Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2017 | Sep. 15, 2017 | Dec. 31, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | PRECISION OPTICS CORPORATION, INC. | ||
Entity Central Index Key | 867,840 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 2,196,421 | ||
Entity Common Stock, Shares Outstanding | 9,428,472 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 118,405 | $ 50,059 |
Accounts receivable (net of allowance for doubtful accounts of $5,000 at June 30, 2017 and $23,377 at June 30, 2016) | 468,548 | 750,380 |
Inventories | 1,055,447 | 1,133,451 |
Prepaid expenses | 55,985 | 88,129 |
Total current assets | 1,698,385 | 2,022,019 |
Fixed Assets: | ||
Machinery and equipment | 2,507,190 | 2,479,471 |
Leasehold improvements | 553,596 | 553,596 |
Furniture and fixtures | 148,303 | 148,303 |
Vehicles | 0 | 19,674 |
Total | 3,209,089 | 3,201,044 |
Less: Accumulated depreciation and amortization | 3,136,835 | 3,122,849 |
Net fixed assets | 72,254 | 78,195 |
Patents, net | 30,086 | 22,874 |
TOTAL ASSETS | 1,800,725 | 2,123,088 |
Current Liabilities: | ||
Current portion of capital lease obligation | 8,391 | 7,857 |
Accounts payable | 694,958 | 1,151,561 |
Customer advances | 180,137 | 0 |
Accrued employee compensation | 189,783 | 238,381 |
Accrued professional services | 71,000 | 65,550 |
Accrued warranty expense | 25,000 | 25,000 |
Other accrued liabilities | 49,512 | 15,612 |
Total current liabilities | 1,218,781 | 1,503,961 |
Capital lease obligation, net of current portion | 23,564 | 31,955 |
Stockholders' Equity: | ||
Common stock, $0.01 par value: 50,000,000 shares authorized; issued and outstanding - 8,872,916 shares at June 30, 2017 and 7,539,582 shares at June 30, 2016 | 88,729 | 75,396 |
Additional paid-in capital | 45,140,383 | 44,176,051 |
Accumulated deficit | (44,670,732) | (43,664,275) |
Total stockholders' equity | 558,380 | 587,172 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,800,725 | $ 2,123,088 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 5,000 | $ 23,377 |
STOCKHOLDERS' EQUITY | ||
Common Stock par value | $ 0.01 | $ 0.01 |
Common Stock shares authorized | 50,000,000 | 50,000,000 |
Common Stock shares issued | 8,872,916 | 7,539,582 |
Common Stock shares outstanding | 8,872,916 | 7,539,582 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 3,154,547 | $ 3,916,702 |
Cost of goods sold | 2,380,823 | 2,974,681 |
Gross profit | 773,724 | 942,021 |
Research and development expenses, net | 464,162 | 478,267 |
Selling, general and administrative expenses | 1,313,478 | 1,551,895 |
Gain on sale of assets | (1,515) | (32,707) |
Total operating expenses | 1,776,125 | 1,997,455 |
Operating loss | (1,002,401) | (1,055,434) |
Interest expense | (3,144) | (469) |
Other income | 0 | 22,050 |
Loss before provision for income taxes | (1,005,545) | (1,033,853) |
Provision for income taxes | 912 | 912 |
Net loss | $ (1,006,457) | $ (1,034,765) |
Loss Per Share: | ||
Basic | $ (0.12) | $ (0.15) |
Diluted | $ (0.12) | $ (0.15) |
Weighted Average Common Shares Outstanding: | ||
Basic | 8,343,235 | 7,157,978 |
Diluted | 8,343,235 | 7,157,978 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Jun. 30, 2015 | 6,389,806 | |||
Beginning balance, value at Jun. 30, 2015 | $ 63,898 | $ 43,232,500 | $ (42,629,510) | $ 666,888 |
Proceeds from private placement of common stock, net of issuance costs, shares | 1,044,776 | |||
Proceeds from private placement of common stock, net of issuance costs, value | $ 10,448 | 654,913 | 665,361 | |
Common stock issued for services rendered to the Company, shares | 105,000 | |||
Common stock issued for services rendered to the Company, value | $ 1,050 | 47,250 | 48,300 | |
Stock-based compensation | 241,388 | 241,388 | ||
Net loss | (1,034,765) | (1,034,765) | ||
Ending balance, shares at Jun. 30, 2016 | 7,539,582 | |||
Ending balance, value at Jun. 30, 2016 | $ 75,396 | 44,176,051 | (43,664,275) | 587,172 |
Proceeds from private placement of common stock, net of issuance costs, shares | 1,333,334 | |||
Proceeds from private placement of common stock, net of issuance costs, value | $ 13,333 | 762,720 | 776,053 | |
Stock-based compensation | 201,612 | 201,612 | ||
Net loss | (1,006,457) | (1,006,457) | ||
Ending balance, shares at Jun. 30, 2017 | 8,872,916 | |||
Ending balance, value at Jun. 30, 2017 | $ 88,729 | $ 45,140,383 | $ (44,670,732) | $ 558,380 |
CONSOLIDATED STATEMENTS OF STO6
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Stockholders' Equity [Abstract] | ||
Stock issuance costs | $ 23,947 | $ 34,639 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (1,006,457) | $ (1,034,765) |
Adjustments to reconcile net loss to net cash used in operating activities - | ||
Depreciation and amortization | 33,660 | 25,856 |
Gain on sale of assets | (1,515) | (32,707) |
Stock-based compensation expense | 201,612 | 241,388 |
Non-cash consulting expense | 33,900 | 63,000 |
Non-cash gain on settlement of liabilities by issuing common stock | 0 | (22,050) |
Changes in operating assets and liabilities - | ||
Accounts receivable, net | 281,832 | (162,338) |
Inventories | 78,004 | (60,195) |
Prepaid expenses | 32,144 | (22,947) |
Accounts payable | (457,603) | 261,461 |
Customer advances | 180,137 | (118,800) |
Accrued expenses | (43,148) | (14,201) |
Net cash used in operating activities | (667,434) | (876,298) |
Cash Flows from Investing Activities: | ||
Proceeds from sale of assets | 1,515 | 32,707 |
Additional patent costs | (7,212) | (4,230) |
Purchases of fixed assets | (27,719) | (4,372) |
Net cash provided by (used in) investing activities | (33,416) | 24,105 |
Cash Flows from Financing Activities: | ||
Payment of capital lease obligation | (7,857) | (4,160) |
Proceeds from private placement of common stock | 780,000 | 700,000 |
Private placement expenses incurred and paid | (2,947) | (34,639) |
Net cash provided by financing activities | 769,196 | 661,201 |
Net (decrease) increase in cash and cash equivalents | 68,346 | (190,992) |
Cash and cash equivalents, beginning of year | 50,059 | 241,051 |
Cash and cash equivalents, end of year | 118,405 | 50,059 |
Supplemental Disclosure of Cash Flow Informatin: | ||
Cash paid during the year for income taxes | 912 | 912 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | ||
Issuance of common stock to consultants | 0 | 48,300 |
Private placement expenses incurred but not yet paid | 21,000 | 37,781 |
Issuance of common stock in settlement of accounts payable | 20,000 | 0 |
Capital expenditures funded by capital lease borrowings | $ 0 | $ 43,972 |
1. SUMMARY OF SIGNIFICANT ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | (a) Nature of Business and Liquidity Precision Optics Corporation, Inc. (the “Company”) designs, develops, manufactures and sells specialized optical and illumination systems and related components. The Company conducts business in one industry segment only and its customers are primarily domestic. The Company performs advanced optical and illumination system design, development, assembly and manufacturing services for products that fall into two principal areas: (i) medical products for use by hospitals and physicians; and (ii) products used by military and industrial customers. The Company has sustained recurring net losses for several years. During the year ended June 30, 2017, the Company incurred a net loss of $1,006,457 and used cash in operating activities of $667,434. As of June 30, 2017, cash and cash equivalents were $118,405, accounts receivable were $468,548, and current liabilities were $1,218,781. As of June 30, 2016, cash and cash equivalents were $50,059, accounts receivable were $750,380, and current liabilities were $1,503,961. