Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Sep. 23, 2014 | Dec. 31, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'PRECISION OPTICS CORPORATION, INC. | ' | ' |
Entity Central Index Key | '0000867840 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Jun-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--06-30 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $1,496,808 |
Entity Common Stock, Shares Outstanding | ' | 6,262,584 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Current Assets: | ' | ' |
Cash and cash equivalents | $202,380 | $1,034,587 |
Accounts receivable (net of allowance for doubtful accounts of $22,500 in 2014 and $15,000 in 2013) | 531,049 | 278,700 |
Inventories | 988,878 | 896,173 |
Prepaid expenses | 91,922 | 61,567 |
Total current assets | 1,814,229 | 2,271,027 |
Fixed Assets: | ' | ' |
Machinery and equipment | 2,368,709 | 2,367,029 |
Leasehold improvements | 553,596 | 553,596 |
Furniture and fixtures | 148,303 | 148,303 |
Vehicles | 19,674 | 19,674 |
Total | 3,090,282 | 3,088,602 |
Less: Accumulated depreciation and amortization | 3,075,722 | 3,056,554 |
Net fixed assets | 14,560 | 32,048 |
Patents, net | 7,672 | 0 |
TOTAL ASSETS | 1,836,461 | 2,303,075 |
Current Liabilities: | ' | ' |
Accounts payable | 715,192 | 289,255 |
Customer advances | 26,200 | 38,044 |
Accrued employee compensation | 200,207 | 151,915 |
Accrued professional services | 60,250 | 70,000 |
Accrued warranty expense | 25,000 | 25,000 |
Other accrued liabilities | 69,028 | 18,672 |
Total current liabilities | 1,095,877 | 592,886 |
Commitments (Note 2) | ' | ' |
Stockholders' Equity: | ' | ' |
Common stock, $0.01 par value: 50,000,000 shares authorized; 4,455,134 shares issued and outstanding at June 30, 2014 and June 30, 2013 | 44,551 | 44,551 |
Additional paid-in capital | 42,146,750 | 41,955,717 |
Accumulated deficit | -41,450,717 | -40,290,079 |
Total stockholders' equity | 740,584 | 1,710,189 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,836,461 | $2,303,075 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Allowance for doubtful accounts | $22,500 | $15,000 |
STOCKHOLDERS' EQUITY | ' | ' |
Common Stock par value | $0.01 | $0.01 |
Common Stock shares authorized | 50,000,000 | 50,000,000 |
Common Stock shares issued | 4,455,134 | 4,455,134 |
Common Stock shares outstanding | 4,455,134 | 4,455,134 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Statement [Abstract] | ' | ' |
Revenues | $3,651,181 | $2,519,743 |
Cost of goods sold | 2,850,386 | 1,865,315 |
Gross profit | 800,795 | 654,428 |
Research and development expenses, net | 471,106 | 630,294 |
Selling, general and administrative expenses | 1,503,443 | 1,261,141 |
Gain on sale of assets | -14,028 | -4,498 |
Total operating expenses | 1,960,521 | 1,886,937 |
Operating loss | -1,159,726 | -1,232,509 |
Non-cash provision for claims for liquidated damages | 0 | -629,000 |
Other income | 0 | 76,149 |
Interest expense | 0 | -1,408 |
Loss before provision for income taxes | -1,159,726 | -1,786,768 |
Provision for income taxes | 912 | 912 |
Net loss | ($1,160,638) | ($1,787,680) |
Income (Loss) Per Share: | ' | ' |
Basic | ($0.26) | ($0.51) |
Diluted | ($0.26) | ($0.51) |
Weighted Average Common Shares Outstanding: | ' | ' |
Basic | 4,455,134 | 3,521,387 |
Diluted | 4,455,134 | 3,521,387 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, value at Jun. 30, 2012 | $12,513 | $39,009,215 | ($38,502,399) | $519,329 |
Beginning balance, shares at Jun. 30, 2012 | 1,251,339 | ' | ' | ' |
Proceeds from sale of common stock and warrants, shares issued | 2,777,795 | ' | ' | ' |
Proceeds from sale of common stock and warrants, amount | 27,778 | 2,163,340 | ' | 2,191,118 |
Exercise of warrants, shares issued | 50,000 | ' | ' | ' |
Exercise of warrants, amount | 500 | 49,500 | ' | 50,000 |
Issuance of common stock to settle claims for liquidated damages, shares issued | 370,000 | ' | ' | ' |
Issuance of common stock to settle claims for liquidated damages, amount | 3,700 | 625,300 | ' | 629,000 |
Stock-based compensation, shares issued | 6,000 | ' | ' | ' |
Stock-based compensation, amount | 60 | 108,362 | ' | 108,422 |
Net loss | ' | ' | -1,787,680 | -1,787,680 |
Ending balance, value at Jun. 30, 2013 | 44,551 | 41,955,717 | -40,290,079 | 1,710,189 |
Ending balance, shares at Jun. 30, 2013 | 4,455,134 | ' | ' | ' |
Exercise of warrants, amount | ' | ' | ' | 0 |
Issuance of common stock to settle claims for liquidated damages, amount | ' | ' | ' | 0 |
Advance proceeds from private placement of common stock | ' | 50,000 | ' | 50,000 |
Stock-based compensation, amount | ' | 141,033 | ' | 141,033 |
Net loss | ' | ' | -1,160,638 | -1,160,638 |
Ending balance, value at Jun. 30, 2014 | $44,551 | $42,146,750 | ($41,450,717) | $740,584 |
Ending balance, shares at Jun. 30, 2014 | 4,455,134 | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Cash Flows from Operating Activities: | ' | ' |
Net loss | ($1,160,638) | ($1,787,680) |
Adjustments to reconcile net loss to net cash used in operating activities - | ' | ' |
Depreciation and amortization | 20,020 | 20,970 |
Gain on sale of assets | -14,028 | -4,498 |
Gain on settlement of accounts payable | 0 | -76,149 |
Provision for inventory write-down | 0 | 19,337 |
Stock-based compensation expense | 141,033 | 108,422 |
Non-cash consulting expense | 64,507 | 0 |
Non-cash provision for settlement of claims for liquidated damages | 0 | 629,000 |
Non-cash interest expense | 0 | 1,250 |
Changes in operating assets and liabilities - | ' | ' |
Accounts receivable, net | -252,349 | 63,200 |
Inventories | -92,705 | -232,610 |
Prepaid expenses | -30,355 | -27,848 |
Accounts payable | 425,937 | -44,912 |
Customer advances | -11,844 | 31,657 |
Accrued expenses | 24,391 | 6,469 |
Net cash used In operating activities | -886,031 | -1,293,392 |
Cash Flows from Investing Activities: | ' | ' |
Proceeds from sale of assets | 14,028 | 4,498 |
Additional patent costs | -8,524 | 0 |
Purchases of fixed assets | -1,680 | -11,061 |
Net cash provided by (used in) investing activities | 3,824 | -6,563 |
Cash Flows from Financing Activities: | ' | ' |
Advance proceeds from July 2014 private placement of common stock | 50,000 | 0 |
Gross proceeds from September 2012 private placement of common stock and warrants | 0 | 2,500,015 |
Private placement expenses incurred and paid | 0 | -308,896 |
Payment of principal and interest on 10% Senior Convertible Notes | 0 | -52,500 |
Proceeds from exercise of warrants to purchase common stock (50,000 shares) | 0 | 50,000 |
Net cash provided by financing activities | 50,000 | 2,188,619 |
Net (decrease) increase in cash and cash equivalents | -832,207 | 888,664 |
Cash and cash equivalents, beginning of year | 1,034,587 | 145,923 |
Cash and cash equivalents, end of year | 202,380 | 1,034,587 |
Supplemental Disclosure of Cash Flow Informatin: | ' | ' |
Cash paid during the year for income taxes | $912 | $912 |
CONSOLIDATED_STATEMENTS_OF_CAS1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (Warrant [Member]) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Warrant [Member] | ' | ' |
Warrants exercised, shares | 50,000 | 0 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||
(a) Nature of Business | |||||||||
Precision Optics Corporation, Inc. (the “Company”) designs, develops, manufactures and sells specialized optical systems and components and optical thin-film coatings. The Company conducts business in one industry segment only and its customers are primarily domestic. The Company’s products and services fall into two principal areas: (i) medical products for use by hospitals and physicians; and (ii) advanced optical system design and development services and products used by military and industrial customers. | |||||||||
(b) Principles of Consolidation | |||||||||
The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. | |||||||||
(c) Revenues | |||||||||
The Company recognizes revenue when four basic criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. The Company’s shipping terms are customarily FOB shipping point. | |||||||||
The sales price of products and services sold is fixed and determinable after receipt and acceptance of a customer’s purchase order or properly executed sales contract, typically before any work is performed. Management reviews each customer purchase order or sales contract to determine that the work to be performed is specified and there are no unusual terms and conditions that would raise questions as to whether the sales price is fixed or determinable. The Company assesses credit worthiness of customers based upon prior history with the customer and assessment of financial condition. Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for that portion of accounts receivable considered to be uncollectible, based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Bad debts are written off against the allowance when identified. | |||||||||
The Company’s revenue transactions typically do not contain multiple deliverable elements for future performance obligations to customers, other than a standard one-year warranty on materials and workmanship, the estimated costs for which are provided for at the time revenue is recognized. | |||||||||
Revenues for industrial and medical products sold in the normal course of business are recognized upon shipment when delivery terms are FOB shipping point and all other revenue recognition criteria have been met. Gross shipping charges reimbursable from customers, to deliver product, are insignificant and are included in “Revenues” section of the Company’s consolidated statement of operations, while shipping costs are classified in the “selling, general and administrative expenses” section of the Company’s consolidated statement of operations. | |||||||||
(d) Cash and Cash Equivalents | |||||||||
The Company includes in cash equivalents all highly liquid investments with original maturities of three months or less at the time of acquisition. Cash and cash equivalents of $202,380 and $1,034,587 at June 30, 2014 and 2013, respectively, consist primarily of cash at banks and money market funds. The Company maintains its cash and cash equivalents in bank deposit accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on its cash and cash equivalents. | |||||||||
(e) Inventories | |||||||||
Inventories are stated at the lower of cost (first-in, first-out) or market and include material, labor and manufacturing overhead. The components of inventories at June 30, 2014 and 2013 are as follows: | |||||||||
2014 | 2013 | ||||||||
Raw material | $ | 445,210 | $ | 302,448 | |||||
Work-in-progress | 385,601 | 392,991 | |||||||
Finished goods | 158,067 | 200,734 | |||||||
$ | 988,878 | $ | 896,173 | ||||||
The Company provides for estimated obsolescence on unmarketable inventory based upon assumptions about future demand and market conditions. If actual demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Inventory, once written down, is not subsequently written back up, as these adjustments are considered permanent adjustments to the carrying value of the inventory. | |||||||||
During fiscal year 2014 and 2013, the Company recorded a pre-tax non-cash provision for slow-moving and obsolete inventories of $0 and $19,337, respectively. | |||||||||
(f) Property and Equipment | |||||||||
Property and equipment are recorded at cost. Maintenance and repair items are expensed as incurred. The Company provides for depreciation and amortization by charges to operations, using the straight-line and declining-balance methods, which allocate the cost of property and equipment over the following estimated useful lives: | |||||||||
Asset Classification | Estimated Useful Life | ||||||||
Machinery and equipment | 2-7 years | ||||||||
Leasehold improvements | Shorter of lease term or estimated useful life | ||||||||
Furniture and fixtures | 5 years | ||||||||
Vehicles | 3 years | ||||||||
Depreciation expense was $19,168 and $20,970 for the years ended June 30, 2014 and 2013, respectively. | |||||||||
(g) Significant Customers and Concentration of Credit Risk | |||||||||
