Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Sep. 11, 2019 | Dec. 31, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | PARK CITY GROUP INC | ||
Entity Central Index Key | 0000050471 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2019 | ||
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 | Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 19,821,188 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Public Float | $ 64,653,279 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | NV | ||
Entity File Number | 001-34941 | ||
Title of 12b security | Common Stock, $0.01 Par Value | ||
Trading Symbol | PCYG | ||
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Current Assets: | ||
Cash | $ 18,609,423 | $ 14,892,439 |
Receivables, net of allowance for doubtful accounts of $145,825 and $153,220 at June 30, 2019 and 2018, respectively | 3,878,658 | 4,222,348 |
Contract asset - unbilled current portion | 3,023,694 | 3,502,287 |
Prepaid expense and other current assets | 1,037,099 | 1,116,387 |
Total current assets | 26,548,874 | 23,733,461 |
Property and equipment, net | 2,972,257 | 1,896,348 |
Other Assets: | ||
Deposits, and other assets | 17,146 | 18,691 |
Contract asset - unbilled long-term portion | 1,659,110 | 1,194,574 |
Investments | 0 | 477,884 |
Customer relationships | 788,400 | 919,800 |
Goodwill | 20,883,886 | 20,883,886 |
Capitalized software costs, net | 70,864 | 168,926 |
Total other assets | 23,419,406 | 23,663,761 |
Total assets | 52,940,537 | 49,293,570 |
Current liabilities: | ||
Accounts payable | 530,294 | 1,490,434 |
Accrued liabilities | 1,399,368 | 745,694 |
Contract liability - deferred revenue | 1,917,787 | 2,335,286 |
Line of credit | 4,660,000 | 3,230,000 |
Current portion of notes payable | 295,168 | 188,478 |
Total current liabilities | 8,802,617 | 7,989,892 |
Long-term liabilities: | ||
Notes payable, less current portion | 920,754 | 1,592,077 |
Other long-term liabilities | 0 | 7,275 |
Total liabilities | 9,723,371 | 9,589,244 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common Stock, $0.01 par value, 50,000,000 shares authorized; 19,793,372 and 19,773,549 issued and outstanding at June 30, 2019 and 2018, respectively | 197,936 | 197,738 |
Additional paid-in capital | 76,908,566 | 76,711,887 |
Accumulated deficit | (33,897,714) | (37,213,677) |
Total stockholders' equity | 43,217,166 | 39,704,326 |
Total liabilities and stockholders' equity | 52,940,537 | 49,293,570 |
Series B Preferred | ||
Stockholders' equity: | ||
Preferred stock | 6,254 | 6,254 |
Series B-1 Preferred | ||
Stockholders' equity: | ||
Preferred stock | $ 2,124 | $ 2,124 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Allowance for doubtful accounts | $ 145,825 | $ 153,220 |
Stockholders' equity: | ||
Preferred stock, par value | $ .01 | $ 0.01 |
Preferred stock, authorized | 30,000,000 | 30,000,000 |
Common stock, par value | $ .01 | $ 0.01 |
Common stock, authorized | 50,000,000 | 50,000,000 |
Common stock, issued | 19,793,372 | 19,773,548 |
Common stock, outstanding | 19,793,372 | 19,773,548 |
Series B Preferred | ||
Stockholders' equity: | ||
Preferred stock, authorized | 700,000 | 700,000 |
Preferred stock, issued | 625,375 | 625,375 |
Preferred stock, outstanding | 625,375 | 625,375 |
Series B-1 Preferred | ||
Stockholders' equity: | ||
Preferred stock, authorized | 550,000 | 550,000 |
Preferred stock, issued | 212,403 | 212,403 |
Preferred stock, outstanding | 212,403 | 212,403 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 21,169,608 | $ 22,036,278 |
Operating expense: | ||
Cost of revenue and product support | 5,830,084 | 6,587,486 |
Sales and marketing | 6,006,597 | 6,403,343 |
General and administrative | 4,742,205 | 4,894,746 |
Depreciation and amortization | 601,433 | 633,854 |
Total operating expenses | 17,180,319 | 18,519,429 |
Income from operations | 3,989,289 | 3,516,849 |
Other income: | ||
Interest income | 247,059 | 164,217 |
Interest expense | (42,684) | (166,888) |
Gain (loss) on disposition of investment | (148,548) | 0 |
Income before income taxes | 4,045,116 | 3,514,178 |
(Provision) for income taxes | (142,710) | (105,395) |
Net income | 3,902,406 | 3,408,783 |
Dividends on preferred stock | (586,443) | (573,348) |
Net income (loss) applicable to common shareholders | $ 3,315,963 | $ 2,835,435 |
Weighted average shares, basic | 19,849,000 | 19,581,000 |
Weighted average shares, diluted | 20,368,000 | 20,280,000 |
Basic earnings (loss) per share | $ 0.17 | $ 0.14 |
Diluted earnings (loss) per share | $ 0.16 | $ 0.14 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) | Series B Preferred | Series B-1 Preferred | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Jun. 30, 2017 | $ 6,254 | $ 2,859 | $ 194,241 | $ 75,489,189 | $ (39,983,692) | $ 35,708,851 |
Beginning Balance, Shares at Jun. 30, 2017 | 625,375 | 285,859 | 19,423,821 | |||
Stock issued for: | ||||||
Accrued Compensation, Amount | $ 200 | $ 1,362 | 1,247,150 | 0 | 1,248,712 | |
Accrued Compensation, Shares | 20,000 | 136,160 | ||||
Cash, Amount | $ 270 | 244,147 | 0 | 244,417 | ||
Cash, Shares | 27,018 | |||||
Preferred Dividends-Declared | (573,348) | (573,348) | ||||
Exercise of Options/Warrants, Amount | $ 1,866 | 665,037 | 0 | 666,903 | ||
Exercise of Options/Warrants, Shares | 186,550 | |||||
Redemption, Amount | $ (935) | (933,635) | (65,420) | (999,990) | ||
Redemption, Shares | (93,457) | |||||
Net Income | 3,408,787 | 3,408,783 | ||||
Ending Balance, Amount at Jun. 30, 2018 | $ 6,254 | $ 2,124 | $ 197,738 | 76,711,887 | (37,213,673) | 39,704,326 |
Ending Balance, Shares at Jun. 30, 2018 | 625,375 | 212,402 | 19,773,549 | |||
Stock issued for: | ||||||
Accrued Compensation, Amount | $ 553 | 452,276 | 452,828 | |||
Accrued Compensation, Shares | 55,274 | |||||
Cash, Amount | $ 266 | 154,409 | 154,675 | |||
Cash, Shares | 26,568 | |||||
Preferred Dividends-Declared | (586,443) | (586,443) | ||||
Exercise of Options/Warrants, Amount | $ 256 | 164,741 | 164,997 | |||
Exercise of Options/Warrants, Shares | 25,581 | |||||
Redemption, Amount | (93,217) | (93,217) | ||||
Stock buyback, Amount | $ (876) | (481,530) | (482,406) | |||
Stock buyback, Shares | (87,600) | |||||
Net Income | 3,902,406 | 3,902,406 | ||||
Ending Balance, Amount at Jun. 30, 2019 | $ 6,254 | $ 2,124 | $ 197,936 | $ 76,908,566 | $ (33,897,714) | $ 43,217,166 |
Ending Balance, Shares at Jun. 30, 2019 | 625,375 | 212,402 | 19,793,372 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows From Operating Activities: | ||
Net income | $ 3,902,406 | $ 3,408,783 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 601,433 | 633,854 |
Stock compensation expense | 551,881 | 588,984 |
Bad debt expense | 510,000 | 465,050 |
Decrease (increase) in: | ||
Trade receivables | 312,283 | (4,180,558) |
Long-term receivables, prepaids and other assets | (383,703) | 854,239 |
Increase (decrease) in: | ||
Accounts payable | (960,140) | 924,947 |
Accrued liabilities | 462,194 | (500,253) |
Deferred revenue | (417,499) | (15,560) |
Net cash provided by operating activities | 4,578,855 | 2,179,486 |
Cash Flows From Investing Activities: | ||
Purchase of property and equipment | (1,447,880) | (204,005) |
Capitalization of software costs | 0 | (111,241) |
Sale of long-term investments | 477,884 | 0 |
Net cash used in investing activities | (969,996) | (315,246) |
Cash Flows From Financing Activities: | ||
Proceeds from employee stock purchase plans | 0 | 244,417 |
Proceeds from exercise of options and warrants | 164,997 | 666,903 |
Proceeds from issuance of notes payable | 1,268,959 | 56,078 |
Net increase in lines of credit | 1,430,000 | 380,000 |
Redemption of Series B-1 Preferred | 0 | (999,990) |
Dividends paid | (439,833) | (782,123) |
Common stock buy-back | (482,406) | 0 |
Payments on notes payable and capital leases | (1,833,592) | (591,092) |
Net cash provided by (used in) financing activities | 108,125 | (1,025,807) |
Net increase in cash and cash equivalents | 3,716,984 | 838,433 |
Cash and cash equivalents at beginning of period | 14,892,439 | 14,054,006 |
Cash and cash equivalents at end of period | 18,609,423 | 14,892,439 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for income taxes | 76,063 | 75,714 |
Cash paid for interest | 146,889 | 166,888 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Preferred stock to pay accrued liabilities | 0 | 200,000 |
Common stock to pay accrued liabilities | 514,286 | 1,048,710 |
Dividends accrued on preferred stock | $ 586,443 | $ 573,532 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | Summary of Business Park City Group, Inc. (the “ Company SaaS” B2B |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | Principles of Consolidation The financial statements presented herein reflect the consolidated financial position of Park City Group, Inc. and our subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that materially affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates. The methods, estimates, and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results it reports in its financial statements. The Securities and Exchange Commission has defined the most critical accounting policies as those that are most important to the portrayal of the Company’s financial condition and results and require the Company to make its most difficult and subjective judgments, often because of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include revenue recognition, goodwill, other long-lived asset valuations, income taxes, stock-based compensation, and capitalization of software development costs. Concentration of Credit Risk and Significant Customers The Company maintains cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing evaluations of its customers and maintains allowances for possible losses. The provision is based on the overall composition of our accounts receivable aging, our prior history of accounts receivable write-offs, and our experience with specific customers. Other factors indicating significant risk include customers that have filed for bankruptcy or customers for which we have less payment history to rely upon. We rely on historical