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Until the Company achieves breakeven and profitable results, the Company will be required to pursue several options to manage cash flow and raise capital, including issuing debt or equity or entering into a strategic alliance. The sale of additional equity or convertible debt securities, if converted into common stock, would result in additional dilution to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants that could restrict our operations or finances and encumber the Company’s assets. Financing may not be available in amounts or on terms acceptable to the Company, if at all. If the Company is unable to secure additional capital, it may be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations. If the Company cannot raise funds on acceptable terms or achieve positive cash flow, it may not be able to continue to develop new products, grow market share, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, any of which could negatively impact the Company’s business, operating results and financial condition, or impact the Company’s ability to continue to conduct operations. (b) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. (c) Revenues The Company recognizes revenue when four basic criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. The Company’s shipping terms are customarily FOB shipping point. The sales price of products and services sold is fixed and determinable after receipt and acceptance of a customer’s purchase order or properly executed sales contract, typically before any work is performed. Management reviews each customer purchase order or sales contract to determine that the work to be performed is specified and there are no unusual terms and conditions that would raise questions as to whether the sales price is fixed or determinable. The Company assesses credit worthiness of customers based upon prior history with the customer and assessment of financial condition. Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for that portion of accounts receivable considered to be uncollectible, based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Bad debts are written off against the allowance when identified. The Company’s revenue transactions typically do not contain multiple deliverable elements for future performance obligations to customers, other than a standard one-year warranty on materials and workmanship, the estimated costs for which are provided for at the time revenue is recognized. Revenues for industrial and medical products sold in the normal course of business are recognized upon shipment when delivery terms are FOB shipping point and all other revenue recognition criteria have been met. Gross shipping charges reimbursable from customers, to deliver product, are insignificant and are included in the “Revenues” section of the Company’s consolidated statement of operations, while shipping costs are classified in the “selling, general and administrative expenses” section of the Company’s consolidated statement of operations. (d) Cash and Cash Equivalents The Company includes in cash equivalents all highly liquid investments with original maturities of three months or less at the time of acquisition. Cash and cash equivalents of $118,405 and $50,059 at June 30, 2017 and 2016, respectively, consist primarily of cash at banks and money market funds. The Company maintains its cash and cash equivalents in bank deposit accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on its cash and cash equivalents. (e) Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and include material, labor and manufacturing overhead. The components of inventories at June 30, 2017 and 2016 are as follows: 2017 2016 Raw material $ 501,346 $ 520,490 Work-in-progress 388,614 383,889 Finished goods 165,487 229,072 $ 1,055,447 $ 1,133,451 The Company provides for estimated obsolescence on unmarketable inventory based upon assumptions about future demand and market conditions. If actual demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Inventory, once written down, is not subsequently written back up, as these adjustments are considered permanent adjustments to the carrying value of the inventory. (f) Property and Equipment Property and equipment are recorded at cost. Maintenance and repair items are expensed as incurred. The Company provides for depreciation and amortization by charges to operations, using the straight-line and declining-balance methods, which allocate the cost of property and equipment over the following estimated useful lives: Asset Classification Estimated Useful Life Machinery and equipment 2-7 years Leasehold improvements Shorter of lease term or estimated useful life Furniture and fixtures 5 years Vehicles 3 years Depreciation expense was $33,660 and $25,856 for the years ended June 30, 2017 and 2016, respectively. (g) Significant Customers and Concentration of Credit Risk Financial instruments that subject the Company to credit risk consist primarily of cash equivalents and trade accounts receivable. The Company places its investments with highly rated financial institutions. The Company has not experienced any losses on these investments to date. At June 30, 2017, the Company’s five largest customer account receivable balances were 16%, 15%, 12%, 12% and 11%, respectively, of total accounts receivable. At June 30, 2016, receivables from the Company’s three largest customers were 19%, 13% and 10%, respectively, of the total accounts receivable. No other customer accounted for more than 10% of the Company’s receivables as of June 30, 2017 and 2016. The Company has not experienced any material losses related to accounts receivable from individual customers. The Company generally does not require collateral or other security as a condition of sale, rather it relies on credit approval, balance limitation and monitoring procedures to control credit risk of trade account financial instruments. Management believes that allowances for doubtful accounts, which are established based upon review of specific account balances and historical experience, are adequate. Revenues from the Company’s largest customers, as a percentage of total revenues, were as follows: 2017 2016 Customer A 11% 4% Customer B 10 7 Customer C 10 16 Customer D – 12 All Others 69 61 100% 100% No other customer accounted for more than 10% of the Company’s revenues in fiscal years 2017 and 2016. (h) Loss per Share Basic income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period, plus the number of potentially dilutive securities outstanding during the period such as stock options and warrants. For the year ended June 30, 2017 and 2016, the effect of such securities was antidilutive and not included in the diluted calculation because of the net loss generated in those periods. The following is the calculation of loss per share for the years ended June 30, 2017 and 2016: Year Ended June 30 2017 2016 Net Loss– Basic and Diluted $ (1,006,457 ) $ (1,034,765 ) Basic Weighted Average Shares Outstanding 8,343,235 7,157,978 Potentially Dilutive Securities – – Diluted Weighted Average Shares Outstanding 8,343,235 7,157,978 Loss Per Share Basic $ (0.12 ) $ (0.15 ) Diluted $ (0.12 ) $ (0.15 ) The number of shares issuable upon the exercise of outstanding stock options and warrants that were excluded from the computation as their effect was antidilutive was approximately 4,553,213 and 4,169,000 for the years ended June 30, 2017 and 2016, respectively. (i) Stock-Based Compensation The measurement and recognition of compensation costs for all stock-based awards made to employees and the Board of Directors are based upon fair value over the requisite service period for awards expected to vest. The Company estimates the fair value of share-based awards on the date of grant using the Black-Scholes option-pricing model. Stock-based compensation costs recognized for the years ended June 30, 2017 and 2016 amounted to $201,612 and $241,388, respectively. (j) Patents Patent costs are amortized using the straight-line method over the shorter of their legal or estimated useful lives, generally five to ten years. Amortization expense was $0 for the years ended June 30, 2017 and 2016, respectively. In July 2011, the Company assigned all of its currently issued and pending patents, as well as new inventions that it conceived before July 28, 2012, to Intuitive Surgical Operations, Inc. The Company retained a royalty-free, worldwide license to these patents in fields outside of medical robotics. (k) Fair Value of Financial Instruments Financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable. The estimated fair