Financial instruments that subject the Company to credit risk consist primarily of cash equivalents and trade accounts receivable. The Company places its investments with highly rated financial institutions. The Company has not experienced any losses on these investments to date. At June 30, 2014, receivables from the Company’s three largest customers were 30%, 17% and 11% of the total accounts receivable. At June 30, 2013, receivables from the Company’s three largest customers were 26%, 24% and 12%, of the total accounts receivable. No other customer accounted for more than 10% of the Company’s receivables as of June 30, 2014 and 2013. The Company has not experienced any material losses related to accounts receivable from individual customers. The Company generally does not require collateral or other security as a condition of sale, rather it relies on credit approval, balance limitation and monitoring procedures to control credit risk of trade account financial instruments. Management believes that allowances for doubtful accounts, which are established based upon review of specific account balances and historical experience, are adequate. | |||||||||
Revenues from the Company’s largest customers, as a percentage of total revenues, were as follows: | |||||||||
Year Ended June 30 | |||||||||
2014 | 2013 | ||||||||
Customer A | 21 | % | 13 | % | |||||
Customer B | 21 | 54 | |||||||
Customer C | 14 | 1 | |||||||
All others | 44 | 32 | |||||||
100 | % | 100 | % | ||||||
No other customer accounted for more than 10% of the Company’s revenues in fiscal years 2014 and 2013. | |||||||||
(h) Loss per Share | |||||||||
Basic income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period, plus the number of potentially dilutive securities outstanding during the period such as stock options and warrants. For the year ended June 30, 2014 and 2013, the effect of such securities was antidilutive and not included in the diluted calculation because of the net loss generated in those periods. | |||||||||
The following is the calculation of loss per share for the years ended June 30, 2014 and 2013: | |||||||||
Year Ended June 30 | |||||||||
2014 | 2013 | ||||||||
Net Loss– Basic and Diluted | $ | (1,160,638 | ) | $ | (1,787,680 | ) | |||
Basic Weighted Average Shares Outstanding | 4,455,134 | 3,521,387 | |||||||
Potentially Dilutive Securities | – | – | |||||||
Diluted Weighted Average Shares Outstanding | 4,455,134 | 3,521,387 | |||||||
Loss Per Share | |||||||||
Basic | $ | (0.26 | ) | $ | (0.51 | ) | |||
Diluted | $ | (0.26 | ) | $ | (0.51 | ) | |||
The number of shares issuable upon the exercise of outstanding stock options and warrants that were excluded from the computation as their effect was antidilutive was approximately 3,393,000 and 3,434,000 for the years ended June 30, 2014 and 2013, respectively. | |||||||||
(i) Stock-Based Compensation | |||||||||
The measurement and recognition of compensation costs for all stock-based awards made to employees and the Board of Directors are based upon fair value over the requisite service period for awards expected to vest. The Company estimates the fair value of share-based awards on the date of grant using the Black-Scholes option-pricing model. Stock-based compensation costs recognized for the years ended June 30, 2014 and 2013 amounted to $141,033 and $108,422, respectively. | |||||||||
(j) Patents | |||||||||
Patent costs are amortized using the straight-line method over the shorter of their legal or estimated useful lives, generally five to ten years. Amortization expense was $852 and $0 for the years ended June 30, 2014 and 2013, respectively. | |||||||||
In July 2011, the Company assigned all of its currently issued and pending patents, as well as new inventions that it conceives before July 28, 2012, to Intuitive Surgical. | |||||||||
(k) Fair Value of Financial Instruments | |||||||||
Financial instruments consist principally of cash equivalents, accounts receivable, senior secured convertible notes payable, accounts payable and accrued expenses. The estimated fair value of these financial instruments approximates their carrying value due to their short-term nature. | |||||||||
(l) Long-Lived Assets | |||||||||
Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. | |||||||||
(m) Warranty Costs | |||||||||
The Company does not incur future performance obligations in the normal course of business other than providing a standard one-year warranty on materials and workmanship to its customers (except in certain unusual and infrequently occurring situations where extended warranty terms beyond one year are negotiated with the customer). The Company provides for estimated warranty costs at the time product revenue is recognized. Warranty costs have been included as a component of cost of goods sold in the accompanying consolidated statements of operations. The following tables summarize warranty reserve activity for the years ended June 30, 2014 and 2013: | |||||||||
2014 | 2013 | ||||||||
Balance at beginning of period | $ | 25,000 | $ | 25,000 | |||||
Provision for warranty claims | 11,917 | 2,006 | |||||||
Warranty claims incurred | (11,917 | ) | (2,006 | ) | |||||
Balance at end of period | $ | 25,000 | $ | 25,000 | |||||
(n) Research and Development | |||||||||
Research and development expenses are charged to operations as incurred. The Company groups development and prototype costs and related reimbursements in research and development. For the years ended June 30, 2014 and 2013, research and development expense is shown net of reimbursements of $45,997 and $87,496, respectively, in the accompanying statements of operations. | |||||||||
(o) Comprehensive Income | |||||||||
Comprehensive income or loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owners sources. The Company’s comprehensive loss or income for the years ended June 30, 2014 and 2013 was equal to its net loss for the same periods. | |||||||||
(p) Income Taxes | |||||||||
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the likelihood of utilization of existing deferred tax assets, management has considered historical results of operations and the current operating environment. | |||||||||
(q) Segment Reporting | |||||||||
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions about how to allocate resources and assess performance. The Company’s chief decision-maker is its Chief Executive Officer. To date, the Company has viewed its operations and manages its business as principally one segment. For all periods presented, over 90% of the Company’s sales have been to customers in the United States. | |||||||||
(r) Use of Estimates | |||||||||
The preparation of financial statements in conformity with accounting standards generally accepted in the United States 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||
(s) Recent Accounting Pronouncements | |||||||||
In July 2013, the FASB issued Accounting Standards Update (ASU) 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"). The new standard requires the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the consolidated balance sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2013, which for the Company is the first quarter of fiscal 2015. The Company does not expect the adoption of ASU 2013-11 to have a material impact on its consolidated financial statements. | |||||||||
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The update is intended to resolve the diverse accounting treatment of these types of awards in practice. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in "Compensation - Stock Compensation (Topic 718)" as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The ASU is effective for interim and annual reporting periods that begin after December 15, 2015. The Company does not expect the adoption of this pronouncement to have an impact on our financial statements as this guidance mirrors our existing policy for such share-based awards. | |||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 provides a single, comprehensive accounting model for revenues arising from contracts with customers that supersedes most of the existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue is recognized at an amount that an entity expects to be entitled to upon transferring control of goods or services to a customer, as opposed to when risks and rewards transfer to a customer under existing revenue recognition guidance. ASU 201-09 is effective for the Company beginning in its fiscal year 2018, and may be applied retrospectively to all prior periods presented or through a cumulative adjustment to the opening retained earnings balance in the year of adoption. The Company is currently in the process of evaluation the impact of ASU 2014-09 on its consolidated financial statements. |
2_COMMITMENTS
2. COMMITMENTS | 12 Months Ended | |||||
Jun. 30, 2014 | ||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||
2. COMMITMENTS | ' | |||||
(a) Related Party Transactions | ||||||
The Company leases its main Gardner facility from a corporation owned by Mr. Richard E. Forkey, who resigned from our board of directors on July 9, 2014, but continues to be involved with our Company as the Founder and Chairman Emeritus. The Company is currently a tenant-at-will, paying rent of $9,000 per month. Total rent expense paid or accrued to such related party was $108,000 in each of fiscal years 2014 and 2013, and is included in the Company’s accompanying consolidated statements of operations. | ||||||
On September 28, 2012, the Company closed on agreements with investors for the sale and purchase of units consisting of an aggregate of (i) 2,777,795 shares of common stock, and (ii) warrants to purchase an aggregate of 1,944,475 shares of common stock, at a per unit price of $0.90. Each unit consisted of one share of common stock and 70% warrant coverage. The warrants have an exercise price of $1.25 per share, subject to adjustment and a call provision if certain market price targets are reached, expire five years from September 28, 2012, and are exercisable in whole or in part, at any time prior to expiration. The Company received $2.5 million in gross proceeds from the offering. | ||||||
Certain of the Company’s directors and officers participated in the offering on the same terms as the other investors and purchased a total aggregate amount of approximately $80,000 of units in the offering, in such amounts as follows: | ||||||
Name of Purchaser | Company Affiliation | Securities Purchased in Offering | Unit Price | Subscription Amount | ||
Shares of Common Stock | Warrants | |||||
Forkey, Richard E. | Director | 27,778 | 19,445 | $0.90 | $25,000.20 | |
Joseph N. Forkey and Heather C. Forkey JTTEN | Chairman of the Board, Chief Executive Officer, President, and Treasurer | 22,223 | 15,557 | $0.90 | $20,000.70 | |
Major, Donald A. | Executive Vice President for Corporate Development and Director | 27,778 | 19,445 | $0.90 | $25,000.20 | |
Miles, Richard | Director | 11,112 | 7,779 | $0.90 | $10,000.80 | |
On February 12, 2013, the Company entered into a settlement agreement with one of its directors and stockholders, Joel Pitlor (the “Pitlor Settlement Agreement”). Under the terms of the Pitlor Settlement Agreement, the Company issued 10,000 shares of common stock and warrants to purchase 10,000 shares of common stock as payment in full of any amounts due to Mr. Pitlor under the registration rights agreement the Company entered into with Mr. Pitlor, and other parties, on February 1, 2007. The warrants issued in connection with the Pitlor Settlement Agreement have an exercise price of $1.50 per share, subject to adjustment, expire three years from February 12, 2013, and are exercisable in whole or in part, at any time prior to expiration. The Company valued the securities issued to Mr. Pitlor at $17,000. | ||||||
Transactions with Stockholders Known by the Company to Own 5% or More of the Company’s Common Stock | ||||||
Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. | ||||||