trends of bad debt as a percentage of total revenue and apply these percentages to the accounts receivable which when realized have been within the range of management’s expectations. The Company does not require collateral from its customers. The Company’s accounts receivable are derived from sales of products and services primarily to customers operating multilocation retail and grocery stores. The Company writes off accounts receivable when they are determined to be uncollectible. Changes in the allowances for doubtful accounts are recorded as bad debt expense and are included in general and administrative expense in our consolidated financial statements. Amounts that have been invoiced are recorded in accounts receivable (current and long-term), and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. The Company had one customer that accounted for greater than 10% of accounts receivable at June 30, 2019. Customer A had a balance of $886,174 and $1,288,980, for June 30,2019 and June 30, 2018, respectively. Prepaid Expense and Other Current Assets Prepaid expense and other current assets include amounts for which payment has been made but the services have not yet been consumed. The Company’s prepaid expense is made up primarily of prepayments for hosted software applications used in the Company’s operations, maintenance agreements on hardware and software, and other miscellaneous amounts for insurance, membership fees and professional fees. Prepaid expense is amortized on a pro-rata basis to expense accounts as the services are consumed typically by the passage of time or as the service is used. Depreciation and Amortization Depreciation and amortization of property and equipment is computed using the straight-line method based on the following estimated useful lives: Years Furniture and fixtures 5-7 Computer equipment 3 Equipment under capital leases 3 Long-term use equipment 10 Leasehold improvements See below Leasehold improvements are amortized over the shorter of the remaining lease term or the estimated useful life of the improvements. Amortization of intangible assets are computed using the straight-line method based on the following estimated useful lives: Years Customer relationships 10 Acquired developed software 5 Developed software 3 Goodwill See below Goodwill and intangible assets deemed to have indefinite lives are subject to annual impairment tests. Other intangible assets are amortized over their useful lives. Warranties The Company offers a limited warranty against software defects. Customers who are not completely satisfied with their software purchase may attempt to be reimbursed for their purchases outside the warranty period. For the years ending June 30, 2019 and 2018, the Company did not incur any expense associated with warranty claims. Adoption of ASC Topic 606, “Revenue from Contracts with Customers” In May 2014, the Financial Accounting Standards Board (“ FASB ASC 606 The effect of applying ASC 606 did not result in an opening balance adjustment to retained earnings or any other balance sheet accounts because the Company: (1) identified similar performance obligations under ASC 606 as compared with deliverables and separate units of account previously identified; (2) determined the transaction price to be consistent; and (3) concluded that revenue is recorded at the same point in time, upon performance under both ASC 605 and ASC 606. The adoption of ASC 606 did not require significant changes in our internal controls and procedures over financial reporting and disclosures. However, we made enhancements to existing internal controls and procedures to ensure compliance with the new guidance. Revenue Recognition The Company recognizes revenue as it transfers control of deliverables (products, solutions and services) to its customers in an amount reflecting the consideration to which it expects to be entitled. To recognize revenue, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company accounts for a contract based on the terms and conditions the parties agree to, the contract has commercial substance and collectability of consideration is probable. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience. The Company may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any combination of its deliverables. To the extent a contract includes multiple promised deliverables, the Company applies judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, the Company allocates consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which the Company would sell a promised good or service separately to the customer. When not directly observable, the Company typically estimates standalone selling price by using the expected cost plus a margin approach. The Company typically establishes a standalone selling price range for its deliverables, which is reassessed on a periodic basis or when facts and circumstances change. For performance obligations where control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenue related to fixed-price contracts for application development and systems integration services, consulting or other technology services is recognized as the service is performed using the output method, under which the total value of revenue is recognized based on each contract’s deliverable(s) as they are completed and when value is transferred to a customer. Revenue related to fixed-price application maintenance, testing and business process services is recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. If the Company’s invoicing is not consistent with the value delivered, revenue is recognized as the service is performed based on the method described above. The output method measures the results achieved and value transferred to a customer, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately. Revenue related to fixed-price hosting and infrastructure services is recognized based on the Company’s right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. If the Company’s invoicing is not consistent with value delivered, revenue is recognized on a straight-line basis unless revenue is earned and obligations are fulfilled in a different pattern. The revenue recognition method applied to the types of contracts described above provides the most faithful depiction of performance towards satisfaction of the Company’s performance obligations. Revenue related to the Company’s software license arrangements that do not require significant modification or customization of the underlying software is recognized when the software is delivered as control is transferred at a point in time. For software license arrangements that require significant functionality enhancements or modification of the software, revenue for the software license and related services is recognized as the services are performed in accordance with the methods described above. In software hosting arrangements, the rights provided to the customer, such as ownership of a license, contract termination provisions and the feasibility of the client to operate the software, are considered in determining whether the arrangement includes a license or a service. Revenue related to software maintenance and support is generally recognized on a straight-line basis over the contract period. Revenue related to transaction-based or volume-based contracts is recognized over the period the services are provided in a manner that corresponds with the value transferred to the customer to-date relative to the remaining services to be provided. From time to time, the Company may enter into arrangements with third party suppliers to resell products or services. In such cases, the Company evaluates whether the Company is the principal (i.e. report revenue on a gross basis) or agent (i.e. report revenue on a net basis). In doing so, the Company first evaluates whether it controls the good or service before it is transferred to the customer. If the Company controls the good or service before it is transferred to the customer, the Company is the principal; if not, the Company is the agent. Determining whether the Company controls the good or service before it is transferred to the customer may require judgment. The Company provides customers with assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications. General updates or patch fixes are not considered an additional performance obligation in the contract. Variable consideration is estimated using either the sum of probability weighted amounts in a range of possible consideration amounts (expected value), or the single most likely amount in a range of possible consideration amounts (most likely amount), depending on which method better predicts the amount of consideration to which we may be entitled. The Company includes in the transaction price variable consideration only to the extent it is probable that a significant reversal of revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price may involve judgment and is based largely on an assessment of its anticipated performance and all information that is reasonably available to the Company. The Company assesses the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its services, not to receive or provide financing from or to customers. The Company does not consider set up or transition fees paid upfront by its customers to represent a financing component, as such fees are required to encourage customer commitment to the project and protect us from early termination of the contract. Trade Accounts Receivable and Contract Balances We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset (unbilled receivable). A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, we recognize a receivable for revenue related to our transaction or volume-based contracts when earned regardless of whether amounts have been billed. We present such receivables in trade accounts receivable, net in our consolidated statements of financial position at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables, judgment, and other applicable factors. A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented in current and other