value of these financial instruments approximates their carrying value due to their short-term nature. (l) Long-Lived Assets Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. (m) Warranty Costs The Company does not incur future performance obligations in the normal course of business other than providing a standard one-year warranty on materials and workmanship to its customers (except in certain unusual and infrequently occurring situations where extended warranty terms beyond one year are negotiated with the customer). The Company provides for estimated warranty costs at the time product revenue is recognized. Warranty costs have been included as a component of cost of goods sold in the accompanying consolidated statements of operations. The following tables summarize warranty reserve activity for the years ended June 30, 2017 and 2016: 2017 2016 Balance at beginning of period $ 25,000 $ 25,000 Provision for warranty claims 14,842 4,189 Warranty claims incurred (14,842 ) (4,189 ) Balance at end of period $ 25,000 $ 25,000 (n) Research and Development Research and development expenses are charged to operations as incurred. The Company groups development and prototype costs and related reimbursements in research and development. There were no reimbursements for research and development recorded in research and development for the years ended June 30, 2017 and 2016. (o) Comprehensive Income Comprehensive income or loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owners sources. The Company’s comprehensive loss or income for the years ended June 30, 2017 and 2016 was equal to its net loss for the same periods. (p) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the likelihood of utilization of existing deferred tax assets, management has considered historical results of operations and the current operating environment. (q) Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions about how to allocate resources and assess performance. The Company’s chief decision-maker is its Chief Executive Officer. To date, the Company has viewed its operations and manages its business as principally one segment. For all periods presented, over 90% of the Company’s sales have been to customers in the United States. (r) Use of Estimates The preparation of financial statements in conformity with accounting standards generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (s) Recent Accounting Pronouncements In July 2015, the Financial Accounting Standards Board ("FASB") issued new accounting guidance for measuring inventory. The core principal of the guidance is that an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance does not apply to inventory that is being measured using the Last-In, First-Out (LIFO) or the retail inventory method. The guidance is effective for financial statements issued for annual and interim periods beginning after December 15, 2016 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact this will have on the consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 provides a single, comprehensive accounting model for revenues arising from contracts with customers that supersedes most of the existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue is recognized at an amount that an entity expects to be entitled to upon transferring control of goods or services to a customer, as opposed to when risks and rewards transfer to a customer under existing revenue recognition guidance. ASU 201-09 is effective for the Company beginning in its fiscal year 2018, and may be applied retrospectively to all prior periods presented or through a cumulative adjustment to the opening retained earnings balance in the year of adoption. The Company is currently in the process of evaluating the impact of ASU 2014-09 on its consolidated financial statements. |
2. COMMITMENTS
2. COMMITMENTS | 12 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | (a) Related Party Transactions The Company leases its main Gardner facility from a corporation owned by Mr. Richard E. Forkey, who resigned from the Company’s board of directors on July 9, 2014. The Company is currently a tenant-at-will, paying rent of $9,000 per month. Total rent expense paid or accrued to such related party was $108,000 in each of fiscal years 2017 and 2016, and is included in the Company’s accompanying consolidated statements of operations. On November 22, 2016, the Company entered into agreements with accredited investors for the sale and purchase of 1,333,334 units with each unit consisting of one share of the Company’s common stock, $0.01 par value and one warrant to purchase one-half of one share of the Company’s common stock, at a purchase price of $0.60 per unit. The Company received $780,000 in gross cash proceeds from the offering and settled an outstanding accounts payable balance with a consultant in the amount of $20,000 by issuing units. The Company is using the net proceeds from this placement for general working capital purposes. The warrants issued in this offering will vest on October 2, 2017 and expire on October 16, 2017. The warrant exercise price is variable and depends on the Company’s achievement of certain performance criteria. The warrant exercise price was agreed to be $0.40 per share if the Company achieved both of the revenue and income performance criteria as defined, the exercise price would be $0.20 per share if the Company achieves one of the performance criteria, and the exercise price would be $0.01 if the Company did not achieve either of the performance criteria. Since the Company did not achieve either of the criteria, the exercise price of the warrants is $0.01. In conjunction with the offering, the Company also entered into a registration rights agreement with the investors, whereby the Company was obligated to file a registration statement with the Securities Exchange Commission on or before 90 calendar days after November 22, 2016 to register the resale by the investors of the 1,333,334 shares and warrant shares purchased in the offering. The registration statement was filed with the Securities and Exchange Commission on February 3, 2017 and became effective on March 2, 2017. Pursuant to the above transaction, the Company’s Chairman of the Board Mr. Woodward, as principal of MHW Partners, L.P., purchased 156,667 units at an aggregate purchase price of $94,000. On October 19, 2015, the Company entered into agreements with accredited investors for the sale and purchase of 1,044,776 shares of the Company’s common stock, $0.01 par value at a purchase price of $0.67 per share. The Company received $700,000 in gross proceeds from the offering. The Company used the net proceeds from this placement for general working capital purposes. In conjunction with the placement, the Company also entered into a registration rights agreement with the investors, whereby it was obligated to file a registration statement with the Securities Exchange Commission on or before 90 calendar days after October 19, 2015 to register the resale by the investors of the 1,044,776 shares of common stock purchased in the placement. The registration statement was filed with the Securities Exchange Commission on January 19, 2016 and became effective on February 1, 2016. Pursuant to the above transaction, the Company’s director Mr. Schwartz purchased 14,925 shares of common stock at an aggregate purchase price of $10,000, and the Chairman of the Board Mr. Woodward, as principal of MHW Partners, L.P., purchased 87,313 shares of common stock at an aggregate purchase price of $58,500. Transactions with Stockholders Known by the Company to Own 5% or More of the Company’s Common Stock Pursuant to the November 2016 placement described above, Dolphin Offshore Partners L.P. and Hershey Strategic Capital, L.P. purchased 916,667 and 125,000, respectively, at aggregate purchase prices of $550,000 and $75,000, respectively. At the time of the transaction, both Dolphin Offshore Partners L.P. and Hershey Strategic Capital, L.P. were beneficial owners of more than 5% of outstanding common stock. Pursuant to the October 2015 placement described above, Hershey Strategic Capital, L.P. purchased 37,313 shares of common stock at an aggregate purchase price of $25,000. At the time of the transaction, Hershey Strategic Capital was a beneficial owner of more than 5% of outstanding common stock. (b) Capital Lease Obligation The Company entered into a five-year capital lease obligation in January 2016 for the acquisition of manufacturing equipment with payments totaling $51,252. At June 30, 2017, future minimum lease payments under the capital lease obligation are as follows: Fiscal Year Ending June 30: Amount 2018 $ 10,250 2019 10,250 2020 10,250 2021 5,126 Total minimum payments 35,876 Less: amount representing interest 3,921 Present value of minimum lease payments 31,955 Less: current portion 8,391 $ 23,564 The net book value of assets held under capital leases is $30,780 at June 30, 2017. (c) Operating Lease Commitments The Company’s operating leases for its office space and equipment expired at various dates during fiscal year 2017 and the Company is continuing those rents on a month to month tenant at will basis. Rent expense on operating leases, excluding the related party rent described above, was $54,912 and $52,168 for the years ended June 30, 2017 and 2016, respectively. |