On June 25, 2008, the Company entered into a purchase agreement, as amended on December 11, 2008, with Special Situations Fund III QP, L.P., Special Situations Private Equity Fund, L.P., and other accredited investors pursuant to which it sold a total of $600,000 of 10% Senior Secured Convertible Notes, referred to as the “Notes,” that are convertible into a total of 480,000 shares of common stock at a conversion rate of $1.25. The Company also issued warrants to purchase a total of 316,800 shares of common stock at an exercise price of $1.75 per share, referred to as the “Warrants.” Interest accrued on the Notes at a rate of 10% per year and was payable in cash upon the earlier of conversion or maturity of the Notes. The original maturity of the Notes was June 25, 2010 and the original expiration date of the Warrants was June 25, 2015, subject to extension. By mutual agreement with the Company, Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. agreed to amend its Notes on December 11, 2008, June 25, 2010, July 26, 2010, September 15, 2010, October 15, 2010, November 15, 2010, November 30, 2010, December 1, 2010, December 3, 2010, December 17, 2010, January 10, 2011, January 24, 2011, February 7, 2011, February 25, 2011, March 11, 2011, March 31, 2011, April 14, 2011, April 29, 2011, May 13, 2011, June 3, 2011, June 28, 2011, July 6, 2011, July 20, 2011, July 25, 2011, July 27, 2011, August 31, 2011, September 30, 2011, and October 31, 2011 to extend the “Stated Maturity Date” of the Notes. At the time of each of the amendments of the Notes, Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. owned over 5% of the Company’s common stock. Pursuant to the terms of the settlement agreement entered into with Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. on February 12, 2013 (as discussed in further detail below), the expiration date of the Warrants held by Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. was amended from June 25, 2015 to May 11, 2017. The exercise price of the Warrants may be adjusted downward in the event the Company issues shares of common stock or securities convertible into common stock at a price lower than the exercise price of the Warrants at the time of issuance. On December 15, 2011, the Company repaid Special Situations Fund III QP, L.P. a principal repayment of $275,000 and accrued interest of $95,486, for a total payment of $370,486. On December 15, 2011, the Company repaid Special Situations Private Equity Fund, L.P. a principal repayment of $275,000 and accrued interest of $95,486, for a total payment of $370,486. The Notes held by Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. have been satisfied in full and the obligations thereunder have been terminated. The Company registered the shares and the shares underlying the Warrants purchased by Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. in the June 2008 private placement in a registration statement that is currently effective. | ||||||
In the Company’s private placement of common stock and warrants on September 28, 2012, Special Situations Fund III QP, L.P. purchased 611,112 shares of common stock, and warrants to purchase up to 427,779 shares of common stock at an exercise price of $1.25 per share, subject to adjustment and a call provision if certain market price targets are reached, and an expiration date of September 28, 2017. At the time of the transaction, Special Situations Fund III QP, L.P. owned 5% or more of the Company’s common stock. The Company registered the shares and the shares underlying the warrants purchased by Special Situations Fund III QP, L.P. in the September 2012 private placement in a registration statement that is currently effective. | ||||||
On February 12, 2013, the Company entered into a settlement agreement with Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. Under the terms of the settlement agreement, the Company agreed to: (a) issue an aggregate of (i) 350,000 shares of common stock, and (ii) warrants to purchase an aggregate of 350,000 shares of common stock, and (b) amend the expiration date of the warrants issued to Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. in conjunction with the Company’s June 25, 2008 private placement (the “2008 Warrants”), as payment in full of the alleged damages sought by Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. The expiration date of the 2008 Warrants was amended from June 25, 2015 to May 11, 2017. The warrants issued in connection with the settlement agreement have an exercise price of $1.50 per share, subject to adjustment, expire three years from February 12, 2013, and are exercisable in whole or in part, at any time prior to expiration. The Company valued the securities issued to Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. at $595,000. At the time of the transaction, Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. owned more than 5% of the Company’s common stock. | ||||||
Arnold Schumsky | ||||||
On June 25, 2008, the Company entered into a purchase agreement, as amended on December 11, 2008, with Mr. Arnold Schumsky and other accredited investors pursuant to which it sold a total of $600,000 of 10% Senior Secured Convertible Notes, referred to as the “Notes,” that are convertible into a total of 480,000 shares of common stock at a conversion rate of $1.25. The Company also issued warrants to purchase a total of 316,800 shares of common stock at an exercise price of $1.75 per share, referred to as the “Warrants.” Interest accrued on the Notes at a rate of 10% per year and was payable in cash upon the earlier of conversion or maturity of the Notes. The original maturity of the Notes was June 25, 2010 and the original expiration date of the Warrants was June 25, 2015, subject to extension. By mutual agreement with the Company, Mr. Schumsky agreed to amend his Note on December 11, 2008, June 25, 2010, July 26, 2010, September 15, 2010, October 15, 2010, November 15, 2010, November 30, 2010, December 1, 2010, December 3, 2010, December 17, 2010, January 10, 2011, January 24, 2011, February 7, 2011, February 25, 2011, March 11, 2011, March 31, 2011, April 15, 2011, April 29, 2011, May 13, 2011, June 3, 2011, June 28, 2011, July 6, 2011, July 20, 2011, July 25, 2011, July 27, 2011, August 31, 2011, September 30, 2011, October 31, 2011, December 15, 2011, and January 31, 2012 to extend the “Stated Maturity Date.” On March 31, 2012, Mr. Schumsky further amended his Note to extend the “Stated Maturity Date” of the principal to July 31, 2012 and to modify the Note such that all accrued and unpaid interest on the Note up to and including March 31, 2012 shall be due on or before April 13, 2012, on the condition that the Company issue to him a warrant for 5,000 shares of common stock with an exercise price of $1.20 per share and a term of three years. On April 13, 2012, the Company repaid Mr. Schumsky a payment of the accrued interest of $18,819, and such payment included all accrued and unpaid interest on the Note up to and including March 31, 2012. On May 8, 2012, the Company issued Mr. Schumsky the warrant according to the terms described in the amended Note. On July 31, 2012, Mr. Schumsky further amended his Note to extend the “Stated Maturity Date” of the principal to August 31, 2012. On August 31, 2012, Mr. Schumsky further amended his Note to extend the “Stated Maturity Date” of the principal to September 30, 2012. On September 28, 2012, the Company repaid Mr. Schumsky the outstanding and accrued interest of $2,500 due under his Note and such payment satisfied its obligations in regards to the accrued interest due on the Note in full. On that same date, Mr. Schumsky presented the outstanding principal balance of the Note to the Company and agreed to exchange the $50,000 principal balance of his Note for participation in the Company’s September 2012 private placement and was awarded units consisting of 55,555 shares of common stock and 38,889 warrants upon the same terms as the units sold in the September 2012 private placement. Accordingly, the Note held by Mr. Schumsky has been satisfied in full and the obligations thereunder have been terminated. At the time of each of the amendments and the 2012 transactions, Mr. Schumsky owned 5% or more of the Company’s stock. The Company registered the shares and the shares underlying the Warrants purchased by Mr. Schumsky in the June 2008 private placement in a registration statement that is currently effective. | ||||||
On September 28, 2012, Mr. Schumsky presented the outstanding principal balance of his Note to the Company and agreed to exchange the $50,000 principal balance of his Note for participation in the Company’s September 2012 private placement. Mr. Schumsky was issued units consisting of 55,555 shares of common stock and warrants to purchase up to 38,889 shares of common stock at an exercise price of $1.25 per share, subject to adjustment and a call provision if certain market price targets are reached, and an expiration date of September 28, 2017. On September 28, 2012, Mr. Schumsky also purchased additional shares in the private placement consisting of 27,779 shares of common stock, and warrants to purchase up to 19,445 shares of common stock at an exercise price of $1.25 per share, subject to adjustment and a call provision if certain market price targets are reached, and an expiration date of September 28, 2017. At the time of the exchange and transaction, Mr. Schumsky owned 5% or more of the Company’s stock. The Company registered the shares and the shares underlying the warrants purchased by Mr. Schumsky in the September 2012 private placement in a registration statement that is currently effective. | ||||||
On February 12, 2013, the Company entered into a settlement agreement with Mr. Schumsky (the “Schumsky Settlement Agreement”). Under the terms of the Schumsky Settlement Agreement, the Company issued 10,000 shares of common stock and warrants to purchase 10,000 shares of common stock as payment in full of any amounts due to Mr. Schumsky under the registration rights agreement the Company entered into with Mr. Schumsky, and other parties, on February 1, 2007 and under the registration rights agreement the Company entered into with Mr. Schumsky, and other parties, on June 25, 2008. The warrants issued in connection with the Schumsky Settlement Agreement have an exercise price of $1.50 per share, subject to adjustment, expire three years from February 12, 2013, and are exercisable in whole or in part, at any time prior to expiration. The Company valued the securities issued to Mr. Schumsky at $17,000. At the time of the transaction, Mr. Schumsky owned 5% or more of the Company’s stock. | ||||||
On July 1 through July 7, 2014, the Company closed agreements with institutional and accredited investors for the sale and purchase of 1,717,152 shares of our common stock, $0.01 par value at a purchase price of $0.60 per share. Pursuant to this transaction, Mr. Schumsky purchased 83,343 shares of the Company’s common stock. In conjunction with the placement, the Company also entered into a registration rights agreement with the Investors, whereby the Company was obligated to file a registration statement with the Securities Exchange Commission on or before forty-five calendar days after July 1, 2014 to register the resale by the investors of the 1,717,152 shares of the common stock purchased in the placement. Subsequent to the agreement, the parties agreed to extend the time period by which the Company is obligated to file a registration statement with the Securities Exchange Commission. | ||||||
MHW Partners, LP | ||||||
On July 1 through July 7, 2014, the Company closed agreements with institutional and accredited investors for the sale and purchase of 1,717,152 shares of our common stock, $0.01 par value at a purchase price of $0.60 per share. Pursuant to this transaction, MHW Partners purchased 125,000 shares of the Company’s common stock. In conjunction with the placement, the Company also entered into a registration rights agreement with the Investors, whereby the Company was obligated to file a registration statement with the Securities Exchange Commission on or before forty-five calendar days after July 1, 2014 to register the resale by the investors of the 1,717,152 shares of the common stock purchased in the placement. Subsequent to the agreement, the parties agreed to extend the time period by which the Company is obligated to file a registration statement with the Securities Exchange Commission. | ||||||
At the time of the transaction, MHW was a holder of more than 5% of the Company’s securities. Mr. Woodward is the principal of MHW Capital Management, LLC and MHW Capital, LLC and in such capacity, Mr. Woodward holds the power to vote and direct the disposition of all shares of common stock owned by MHW Partners, LP. Pursuant to the transaction described above, Mr. Woodward was subsequently appointed as Chairman of the Company’s Board of Directors on July 9, 2014. | ||||||
(b) Operating Lease Commitments | ||||||