assets in our consolidated balance sheets and primarily relate to unbilled amounts on fixed-price contracts utilizing the output method of revenue recognition. The table below shows movements in contract assets: Contract assets Balance – June 30, 2018 $ 4,696,861 Revenue recognized during the period but not billed 3,544,122 Amounts reclassified to accounts receivable (3,558,184 ) Other - Balance – June 30, 2019 $ 4,682,799 (1) (1) Contract asset balances for June 30, 2019 include a current and a long-term contract asset, $3,023,694, and $1,659,110 respectively. Our contract assets and liabilities are reported in a net position at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenue primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which may vary generally by contract type. The table below shows movements in the deferred revenue balances (current and noncurrent) for the period: Contract liability Balance – June 30, 2018 $ 2,335,286 Amounts billed but not recognized as revenue 66,525 Revenue recognized related to the opening balance of deferred revenue (484,024 ) Other - Balance – June 30, 2019 $ 1,917,787 Our contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenue primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which may vary generally by contract type. Disaggregation of Revenue The table below presents disaggregated revenue from contracts with customers by customer geography and contract-type. We believe this disaggregation best depicts the nature, amount, timing and uncertainty of our revenue and cash flows that may be affected by industry, market and other economic factors: For the Year Ended June 30, 2019 Geography Subscription & support Professional services Transaction based Total North America $ 16,159,572 $ 2,055,968 $ 2,893,675 $ 21,109,215 International - - 60,393 60,393 Total $ 16,159,572 $ 2,055,968 $ 2,954,068 $ 21,169,608 Software Development Costs The Company accounts for research costs of computer software to be sold, leased or otherwise marketed as expense until technological feasibility has been established for the product. Once technological feasibility is established, the company will occasionally capitalize software costs until the product is available for general release to customers. In these instances, the Company determines technological feasibility for its software products to have been reached when a working prototype is complete and meets or exceeds design specifications including functions, features, and technical performance requirements. During the 2019 and 2018 fiscal years, capitalized development costs of zero and $65,505, respectively, were amortized into expense. The Company amortizes its developed and purchased software on a straight-line basis over three and five years, respectively. Research and Development Costs Research and development costs include personnel costs, engineering, consulting, and contract labor and are expensed as incurred for software that has not achieved technological feasibility. Advertising Costs Advertising is expensed as incurred. Advertising costs were approximately $90,546 and $107,656 for the years ended June 30, 2019 and 2018, respectively. Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. Earnings Per Share Basic net income per common share (“ Basic EPS Diluted EPS For the year ended June 30, 2019 and 2018 warrants to purchase 1,108,805 and 1,185,549 shares of Common Stock, respectively, were included in the computation of diluted EPS due to the anti-dilutive effect. Warrants to purchase shares of Common Stock were outstanding at prices ranging $4.00 from to $10.00 per share at June 30, 2019. The following table presents the components of the computation of basic and diluted earnings per share for the periods indicated: Year ended June 30, 2019 2018 Numerator Net income applicable to common shareholders $ 3,315,963 $ 2,835,435 Denominator Weighted average common shares outstanding, basic 19,849,000 19,581,000 Warrants to purchase Common Stock 519,000 699,000 Weighted average common shares outstanding, diluted 20,368,000 20,280,000 Net income per share Basic $ 0.17 $ 0.14 Diluted $ 0.16 $ 0.14 Stock-Based Compensation The Company recognizes the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards. The Company records compensation expense on a straight-line basis. The fair value of options granted are estimated at the date of grant using a Black-Scholes option pricing model with assumptions for the risk-free interest rate, expected life, volatility, dividend yield and forfeiture rate. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of twelve months or less to be cash equivalents. Cash and cash equivalents are stated at fair value. Marketable Securities Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the consolidated statements of comprehensive income. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. The cost of securities sold is based on the specific-identification method. Interest on securities classified as available for sale is also included as a component of interest income. Fair Value of Financial Instruments The Company’s financial instruments consist of cash, cash equivalents, receivables, payables, accruals and notes payable. The carrying amount of cash, cash equivalents, receivables, payables and accruals approximates fair value due to the short-term nature of these items. The notes payable also approximate fair value based on evaluations of market interest rates. Reclassifications There were no reclassifications. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | As of June 30, 2019, the Company sold its investment resulting in a $148,548 loss on disposition of investment. Previously the Company had a 36% ownership in a privately held corporation. Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s consolidated balance sheet and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the consolidated statements of operations. The Company’s carrying value in an equity method investee company is reflected in the caption ‘‘Investments’’ in the Company’s consolidated balance sheet. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. |
RECEIVABLES
RECEIVABLES | 12 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
RECEIVABLES | Accounts receivable consist of the following: 2019 2018 Accounts receivable $ 7,048,177 $ 7,877,855 Allowance for doubtful accounts (145,825 ) (153,220 ) $ 6,902,352 $ 7,724,635 Accounts receivable consist of trade accounts receivable and unbilled amounts recognized as revenue during the year for which invoicing occurs subsequent to year-end. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment are stated at cost and consist of the following at June 30: 2019 2018 Computer equipment $ 3,678,638 $ 2,920,180 Furniture and equipment 1,833,074 1,703,586 Leasehold improvements 805,769 245,835 6,317,481 4,869,601 Less accumulated depreciation and amortization (3,345,224 ) (2,973,253 ) $ 2,972,257 $ 1,896,348 Depreciation expense for the years ended June 30, 2019 and 2018 was $371,972 and $422,933, respectively. |
CAPITALIZED SOFTWARE COSTS
CAPITALIZED SOFTWARE COSTS | 12 Months Ended |
Jun. 30, 2019 | |
Capitalized Computer Software, Net [Abstract] | |
CAPITALIZED SOFTWARE COSTS | Capitalized software costs consist of the following at June 30: 2019 2018 Capitalized software costs $ 2,737,312 $ 2,737,312 Less accumulated amortization (2,666,448 ) (2,568,386 ) $ 70,864 $ 168,926 Amortization expense for the years ended June 30, 2019 and 2018 was $98,061 and $79,521, respectively. |
ACQUISITION RELATED INTANGIBLE
ACQUISITION RELATED INTANGIBLE ASSETS, NET | 12 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
ACQUISITION RELATED INTANGIBLE ASSETS, NET | Customer relationships consist of the following at June 30: 2019 2018 Customer relationships $ 5,537,161 $ 5,537,161 Less accumulated amortization (4,748,761 ) (4,617,361 ) $ 788,400 $ 919,800 Amortization expense for the years ended June 30, 2019 and 2018 was $131,400 and $131,400, respectively. Estimated aggregate amortization expense per year are as follows: Years ending June 30: 2020 $ 131,400 2021 $ 131,400 2022 $ 131,400 2023 $ 131,400 Thereafter $ 394,200 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES | Accrued liabilities consist of the following at June 30, 2019 and 2018: 2019 2018 Accrued stock-based compensation $ 275,359 $ 347,971 Accrued compensation 503,578 300,571 Accrued other liabilities 222,238 (199,564 ) Accrued taxes 253,832 298,965 Accrued dividends 144,361 (2,249 ) $ 1,399,368 $ 745,694 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Jun. 30, 2019 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | The Company had the following notes payable obligations at June 30, 2019 and 2018: Notes Payable: 2019 2018 Note payable to an entity, due in monthly installments of $0 bearing interest at 4.00% due July 1, 2019, secured by long-term investments. - 312,456 Note payable to a bank, due in quarterly installments of $53,996 bearing interest at 4.21% balloon payment of $800,000 due July 28, 2022, secured by related capital equipment, NBV of approximately $1,550,000 - 1,467,599 Note payable to a bank, due in monthly installments of $29,097 bearing interest at 4.99% due April 1, 2023 secured by related capital equipment 1,215,922 - $ 1,215,922 $ 1,780,555 Less current portion notes payable (295,168 ) (188,478 ) $ 920,754 $ 1,592,077 Maturities of notes payable at June 30, 2019 are as follows: Year ending June 30: 2020 $ 295,168 2021 $ 310,242 2022 $ 326,087 2023 $ 284,425 Thereafter $ - |
LINES OF CREDIT
LINES OF CREDIT | 12 Months Ended |
Jun. 30, 2019 | |
Line of Credit Facility [Abstract] | |
LINES OF CREDIT | On January 9, 2019, the Company and U.S. Bank N.A. (the “ Bank Amendment provided, however The line of credit, as amended, is scheduled to mature on December 31, 2019. The balance on the line of credit was $4,660,000 and $3,230,000 at June 30, 2019 and June 30, 2018, respectively. |
DEFERRED REVENUE
DEFERRED REVENUE | 12 Months Ended |
Jun. 30, 2019 | |
Deferred Revenue Disclosure [Abstract] | |