3. STOCKHOLDERS' EQUITY
3. STOCKHOLDERS' EQUITY | 12 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | (a) Stock Options Stock-based compensation costs recognized during the year ended June 30, 2017 and 2016 amounted to $201,612 and $241,388 respectively, and were included in the accompanying consolidated statements of operations in: selling, general and administrative expenses (2017 — $134,984; 2016 — $123,370), cost of goods sold (2017 — $34,676; 2016 — $60,680), and research and development expenses, net (2017 — $31,952; 2016 — $57,338). No compensation has been capitalized because such amounts would have been immaterial. There was no net income tax benefit recognized related to such compensation for the years ended June 30, 2017 or 2016, as the Company is currently in a loss position. There were 15,000 stock options granted during the year ended June 30, 2017 and 160,000 stock options granted during the year ended June 30, 2016. As of June 30, 2017, the unrecognized compensation costs related to options vesting in the future is $0. The Company uses the Black-Scholes option-pricing model as the most appropriate method for determining the estimated fair value for the stock awards. The Black-Scholes method of valuation requires several assumptions: (1) the expected term of the stock award; (2) the expected future stock volatility over the expected term; and (3) risk-free interest rate. The expected term represents the expected period of time the Company believes the options will be outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock and the risk-free interest rate is based on the U.S. Zero-Bond rate. The Company utilizes a forfeiture rate based on an analysis of the Company’s actual experience. The fair value of options at date of grant was estimated with the following assumptions for options granted in fiscal 2017: Year Ended June 30, 2017 Assumptions: Option life 5.3 years Risk-free interest rate 1.01% Stock volatility 175% Dividend yield 0 Weighted average fair value of grants $ 0.38 Stock Option and Other Compensation Plans: The type of share-based payments currently utilized by the Company is stock options. The Company has various stock option and other compensation plans for directors, officers and employees. The Company has the following stock option plans outstanding as of June 30, 2017: The Precision Optics Corporation, Inc. 2011 Equity Incentive Plan (the “2011 Plan”); the Precision Optics Corporation, Inc. 2006 Equity Incentive Plan (the “2006 Plan”), and the Precision Optics Corporation, Inc. Amended and Restated 1997 Incentive Plan (the “1997 Plan”). Vesting periods under the 2011 Plan, the 2006 Plan, and the 1997 Plan are at the discretion of the Board of Directors and typically average three to five years. Options under these Plans are granted at fair market value on the date of grant and typically have a term of ten years from the date of grant. The 2011 Plan, which provides eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vest and are exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. On April 16, 2015, the Board of Directors approved an amendment to the 2011 Equity Incentive Plan which increased the maximum number of shares of the Company’s common stock that may be awarded under the Plan from 325,000 to 1,825,000, an increase of 1,500,000 shares. In connection therewith, on April 20, 2015, the Company filed a registration statement on Form S-8 to register the 1,500,000 shares of the Company’s common stock. At June 30, 2017, a total of 954,602 stock options are outstanding and 870,398 shares of common stock were available for future grants under the 2011 Plan. The 2006 Plan, which provides eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vest and are exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. A total of 139,898 shares of common stock, including shares rolled forward from the 1997 Plan, have been reserved for issuance under the 2006 Plan. At June 30, 2017, a total of 123,798 stock options are outstanding, 23,100 stock options have been cancelled and no shares of common stock are available for future grants under the 2006 Plan. The 1997 Plan as amended and restated in 2006 provided eligible participants (certain employees, directors, consultants, etc.) the opportunity to receive a broad variety of equity based and cash awards. Options granted vested and were exercisable for periods determined by the Board of Directors, not to exceed 10 years from the date of grant. All stock options outstanding under the 1997 Plan expired during fiscal 2016, no options are outstanding under the 1997 Plan at June 30, 2017, and no shares of common stock are available for future grants under the 1997 Plan. The following tables summarize stock option activity for the years ended June 30, 2017 and 2016: Options Outstanding Number of Shares Weighted Average Exercise Price Weighted Average Contractual Life Outstanding at July 1, 2015 1,079,079 $ 1.43 8.46 years Grants 160,000 $ 0.49 Cancellations (103,079 ) $ 7.03 Outstanding at June 30, 2016 1,136,000 $ 0.79 8.00 years Grants 15,000 $ 0.40 Cancellations (72,600 ) $ 0.85 Outstanding at June 30, 2017 1,078,400 $ 0.78 7.01 years Information related to the stock options outstanding as of June 30, 2017 is as follows: Range of Exercise Prices Number of Shares Weighted- Average Remaining Contractual Life (years) Weighted- Average Exercise Price Exercisable Number of Shares Exercisable Weighted- Average Exercise Price $ 0.27 40,000 4.04 $ 0.27 40,000 $ 0.27 $ 0.40 15,000 9.83 $ 0.40 5,000 $ 0.40 $ 0.48 60,000 8.75 $ 0.48 40,000 $ 0.48 $ 0.50 100,000 8.98 $ 0.50 65,000 $ 0.50 $ 0.55 29,500 4.62 $ 0.55 29,500 $ 0.55 $ 0.73 539,500 7.88 $ 0.73 479,500 $ 0.73 $ 0.85 9,000 5.51 $ 0.85 9,000 $ 0.85 $ 0.90 9,000 6.51 $ 0.90 9,000 $ 0.90 $ 0.95 65,000 7.03 $ 0.95 65,000 $ 0.95 $ 1.20 207,800 4.67 $ 1.20 207,800 $ 1.20 $ 1.25 1,200 1.41 $ 1.25 1,200 $ 1.25 $ 1.35 1,200 2.40 $ 1.35 1,200 $ 1.35 $ 7.75 1,200 0.41 $ 7.75 1,200 $ 7.75 $ 0.27–7.75 1,078,400 7.01 $ 0.78 953,400 $ 0.81 The aggregate intrinsic value of the Company’s “in-the-money” outstanding and exercisable options as of June 30, 2017 was $34,875 and $26,975, respectively. (b) Warrants As of June 30, 2017, there are warrants outstanding for the issuance of an aggregate of 3,661,560 shares of common stock, at a weighted average exercise price of $0.75 per share. Warrants for the issuance of 2,994,893 of these shares at an average exercise price of $0.87 per share expire on September 28, 2017, and warrants for the issuance of the remaining 666,667 shares at an exercise price $0.01 per share expire on October 16, 2017. (c) Sale of Stock in October 2015 On October 19, 2015, the Company entered into agreements with accredited investors for the sale and purchase of 1,044,776 shares of the Company’s common stock, $0.01 par value at a purchase price of $0.67 per share. The Company received $700,000 in gross proceeds from the offering. The Company used the majority of the net proceeds from