The Company has entered into operating leases for its office space and equipment that expire at various dates through fiscal year 2017. Total future minimum rental payments under all non-cancelable operating leases are $13,178 in fiscal year 2015 and $776 in each of the two fiscal years thereafter. | ||||||
Rent expense on operating leases, excluding the related party rent described above, was $68,232 and $64,627 for the years ended June 30, 2014 and 2013, respectively. |
3_STOCKHOLDERS_EQUITY
3. STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||||
3. STOCKHOLDERS' EQUITY | ' | ||||||||||||||||||||||
(a) Stock Options | |||||||||||||||||||||||
Stock-based compensation costs recognized during the year ended June 30, 2014 and 2013 amounted to $141,033 and $108,422 respectively, and were included in the accompanying consolidated statements of operations in: selling, general and administrative expenses (2014 — $134,800; 2013 — $98,589), cost of goods sold (2014 — $4,033; 2013 — $7,633), and research and development expenses, net (2014 — $2,200; 2013 — $2,200). No compensation has been capitalized because such amounts would have been immaterial. There was no net income tax benefit recognized related to such compensation for the years ended June 30, 2014 or 2013, as the Company is currently in a loss position. There were 9,000 stock options granted during the year ended June 30, 2014 and 9,000 stock options granted during the year ended June 30, 2013. | |||||||||||||||||||||||
As of June 30, 2014, the unrecognized compensation costs related to options vesting in the future is $0. The Company uses the Black-Scholes option-pricing model as the most appropriate method for determining the estimated fair value for the stock awards. The Black-Scholes method of valuation requires several assumptions: (1) the expected term of the stock award; (2) the expected future stock volatility over the expected term; and (3) risk-free interest rate. The expected term represents the expected period of time the Company believes the options will be outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock and the risk free interest rate is based on the U.S. Zero-Bond rate. The Company utilizes a forfeiture rate based on an analysis of the Company’s actual experience. The fair value of options at date of grant was estimated with the following assumptions for options granted in fiscal 2014: | |||||||||||||||||||||||
Year Ended | |||||||||||||||||||||||
June 30, | |||||||||||||||||||||||
2014 | |||||||||||||||||||||||
Assumptions: | |||||||||||||||||||||||
Option life | 5.0 years | ||||||||||||||||||||||
Risk-free interest rate | 3.00% | ||||||||||||||||||||||
Stock volatility | 479% | ||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||
Weighted average fair value of grants | $ | 0.9 | |||||||||||||||||||||
Stock Option and Other Compensation Plans: | |||||||||||||||||||||||
The type of share-based payments currently utilized by the Company is stock options. | |||||||||||||||||||||||
The Company has various stock option and other compensation plans for directors, officers, and employees. The Company has the following stock option plans outstanding as of June 30, 2014: the Precision Optics Corporation, Inc. 2011 Equity Incentive Plan (the “2011 Plan”); the Precision Optics Corporation, Inc. 2006 Equity Incentive Plan (the “2006 Plan”), and the Precision Optics Corporation, Inc. Amended and Restated 1997 Incentive Plan (the “1997 Plan”). Vesting periods under the 2011 Plan, the 2006 Plan, and the 1997 Plan are at the discretion of the Board of Directors and typically average three to five years. Options under these Plans are granted at fair market value on the date of grant and have a term of ten years from the date of grant. | |||||||||||||||||||||||
The 2011 Plan, which provides eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vest and are exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. A total of 325,000 shares of common stock, including shares rolled forward from the 1997 Plan, have been reserved for issuance under the 2011 Plan. At June 30, 2014, a total of 207,800 stock options are outstanding and 117,200 shares of common stock were available for future grants under the 2011 Plan. | |||||||||||||||||||||||
The 2006 Plan, which provides eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vest and are exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. A total of 139,898 shares of common stock, including shares rolled forward from the 1997 Plan, have been reserved for issuance under the 2006 Plan. At June 30, 2014, a total of 112,700 stock options are outstanding and 27,198 shares of common stock were available for future grants under the 2006 Plan. | |||||||||||||||||||||||
The 1997 Plan provided eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vested and were exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. Options for a total of 88,587 shares of common stock were outstanding at June 30, 2013 under the 1997 Plan, as amended and restated in fiscal year 2006. Prior to the adoption of the 2006 Plan, 9,000 stock options were granted in fiscal year 2007 under the 1997 Plan. Upon the adoption of the 2006 Plan, no new awards were granted under the 1997 Plan. No shares are available for future grants under the 1997 Plan. | |||||||||||||||||||||||
The following tables summarize stock option activity for the years ended June 30, 2014 and 2013: | |||||||||||||||||||||||
Options Outstanding | |||||||||||||||||||||||
Number of | Weighted Average | Weighted Average | |||||||||||||||||||||
Shares | Exercise Price | Contractual Life | |||||||||||||||||||||
Outstanding at July 1, 2012 | 392,587 | $ | 4.56 | 8.15 years | |||||||||||||||||||
Grants | 9,000 | 0.85 | |||||||||||||||||||||
Cancellations | (1,500 | ) | 0.55 | ||||||||||||||||||||
Outstanding at June 30, 2013 | 400,087 | $ | 4.49 | 7.21 years | |||||||||||||||||||
Grants | 9,000 | 0.9 | |||||||||||||||||||||
Outstanding at June 30, 2014 | 409,087 | $ | 4.41 | 6.27 years | |||||||||||||||||||
Information related to the stock options outstanding as of June 30, 2014 is as follows: | |||||||||||||||||||||||
Range of Exercise | Number of | Weighted-Average | Weighted-Average | Exercisable | Exercisable | ||||||||||||||||||
Prices | Shares | Remaining | Exercise Price | Number | Weighted-Average | ||||||||||||||||||
Contractual | of Shares | Exercise Price | |||||||||||||||||||||
Life (years) | |||||||||||||||||||||||
$ | 1.2 | 207,800 | 7.68 | $ | 1.2 | 207,800 | $ | 1.2 | |||||||||||||||
$ | 0.9 | 9,000 | 9.52 | 0.9 | 9,000 | 0.9 | |||||||||||||||||
$ | 0.85 | 9,000 | 8.52 | 0.85 | 9,000 | 0.85 | |||||||||||||||||
$ | 0.55 | 49,500 | 7.62 | 0.55 | 49,500 | 0.55 | |||||||||||||||||
$ | 0.27 | 40,000 | 7.04 | 0.27 | 40,000 | 0.27 | |||||||||||||||||
$ | 1.35 | 1,200 | 5.41 | 1.35 | 1,200 | 1.35 | |||||||||||||||||
$ | 1.25 | 1,200 | 4.41 | 1.25 | 1,200 | 1.25 | |||||||||||||||||
$ | 6.25 | 1,600 | 2.42 | 6.25 | 1,600 | 6.25 | |||||||||||||||||
$ | 7.75 | 1,200 | 3.41 | 7.75 | 1,200 | 7.75 | |||||||||||||||||
$ | 11.5 | 800 | 1.42 | 11.5 | 800 | 11.5 | |||||||||||||||||
$ | 13.75 | 50,427 | 1.86 | 13.75 | 50,427 | 13.75 | |||||||||||||||||
$ | 20.75 | 37,360 | 0.96 | 20.75 | 37,360 | 20.75 | |||||||||||||||||
$ | 0.27–$20.75 | 409,087 | 6.27 | $ | 4.41 | 409,087 | $ | 6.21 | |||||||||||||||
The aggregate intrinsic value of the Company’s “in-the-money” outstanding and exercisable options as of June 30, 2014 was $26,415. | |||||||||||||||||||||||
(b) Warrants | |||||||||||||||||||||||
During the quarter ended December 31, 2010, the Company issued warrants to purchase 100,000 shares of common stock at an exercise price of $1.00 per share to several consultants to the Company. The warrants became exercisable beginning six months after December 16, 2010 (the issue date) and expired on December 16, 2013. In December 2012, warrants for 50,000 shares were exercised, and accordingly, 50,000 shares of restricted common stock were issued. | |||||||||||||||||||||||
On June 25, 2008, the Company entered into a Purchase Agreement, as amended on December 11, 2008, with institutional and other accredited investors pursuant to which it sold a total of $600,000 of 10% senior secured convertible notes (the “Notes”) that were convertible at the investor’s option into a total of 480,000 shares of the Company’s common stock at a conversion rate of $1.25. On March 31, 2012, the remaining investor, Arnold Schumsky, further amended his remaining Note to extend the “Stated Maturity Date” of the principal to July 31, 2012 and to modify the Note such that all accrued and unpaid interest on the Note up to and including March 31, 2012 shall be due on or before April 13, 2012, on the condition that the Company issue to him a warrant for 5,000 shares of common stock with an exercise price of $1.20 per share and a term of three years. On April 13, 2012, the Company repaid Mr. Schumsky a payment of the accrued interest of $18,819, and such payment included all accrued and unpaid interest on the Note up to and including March 31, 2012. On May 8, 2012, the Company issued Mr. Schumsky the warrant according to the terms described in the amended Note. | |||||||||||||||||||||||
In conjunction with the sale of the Notes on June 25, 2008 mentioned above, the Company also issued warrants to purchase an aggregate of 316,800 shares of common stock at an exercise price of $1.75 per share. In conjunction with the issuance of warrants to purchase 100,000 shares of common stock in December 2010, certain anti-dilution provisions of the existing warrants were triggered. As a result, the number of existing warrants was increased from 316,800 to 318,621 and the related exercise price was decreased from $1.75 per share to $1.74 per share. In conjunction with the issuance of warrants to purchase 1,944,475 shares of common stock in September 2012, certain anti-dilution provisions of the existing warrants were triggered. As a result, the number of existing warrants was increased from 318,621 to 469,831 and the related exercise price was decreased from $1.74 per share to $1.18 per share. 39,153 of these warrants expire on June 25, 2015, and the remaining 430,678 warrants expire on May 11, 2017. | |||||||||||||||||||||||
As of June 30, 2014, there are warrants outstanding for the issuance of an aggregate of 2,983,752 shares of common stock, including warrants for a total of 2,138,921 shares issued on September 28, 2013 as described below under “Sale of Stock,” and warrants for a total of 370,000 shares issued on February 12, 2013 as described below under Note 10, “Claims for Liquidated Damages,” all at a weighted average exercise price of $1.25 per share. | |||||||||||||||||||||||
(c) Sale of Stock | |||||||||||||||||||||||
On September 28, 2012, the Company closed on agreements with accredited investors (the “Investors”) for the sale and purchase of units consisting of an aggregate of (i) 2,777,795 shares of the Company’s common stock, and (ii) warrants to purchase an aggregate of 1,944,475 shares of common stock, at a per unit price of $0.90. Each unit consisted of one share of common stock and 70% warrant coverage. The warrants have an exercise price of $1.25 per share, subject to adjustment and a call provision if certain market price targets are reached, an expiration date of September 28, 2017, and are exercisable in whole or in part, at any time prior to expiration. Certain directors and officers participated in the offering and purchased a total aggregate amount of approximately $80,000 of units in the offering. | |||||||||||||||||||||||
The Company received $2.5 million in gross proceeds from the offering. The Company retained Loewen, Ondaatje, McCutcheon USA LTD as the exclusive placement agent for the offering. In addition to the payment of certain cash fees upon closing of the offering, the Company issued a warrant to the placement agent to purchase up to 194,446 shares of common stock on substantially similar terms to the warrants issued in the offering, except that the placement agent warrant has an exercise price of $0.95 per share. | |||||||||||||||||||||||