DEFERRED REVENUE | Deferred revenue consisted of the following at June 30: 2019 2018 Subscription $ 1,606,985 $ 2,056,796 Other 310,802 278,490 $ 1,917,787 $ 2,335,286 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Due to the tax rates being changed in 2018 we have used a federal and state blended rate of 26%. Net deferred tax liabilities consist of the following components at June 30: 2019 2018 Deferred tax assets: NOL Carryover $ 29,234,200 31,664,500 Allowance for Bad Debts 37,900 39,800 Accrued Expenses 55,700 70,400 Deferred Revenue - - Depreciation (641,800 ) (274,500 ) Amortization (277,300 ) (337,000 ) Valuation allowance (28,408,700 ) (31,163,200 ) Net deferred tax asset - $ - The income tax provision differs from the amounts of income tax determined by applying the US federal income tax rate to pretax income from continuing operations for the years ended June 30, 2019 and 2018 due to the following: 2019 2018 Book Income $ 1,039,326 1,107,856 Stock for Services 26,078 (88,504 ) Change in accrual (14,727 ) (216,453 ) Life Insurance 17,626 26,438 Meals & Entertainment 10,939 9,562 Change in Allowance (1,923 ) (77,685 ) Change in Depreciation (477,179 ) (248,647 ) NOL Utilization (600,140 ) (512,567 ) Valuation allowance - $ - At June 30, 2019, the Company had net operating loss carryforwards of approximately $112,439,000 that may be offset against past and future taxable income from the year 2018 through 2036. A significant portion of the net operating loss carryforwards begin to expire in 2019. No tax benefit has been reported in the June 30, 2019 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. In January of 2009 the Company acquired Prescient Applied Intelligence, Inc. which had significant net operating loss carry-forwards. Due to the change in ownership, Prescient's net operating loss carryforwards may be limited as to use in future years. The limitation will be determined on a year-to-year basis. In June of 2015 the Company acquired Repositrak, Inc. which had significant net operating loss carryforwards. Due to the change in ownership, Repositrak's net operating loss carryforwards may be limited as to use in future years. The limitation will be determined on a year to year basis. The Company determines whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, the Company measures the tax position to determine the amount to recognize in the financial statements. The Company performed a review of its material tax positions in accordance with these recognition and measurement standards. The Company has concluded that there are no significant uncertain tax positions requiring disclosure, and there are not material amounts of unrecognized tax benefits. The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of June 30, 2019, the Company had no accrued interest or penalties related to uncertain tax positions. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Leases On May 1, 2019, the Company completed the expansion of new equipment for the Company’s information technology infrastructure, buildout of its corporate headquarters, and expansion of its collocation data center, which it completed using approximately $1,269,000 (the “Lease Amount”) of funds provided by the Bank to finance equipment and services related to the Company’s expansion and relocation pursuant to the Lease Agreement, originally entered into by and between the Company and the Bank on January 9, 2019. Pursuant to the Lease Agreement, as of May 1, 2019, the Bank is now leasing back the property and equipment purchased by the Company. Pursuant to the Lease Agreement, commencing May 1, 2019, the initial term of the lease shall be 48 months, the Lease Amount shall accrue interest at a rate of 5.0% per annum, and the Company shall be required to make monthly rental payments in the amount of approximately $29,097 per month. On June 21, 2018 the Company entered into an office lease at 5252 South Commerce Drive Suite D292, Murray, Utah 84107, providing for the lease of approximately 9,800 square feet for a period of three years, commencing on March 1, 2019. The monthly rent is $10,200. Minimum future payments, including principal and interest, under the non-cancelable capital leases are as follows: Year ending June 30: 2020 $ 471,564 2021 $ 471,564 2022 $ 430,764 2023 $ 290,970 2024 $ From time to time the Company may enter into or exit from diminutive operating lease agreements for equipment such as copiers, temporary back up servers, etc. These leases are not of a material amount and thus will not in the aggregate have a material adverse effect on our business, financial condition, results of operation or liquidity. |
EMPLOYEEE BENEFIT PLAN
EMPLOYEEE BENEFIT PLAN | 12 Months Ended |
Jun. 30, 2019 | |
Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract] | |
EMPLOYEEE BENEFIT PLAN | The Company offers an employee benefit plan under Benefit Plan Section 401(k) of the Internal Revenue Code. Employees who have attained the age of 18 are eligible to participate. The Company, at its discretion, may match employee’s contributions at a percentage determined annually by the Board of Directors. The Company does not currently match contributions. There were no expenses for the years ended June 30, 2019 and 2018. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 12 Months Ended |
Jun. 30, 2019 | |
Stockholders' equity: | |
STOCKHOLDERS EQUITY | Officers and Directors Stock Compensation Effective October 2018, the Board of Directors approved the following compensation for directors who are not employed by the Company: ● Annual cash compensation of $75,000 payable at the rate of $18,750 per quarter. The Company has the right to pay this amount in the form of shares of the Company’s Common Stock. ● Upon appointment, outside independent directors receive a grant of $150,000 payable in shares of the Company’s restricted Common Stock calculated based on the market value of the shares of Common Stock on the date of grant. The shares vest ratably over a five-year period. ● Reimbursement of all travel expense related to performance of Directors’ duties on behalf of the Company. Officers, Key Employees, Consultants and Directors Stock Compensation. In January 2013, the Board of Directors approved the Second Amended and Restated 2011 Stock Plan (the “ Amended 2011 Plan A Committee of independent members of the Company’s Board of Directors administers the 2011 Plan. The exercise price for each share of Common Stock purchasable under any incentive stock option granted under the 2011 Plan shall be not less than 100% of the fair market value of the Common Stock, as determined by the stock exchange on which the Common Stock trades on the date of grant. If the incentive stock option is granted to a shareholder who possesses more than 10% of the Company’s voting power, then the exercise price shall be not less than 110% of the fair market value on the date of grant. Each option shall be exercisable in whole or in installments as determined by the Committee at the time of the grant of such options. All incentive stock options expire after 10 years. If the incentive stock option is held by a shareholder who possesses more than 10% of the Company's voting power, then the incentive stock option expires after five years. If the option holder is terminated, then the incentive stock options granted to such holder expire no later than three months after the date of termination. For option holders granted incentive stock options exercisable for the first time during any fiscal year and in excess of $100,000 (determined by the fair market value of the shares of Common Stock as of the grant date), the excess shares of Common Stock shall not be deemed to be purchased pursuant to incentive stock options. During the years ended June 30, 2019 and 2018 the Company issued 34,382 and 27,880 shares to its directors and 81,842 and 127,161 shares to employees and consultants, respectively under these plans. The Company, under its Common Stock buyback plan purchased 87,600 shares. Those shares were cancelled and returned to authorized but unissued shares. The Company holds no Treasury Stock. 31,078 and 119,597, respectively are included in the rollforward of Restricted Stock units below. Restricted Stock Units Restricted Stock Units Weighted Average Grant Date Fair Value ($/share) Outstanding at July 1, 2017 982,613 6.01 Granted 23,085 10.50 Vested and issued (119,597 ) 7.38 Forfeited (28,487 ) 10.96 Outstanding at June 30, 2018 857,614 $ 6.46 Granted 62,962 6.05 Vested and issued (31,078 ) 10.77 Forfeited (23,224 ) 10.03 Outstanding at June 30, 2019 866,274 5.47 The number of restricted stock units outstanding at June 30, 2019 included 23,915 units that have vested but for which shares of Common Stock had not yet been issued pursuant to the terms of the agreement. As of June 30, 2019, there was approximately $4.7 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted average period of 3.51 years. Warrants Outstanding warrants were issued in connection with private placements of the Company’s Common Stock and with the Series B Preferred Restructure. The following table summarizes information about fixed stock warrants outstanding at June 30, 2019: Warrants Outstanding at June 30, 2019 Warrants Exercisable at June 30, 2019 Range of exercise prices Number Outstanding Weighted average remaining contractual life (years) Weighted average exercise price Number exercisable Weighted average exercise price $ 4.00 1,085,068 0.60 $ 4.00 1,085,068 $ 4.00 $ 10.00 23,737 $ 0.57 10.00 $ 23,737 10.00 1,108,805 0.60 $ 4.13 1,108,85 $ 4.13 Preferred Stock The Company’s articles of incorporation currently authorizes the issuance of up to 30,000,000 shares of ‘blank check’ preferred stock with designations, rights, and preferences as may be determined from time to time by the Company’s Board of Directors, of which 700,000 shares are currently designated as Series B Preferred Stock (“ Series B Preferred Series B-1 Preferred PIK Shares The Company does business with some of the largest retailers and wholesalers in the World. Management believes the Series B-1 Preferred favorably impacts the Company’s overall cost of capital in that it is: (i) perpetual and, therefore, an