this placement for general working capital purposes. In conjunction with the placement, the Company also entered into a registration rights agreement with the investors, and in compliance with the terms of the agreement the registration statement was filed on January 19, 2016 and became effective on February 1, 2016. In conjunction with the 2015 offering, certain anti-dilution provisions of the warrants issued in conjunction with the Company’s June 25, 2008 and September 28, 2012 financing transactions were triggered. As a result of the offering, the number of existing September 28, 2012 warrants increased from 2,189,724 to 2,293,013 and from 217,322 to 222,559, respectively, and the related exercise price decreased from $1.11 to $1.06 and from $0.85 to $0.83, respectively. (d) Sale of Stock in November 2016 On November 22, 2016, the Company entered into agreements with accredited investors for the sale and purchase of 1,333,334 units with each unit consisting of one share of the Company’s common stock, $0.01 par value and one warrant to purchase one-half of one share of the Company’s common stock, at a purchase price of $0.60 per unit. The Company received $780,000 in gross cash proceeds from the offering and settled an outstanding accounts payable balance with a consultant in the amount of $20,000 by issuing units. The Company is using the net proceeds from this placement for general working capital purposes. The warrants issued in this offering will vest on October 2, 2017 and expire on October 16, 2017. The warrant exercise price is variable and depends on the Company’s achievement of certain performance criteria. The warrant exercise price was agreed to be $0.40 per share if the Company achieved both of the revenue and income performance criteria as defined, the exercise price would be $0.20 per share if the Company achieves one of the performance criteria, and the exercise price would be $0.01 if the Company did not achieve either of the performance criteria. Since the Company did not achieve either of the criteria, the exercise price of the warrants is $0.01. In conjunction with the offering, the Company also entered into a registration rights agreement with the investors, whereby the Company was obligated to file a registration statement with the Securities Exchange Commission on or before 90 calendar days after November 22, 2016 to register the resale by the investors of the 1,333,334 shares and warrant shares purchased in the offering. The registration statement was filed with the Securities and Exchange Commission on February 3, 2017 and became effective on March 2, 2017. In conjunction with the 2016 offering, certain anti-dilution provisions of the warrants issued in conjunction with the Company’s September 28, 2012 financing transaction were triggered. As a result of the offering, the number of existing September 28, 2012 warrants increased from 2,293,013 to 2,558,519 and from 222,559 to 249,627, respectively, and the related exercise price decreased from $1.06 to $0.95 and from $0.83 to $0.74, respectively. |
4. INCOME TAXES
4. INCOME TAXES | 12 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company has identified its federal tax return and its state tax return in Massachusetts as “major” tax jurisdictions. The periods subject to examination for its federal and state income tax returns are the years ended in 2014 and thereafter. The Company believes its income tax filing positions and deductions will be sustained on audit and it does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no liabilities for uncertain income tax positions have been recorded. The provision for income taxes in the accompanying consolidated statements of operations consists of the minimum statutory state income tax liability of $912 for the years ended June 30, 2017 and 2016. A reconciliation of the federal statutory rate to the Company’s effective tax rate for the fiscal years ended June 30, 2017 and 2016 is as follows: 2017 2016 Income tax expense (benefit) at federal statutory rate (34.0 )% (34.0 )% Increase (decrease) in tax resulting from: State taxes, net of federal benefit (5.4 ) (6.3 ) Change in valuation allowance 30.9 30.6 Stock based compensation 8.0 9.3 Nondeductible items 0.2 0.4 Prior-year tax adjustments 0.2 0.8 Other – (0.9 ) Effective tax rate (0.1 )% (0.1 )% The components of deferred tax assets and liabilities at June 30, 2017 and 2016 are approximately as follows: 2017 2016 Deferred tax assets: Net operating loss carry forwards $ 3,716,000 $ 3,396,000 Tax credit carry forwards 404,000 439,000 Reserves and accruals not yet deducted for tax purposes 383,000 362,000 Total deferred tax assets 4,503,000 4,197,000 Valuation allowance (4,503,000 ) (4,197,000 ) Net deferred tax asset $ – $ – The Company has provided a valuation allowance to reduce the net deferred tax asset to an amount the Company believes is “more likely than not” to be realized. The valuation allowance increased in fiscal 2017, as compared to the prior year, by approximately $311,000. At June 30, 2017, the Company had federal and state net operating loss carry forwards of approximately $9,220,000 and $3,520,000, respectively, which will, if not used, expire at various dates from 2017 through 2036. In addition, the Company had net operating loss carry forwards from its Hong Kong operations of approximately $2,252,000, which carry forward indefinitely. |
5. PROFIT SHARING PLAN
5. PROFIT SHARING PLAN | 12 Months Ended |
Jun. 30, 2017 | |
Retirement Benefits [Abstract] | |
PROFIT SHARING PLAN | The Company has a defined contribution 401(k) profit sharing plan. Employer profit sharing and matching contributions to the plan are discretionary. No employer profit sharing or matching contributions were made to the plan in fiscal years 2017 and 2016. |
6. SALE OF ASSETS
6. SALE OF ASSETS | 12 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment Assets Held-for-sale Disclosure [Abstract] | |
SALE OF ASSETS | In fiscal year 2017, the Company sold equipment that was previously written off for proceeds totaling $1,515 and recorded a gain of $1,515. In fiscal year 2016, the Company sold equipment that was previously written off for proceeds totaling $32,707 and recorded a gain of $32,707. These gains are included within operating expenses in the accompanying consolidated statements of operations. |
7. OTHER INCOME
7. OTHER INCOME | 12 Months Ended |
Jun. 30, 2017 | |
Other Income and Expenses [Abstract] | |
OTHER INCOME | Other income in the amount of $22,050 for fiscal year 2016 represents non-cash gains on the settlement of liabilities for services rendered to the Company, by issuing 105,000 shares in February 2016. The non-cash gain is the difference between the recorded amount of the liabilities and the value of the stock when issued. |
8. SUBSEQUENT EVENT
8. SUBSEQUENT EVENT | 12 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
8. SUBSEQUENT EVENT | On August 22, 2017, the Company entered into agreements with accredited investors for the sale and purchase of 466,668 shares of its common stock, $0.01 par value at a purchase price of $0.45 per share. The Company received $210,000 in gross proceeds from the offering. The Company intends to use the net proceeds from this placement for general working capital purposes. Concurrently with the placement, the Company entered into an agreement with an investor for the sale of 88,888 unregistered shares of our common stock for services provided to the Company at a price of $0.45 per share. In connection with the placement, the Company also entered into a registration rights agreement with the investors, whereby the Company is obligated to file a registration statement with the Securities Exchange Commission on or before 90 calendar days after August 22, 2017 to register the resale by the investors of 555,556 shares of our common stock purchased in the placement. In conjunction with the 2017 offering, certain anti-dilution provisions of the warrants issued in conjunction with our September 28, 2012 financing transaction were triggered. As a result of the offering, the number of existing September 28, 2012 warrants increased from 2,558,519 to 2,731,003 and 249,627 to 263,891, respectively, and the related exercise price decreased from $0.95 to $0.89 and from $0.74 to $0.70, respectively. |