In conjunction with the offering, the Company also entered into a registration rights agreement dated September 28, 2012 with the Investors, whereby it was obligated to file a registration statement with the Securities and Exchange Commission (the “SEC”) on or before thirty calendar days after September 28, 2012 to register the resale by the Investors of the 2,777,795 shares of common stock purchased in the offering, and the 1,944,475 shares of common stock underlying the warrants purchased in the offering. The Company filed a registration statement with the SEC on October 26, 2012, prior to the filing deadline. The registration statement became effective on December 14, 2012. The Company is obligated to continue to keep the securities registered and, in the event the Company does not comply with such provision of the registration rights agreement, it may have to pay damages to the Investors. | |||||||||||||||||||||||
In conjunction with the offering, certain anti-dilution provisions of the warrants issued in conjunction with the Company’s June 25, 2008 financing transaction were triggered. As a result, the number of existing June 25, 2008 warrants increased from 318,621 to 469,831 and the related exercise price of the warrants decreased from $1.74 per share to $1.18 per share. The June 25, 2008 warrants expire on June 25, 2015. |
4_INCOME_TAXES
4. INCOME TAXES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
4. INCOME TAXES | ' | ||||||||
The Company has identified its federal tax return and its state tax return in Massachusetts as “major” tax jurisdictions. The periods subject to examination for its federal and state income tax returns are the years ended in 2012 and thereafter. The Company believes its income tax filing positions and deductions will be sustained on audit and it does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no liabilities for uncertain income tax positions have been recorded. | |||||||||
The provision for income taxes in the accompanying consolidated statements of operations consists of the minimum statutory state income tax liability of $912 for the years ended June 30, 2014 and 2013. | |||||||||
A reconciliation of the federal statutory rate to the Company’s effective tax rate for the fiscal years ended June 30, 2014 and 2013 is as follows | |||||||||
2014 | 2013 | ||||||||
Income tax expense (benefit) at federal statutory rate | (34.0 | )% | (34.0 | )% | |||||
Increase (decrease) in tax resulting from: | |||||||||
State taxes, net of federal benefit | (5.3 | ) | (6.3 | ) | |||||
Change in valuation allowance | 15 | 30.1 | |||||||
Nondeductible items | 0.3 | 1 | |||||||
Prior-year tax adjustments | 14 | 7.5 | |||||||
Other | 9.9 | 1.6 | |||||||
Effective tax rate | (0.1 | )% | (0.1 | )% | |||||
The components of deferred tax assets and liabilities at June 30, 2014 and 2013 are approximately as follows: | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carry forwards | $ | 2,747,000 | $ | 2,582,000 | |||||
Tax credit carry forwards | 405,000 | 381,000 | |||||||
Reserves and accruals not yet deducted for tax purposes | 286,000 | 301,000 | |||||||
Total deferred tax assets | 3,438,000 | 3,264,000 | |||||||
Valuation allowance | (3,438,000 | ) | (3,264,000 | ) | |||||
Net deferred tax asset | $ | – | $ | – | |||||
The Company has provided a valuation allowance to reduce the net deferred tax asset to an amount the Company believes is “more likely than not” to be realized. The valuation allowance increased in fiscal 2014, as compared to the prior year, by approximately $174,000. | |||||||||
At June 30, 2014, the Company had federal and state net operating loss carry forwards of approximately $6,600,000 and $2,100,000, respectively, which will, if not used, expire at various dates from 2015 through 2033. In addition, the Company had net operating loss carry forwards from its Hong Kong operations of approximately $2,171,000, which carry forward indefinitely. |
5_PROFIT_SHARING_PLAN
5. PROFIT SHARING PLAN | 12 Months Ended |
Jun. 30, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ' |
5. PROFIT SHARING PLAN | ' |
The Company has a defined contribution 401(k) profit sharing plan. Employer profit sharing and matching contributions to the plan are discretionary. No employer profit sharing or matching contributions were made to the plan in fiscal years 2014 and 2013. |
6_SALE_OF_ASSETS
6. SALE OF ASSETS | 12 Months Ended |
Jun. 30, 2014 | |
Property, Plant and Equipment Assets Held-for-sale Disclosure [Abstract] | ' |
6. SALE OF ASSETS | ' |
In fiscal year 2014, the Company sold equipment that was previously written off for proceeds totaling $14,028 and recorded a gain of $14,028. In fiscal year 2013, the Company sold equipment that was previously written off for proceeds totaling $4,498 and recorded a gain of $4,498. These gains are included within operating expenses in the accompanying consolidated statements of operations. |
7_CLAIMS_FOR_LIQUIDATED_DAMAGE
7. CLAIMS FOR LIQUIDATED DAMAGES | 12 Months Ended |
Jun. 30, 2014 | |
Claims For Liquidated Damages | ' |
7. CLAIMS FOR LIQUIDATED DAMAGES | ' |
Settlement Agreement with Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. | |
On January 17, 2013, the Company received a demand letter from two of its stockholders, Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. (along with Special Situations Fund III QP, L.P., “Special Situations”). The letter alleged that the Company failed to maintain a current registration statement for the sale of stock purchased by Special Situations pursuant to registration rights agreements entered into with the Company on February 1, 2007 and June 25, 2008, and sought prompt payment of $719,100 as liquidated damages and an amendment to the terms of certain warrants purchased in 2008. A registration statement covering the shares in question is currently effective. | |
On February 12, 2013, the Company entered into a settlement agreement with Special Situations (the “Settlement Agreement”). Without agreeing to the alleged damages, the Company entered into the Settlement Agreement in order to resolve the claim without requiring a cash payment or extended distraction of its resources away from operational activities. Under the terms of the Settlement Agreement, Special Situations agreed to forego their claims for cash damages. In return, the Company agreed to: (a) issue an aggregate of (i) 350,000 shares of common stock, and (ii) warrants to purchase an aggregate of 350,000 shares of common stock (the “Securities”), and (b) amend the expiration date of the warrants issued to Special Situations in conjunction with the Company’s June 25, 2008 private placement (the “2008 Warrants”), as payment in full of the alleged damages sought by Special Situations. The Securities were issued on February 12, 2013. The expiration date of the 2008 Warrants was amended from June 25, 2015 to May 11, 2017. The new warrants issued in connection with the Settlement Agreement have an exercise price of $1.50 per share, subject to adjustment, expire three years from February 12, 2013, and are exercisable in whole or in part, at any time prior to expiration. | |
In conjunction with the Settlement Agreement, the Company also entered into a registration rights agreement dated February 12, 2013 with Special Situations, whereby it was obligated to register the resale by Special Situations of the Securities, consisting of 350,000 shares of common stock and the 350,000 shares of common stock underlying the warrants issued on February 12, 2013. A registration statement covering the Securities was declared effective on April 26, 2013. | |
Settlement Agreement with Joel Pitlor | |
On February 12, 2013, the Company entered into a settlement agreement with one of its directors and stockholders, Joel Pitlor (the “Pitlor Settlement Agreement”). Under the terms of the Pitlor Settlement Agreement, the Company agreed to issue 10,000 shares of common stock and warrants to purchase 10,000 shares of common stock as payment in full of any amounts due to Mr. Pitlor under the registration rights agreement the Company entered into with Mr. Pitlor, and other parties, on February 1, 2007. The shares and warrants were issued on February 12, 2013. The warrants issued in connection with the Pitlor Settlement Agreement have an exercise price of $1.50 per share, subject to adjustment, expire three years from February 12, 2013, and are exercisable in whole or in part, at any time prior to expiration. There are no registration rights associated with the securities acquired pursuant to the Pitlor Settlement Agreement. | |
By virtue of Mr. Pitlor’s directorship with the Company, he is considered a related party of the Company under federal securities law. The Company’s Board of Directors has acknowledged that Mr. Pitlor’s entry into the Pitlor Settlement Agreement is a related party transaction and has approved such transaction. | |
Settlement Agreement with Arnold Schumsky | |
On February 12, 2013, the Company also entered into a settlement agreement with one of its stockholders, Arnold Schumsky (the “Schumsky Settlement Agreement”). The terms of the Schumsky Settlement Agreement and the accompanying Form of Warrant of the Schumsky Settlement Agreement are substantially similar to the terms of the Pitlor Settlement Agreement and the accompanying Form of Warrant of the Pitlor Settlement Agreement. Under the terms of the Schumsky Settlement Agreement, the Company agreed to issue 10,000 shares of common stock and warrants to purchase 10,000 shares of common stock as payment in full of any amounts due to Mr. Schumsky under the registration rights agreement the Company entered into with Mr. Schumsky, and other parties, on February 1, 2007 and under the registration rights agreement the Company entered into with Mr. Schumsky, and other parties, on June 25, 2008. The shares and warrants were issued on February 12, 2013. The warrants issued in connection with the Schumsky Settlement Agreement have an exercise price of $1.50 per share, subject to adjustment, expire three years from February 12, 2013, and are exercisable in whole or in part, at any time prior to expiration. There are no registration rights associated with the securities acquired pursuant to the Schumsky Settlement Agreement. | |
The Company has estimated the fair value of the non-cash consideration exchanged for the settlement of claims with Special Situations, Mr. Pitlor, and Mr. Schumsky to be a total of $629,000 as of December 31, 2012, and recorded this amount as a non-cash expense and current liability in its consolidated financial statements as of December 31, 2012, and for the quarter and six months then ended. | |
The Company used the Black-Scholes option-pricing model for determining the estimated fair value of the new warrants to be issued to Special Situations, Mr. Pitlor, and Mr. Schumsky, and for determining the value of the extension of the maturity date of the 2008 Warrants held by Special Situations. The Company valued its issued common stock as of the closing price of the stock at December 31, 2012, which was $0.85 per share. |
8_SETTLEMENT_OF_ACCOUNTS_PAYAB
8. SETTLEMENT OF ACCOUNTS PAYABLE | 12 Months Ended |
Jun. 30, 2014 | |
Settlement Of Accounts Payable | ' |
8. SETTLEMENT OF ACCOUNTS PAYABLE | ' |
In December 2012, the Company settled $106,149 of accounts payable with a vendor for a negotiated payment of $30,000, and recorded a gain of $76,149. The gain is included within other income for the year ended June 30, 2013 in the accompanying consolidated statements of operations. |
9_SUBSEQUENT_EVENTS
9. SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
9. SUBSEQUENT EVENTS | ' |
(a) Equity Issuances | |
On July 1 through July 7, 2014, the Company closed on agreements with institutional and accredited investors (the “Investors”) for the sale and purchase of 1,717,152 shares of the Company’s common stock, $0.01 par value at a purchase price of $0.60 per share (the “Shares”). The Company received $1,030,291 in gross proceeds from the offering. The Company anticipates using the net proceeds from this placement for general working capital purposes. Of this amount, $50,000 was received in June 2014 and the remainder was received in July 2014. | |
In conjunction with the placement, the Company also entered into a registration rights agreement with the Investors, whereby the Company is obligated to file a registration statement with the Securities Exchange Commission on or before forty-five calendar days after July 1, 2014 to register the resale by the Investors of the 1,717,152 shares of the common stock purchased in the placement. Subsequent to the execution of the agreement, the parties agreed to extend the time period by which the Company is obligated to file a registration statement with the Securities Exchange Commission. | |