equity instrument that positively impacts the Company’s coverage ratios, (ii) possesses a below market dividend rate relative to similar instruments, (iii) offers the flexibility of a paid-in-kind (PIK) payment option, and (iv) is without covenants. After exploring alternative options for redeeming the Series B-1 Preferred, management determined that alternative financing options were materially more expensive, or would impair the Company’s net cash position, which management believes could cause customer concerns and negatively impact the Company’s ability to attract new business. Section 4 of the Company’s First Amended and Restated Certificate of Designation of the Relative Rights, Powers and Preferences of the Series B-1 Preferred Stock, as amended (the “ Series B-1 COD Redemption Notice In July 2017, the Company issued 20,000 shares of Series B-1 Preferred in satisfaction of an accrued bonus payable to the Company’s Chief Executive Officer. On January 27, 2018, the Company’s Board of Directors approved the redemption of 93,457 of the 305,859 issued and outstanding shares of the Company’s Series B-1 Preferred (the “ Redemption Shares Redemption Date Series B-1 Redemption As of June 30, 2019, a total of 625,375 shares of Series B Preferred and 212,402 shares of Series B-1 Preferred were issued and outstanding. Share Repurchase Program As previously disclosed on May 9, 2019, the Board of the Company approved the repurchase of up to $4.0 million of the Company’s stock, par value $0.01 per share, over the next 24 months (the “ Share Repurchase Program Exchange Act Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Amount Available for Future Share Repurchases Under the Plans or Programs May 9, 2019 – May 31, 2019: 17,600 $ 5.65 17,600 $ 3,897,659 June 1, 2019 – June 30, 2019: 70,000 $ 5.41 87,600 $ 3,517,594 May 9, 2019 – June 30, 2019: 87,600 $ 5.53 87,600 $ 3,517,594 (1) We close our books and records on the last calendar day of each month to align our financial closing with our business processes. (2) On May 9, 2019, our Board of Directors approved a Share Repurchase Program pursuant to which we are authorized to repurchase our Common Stock in privately negotiated transactions or in the open market at prices per share not exceeding the then-current market prices. From time to time, our Board of Directors may authorize increases to our Share Repurchase Program. The total remaining authorization for future common share repurchases under our Share Repurchase Program was $3,517,594 as of June 30, 2019. Under the Share Repurchase Program, management has discretion to determine the dollar amount of shares to be repurchased and the timing of any repurchases in compliance with applicable laws and regulations, including Rule 12b-18 of the Exchange Act. The Share Repurchase Program expires 24 months following May 9, 2019, and it may be suspended for periods or discontinued at any time. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Jun. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | In August 2018, the FASB issued ASU 2018-15 Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract In August 2018, the FASB issued ASU 2018-13 Fair Value Measurement (Topic 820) Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement In June 2018, the FASB issued ASU 2018-07 Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting In May 2014, August 2015, April 2016, May 2016, September 2017 and November 2017, the Financial Accounting Standards Board (“ FASB Revenue from Contracts with Customers Revenue from Contracts with Customers, Deferral of the Effective Date Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing Revenue from Contracts with Customers, Narrow Scope Improvements and Practical Expedients Income Statement - Reporting Comprehensive Income Revenue Recognition Revenue from Contracts with Customers In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In February 2016, the FASB issued ASU 2016-02 (ASC Topic 842), Leases |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Service Agreement. FMI Randall K. Fields and Robert W. Allen each beneficially own Series B-1 Preferred. As a result of the Series B-1 Redemption, the Company paid an aggregate of $0 and $889,159 to Messrs. Fields and Allen, respectively, in consideration for the redemption of 0 and 83,099 shares of Series B-1 Preferred. See Note 15. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events, through the filing date and noted no subsequent events that are reasonably likely to impact the financial statements. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The financial statements presented herein reflect the consolidated financial position of Park City Group, Inc. and our subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. |
Use of Estimates | The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that materially affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates. The methods, estimates, and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results it reports in its financial statements. The Securities and Exchange Commission has defined the most critical accounting policies as those that are most important to the portrayal of the Company’s financial condition and results and require the Company to make its most difficult and subjective judgments, often because of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include revenue recognition, goodwill, other long-lived asset valuations, income taxes, stock-based compensation, and capitalization of software development costs. |
Concentration of Credit Risk and Significant Customers | The Company maintains cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing evaluations of its customers and maintains allowances for possible losses. The provision is based on the overall composition of our accounts receivable aging, our prior history of accounts receivable write-offs, and our experience with specific customers. Other factors indicating significant risk include customers that have filed for bankruptcy or customers for which we have less payment history to rely upon. We rely on historical trends of bad debt as a percentage of total revenue and apply these percentages to the accounts receivable which when realized have been within the range of management’s expectations. The Company does not require collateral from its customers. The Company’s accounts receivable are derived from sales of products and services primarily to customers operating multilocation retail and grocery stores. The Company writes off accounts receivable when they are determined to be uncollectible. Changes in the allowances for doubtful accounts are recorded as bad debt expense and are included in general and administrative expense in our consolidated financial statements. Amounts that have been invoiced are recorded in accounts receivable (current and long-term), and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. The Company had one customer that accounted for greater than 10% of accounts receivable at June 30, 2019. Customer A had a balance of $886,174 and $1,288,980, for June 30,2019 and June 30, 2018, respectively. |
Prepaid Expense and Other Current Assets | Prepaid expense and other current assets include amounts for which payment has been made but the services have not yet been consumed. The Company’s prepaid expense is made up primarily of prepayments for hosted software applications used in the Company’s operations, maintenance agreements on hardware and software, and other miscellaneous amounts for insurance, membership fees and professional fees. Prepaid expense is amortized on a pro-rata basis to expense accounts as the services are consumed typically by the passage of time or as the service is used. |
Depreciation and Amortization | Depreciation and amortization of property and equipment is computed using the straight-line method based on the following estimated useful lives: Years Furniture and fixtures 5-7 Computer equipment 3 Equipment under capital leases 3 Long-term use equipment 10 Leasehold improvements See below Leasehold improvements are amortized over the shorter of the remaining lease term or the estimated useful life of the improvements. Amortization of intangible assets are computed using the straight-line method based on the following estimated useful lives: Years Customer relationships 10 Acquired developed software 5 Developed software 3 Goodwill See below Goodwill and intangible assets deemed to have indefinite lives are subject to annual impairment tests. Other intangible assets are amortized over their useful lives. |
Warranties | The Company offers a limited warranty against software defects. Customers who are not completely satisfied with their software purchase may attempt to be reimbursed for their purchases outside the warranty period. For the years ending June 30, 2019 and 2018, the Company did not incur any expense associated with warranty claims. |
Adoption of ASC Topic 606, "Revenue from Contracts with Customers" | In May 2014, the Financial Accounting Standards Board (“ FASB ASC 606 The effect of applying ASC 606 did not result in an opening balance adjustment to retained earnings or any other balance sheet accounts because the Company: (1) identified similar performance obligations under ASC 606 as compared with deliverables and separate units of account previously identified; (2) determined the transaction price to be consistent; and (3) concluded that revenue is recorded at the same point in time, upon performance under both ASC 605 and ASC 606. The adoption of ASC 606 did not require significant changes in our internal controls and procedures over financial reporting and disclosures. However, we made enhancements to existing internal controls and procedures to ensure compliance with the new guidance. |