1. SUMMARY OF SIGNIFICANT ACC16
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Nature of Business and Liquidity | (a) Nature of Business and Liquidity Precision Optics Corporation, Inc. (the “Company”) designs, develops, manufactures and sells specialized optical and illumination systems and related components. The Company conducts business in one industry segment only and its customers are primarily domestic. The Company performs advanced optical and illumination system design, development, assembly and manufacturing services for products that fall into two principal areas: (i) medical products for use by hospitals and physicians; and (ii) products used by military and industrial customers. The Company has sustained recurring net losses for several years. During the year ended June 30, 2017, the Company incurred a net loss of $1,006,457 and used cash in operating activities of $667,434. As of June 30, 2017, cash and cash equivalents were $118,405, accounts receivable were $468,548, and current liabilities were $1,218,781. As of June 30, 2016, cash and cash equivalents were $50,059, accounts receivable were $750,380, and current liabilities were $1,503,961. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Until the Company achieves breakeven and profitable results, the Company will be required to pursue several options to manage cash flow and raise capital, including issuing debt or equity or entering into a strategic alliance. The sale of additional equity or convertible debt securities, if converted into common stock, would result in additional dilution to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants that could restrict our operations or finances and encumber the Company’s assets. Financing may not be available in amounts or on terms acceptable to the Company, if at all. If the Company is unable to secure additional capital, it may be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations. If the Company cannot raise funds on acceptable terms or achieve positive cash flow, it may not be able to continue to develop new products, grow market share, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, any of which could negatively impact the Company’s business, operating results and financial condition, or impact the Company’s ability to continue to conduct operations. |
Principles of Consolidation | (b) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. |
Revenues | (c) Revenues The Company recognizes revenue when four basic criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. The Company’s shipping terms are customarily FOB shipping point. The sales price of products and services sold is fixed and determinable after receipt and acceptance of a customer’s purchase order or properly executed sales contract, typically before any work is performed. Management reviews each customer purchase order or sales contract to determine that the work to be performed is specified and there are no unusual terms and conditions that would raise questions as to whether the sales price is fixed or determinable. The Company assesses credit worthiness of customers based upon prior history with the customer and assessment of financial condition. Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for that portion of accounts receivable considered to be uncollectible, based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Bad debts are written off against the allowance when identified. The Company’s revenue transactions typically do not contain multiple deliverable elements for future performance obligations to customers, other than a standard one-year warranty on materials and workmanship, the estimated costs for which are provided for at the time revenue is recognized. Revenues for industrial and medical products sold in the normal course of business are recognized upon shipment when delivery terms are FOB shipping point and all other revenue recognition criteria have been met. Gross shipping charges reimbursable from customers, to deliver product, are insignificant and are included in the “Revenues” section of the Company’s consolidated statement of operations, while shipping costs are classified in the “selling, general and administrative expenses” section of the Company’s consolidated statement of operations. |
Cash and Cash Equivalents | (d) Cash and Cash Equivalents The Company includes in cash equivalents all highly liquid investments with original maturities of three months or less at the time of acquisition. Cash and cash equivalents of $118,405 and $50,059 at June 30, 2017 and 2016, respectively, consist primarily of cash at banks and money market funds. The Company maintains its cash and cash equivalents in bank deposit accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on its cash and cash equivalents. |
Inventories | (e) Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and include material, labor and manufacturing overhead. The components of inventories at June 30, 2017 and 2016 are as follows: 2017 2016 Raw material $ 501,346 $ 520,490 Work-in-progress 388,614 383,889 Finished goods 165,487 229,072 $ 1,055,447 $ 1,133,451 The Company provides for estimated obsolescence on unmarketable inventory based upon assumptions about future demand and market conditions. If actual demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Inventory, once written down, is not subsequently written back up, as these adjustments are considered permanent adjustments to the carrying value of the inventory. |
Property and Equipment | (f) Property and Equipment Property and equipment are recorded at cost. Maintenance and repair items are expensed as incurred. The Company provides for depreciation and amortization by charges to operations, using the straight-line and declining-balance methods, which allocate the cost of property and equipment over the following estimated useful lives: Asset Classification Estimated Useful Life Machinery and equipment 2-7 years Leasehold improvements Shorter of lease term or estimated useful life Furniture and fixtures 5 years Vehicles 3 years Depreciation expense was $33,660 and $25,856 for the years ended June 30, 2017 and 2016, respectively. |
Significant Customers and Concentration of Credit Risk | (g) Significant Customers and Concentration of Credit Risk Financial instruments that subject the Company to credit risk consist primarily of cash equivalents and trade accounts receivable. The Company places its investments with highly rated financial institutions. The Company has not experienced any losses on these investments to date. At June 30, 2017, the Company’s five largest customer account receivable balances were 16%, 15%, 12%, 12% and 11%, respectively, of total accounts receivable. At June 30, 2016, receivables from the Company’s three largest customers were 19%, 13% and 10%, respectively, of the total accounts receivable. No other customer accounted for more than 10% of the Company’s receivables as of June 30, 2017 and 2016. The Company has not experienced any material losses related to accounts receivable from individual customers. The Company generally does not require collateral or other security as a condition of sale, rather it relies on credit approval, balance limitation and monitoring procedures to control credit risk of trade account financial instruments. Management believes that allowances for doubtful accounts, which are established based upon review of specific account balances and historical experience, are adequate. Revenues from the Company’s largest customers, as a percentage of total revenues, were as follows: 2017 2016 Customer A 11% 4% Customer B 10 7 Customer C 10 16 Customer D – 12 All Others 69 61 100% 100% No other customer accounted for more than 10% of the Company’s revenues in fiscal years 2017 and 2016. |
