentrations (Details) - item | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Ingram Micro [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 24.00% | 9.00% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Wal-Mart [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 1.00% | 8.00% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Amazon [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 19.00% | 17.00% |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Ingram Micro [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 18.00% | 10.00% |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Wal-Mart [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 6.00% | 18.00% |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Amazon [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 10.00% | 11.00% |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Five Largest Clients [Member] | ||
Concentration Risk [Line Items] | ||
Number of Major Vendors | 5 | 5 |
Concentration Risk, Percentage | 48.00% | 48.00% |
Geographic Concentration Risk [Member] | Trade Accounts Receivable [Member] | Foreign [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 6.00% | 11.00% |
Geographic Concentration Risk [Member] | Manufacturing Costs Benchmark [Member] | China [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 52.00% | 70.00% |
Legal Matters (Details)
Legal Matters (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Loss Contingencies [Line Items] | ||
Recovered fees and costs | $ 385,000 | |
Accrual | 41,000 | $ 41,000 |
Minimum [Member] | ||
Loss Contingencies [Line Items] | ||
Estimate of loss | 41,000 | |
Maximum [Member] | ||
Loss Contingencies [Line Items] | ||
Estimate of loss | $ 140,000 |