Revenue Recognition | The Company recognizes revenue as it transfers control of deliverables (products, solutions and services) to its customers in an amount reflecting the consideration to which it expects to be entitled. To recognize revenue, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company accounts for a contract based on the terms and conditions the parties agree to, the contract has commercial substance and collectability of consideration is probable. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience. The Company may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any combination of its deliverables. To the extent a contract includes multiple promised deliverables, the Company applies judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, the Company allocates consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which the Company would sell a promised good or service separately to the customer. When not directly observable, the Company typically estimates standalone selling price by using the expected cost plus a margin approach. The Company typically establishes a standalone selling price range for its deliverables, which is reassessed on a periodic basis or when facts and circumstances change. For performance obligations where control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenue related to fixed-price contracts for application development and systems integration services, consulting or other technology services is recognized as the service is performed using the output method, under which the total value of revenue is recognized based on each contract’s deliverable(s) as they are completed and when value is transferred to a customer. Revenue related to fixed-price application maintenance, testing and business process services is recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. If the Company’s invoicing is not consistent with the value delivered, revenue is recognized as the service is performed based on the method described above. The output method measures the results achieved and value transferred to a customer, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately. Revenue related to fixed-price hosting and infrastructure services is recognized based on the Company’s right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. If the Company’s invoicing is not consistent with value delivered, revenue is recognized on a straight-line basis unless revenue is earned and obligations are fulfilled in a different pattern. The revenue recognition method applied to the types of contracts described above provides the most faithful depiction of performance towards satisfaction of the Company’s performance obligations. Revenue related to the Company’s software license arrangements that do not require significant modification or customization of the underlying software is recognized when the software is delivered as control is transferred at a point in time. For software license arrangements that require significant functionality enhancements or modification of the software, revenue for the software license and related services is recognized as the services are performed in accordance with the methods described above. In software hosting arrangements, the rights provided to the customer, such as ownership of a license, contract termination provisions and the feasibility of the client to operate the software, are considered in determining whether the arrangement includes a license or a service. Revenue related to software maintenance and support is generally recognized on a straight-line basis over the contract period. Revenue related to transaction-based or volume-based contracts is recognized over the period the services are provided in a manner that corresponds with the value transferred to the customer to-date relative to the remaining services to be provided. From time to time, the Company may enter into arrangements with third party suppliers to resell products or services. In such cases, the Company evaluates whether the Company is the principal (i.e. report revenue on a gross basis) or agent (i.e. report revenue on a net basis). In doing so, the Company first evaluates whether it controls the good or service before it is transferred to the customer. If the Company controls the good or service before it is transferred to the customer, the Company is the principal; if not, the Company is the agent. Determining whether the Company controls the good or service before it is transferred to the customer may require judgment. The Company provides customers with assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications. General updates or patch fixes are not considered an additional performance obligation in the contract. Variable consideration is estimated using either the sum of probability weighted amounts in a range of possible consideration amounts (expected value), or the single most likely amount in a range of possible consideration amounts (most likely amount), depending on which method better predicts the amount of consideration to which we may be entitled. The Company includes in the transaction price variable consideration only to the extent it is probable that a significant reversal of revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price may involve judgment and is based largely on an assessment of its anticipated performance and all information that is reasonably available to the Company. The Company assesses the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its services, not to receive or provide financing from or to customers. The Company does not consider set up or transition fees paid upfront by its customers to represent a financing component, as such fees are required to encourage customer commitment to the project and protect us from early termination of the contract. |
Trade Accounts Receivable and Contract Balances | We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset (unbilled receivable). A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, we recognize a receivable for revenue related to our transaction or volume-based contracts when earned regardless of whether amounts have been billed. We present such receivables in trade accounts receivable, net in our consolidated statements of financial position at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables, judgment, and other applicable factors. A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented in current and other assets in our consolidated balance sheets and primarily relate to unbilled amounts on fixed-price contracts utilizing the output method of revenue recognition. The table below shows movements in contract assets: Contract assets Balance – June 30, 2018 $ 4,696,861 Revenue recognized during the period but not billed 3,544,122 Amounts reclassified to accounts receivable (3,558,184 ) Other - Balance – June 30, 2019 $ 4,682,799 (1) (1) Contract asset balances for June 30, 2019 include a current and a long-term contract asset, $3,023,694, and $1,659,110 respectively. Our contract assets and liabilities are reported in a net position at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenue primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which may vary generally by contract type. The table below shows movements in the deferred revenue balances (current and noncurrent) for the period: Contract liability Balance – June 30, 2018 $ 2,335,286 Amounts billed but not recognized as revenue 66,525 Revenue recognized related to the opening balance of deferred revenue (484,024 ) Other - Balance – June 30, 2019 $ 1,917,787 Our contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenue primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which may vary generally by contract type. |
Disaggregation of Revenue | The table below presents disaggregated revenue from contracts with customers by customer geography and contract-type. We believe this disaggregation best depicts the nature, amount, timing and uncertainty of our revenue and cash flows that may be affected by industry, market and other economic factors: For the Year Ended June 30, 2019 Geography Subscription & support Professional services Transaction based Total North America $ 16,159,572 $ 2,055,968 $ 2,893,675 $ 21,109,215 International - - 60,393 60,393 Total $ 16,159,572 $ 2,055,968 $ 2,954,068 $ 21,169,608 |
Software Development Costs | The Company accounts for research costs of computer software to be sold, leased or otherwise marketed as expense until technological feasibility has been established for the product. Once technological feasibility is established, the company will occasionally capitalize software costs until the product is available for general release to customers. In these instances, the Company determines technological feasibility for its software products to have been reached when a working prototype is complete and meets or exceeds design specifications including functions, features, and technical performance requirements. During the 2019 and 2018 fiscal years, capitalized development costs of zero and $65,505, respectively, were amortized into expense. The Company amortizes its developed and purchased software on a straight-line basis over three and five years, respectively. |
Research and Development Costs | Research and development costs include personnel costs, engineering, consulting, and contract labor and are expensed as incurred for software that has not achieved technological feasibility. |
Advertising Costs | Advertising is expensed as incurred. Advertising costs were approximately $90,546 and $107,656 for the years ended June 30, 2019 and 2018, respectively. |
Income Taxes | The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. |
Earnings Per Share | Basic net income per common share (“ Basic EPS Diluted EPS For the year ended June 30, 2019 and 2018 warrants to purchase 1,108,805 and 1,185,549 shares of Common Stock, respectively, were included in the computation of diluted EPS due to the anti-dilutive effect. Warrants to purchase shares of Common Stock were outstanding at prices ranging $4.00 from to $10.00 per share at June 30, 2019. The following table presents the components of the computation of basic and diluted earnings per share for the periods indicated: Year ended June 30, 2019 2018 Numerator Net income applicable to common shareholders $ 3,315,963 $ 2,835,435 Denominator Weighted average common shares outstanding, basic 19,849,000 19,581,000 Warrants to purchase Common Stock 519,000 699,000 Weighted average common shares outstanding, diluted 20,368,000 20,280,000 Net income per share Basic $ 0.17 $ 0.14 Diluted $ 0.16 $ 0.14 |