In conjunction with the offering, certain anti-dilution provisions of the warrants issued in conjunction with the Company’s June 25, 2008 and September 28, 2012 financing transactions were triggered. As a result, the number of existing June 25, 2008 warrants increased from 469,831 to 538,253 and the related exercise price of the warrants decreased from $1.18 per share to $1.03 per share. And the number of existing September 28, 2012 warrants increased from 1,944,475 to 2,189,724 and 194,446 to 217,322, respectively, and the related exercise price decreased from $1.25 to $1.11 and from $0.95 to $0.85, respectively. | |
On July 22, 2014, the Company issued 78,000 restricted shares of our common stock to Mr. Jeff DiRubio as compensation for services rendered to the Company. | |
On July 22, 2014, the Company issued 12,298 restricted shares of our common stock to Mr. Kevin Dahill as compensation for services rendered to the Company. | |
On September 23, 2014, the Company granted an option to purchase 35,000 shares of our common stock to Mr. Bob Hallock as compensation for services rendered to the Company. The option shall expire September 23, 2024 and shall have an exercise price of $0.90 per share. | |
On September 23, 2014, the Company granted an option to purchase 30,000 shares of our common stock to its Executive Vice President of Corporate Development, Mr. Donald Major as compensation for services rendered to the Company. The option shall expire September 23, 2024 and shall have an exercise price of $0.90 per share. | |
(b) Departure of Director | |
On July 9, 2014, Mr. Richard E. Forkey resigned from the Company’s Board of Directors. Mr. Forkey shall continue to stay involved with the Company as the Founder and Chairman Emeritus. | |
(c) Appointment of New Directors | |
On July 9, 2014, the Board of Directors appointed Dr. Kenneth S. Schwartz, MD and Peter H. Woodward as directors of the Company and Mr. Woodward as Chairman of the Board. | |
Both Dr. Schwartz and Mr. Woodward were appointed in connection with the sale and purchase agreement between the Company and accredited investors reported on the Company’s Periodic Report on Form 8-K filed July 7, 2014. Pursuant to the Agreement, the Company is required to appoint two qualified individuals named by Hershey Strategic Capital LP to the Company’s Board of Directors. Those individuals shall serve for three years or until resignation, whichever is earlier. | |
(d) Amendment of Bylaws | |
On July 9, 2014, the Board of Directors approved an amendment to the Company’s Bylaws. The Bylaws now provide that the Board of Directors shall consist of six directors, rather than five. Additionally, the Bylaws were revised to state that the Chairman of the Board is not required to be an officer of the Company. Massachusetts law provides for a staggered Board by default; however, the Board of Directors believed it would add clarity to revise the Bylaws to explicitly state that the Company has a staggered Board. |
1_SUMMARY_OF_SIGNIFICANT_ACCOU1
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
(a) Nature of Business | ' | ||||||||
(a) Nature of Business | |||||||||
Precision Optics Corporation, Inc. (the “Company”) designs, develops, manufactures and sells specialized optical systems and components and optical thin-film coatings. The Company conducts business in one industry segment only and its customers are primarily domestic. The Company’s products and services fall into two principal areas: (i) medical products for use by hospitals and physicians; and (ii) advanced optical system design and development services and products used by military and industrial customers. | |||||||||
(b) Principles of Consolidation | ' | ||||||||
(b) Principles of Consolidation | |||||||||
The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. | |||||||||
(c) Revenues | ' | ||||||||
(c) Revenues | |||||||||
The Company recognizes revenue when four basic criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. The Company’s shipping terms are customarily FOB shipping point. | |||||||||
The sales price of products and services sold is fixed and determinable after receipt and acceptance of a customer’s purchase order or properly executed sales contract, typically before any work is performed. Management reviews each customer purchase order or sales contract to determine that the work to be performed is specified and there are no unusual terms and conditions that would raise questions as to whether the sales price is fixed or determinable. The Company assesses credit worthiness of customers based upon prior history with the customer and assessment of financial condition. Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for that portion of accounts receivable considered to be uncollectible, based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Bad debts are written off against the allowance when identified. | |||||||||
The Company’s revenue transactions typically do not contain multiple deliverable elements for future performance obligations to customers, other than a standard one-year warranty on materials and workmanship, the estimated costs for which are provided for at the time revenue is recognized. | |||||||||
Revenues for industrial and medical products sold in the normal course of business are recognized upon shipment when delivery terms are FOB shipping point and all other revenue recognition criteria have been met. Gross shipping charges reimbursable from customers, to deliver product, are insignificant and are included in “Revenues” section of the Company’s consolidated statement of operations, while shipping costs are classified in the “selling, general and administrative expenses” section of the Company’s consolidated statement of operations. | |||||||||
(d) Cash and Cash Equivalents | ' | ||||||||
(d) Cash and Cash Equivalents | |||||||||
The Company includes in cash equivalents all highly liquid investments with original maturities of three months or less at the time of acquisition. Cash and cash equivalents of $202,380 and $1,034,587 at June 30, 2014 and 2013, respectively, consist primarily of cash at banks and money market funds. The Company maintains its cash and cash equivalents in bank deposit accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on its cash and cash equivalents. | |||||||||
(e) Inventories | ' | ||||||||
(e) Inventories | |||||||||
Inventories are stated at the lower of cost (first-in, first-out) or market and include material, labor and manufacturing overhead. The components of inventories at June 30, 2014 and 2013 are as follows: | |||||||||
2014 | 2013 | ||||||||
Raw material | $ | 445,210 | $ | 302,448 | |||||
Work-in-progress | 385,601 | 392,991 | |||||||
Finished goods | 158,067 | 200,734 | |||||||
$ | 988,878 | $ | 896,173 | ||||||
The Company provides for estimated obsolescence on unmarketable inventory based upon assumptions about future demand and market conditions. If actual demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Inventory, once written down, is not subsequently written back up, as these adjustments are considered permanent adjustments to the carrying value of the inventory. | |||||||||
During fiscal year 2014 and 2013, the Company recorded a pre-tax non-cash provision for slow-moving and obsolete inventories of $0 and $19,337, respectively. | |||||||||
(f) Property and Equipment | ' | ||||||||
(f) Property and Equipment | |||||||||
Property and equipment are recorded at cost. Maintenance and repair items are expensed as incurred. The Company provides for depreciation and amortization by charges to operations, using the straight-line and declining-balance methods, which allocate the cost of property and equipment over the following estimated useful lives: | |||||||||
Asset Classification | Estimated Useful Life | ||||||||
Machinery and equipment | 2-7 years | ||||||||
Leasehold improvements | Shorter of lease term or estimated useful life | ||||||||
Furniture and fixtures | 5 years | ||||||||
Vehicles | 3 years | ||||||||
Depreciation expense was $19,168 and $20,970 for the years ended June 30, 2014 and 2013, respectively. | |||||||||
(g) Significant Customers and Concentration of Credit Risk | ' | ||||||||
(g) Significant Customers and Concentration of Credit Risk | |||||||||
Financial instruments that subject the Company to credit risk consist primarily of cash equivalents and trade accounts receivable. The Company places its investments with highly rated financial institutions. The Company has not experienced any losses on these investments to date. At June 30, 2014, receivables from the Company’s three largest customers were 30%, 17% and 11% of the total accounts receivable. At June 30, 2013, receivables from the Company’s three largest customers were 26%, 24% and 12%, of the total accounts receivable. No other customer accounted for more than 10% of the Company’s receivables as of June 30, 2014 and 2013. The Company has not experienced any material losses related to accounts receivable from individual customers. The Company generally does not require collateral or other security as a condition of sale, rather it relies on credit approval, balance limitation and monitoring procedures to control credit risk of trade account financial instruments. Management believes that allowances for doubtful accounts, which are established based upon review of specific account balances and historical experience, are adequate. | |||||||||
Revenues from the Company’s largest customers, as a percentage of total revenues, were as follows: | |||||||||
Year Ended June 30 | |||||||||
2014 | 2013 | ||||||||
Customer A | 21 | % | 13 | % | |||||
Customer B | 21 | 54 | |||||||
Customer C | 14 | 1 | |||||||
All others | 44 | 32 | |||||||
100 | % | 100 | % | ||||||
No other customer accounted for more than 10% of the Company’s revenues in fiscal years 2014 and 2013. | |||||||||
(h) Loss per Share | ' | ||||||||
(h) Loss per Share | |||||||||
Basic income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period, plus the number of potentially dilutive securities outstanding during the period such as stock options and warrants. For the year ended June 30, 2014 and 2013, the effect of such securities was antidilutive and not included in the diluted calculation because of the net loss generated in those periods. | |||||||||
The following is the calculation of loss per share for the years ended June 30, 2014 and 2013: | |||||||||
Year Ended June 30 | |||||||||
2014 | 2013 | ||||||||
Net Loss– Basic and Diluted | $ | (1,160,638 | ) | $ | (1,787,680 | ) | |||
Basic Weighted Average Shares Outstanding | 4,455,134 | 3,521,387 | |||||||
Potentially Dilutive Securities | – | – | |||||||
Diluted Weighted Average Shares Outstanding | 4,455,134 | 3,521,387 | |||||||
Loss Per Share | |||||||||
Basic | $ | (0.26 | ) | $ | (0.51 | ) | |||
Diluted | $ | (0.26 | ) | $ | (0.51 | ) | |||
The number of shares issuable upon the exercise of outstanding stock options and warrants that were excluded from the computation as their effect was antidilutive was approximately 3,393,000 and 3,434,000 for the years ended June 30, 2014 and 2013, respectively. | |||||||||
(i) Stock-Based Compensation | ' | ||||||||
(i) Stock-Based Compensation | |||||||||
The measurement and recognition of compensation costs for all stock-based awards made to employees and the Board of Directors are based upon fair value over the requisite service period for awards expected to vest. The Company estimates the fair value of share-based awards on the date of grant using the Black-Scholes option-pricing model. Stock-based compensation costs recognized for the years ended June 30, 2014 and 2013 amounted to $141,033 and $108,422, respectively. | |||||||||
(j) Patents | ' | ||||||||
(j) Patents | |||||||||
Patent costs are amortized using the straight-line method over the shorter of their legal or estimated useful lives, generally five to ten years. Amortization expense was $852 and $0 for the years ended June 30, 2014 and 2013, respectively. | |||||||||
In July 2011, the Company assigned all of its currently issued and pending patents, as well as new inventions that it conceives before July 28, 2012, to Intuitive Surgical. | |||||||||
(k) Fair Value of Financial Instruments | ' | ||||||||
(k) Fair Value of Financial Instruments | |||||||||