Loss per Share | (h) Loss per Share Basic income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income or net loss by the weighted average number of shares of common stock outstanding during the period, plus the number of potentially dilutive securities outstanding during the period such as stock options and warrants. For the year ended June 30, 2017 and 2016, the effect of such securities was antidilutive and not included in the diluted calculation because of the net loss generated in those periods. The following is the calculation of loss per share for the years ended June 30, 2017 and 2016: Year Ended June 30 2017 2016 Net Loss– Basic and Diluted $ (1,006,457 ) $ (1,034,765 ) Basic Weighted Average Shares Outstanding 8,343,235 7,157,978 Potentially Dilutive Securities – – Diluted Weighted Average Shares Outstanding 8,343,235 7,157,978 Loss Per Share Basic $ (0.12 ) $ (0.15 ) Diluted $ (0.12 ) $ (0.15 ) The number of shares issuable upon the exercise of outstanding stock options and warrants that were excluded from the computation as their effect was antidilutive was approximately 4,553,213 and 4,169,000 for the years ended June 30, 2017 and 2016, respectively. |
Stock-Based Compensation | (i) Stock-Based Compensation The measurement and recognition of compensation costs for all stock-based awards made to employees and the Board of Directors are based upon fair value over the requisite service period for awards expected to vest. The Company estimates the fair value of share-based awards on the date of grant using the Black-Scholes option-pricing model. Stock-based compensation costs recognized for the years ended June 30, 2017 and 2016 amounted to $201,612 and $241,388, respectively. |
Patents | (j) Patents Patent costs are amortized using the straight-line method over the shorter of their legal or estimated useful lives, generally five to ten years. Amortization expense was $0 for the years ended June 30, 2017 and 2016, respectively. In July 2011, the Company assigned all of its currently issued and pending patents, as well as new inventions that it conceived before July 28, 2012, to Intuitive Surgical Operations, Inc. The Company retained a royalty-free, worldwide license to these patents in fields outside of medical robotics. |
Fair Value of Financial Instruments | (k) Fair Value of Financial Instruments Financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable. The estimated fair value of these financial instruments approximates their carrying value due to their short-term nature. |
Long-Lived Assets | (l) Long-Lived Assets Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
Warranty Costs | (m) Warranty Costs The Company does not incur future performance obligations in the normal course of business other than providing a standard one-year warranty on materials and workmanship to its customers (except in certain unusual and infrequently occurring situations where extended warranty terms beyond one year are negotiated with the customer). The Company provides for estimated warranty costs at the time product revenue is recognized. Warranty costs have been included as a component of cost of goods sold in the accompanying consolidated statements of operations. The following tables summarize warranty reserve activity for the years ended June 30, 2017 and 2016: 2017 2016 Balance at beginning of period $ 25,000 $ 25,000 Provision for warranty claims 14,842 4,189 Warranty claims incurred (14,842 ) (4,189 ) Balance at end of period $ 25,000 $ 25,000 |
Research and Development | (n) Research and Development Research and development expenses are charged to operations as incurred. The Company groups development and prototype costs and related reimbursements in research and development. There were no reimbursements for research and development recorded in research and development for the years ended June 30, 2017 and 2016. |
Comprehensive Income | (o) Comprehensive Income Comprehensive income or loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owners sources. The Company’s comprehensive loss or income for the years ended June 30, 2017 and 2016 was equal to its net loss for the same periods. |
Income Taxes | (p) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the likelihood of utilization of existing deferred tax assets, management has considered historical results of operations and the current operating environment. |
Segment Reporting | (q) Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions about how to allocate resources and assess performance. The Company’s chief decision-maker is its Chief Executive Officer. To date, the Company has viewed its operations and manages its business as principally one segment. For all periods presented, over 90% of the Company’s sales have been to customers in the United States. |
Use of Estimates | (r) Use of Estimates The preparation of financial statements in conformity with accounting standards generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | (s) Recent Accounting Pronouncements In July 2015, the Financial Accounting Standards Board ("FASB") issued new accounting guidance for measuring inventory. The core principal of the guidance is that an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance does not apply to inventory that is being measured using the Last-In, First-Out (LIFO) or the retail inventory method. The guidance is effective for financial statements issued for annual and interim periods beginning after December 15, 2016 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact this will have on the consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 provides a single, comprehensive accounting model for revenues arising from contracts with customers that supersedes most of the existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue is recognized at an amount that an entity expects to be entitled to upon transferring control of goods or services to a customer, as opposed to when risks and rewards transfer to a customer under existing revenue recognition guidance. ASU 201-09 is effective for the Company beginning in its fiscal year 2018, and may be applied retrospectively to all prior periods presented or through a cumulative adjustment to the opening retained earnings balance in the year of adoption. The Company is currently in the process of evaluating the impact of ASU 2014-09 on its consolidated financial statements. |
1. SUMMARY OF SIGNIFICANT ACC17
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Inventory | 2017 2016 Raw material $ 501,346 $ 520,490 Work-in-progress 388,614 383,889 Finished goods 165,487 229,072 $ 1,055,447 $ 1,133,451 |
Estimated Useful Lives of Property and Equipment | Asset Classification Estimated Useful Life Machinery and equipment 2-7 years Leasehold improvements Shorter of lease term or estimated useful life Furniture and fixtures 5 years Vehicles 3 years |
Percent schedule of entity wide revenues | 2017 2016 Customer A 11% 4% Customer B 10 7 Customer C 10 16 Customer D – 12 All Others 69 61 100% 100% |
Schedule of earnings per share | Year Ended June 30 2017 2016 Net Loss– Basic and Diluted $ (1,006,457 ) $ (1,034,765 ) Basic Weighted Average Shares Outstanding 8,343,235 7,157,978 Potentially Dilutive Securities – – Diluted Weighted Average Shares Outstanding 8,343,235 7,157,978 Loss Per Share Basic $ (0.12 ) $ (0.15 ) Diluted $ (0.12 ) $ (0.15 ) |
Warranty reserve activity | 2017 2016 Balance at beginning of period $ 25,000 $ 25,000 Provision for warranty claims 14,842 4,189 Warranty claims incurred (14,842 ) (4,189 ) Balance at end of period $ 25,000 $ 25,000 |
2. COMMITMENTS (Tables)
2. COMMITMENTS (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments | Fiscal Year Ending June 30: Amount 2018 $ 10,250 2019 10,250 2020 10,250 2021 5,126 Total minimum payments 35,876 Less: amount representing interest 3,921 Present value of minimum lease payments 31,955 Less: current portion 8,391 $ 23,564 |
3. STOCKHOLDERS' EQUITY (Tables
3. STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Assumptions for fair value of options granted | Year Ended June 30, 2017 Assumptions: Option life 5.3 years Risk-free interest rate 1.01% Stock volatility 175% Dividend yield 0 Weighted average fair value of grants $ 0.38 |