Stock-Based Compensation | The Company recognizes the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards. The Company records compensation expense on a straight-line basis. The fair value of options granted are estimated at the date of grant using a Black-Scholes option pricing model with assumptions for the risk-free interest rate, expected life, volatility, dividend yield and forfeiture rate. |
Cash and Cash Equivalents | The Company considers all highly liquid investments purchased with an original maturity of twelve months or less to be cash equivalents. Cash and cash equivalents are stated at fair value. |
Marketable Securities | Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the consolidated statements of comprehensive income. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. The cost of securities sold is based on the specific-identification method. Interest on securities classified as available for sale is also included as a component of interest income. |
Fair Value of Financial Instruments | The Company’s financial instruments consist of cash, cash equivalents, receivables, payables, accruals and notes payable. The carrying amount of cash, cash equivalents, receivables, payables and accruals approximates fair value due to the short-term nature of these items. The notes payable also approximate fair value based on evaluations of market interest rates. |
Reclassifications | There were no reclassifications. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Depreciation and amortization of property and equipment | Years Furniture and fixtures 5-7 Computer equipment 3 Equipment under capital leases 3 Long-term use equipment 10 Leasehold improvements See below |
Amortization of intangible assets | Years Customer relationships 10 Acquired developed software 5 Developed software 3 Goodwill See below |
Contract assets and liabilities | Contract assets Balance – June 30, 2018 $ 4,696,861 Revenue recognized during the period but not billed 3,544,122 Amounts reclassified to accounts receivable (3,558,184 ) Other - Balance – June 30, 2019 $ 4,682,799 (1) (1) Contract asset balances for June 30, 2019 include a current and a long-term contract asset, $3,023,694, and $1,659,110 respectively. Contract liability Balance – June 30, 2018 $ 2,335,286 Amounts billed but not recognized as revenue 66,525 Revenue recognized related to the opening balance of deferred revenue (484,024 ) Other - Balance – June 30, 2019 $ 1,917,787 |
Disaggregation of revenue | For the Year Ended June 30, 2019 Geography Subscription & support Professional services Transaction based Total North America $ 16,159,572 $ 2,055,968 $ 2,893,675 $ 21,109,215 International - - 60,393 60,393 Total $ 16,159,572 $ 2,055,968 $ 2,954,068 $ 21,169,608 |
Diluted EPS | Year ended June 30, 2019 2018 Numerator Net income applicable to common shareholders $ 3,315,963 $ 2,835,435 Denominator Weighted average common shares outstanding, basic 19,849,000 19,581,000 Warrants to purchase Common Stock 519,000 699,000 Weighted average common shares outstanding, diluted 20,368,000 20,280,000 Net income per share Basic $ 0.17 $ 0.14 Diluted $ 0.16 $ 0.14 |
RECEIVABLES (Tables)
RECEIVABLES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
Accounts receivable | 2019 2018 Accounts receivable $ 7,048,177 $ 7,877,855 Allowance for doubtful accounts (145,825 ) (153,220 ) $ 6,902,352 $ 7,724,635 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | 2019 2018 Computer equipment $ 3,678,638 $ 2,920,180 Furniture and equipment 1,833,074 1,703,586 Leasehold improvements 805,769 245,835 6,317,481 4,869,601 Less accumulated depreciation and amortization (3,345,224 ) (2,973,253 ) $ 2,972,257 $ 1,896,348 |
CAPITALIZED SOFTWARE COSTS (Tab
CAPITALIZED SOFTWARE COSTS (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Capitalized Computer Software, Net [Abstract] | |
Capitalized software costs | 2019 2018 Capitalized software costs $ 2,737,312 $ 2,737,312 Less accumulated amortization (2,666,448 ) (2,568,386 ) $ 70,864 $ 168,926 |
ACQUISITION RELATED INTANGIBL_2
ACQUISITION RELATED INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Customer relationships | 2019 2018 Customer relationships $ 5,537,161 $ 5,537,161 Less accumulated amortization (4,748,761 ) (4,617,361 ) $ 788,400 $ 919,800 |
Estimated aggregate amortization expense | Years ending June 30: 2020 $ 131,400 2021 $ 131,400 2022 $ 131,400 2023 $ 131,400 Thereafter $ 394,200 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued liabilities | 2019 2018 Accrued stock-based compensation $ 275,359 $ 347,971 Accrued compensation 503,578 300,571 Accrued other liabilities 222,238 (199,564 ) Accrued taxes 253,832 298,965 Accrued dividends 144,361 (2,249 ) $ 1,399,368 $ 745,694 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Notes Payable [Abstract] | |
Notes payable | Notes Payable: 2019 2018 Note payable to an entity, due in monthly installments of $0 bearing interest at 4.00% due July 1, 2019, secured by long-term investments. - 312,456 Note payable to a bank, due in quarterly installments of $53,996 bearing interest at 4.21% balloon payment of $800,000 due July 28, 2022, secured by related capital equipment, NBV of approximately $1,550,000 - 1,467,599 Note payable to a bank, due in monthly installments of $29,097 bearing interest at 4.99% due April 1, 2023 secured by related capital equipment 1,215,922 - $ 1,215,922 $ 1,780,555 Less current portion notes payable (295,168 ) (188,478 ) $ 920,754 $ 1,592,077 |
Maturities of notes payable and capital leases | Year ending June 30: 2020 $ 295,168 2021 $ 310,242 2022 $ 326,087 2023 $ 284,425 Thereafter $ - |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred revenue | 2019 2018 Subscription $ 1,606,985 $ 2,056,796 Other 310,802 278,490 $ 1,917,787 $ 2,335,286 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Deferred tax assets and liabilities | 2019 2018 Deferred tax assets: NOL Carryover $ 29,234,200 31,664,500 Allowance for Bad Debts 37,900 39,800 Accrued Expenses 55,700 70,400 Deferred Revenue - - Depreciation (641,800 ) (274,500 ) Amortization (277,300 ) (337,000 ) Valuation allowance (28,408,700 ) (31,163,200 ) Net deferred tax asset - $ - |
Summary of income tax | 2019 2018 Book Income $ 1,039,326 1,107,856 Stock for Services 26,078 (88,504 ) Change in accrual (14,727 ) (216,453 ) Life Insurance 17,626 26,438 Meals & Entertainment 10,939 9,562 Change in Allowance (1,923 ) (77,685 ) Change in Depreciation (477,179 ) (248,647 ) NOL Utilization (600,140 ) (512,567 ) Valuation allowance - $ - |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum future rental payments | Year ending June 30: 2020 $ 471,564 2021 $ 471,564 2022 $ 430,764 2023 $ 290,970 2024 $ |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Stockholders' equity: | |
Restricted stock units | Restricted Stock Units Weighted Average Grant Date Fair Value ($/share) Outstanding at July 1, 2017 982,613 6.01 Granted 23,085 10.50 Vested and issued (119,597 ) 7.38 Forfeited (28,487 ) 10.96 Outstanding at June 30, 2018 857,614 $ 6.46 Granted 62,962 6.05 Vested and issued (31,078 ) 10.77 Forfeited (23,224 ) 10.03 Outstanding at June 30, 2019 866,274 5.47 |
Fixed stock options and warrants outstanding | Warrants Outstanding at June 30, 2019 Warrants Exercisable at June 30, 2019 Range of exercise prices Number Outstanding Weighted average remaining contractual life (years) Weighted average exercise price Number exercisable Weighted average exercise price $ 4.00 1,085,068 0.60 $ 4.00 1,085,068 $ 4.00 $ 10.00 23,737 $ 0.57 10.00 $ 23,737 10.00 1,108,805 0.60 $ 4.13 1,108,85 $ 4.13 |
Share repurchase program | Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Amount Available for Future Share Repurchases Under the Plans or Programs May 9, 2019 – May 31, 2019: 17,600 $ 5.65 17,600 $ 3,897,659 June 1, 2019 – June 30, 2019: 70,000 $ 5.41 87,600 $ 3,517,594 May 9, 2019 – June 30, 2019: 87,600 $ 5.53 87,600 $ 3,517,594 (1) We close our books and records on the last calendar day of each month to align our financial closing with our business processes. (2) On May 9, 2019, our Board of Directors approved a Share Repurchase Program pursuant to which we are authorized to repurchase our Common Stock in privately negotiated transactions or in the open market at prices per share not exceeding the then-current market prices. From time to time, our Board of Directors may authorize increases to our Share Repurchase Program. The total remaining authorization for future common share repurchases under our Share Repurchase Program was $3,517,594 as of June 30, 2019. Under the Share Repurchase Program, management has discretion to determine the dollar amount of shares to be repurchased and the timing of any repurchases in compliance with applicable laws and regulations, including Rule 12b-18 of the Exchange Act. The Share Repurchase Program expires 24 months following May 9, 2019, and it may be suspended for periods or discontinued at any time. |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Jun. 30, 2019 | |
Furniture and fixtures | Minimum | |
Property plant and equipment useful life | 5 years |
Furniture and fixtures | Maximum | |
Property plant and equipment useful life | 7 years |
Computer Equipment | |
Property plant and equipment useful life | 3 years |
Equipment Under Capital Leases | |
Property plant and equipment useful life | 3 years |
Long-term Use Equipment | |
Property plant and equipment useful life | 10 years |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 12 Months Ended |
Jun. 30, 2019 | |
Customer Relationships | |
Amortization of intangible asset useful life | 10 years |
Acquired Developed Software | |
Amortization of intangible asset useful life | 5 years |
Developed Software | |
Amortization of intangible asset useful life | 3 years |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 12 Months Ended | |
Jun. 30, 2019USD ($) | ||
Accounting Policies [Abstract] | ||