Financial instruments consist principally of cash equivalents, accounts receivable, senior secured convertible notes payable, accounts payable and accrued expenses. The estimated fair value of these financial instruments approximates their carrying value due to their short-term nature. | |||||||||
(l) Long-Lived Assets | ' | ||||||||
(l) Long-Lived Assets | |||||||||
Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. | |||||||||
(m) Warranty Costs | ' | ||||||||
(m) Warranty Costs | |||||||||
The Company does not incur future performance obligations in the normal course of business other than providing a standard one-year warranty on materials and workmanship to its customers (except in certain unusual and infrequently occurring situations where extended warranty terms beyond one year are negotiated with the customer). The Company provides for estimated warranty costs at the time product revenue is recognized. Warranty costs have been included as a component of cost of goods sold in the accompanying consolidated statements of operations. The following tables summarize warranty reserve activity for the years ended June 30, 2014 and 2013: | |||||||||
2014 | 2013 | ||||||||
Balance at beginning of period | $ | 25,000 | $ | 25,000 | |||||
Provision for warranty claims | 11,917 | 2,006 | |||||||
Warranty claims incurred | (11,917 | ) | (2,006 | ) | |||||
Balance at end of period | $ | 25,000 | $ | 25,000 | |||||
(n) Research and Development | ' | ||||||||
(n) Research and Development | |||||||||
Research and development expenses are charged to operations as incurred. The Company groups development and prototype costs and related reimbursements in research and development. For the years ended June 30, 2014 and 2013, research and development expense is shown net of reimbursements of $45,997 and $87,496, respectively, in the accompanying statements of operations. | |||||||||
(o) Comprehensive Income | ' | ||||||||
(o) Comprehensive Income | |||||||||
Comprehensive income or loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owners sources. The Company’s comprehensive loss or income for the years ended June 30, 2014 and 2013 was equal to its net loss for the same periods. | |||||||||
(p) Income Taxes | ' | ||||||||
(p) Income Taxes | |||||||||
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the likelihood of utilization of existing deferred tax assets, management has considered historical results of operations and the current operating environment. | |||||||||
(q) Segment Reporting | ' | ||||||||
(q) Segment Reporting | |||||||||
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions about how to allocate resources and assess performance. The Company’s chief decision-maker is its Chief Executive Officer. To date, the Company has viewed its operations and manages its business as principally one segment. For all periods presented, over 90% of the Company’s sales have been to customers in the United States. | |||||||||
(r) Use of Estimates | ' | ||||||||
(r) Use of Estimates | |||||||||
The preparation of financial statements in conformity with accounting standards generally accepted in the United States 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||
(s) Recent Accounting Pronouncements | ' | ||||||||
(s) Recent Accounting Pronouncements | |||||||||
In July 2013, the FASB issued Accounting Standards Update (ASU) 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"). The new standard requires the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the consolidated balance sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2013, which for the Company is the first quarter of fiscal 2015. The Company does not expect the adoption of ASU 2013-11 to have a material impact on its consolidated financial statements. | |||||||||
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The update is intended to resolve the diverse accounting treatment of these types of awards in practice. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in "Compensation - Stock Compensation (Topic 718)" as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The ASU is effective for interim and annual reporting periods that begin after December 15, 2015. The Company does not expect the adoption of this pronouncement to have an impact on our financial statements as this guidance mirrors our existing policy for such share-based awards. | |||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 provides a single, comprehensive accounting model for revenues arising from contracts with customers that supersedes most of the existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue is recognized at an amount that an entity expects to be entitled to upon transferring control of goods or services to a customer, as opposed to when risks and rewards transfer to a customer under existing revenue recognition guidance. ASU 201-09 is effective for the Company beginning in its fiscal year 2018, and may be applied retrospectively to all prior periods presented or through a cumulative adjustment to the opening retained earnings balance in the year of adoption. The Company is currently in the process of evaluation the impact of ASU 2014-09 on its consolidated financial statements. |
1_SUMMARY_OF_SIGNIFICANT_ACCOU2
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
2014 | 2013 | ||||||||
Raw material | $ | 445,210 | $ | 302,448 | |||||
Work-in-progress | 385,601 | 392,991 | |||||||
Finished goods | 158,067 | 200,734 | |||||||
$ | 988,878 | $ | 896,173 | ||||||
Property and Equipment | ' | ||||||||
Asset Classification | Estimated Useful Life | ||||||||
Machinery and equipment | 2-7 years | ||||||||
Leasehold improvements | Shorter of lease term or estimated useful life | ||||||||
Furniture and fixtures | 5 years | ||||||||
Vehicles | 3 years | ||||||||
Significant Customers | ' | ||||||||
Year Ended June 30 | |||||||||
2014 | 2013 | ||||||||
Customer A | 21 | % | 13 | % | |||||
Customer B | 21 | 54 | |||||||
Customer C | 14 | 1 | |||||||
All others | 44 | 32 | |||||||
100 | % | 100 | % | ||||||
Loss per Share | ' | ||||||||
Year Ended June 30 | |||||||||
2014 | 2013 | ||||||||
Net Loss– Basic and Diluted | $ | (1,160,638 | ) | $ | (1,787,680 | ) | |||
Basic Weighted Average Shares Outstanding | 4,455,134 | 3,521,387 | |||||||
Potentially Dilutive Securities | – | – | |||||||
Diluted Weighted Average Shares Outstanding | 4,455,134 | 3,521,387 | |||||||
Loss Per Share | |||||||||
Basic | $ | (0.26 | ) | $ | (0.51 | ) | |||
Diluted | $ | (0.26 | ) | $ | (0.51 | ) | |||
Warranty Costs | ' | ||||||||
2014 | 2013 | ||||||||
Balance at beginning of period | $ | 25,000 | $ | 25,000 | |||||
Provision for warranty claims | 11,917 | 2,006 | |||||||
Warranty claims incurred | (11,917 | ) | (2,006 | ) | |||||
Balance at end of period | $ | 25,000 | $ | 25,000 |
2_COMMITMENTS_Tables
2. COMMITMENTS (Tables) | 12 Months Ended | |||||
Jun. 30, 2014 | ||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||
Related Party Transactions | ' | |||||
Name of Purchaser | Company Affiliation | Securities Purchased in Offering | Unit Price | Subscription Amount | ||
Shares of Common Stock | Warrants | |||||
Forkey, Richard E. | Director | 27,778 | 19,445 | $0.90 | $25,000.20 | |
Joseph N. Forkey and Heather C. Forkey JTTEN | Chairman of the Board, Chief Executive Officer, President, and Treasurer | 22,223 | 15,557 | $0.90 | $20,000.70 | |
Major, Donald A. | Executive Vice President for Corporate Development and Director | 27,778 | 19,445 | $0.90 | $25,000.20 | |
Miles, Richard | Director | 11,112 | 7,779 | $0.90 | $10,000.80 |
3_STOCKHOLDERS_EQUITY_Tables
3. STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||||||||
Assumptions for fair value of options granted | ' | ||||||||||||||||||||||
Year Ended | |||||||||||||||||||||||
June 30, | |||||||||||||||||||||||
2014 | |||||||||||||||||||||||
Assumptions: | |||||||||||||||||||||||
Option life | 5.0 years | ||||||||||||||||||||||
Risk-free interest rate | 3.00% | ||||||||||||||||||||||
Stock volatility | 479% | ||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||
Weighted average fair value of grants | $ | 0.9 | |||||||||||||||||||||
Stock option activity | ' | ||||||||||||||||||||||
Options Outstanding | |||||||||||||||||||||||
Number of | Weighted Average | Weighted Average | |||||||||||||||||||||
Shares | Exercise Price | Contractual Life | |||||||||||||||||||||
Outstanding at July 1, 2012 | 392,587 | $ | 4.56 | 8.15 years | |||||||||||||||||||
Grants | 9,000 | 0.85 | |||||||||||||||||||||
Cancellations | (1,500 | ) | 0.55 | ||||||||||||||||||||
Outstanding at June 30, 2013 | 400,087 | $ | 4.49 | 7.21 years | |||||||||||||||||||
Grants | 9,000 | 0.9 | |||||||||||||||||||||
Outstanding at June 30, 2014 | 409,087 | $ | 4.41 | 6.27 years | |||||||||||||||||||
Stock options outstanding by exercise price ranges | ' | ||||||||||||||||||||||
Range of Exercise | Number of | Weighted-Average | Weighted-Average | Exercisable | Exercisable | ||||||||||||||||||
Prices | Shares | Remaining | Exercise Price | Number | Weighted-Average | ||||||||||||||||||
Contractual | of Shares | Exercise Price | |||||||||||||||||||||
Life (years) | |||||||||||||||||||||||
$ | 1.2 | 207,800 | 7.68 | $ | 1.2 | 207,800 | $ | 1.2 | |||||||||||||||
$ | 0.9 | 9,000 | 9.52 | 0.9 | 9,000 | 0.9 | |||||||||||||||||
$ | 0.85 | 9,000 | 8.52 | 0.85 | 9,000 | 0.85 | |||||||||||||||||
$ | 0.55 | 49,500 | 7.62 | 0.55 | 49,500 | 0.55 | |||||||||||||||||
$ | 0.27 | 40,000 | 7.04 | 0.27 | 40,000 | 0.27 | |||||||||||||||||
$ | 1.35 | 1,200 | 5.41 | 1.35 | 1,200 | 1.35 | |||||||||||||||||
$ | 1.25 | 1,200 | 4.41 | 1.25 | 1,200 | 1.25 | |||||||||||||||||
$ | 6.25 | 1,600 | 2.42 | 6.25 | 1,600 | 6.25 | |||||||||||||||||
$ | 7.75 | 1,200 | 3.41 | 7.75 | 1,200 | 7.75 | |||||||||||||||||
$ | 11.5 | 800 | 1.42 | 11.5 | 800 | 11.5 | |||||||||||||||||
$ | 13.75 | 50,427 | 1.86 | 13.75 | 50,427 | 13.75 | |||||||||||||||||
$ | 20.75 | 37,360 | 0.96 | 20.75 | 37,360 | 20.75 | |||||||||||||||||
$ | 0.27–$20.75 | 409,087 | 6.27 | $ | 4.41 | 409,087 | $ | 6.21 |
4_INCOME_TAXES_Tables
4. INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Reconciliation of federal statutory rate | ' | ||||||||
2014 | 2013 | ||||||||
Income tax expense (benefit) at federal statutory rate | (34.0 | )% | (34.0 | )% | |||||
Increase (decrease) in tax resulting from: | |||||||||
State taxes, net of federal benefit | (5.3 | ) | (6.3 | ) | |||||
Change in valuation allowance | 15 | 30.1 | |||||||
Nondeductible items | 0.3 | 1 | |||||||
Prior-year tax adjustments | 14 | 7.5 | |||||||
Other | 9.9 | 1.6 | |||||||
Effective tax rate | (0.1 | )% | (0.1 | )% | |||||
Components of deferred tax assets and liabilities | ' | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carry forwards | $ | 2,747,000 | $ | 2,582,000 | |||||
Tax credit carry forwards | 405,000 | 381,000 | |||||||
Reserves and accruals not yet deducted for tax purposes | 286,000 | 301,000 | |||||||
Total deferred tax assets | 3,438,000 | 3,264,000 | |||||||
Valuation allowance | (3,438,000 | ) | (3,264,000 | ) | |||||
Net deferred tax asset | $ | – | $ | – |
1_SUMMARY_OF_SIGNIFICANT_ACCOU3
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Inventory) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Raw material | $445,210 | $302,448 |
Work-in-progress | 385,601 | 392,991 |
Finished goods | 158,067 | 200,734 |
Total inventories | $988,878 | $896,173 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU4
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Property useful lives) | 12 Months Ended |
Jun. 30, 2014 | |
Machinery and equipment | ' |
Estimated Useful Life | '2 - 7 years |
Leasehold improvements | ' |
Estimated Useful Life | 'Shorter of lease term or estimated useful life |
Furniture and fixtures | ' |
Estimated Useful Life | '5 years |
Vehicles | ' |
Estimated Useful Life | '3 years |
1_SUMMARY_OF_SIGNIFICANT_ACCOU5
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Concentrations) (SalesRevenueNetMember) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Percentage of total revenues | 100.00% | 100.00% |
Customer A | ' | ' |
Percentage of total revenues | 21.00% | 13.00% |
Customer B | ' | ' |
Percentage of total revenues | 21.00% | 54.00% |
All others | ' | ' |
Percentage of total revenues | 14.00% | 1.00% |
Customer C | ' | ' |
Percentage of total revenues | 44.00% | 32.00% |
1_SUMMARY_OF_SIGNIFICANT_ACCOU6
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Loss per share) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Accounting Policies [Abstract] | ' | ' |