Contract assets, beginning | $ 4,696,861 | |
Revenue recognized during the period but not billed | 3,544,122 | |
Amounts reclassified to accounts receivable | (3,558,184) | |
Other | 0 | |
Contract assets, ending | 4,682,799 | [1] |
Contract liability, beginning | 2,335,286 | |
Amounts billed but not recognized as revenue | 66,525 | |
Revenues recognized related to the opening balance of deferred revenue | (484,024) | |
Other | 0 | |
Contract liability, ending | $ 1,917,787 | |
[1] | Contract asset balances for June 30, 2019 include a current and a long-term contract asset, $3,023,694, and $1,659,110 respectively. |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 21,169,608 | $ 22,036,278 |
Subscription & support | ||
Revenue | 16,159,572 | |
Professional services | ||
Revenue | 2,055,968 | |
Transaction based | ||
Revenue | 2,954,068 | |
North America | ||
Revenue | 21,109,215 | |
North America | Subscription & support | ||
Revenue | 16,159,572 | |
North America | Professional services | ||
Revenue | 2,055,968 | |
North America | Transaction based | ||
Revenue | 2,893,675 | |
International | ||
Revenue | 60,393 | |
International | Subscription & support | ||
Revenue | 0 | |
International | Professional services | ||
Revenue | 0 | |
International | Transaction based | ||
Revenue | $ 60,393 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator | ||
Net income applicable to common shareholders | $ 3,315,963 | $ 2,835,435 |
Denominator | ||
Weighted average common shares outstanding, basic | 19,849,000 | 19,581,000 |
Warrants to purchase common stock | 519,000 | 699,000 |
Weighted average common shares outstanding, diluted | 20,368,000 | 20,280,000 |
Net income per share | ||
Basic | $ 0.17 | $ 0.14 |
Diluted | $ 0.16 | $ 0.14 |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Contract assets, current | $ 3,023,694 | $ 3,502,287 |
Contract assets, noncurrent | 1,659,110 | 1,194,574 |
Capitalized development costs | 0 | 65,505 |
Advertising expense | $ 90,546 | $ 107,656 |
Computation of diluted EPS due to the anti-dilutive effect | 1,108,805 | 1,185,549 |
Customer A | ||
Accounts receivable | $ 886,174 | $ 1,288,980 |
RECEIVABLES (Details)
RECEIVABLES (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Receivables [Abstract] | ||
Accounts receivable | $ 7,048,177 | $ 7,877,855 |
Allowance for doubtful accounts | (145,825) | (153,220) |
Accounts receivable, net | $ 6,902,352 | $ 7,724,635 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Property, Plant and Equipment [Abstract] | ||
Computer equipment | $ 3,678,638 | $ 2,920,180 |
Furniture and fixtures | 1,833,074 | 1,703,586 |
Leasehold improvements | 805,769 | 245,835 |
Property and equipment, gross | 6,317,481 | 4,869,601 |
Less accumulated depreciation and amortization | (3,345,224) | (2,973,253) |
Property and equipment, net | $ 2,972,257 | $ 1,896,348 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 371,972 | $ 422,933 |
CAPITALIZED SOFTWARE COSTS (Det
CAPITALIZED SOFTWARE COSTS (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Capitalized Computer Software, Net [Abstract] | ||
Capitalized software costs, gross | $ 2,737,312 | $ 2,737,311 |
Less accumulated amortization | (2,666,448) | (2,568,386) |
Capitalized software costs, net | $ 70,864 | $ 168,926 |
CAPITALIZED SOFTWARE COSTS (D_2
CAPITALIZED SOFTWARE COSTS (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Capitalized Computer Software, Net [Abstract] | ||
Amortization expense | $ 98,061 | $ 79,521 |
ACQUISITION RELATED INTANGIBL_3
ACQUISITION RELATED INTANGIBLE ASSETS, NET (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Business Combinations [Abstract] | ||
Customer relationships | $ 5,537,161 | $ 5,537,161 |
Less accumulated amortization | (4,748,761) | (4,617,361) |
Total | $ 788,400 | $ 919,800 |
ACQUISITION RELATED INTANGIBL_4
ACQUISITION RELATED INTANGIBLE ASSETS, NET (Details 1) | Jun. 30, 2019USD ($) |
Business Combinations [Abstract] | |
2020 | $ 131,400 |
2021 | 131,400 |
2022 | 131,400 |
2023 | 131,400 |
Thereafter | $ 394,200 |
ACQUISITION RELATED INTANGIBL_5
ACQUISITION RELATED INTANGIBLE ASSETS, NET (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Business Combinations [Abstract] | ||
Amortization expense | $ 131,400 | $ 131,400 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Payables and Accruals [Abstract] | ||
Accrued stock-based compensation | $ 275,359 | $ 347,971 |
Accrued compensation | 503,578 | 300,571 |
Accrued other liabilities | 222,238 | (199,564) |
Accrued taxes | 253,832 | 298,965 |
Accrued dividends | 144,361 | (2,249) |
Accrued liabilities | $ 1,399,368 | $ 745,694 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Notes payable | $ 1,215,922 | $ 1,780,555 |
Less current portion of notes payable | (294,168) | (188,478) |
Non current capital lease obligations and notes payable | 920,754 | 1,592,077 |
Bank 1 | ||
Notes payable | 0 | 312,456 |
Monthly debt payment installment | $ 0 | $ 0 |
Annual interest rate | 4.00% | 4.00% |
Bank 2 | ||
Notes payable | $ 0 | $ 1,467,599 |
Quarterly debt payment installment | $ 53,996 | $ 53,996 |
Annual interest rate | 4.21% | 4.21% |
Bank 3 | ||
Notes payable | $ 1,215,922 | $ 0 |
Monthly debt payment installment | $ 29,097 | $ 29,097 |
Annual interest rate | 4.99% | 4.99% |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - Notes Payable Other Payables [Member] | Jun. 30, 2019USD ($) |
2020 | $ 295,168 |
2021 | 310,242 |
2022 | 326,087 |
2023 | 284,425 |
Thereafter | $ 0 |
LINES OF CREDIT (Details Narrat
LINES OF CREDIT (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Line of Credit Facility [Abstract] | ||
Line of credit annual interest rate | 1.75% | |
Line of credit maturity date | Dec. 31, 2019 | |
Line of credit maximum borrowings | $ 6,000,000 | |
Line of credit outstanding | $ 4,660,000 | $ 3,230,000 |
DEFERRED REVENUE (Details)
DEFERRED REVENUE (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Deferred revenue | $ 1,917,787 | $ 2,335,286 |
Subscription | ||
Deferred revenue | 1,606,985 | 2,056,796 |
Other | ||
Deferred revenue | $ 310,802 | $ 278,490 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Deferred tax assets: | ||
NOL Carryover | $ 29,234,200 | $ 31,664,500 |
Allowance for bad debts | 37,900 | 39,800 |
Accrued expense | 55,700 | 70,400 |
Deferred revenue | 0 | 0 |
Deferred tax liabilities: | ||
Depreciation | (641,800) | (274,500) |
Amortization | (277,300) | (337,000) |
Valuation allowance | (28,408,700) | (31,163,200) |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Book income | $ 1,039,326 | $ 1,107,856 |
Stock for services | 26,078 | (88,504) |
Change in accrual | (14,727) | (216,453) |
Life insurance | 17,626 | 26,438 |
Meals & entertainment | 10,939 | 9,562 |
Change in allowance | (1,923) | (77,685) |
Change in depreciation | (477,179) | (248,647) |
NOL utilization | (600,140) | (512,567) |
Valuation allowance | 0 | 0 |
Total | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 12 Months Ended |
Jun. 30, 2019USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforwards | $ 112,439,000 |
Carryforward expiration date | Jun. 30, 2036 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | Jun. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 471,564 |
2021 | 471,564 |
2022 | 430,764 |
2023 | 290,970 |
2024 | $ 0 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) - Restricted Stock - $ / shares | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Restricted Stock Units | ||
Outstanding, beginning of period | 857,614 | 982,613 |
Granted | 62,962 | 23,085 |
Vested and issued | (31,078) | (119,597) |
Forfeited | (23,224) | (28,487) |
Outstanding, end of period | 866,274 | 857,614 |
Weighted Average Grant Date Fair Value | ||
Outstanding, beginning of period | $ 6.46 | $ 6.01 |
Granted | 6.05 | 10.50 |
Vested and issued | 10.77 | 7.38 |
Forfeited | 10.03 | 10.96 |
Outstanding, end of period | $ 5.47 | $ 6.46 |
STOCKHOLDERS EQUITY (Details 1)
STOCKHOLDERS EQUITY (Details 1) - Warrants | 12 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Number outstanding | shares | 1,108,805 |
Weighted average remaining contractual life (years), outstanding | 7 months 6 days |
Weighted average exercise price | $ / shares | $ 4.13 |
Number exercisable | shares | 1,108,805 |
Weighted average exercise price, exercisable | $ / shares | $ 4.13 |
$4.00 | |
Number outstanding | shares | 1,085,068 |
Weighted average remaining contractual life (years), outstanding | 7 months 6 days |
Weighted average exercise price | $ / shares | $ 4 |
Number exercisable | shares | 1,085,068 |
Weighted average exercise price, exercisable | $ / shares | $ 4 |
$10.00 | |
Number outstanding | shares | 23,737 |
Weighted average remaining contractual life (years), outstanding | 6 months 25 days |
Weighted average exercise price | $ / shares | $ 10 |
Number exercisable | shares | 23,737 |
Weighted average exercise price, exercisable | $ / shares | $ 10 |
STOCKHOLDERS EQUITY (Details 2)
STOCKHOLDERS EQUITY (Details 2) - $ / shares | 1 Months Ended | 2 Months Ended | |
Jun. 30, 2019 | May 31, 2019 | Jun. 30, 2019 | |
Stockholders' equity: | |||
Total number of shares purchased | 70,000 | 17,600 | 87,600 |
Average price paid per share | $ 5.41 | $ 5.65 | $ 5.53 |
Total number of shares purchased as part of publicly announced plans or programs | 70,000 | 17,600 | 87,600 |
Amount available for future share repurchases under the plans or programs | 3,517,594 | 3,897,659 | 3,517,594 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Annual compensation | $ 75,000 | |
Quarterly compensation payment | $ 18,750 | |
Appointment grant of shares of restricted stock | 150,000 | |
Preferred stock authorized | 30,000,000 | 30,000,000 |
Series B Preferred | ||
Preferred stock authorized | 700,000 | 700,000 |
Preferred stock, issued | 625,375 | 625,375 |
Preferred stock, outstanding | 625,375 | 625,375 |
Series B-1 Preferred | ||
Preferred stock authorized | 550,000 | 550,000 |
Preferred stock, issued | 212,403 | 212,403 |
Preferred stock, outstanding | 212,403 | 212,403 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Related Party Transactions [Abstract] | ||
Related party payables | $ 316,539 | $ 316,539 |