Net Loss - Basic and Diluted | ($1,160,638) | ($1,787,680) |
Basic Weighted Average Shares Outstanding | 4,455,134 | 3,521,387 |
Potentially Dilutive Securities | 0 | 0 |
Diluted Weighted Average Shares Outstanding | 4,455,134 | 3,521,387 |
Loss Per Share | ' | ' |
Basic | ($0.26) | ($0.51) |
Diluted | ($0.26) | ($0.51) |
1_SUMMARY_OF_SIGNIFICANT_ACCOU7
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Warranty rollforward) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Warranty roll forward | ' | ' |
Balance at beginning of period | $25,000 | $25,000 |
Provision for warranty claims | 11,917 | 2,006 |
Warranty claims incurred | -11,917 | -2,006 |
Balance at end of period | $25,000 | $25,000 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU8
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Cash and cash equivalents | $202,380 | $1,034,587 | $145,923 |
Pre-tax non-cash provision for slow-moving and obsolete inventories | 0 | 19,337 | ' |
Depreciation expense | 19,168 | 20,970 | ' |
Outstanding stock options and warrants that were excluded from the computation as their effect was antidilutive | 3,393,000 | 3,434,000 | ' |
Stock-based compensation costs | 141,033 | 108,422 | ' |
Amortization expense related to patents | 852 | 0 | ' |
Research and development expense reimbursements | 45,997 | 87,496 | ' |
Comprehensive income | ($1,160,638) | ($1,787,680) | ' |
Accounts Receivable [Member] | Customer A | ' | ' | ' |
Concentration risk - receivables | 30.00% | 26.00% | ' |
Accounts Receivable [Member] | Customer B | ' | ' | ' |
Concentration risk - receivables | 17.00% | 24.00% | ' |
Accounts Receivable [Member] | Customer C | ' | ' | ' |
Concentration risk - receivables | 11.00% | 12.00% | ' |
2_COMMITMENTS_Details_Narrativ
2. COMMITMENTS (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jul. 07, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jul. 07, 2014 | Jul. 07, 2014 | |
Subsequent Event [Member] | Richard E. Forkey | Richard E. Forkey | Schumsky | MHW Capital Partners | |||
Subsequent Event [Member] | Subsequent Event [Member] | ||||||
Rent expense | $68,232 | $64,627 | ' | $108,000 | $108,000 | ' | ' |
Future minimum rental payments under all operating leases for fiscal year 2015 | 13,178 | ' | ' | ' | ' | ' | ' |
Future minimum rental payments under all operating leases for thereafter | 776 | ' | ' | ' | ' | ' | ' |
Common stock sold, shares issued | ' | ' | 1,717,152 | ' | ' | 83,343 | 125,000 |
Proceeds from sale of stock | ' | ' | 1,030,291 | ' | ' | ' | ' |
Common stock sold, value | ' | $2,191,118 | ' | ' | ' | $50,000 | $75,000 |
3_STOCKHOLDERS_EQUITY_Details_
3. STOCKHOLDERS' EQUITY (Details - Assumptions) (USD $) | 12 Months Ended |
Jun. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Option life | '5 years |
Risk-free interest rate | 3.00% |
Stock volatility | 479.00% |
Dividend yield | $0 |
Weighted average fair value of grants | $0.90 |
3_STOCKHOLDERS_EQUITY_Details_1
3. STOCKHOLDERS' EQUITY (Details - Option activity) (Stock Options, USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Stock Options | ' | ' | ' |
Stock option activity | ' | ' | ' |
Number of stock options outstanding - at beginning | 400,087 | 392,587 | ' |
Number of Shares options granted | 9,000 | 9,000 | ' |
Number of Shares options cancelled | ' | -1,500 | ' |
Number of stock options outstanding - at ending | 409,087 | 400,087 | 392,587 |
Weighted average exercise price options outstanding- at beginning | $4.49 | $4.56 | ' |
Weighted average exercise price - grants | $0.90 | $0.85 | ' |
Weighted average exercise price - cancelled | ' | $0.55 | ' |
Weighted average exercise price options outstanding - at end | $4.41 | $4.49 | $4.56 |
Weighted average contractual life | '6 years 3 months 7 days | '2 years 2 months 16 days | '8 years 1 month 24 days |
3_STOCKHOLDERS_EQUITY_Details_2
3. STOCKHOLDERS' EQUITY (Details - Option information) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Stock Options | ' | ' | ' |
Range of exercise prices | '$0.27-$20.75 | ' | ' |
Number of shares outstanding | 409,087 | 400,087 | 392,587 |
Weighted average contractual life | '6 years 3 months 7 days | '2 years 2 months 16 days | '8 years 1 month 24 days |
Weighted average exercise price | $4.41 | $4.49 | $4.56 |
Exercisable number of shares | 409,087 | ' | ' |
Exercisable weighted average exercise price | $6.21 | ' | ' |
Option 1 | ' | ' | ' |
Range of exercise prices | $1.20 | ' | ' |
Number of shares outstanding | 207,800 | ' | ' |
Weighted average contractual life | '7 years 8 months 5 days | ' | ' |
Weighted average exercise price | $1.20 | ' | ' |
Exercisable number of shares | 207,800 | ' | ' |
Exercisable weighted average exercise price | $1.20 | ' | ' |
Option 2 | ' | ' | ' |
Range of exercise prices | $0.90 | ' | ' |
Number of shares outstanding | 9,000 | ' | ' |
Weighted average contractual life | '9 years 6 months 7 days | ' | ' |
Weighted average exercise price | $0.90 | ' | ' |
Exercisable number of shares | 9,000 | ' | ' |
Exercisable weighted average exercise price | $0.90 | ' | ' |
Option 3 | ' | ' | ' |
Range of exercise prices | $0.85 | ' | ' |
Number of shares outstanding | 9,000 | ' | ' |
Weighted average contractual life | '8 years 6 months 7 days | ' | ' |
Weighted average exercise price | $0.85 | ' | ' |
Exercisable number of shares | 9,000 | ' | ' |
Exercisable weighted average exercise price | $0.85 | ' | ' |
Option 4 | ' | ' | ' |
Range of exercise prices | $0.55 | ' | ' |
Number of shares outstanding | 49,500 | ' | ' |
Weighted average contractual life | '7 years 7 months 13 days | ' | ' |
Weighted average exercise price | $0.55 | ' | ' |
Exercisable number of shares | 49,500 | ' | ' |
Exercisable weighted average exercise price | $0.55 | ' | ' |
Option 5 | ' | ' | ' |
Range of exercise prices | $0.27 | ' | ' |
Number of shares outstanding | 40,000 | ' | ' |
Weighted average contractual life | '7 years 15 days | ' | ' |
Weighted average exercise price | $0.27 | ' | ' |
Exercisable number of shares | 40,000 | ' | ' |
Exercisable weighted average exercise price | $0.27 | ' | ' |
Option 6 | ' | ' | ' |
Range of exercise prices | $1.35 | ' | ' |
Number of shares outstanding | 1,200 | ' | ' |
Weighted average contractual life | '5 years 4 months 28 days | ' | ' |
Weighted average exercise price | $1.35 | ' | ' |
Exercisable number of shares | 1,200 | ' | ' |
Exercisable weighted average exercise price | $1.35 | ' | ' |
Option 7 | ' | ' | ' |
Range of exercise prices | $1.25 | ' | ' |
Number of shares outstanding | 1,200 | ' | ' |
Weighted average contractual life | '4 years 4 months 28 days | ' | ' |
Weighted average exercise price | $1.25 | ' | ' |
Exercisable number of shares | 1,200 | ' | ' |
Exercisable weighted average exercise price | $1.25 | ' | ' |
Option 8 | ' | ' | ' |
Range of exercise prices | $6.25 | ' | ' |
Number of shares outstanding | 1,600 | ' | ' |
Weighted average contractual life | '2 years 5 months 1 day | ' | ' |
Weighted average exercise price | $6.25 | ' | ' |
Exercisable number of shares | 1,600 | ' | ' |
Exercisable weighted average exercise price | $6.25 | ' | ' |
Option 9 | ' | ' | ' |
Range of exercise prices | $7.75 | ' | ' |
Number of shares outstanding | 1,200 | ' | ' |
Weighted average contractual life | '3 years 4 months 28 days | ' | ' |
Weighted average exercise price | $7.75 | ' | ' |
Exercisable number of shares | 1,200 | ' | ' |
Exercisable weighted average exercise price | $7.75 | ' | ' |
Option 10 | ' | ' | ' |
Range of exercise prices | $11.50 | ' | ' |
Number of shares outstanding | 800 | ' | ' |
Weighted average contractual life | '1 year 5 months 1 day | ' | ' |
Weighted average exercise price | $11.50 | ' | ' |
Exercisable number of shares | 800 | ' | ' |
Exercisable weighted average exercise price | $11.50 | ' | ' |
Option 11 | ' | ' | ' |
Range of exercise prices | $13.75 | ' | ' |
Number of shares outstanding | 50,427 | ' | ' |
Weighted average contractual life | '1 year 10 months 10 days | ' | ' |
Weighted average exercise price | $13.75 | ' | ' |
Exercisable number of shares | 50,427 | ' | ' |
Exercisable weighted average exercise price | $13.75 | ' | ' |
Option 12 | ' | ' | ' |
Range of exercise prices | $20.75 | ' | ' |
Number of shares outstanding | 37,360 | ' | ' |
Weighted average contractual life | '11 months 16 days | ' | ' |
Weighted average exercise price | $20.75 | ' | ' |
Exercisable number of shares | 37,360 | ' | ' |
Exercisable weighted average exercise price | $20.75 | ' | ' |
3_STOCKHOLDERS_EQUITY_Details_3
3. STOCKHOLDERS' EQUITY (Details Narrative) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Stock-based compensation costs | 141,033 | 108,422 | ' |
Capitalized compensation costs | 0 | ' | ' |
Unrecognized compensation costs related to options vesting | 0 | ' | ' |
Aggregate intrinsic value of "in the money" outstanding | 26,415 | ' | ' |
Aggregate intrinsic value of "in the money" exercisable | 26,415 | ' | ' |
Warrants | ' | ' | ' |
Warrants outstanding | 2,983,752 | ' | ' |
Warrant weighted average exercise price | 1.25 | ' | ' |
Warrants | Sale of Stock | ' | ' | ' |
Warrants outstanding | 2,138,921 | ' | ' |
Warrants | Claims for Liquidated Damages | ' | ' | ' |
Warrants outstanding | 370,000 | ' | ' |
2011 Plan | ' | ' | ' |
Shares reserved for issuance | 117,200 | ' | ' |
Stock options outstanding | 207,800 | ' | ' |
2006 Plan | ' | ' | ' |
Shares reserved for issuance | 27,198 | ' | ' |
Stock options outstanding | 112,700 | ' | ' |
1997 Plan | ' | ' | ' |
Shares reserved for issuance | 0 | ' | ' |
Stock options outstanding | 88,587 | ' | ' |
Stock Options | ' | ' | ' |
Options granted | 9,000 | 9,000 | ' |
Stock options outstanding | 409,087 | 400,087 | 392,587 |
Selling, General and Administrative Expenses | ' | ' | ' |
Stock-based compensation costs | 134,800 | 98,589 | ' |
Cost of Goods Sold | ' | ' | ' |
Stock-based compensation costs | 4,033 | 7,633 | ' |
Research and Development Expenses | ' | ' | ' |
Stock-based compensation costs | 2,200 | 2,200 | ' |
4_INCOME_TAXES_Details_Income_
4. INCOME TAXES (Details - Income tax rate) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
Income tax expense (benefit) at federal statutory rate | -34.00% | -34.00% |
Increase (decrease) in tax resulting from: | ' | ' |
State taxes, net of federal benefit | -5.30% | -6.30% |
Change in valuation allowance | 15.00% | 30.10% |
Nondeductible items | 0.30% | 1.00% |
Prior-year tax adjustments | 14.00% | 7.50% |
Other | 9.90% | 1.60% |
Effective tax rate | -0.10% | -0.10% |
4_INCOME_TAXES_Details_Deferre
4. INCOME TAXES (Details - Deferred taxes) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Deferred tax assets: | ' | ' |
Net operating loss carry forwards | $2,747,000 | $2,582,000 |
Tax credit carry forwards | 405,000 | 381,000 |
Reserves and accruals not yet deducted for tax purposes | 286,000 | 301,000 |
Total deferred tax assets | 3,438,000 | 3,264,000 |
Valuation allowance | -3,438,000 | -3,264,000 |
Net deferred tax asset | $0 | $0 |
4_INCOME_TAXES_Details_Narrati
4. INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended |
Jun. 30, 2014 | |
Increase in valuation allowance | $174,000 |
Operating loss carryforwards expiration dates | 'Operating loss expires at various dates from 2015 through 2033 and loss from Hong Kong operations will be carry forward indefinitely. |
Federal | ' |
Operating loss carryforwards | 6,600,000 |
State | ' |
Operating loss carryforwards | 2,100,000 |
Hong Kong operations | ' |
Operating loss carryforwards | $2,171,000 |
5_PROFIT_SHARING_PLAN_Details_
5. PROFIT SHARING PLAN (Details Narrative) (USD $) | 12 Months Ended |
Jun. 30, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ' |
Employer matching contribution | $0 |
6_SALE_OF_ASSETS_Details_Narra
6. SALE OF ASSETS (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Property, Plant and Equipment Assets Held-for-sale Disclosure [Abstract] | ' | ' |
Proceeds from sale of assets | $14,028 | $4,498 |
Gain on sale of assets | $14,028 | $4,498 |
9_SUBSEQUENT_EVENTS_Details_Na
9. SUBSEQUENT EVENTS (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | ||
Jun. 30, 2013 | Jul. 07, 2014 | Jul. 07, 2014 | Jul. 07, 2014 | |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | ||
Schumsky | MHW Capital Partners | |||
Common stock sold, shares issued | ' | 1,717,152 | 83,343 | 125,000 |
Proceeds from sale of stock | ' | $1,030,291 | ' | ' |
Common stock sold, value | $2,191,118 | ' | $50,000 | $75,000 |