Stock option activity | Options Outstanding Number of Shares Weighted Average Exercise Price Weighted Average Contractual Life Outstanding at July 1, 2015 1,079,079 $ 1.43 8.46 years Grants 160,000 $ 0.49 Cancellations (103,079 ) $ 7.03 Outstanding at June 30, 2016 1,136,000 $ 0.79 8.00 years Grants 15,000 $ 0.40 Cancellations (72,600 ) $ 0.85 Outstanding at June 30, 2017 1,078,400 $ 0.78 7.01 years |
Stock options outstanding by exercise price ranges | Range of Exercise Prices Number of Shares Weighted- Average Remaining Contractual Life (years) Weighted- Average Exercise Price Exercisable Number of Shares Exercisable Weighted- Average Exercise Price $ 0.27 40,000 4.04 $ 0.27 40,000 $ 0.27 $ 0.40 15,000 9.83 $ 0.40 5,000 $ 0.40 $ 0.48 60,000 8.75 $ 0.48 40,000 $ 0.48 $ 0.50 100,000 8.98 $ 0.50 65,000 $ 0.50 $ 0.55 29,500 4.62 $ 0.55 29,500 $ 0.55 $ 0.73 539,500 7.88 $ 0.73 479,500 $ 0.73 $ 0.85 9,000 5.51 $ 0.85 9,000 $ 0.85 $ 0.90 9,000 6.51 $ 0.90 9,000 $ 0.90 $ 0.95 65,000 7.03 $ 0.95 65,000 $ 0.95 $ 1.20 207,800 4.67 $ 1.20 207,800 $ 1.20 $ 1.25 1,200 1.41 $ 1.25 1,200 $ 1.25 $ 1.35 1,200 2.40 $ 1.35 1,200 $ 1.35 $ 7.75 1,200 0.41 $ 7.75 1,200 $ 7.75 $ 0.27–7.75 1,078,400 7.01 $ 0.78 953,400 $ 0.81 |
4. INCOME TAXES (Tables)
4. INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of tax rate reconciliation | 2017 2016 Income tax expense (benefit) at federal statutory rate (34.0 )% (34.0 )% Increase (decrease) in tax resulting from: State taxes, net of federal benefit (5.4 ) (6.3 ) Change in valuation allowance 30.9 30.6 Stock based compensation 8.0 9.3 Nondeductible items 0.2 0.4 Prior-year tax adjustments 0.2 0.8 Other – (0.9 ) Effective tax rate (0.1 )% (0.1 )% |
Schedule of deferred tax assets and liabilities | 2017 2016 Deferred tax assets: Net operating loss carry forwards $ 3,716,000 $ 3,396,000 Tax credit carry forwards 404,000 439,000 Reserves and accruals not yet deducted for tax purposes 383,000 362,000 Total deferred tax assets 4,503,000 4,197,000 Valuation allowance (4,503,000 ) (4,197,000 ) Net deferred tax asset $ – $ – |
1. SUMMARY OF SIGNIFICANT ACC21
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Inventory) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 501,346 | $ 520,490 |
Work-in-progress | 388,614 | 383,889 |
Finished goods | 165,487 | 229,072 |
Total inventories | $ 1,055,447 | $ 1,133,451 |
1. SUMMARY OF SIGNIFICANT ACC22
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Property useful lives) | 12 Months Ended |
Jun. 30, 2017 | |
Machinery and equipment [Member] | |
Estimated Useful Life | 2 - 7 years |
Leasehold improvements [Member] | |
Estimated Useful Life | Shorter of lease term or estimated useful life |
Furniture and fixtures [Member] | |
Estimated Useful Life | 5 years |
Vehicles [Member] | |
Estimated Useful Life | 3 years |
1. SUMMARY OF SIGNIFICANT ACC23
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Concentrations) - Total Revenues [Member] | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Concentration risk percentage | 100.00% | 100.00% |
Customer A [Member] | ||
Concentration risk percentage | 11.00% | 4.00% |
Customer B [Member] | ||
Concentration risk percentage | 10.00% | 7.00% |
Customer C [Member] | ||
Concentration risk percentage | 10.00% | 16.00% |
Customer D [Member] | ||
Concentration risk percentage | 0.00% | 12.00% |
All others [Member] | ||
Concentration risk percentage | 69.00% | 61.00% |
1. SUMMARY OF SIGNIFICANT ACC24
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Loss per share) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Accounting Policies [Abstract] | ||
Net Loss - Basic and Diluted | $ (1,006,457) | $ (1,034,765) |
Basic Weighted Average Shares Outstanding | 8,343,235 | 7,157,978 |
Potentially Dilutive Securities | 0 | 0 |
Diluted Weighted Average Shares Outstanding | 8,343,235 | 7,157,978 |
Loss Per Share | ||
Basic | $ (0.12) | $ (0.15) |
Diluted | $ (0.12) | $ (0.15) |
1. SUMMARY OF SIGNIFICANT ACC25
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Warranty rollforward) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Warranty roll forward | ||
Balance at beginning of period | $ 25,000 | $ 25,000 |
Provision for warranty claims | 14,842 | 4,189 |
Warranty claims incurred | (14,842) | (4,189) |
Balance at end of period | $ 25,000 | $ 25,000 |
1. SUMMARY OF SIGNIFICANT ACC26
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
Net loss | $ (1,006,457) | $ (1,034,765) | |
Net cash used in operating activities | (667,434) | (876,298) | |
Cash and cash equivalents | 118,405 | 50,059 | $ 241,051 |
Accounts receivable | 468,548 | 750,380 | |
Current liabilities | 1,218,781 | 1,503,961 | |
Depreciation expense | $ 33,660 | $ 25,856 | |
Outstanding stock options and warrants that were excluded from the computation as their effect was antidilutive | 4,553,213 | 4,169,000 | |
Stock-based compensation costs | $ 201,612 | $ 241,388 | |
Amortization expense related to patents | $ 0 | $ 0 | |
Accounts Receivable [Member] | Customer A [Member] | |||
Concentration risk percentage | 16.00% | 19.00% | |
Accounts Receivable [Member] | Customer B [Member] | |||
Concentration risk percentage | 15.00% | 13.00% | |
Accounts Receivable [Member] | Customer C [Member] | |||
Concentration risk percentage | 12.00% | 10.00% | |
Accounts Receivable [Member] | Customer D [Member] | |||
Concentration risk percentage | 12.00% | ||
Accounts Receivable [Member] | Customer E [Member] | |||
Concentration risk percentage | 11.00% |
2. COMMITMENTS (Details)
2. COMMITMENTS (Details) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Commitments and Contingencies Disclosure [Abstract] | ||
2,018 | $ 10,250 | |
2,019 | 10,250 | |
2,020 | 10,250 | |
2,021 | 5,126 | |
Total minimum payments | 35,876 | |
Less: amount representing interest | 3,921 | |
Present value of minimum lease payments | 31,955 | |
Less: current portion | 8,391 | $ 7,857 |
Capital lease payments, noncurrent | $ 23,564 | $ 31,955 |
2. COMMITMENTS (Details Narrati
2. COMMITMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Capital leased equipment | $ 30,780 | |
Future lease payments | 51,252 | |
Rent expense for operating leases | $ 54,912 | $ 52,168 |
Woodward [Member] | ||
Common stock sold, shares issued | 156,667 | 87,313 |
Proceeds from sale of stock | $ 94,000 | $ 58,500 |
Richard E. Forkey [Member] | ||
Rent expense | 108,000 | $ 108,000 |
Schwartz [Member] | ||
Common stock sold, shares issued | 14,925 | |
Proceeds from sale of stock | $ 10,000 | |
Consultant [Member] | ||
Accounts payable balance paid to consultant | $ 20,000 | |
Investors [Member] | ||
Common stock sold, shares issued | 1,333,334 | 1,044,776 |
Proceeds from sale of stock | $ 780,000 | $ 700,000 |
Dolphin Offshore Partners L.P. [Member] | ||
Common stock sold, shares issued | 916,667 | |
Proceeds from sale of stock | $ 550,000 | |
Hershey Stategic [Member] | ||
Common stock sold, shares issued | 125,000 | 37,313 |
Proceeds from sale of stock | $ 75,000 | $ 25,000 |
3. STOCKHOLDERS' EQUITY (Detail
3. STOCKHOLDERS' EQUITY (Details - Assumptions) | 12 Months Ended |
Jun. 30, 2017USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |
Option life | 5 years 3 months 19 days |
Risk-free interest rate | 1.01% |
Stock volatility | 175.00% |
Dividend yield | $ | $ 0 |
Weighted average fair value of grants | $ / shares | $ 0.38 |
3. STOCKHOLDERS' EQUITY (Deta30
3. STOCKHOLDERS' EQUITY (Details - Option activity) - Stock Options [Member] - $ / shares | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock option activity | |||
Number of stock options outstanding - at beginning | 1,136,000 | 1,079,079 | |
Number of Shares options granted | 15,000 | 160,000 | |
Number of Shares options cancelled | (72,600) | (103,079) | |
Number of stock options outstanding - at ending | 1,078,400 | 1,136,000 | 1,079,079 |
Weighted average exercise price options outstanding- at beginning | $ 0.79 | $ 1.43 | |
Weighted average exercise price - grants | 0.4 | 0.49 | |
Weighted average exercise price - cancelled | 0.85 | 7.03 | |
Weighted average exercise price options outstanding - at end | $ 0.78 | $ 0.79 | $ 1.43 |
Weighted average contractual life | 7 years 4 days | 8 years | 8 years 5 months 16 days |
3. STOCKHOLDERS' EQUITY (Deta31
3. STOCKHOLDERS' EQUITY (Details - Option information) - $ / shares | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock Options [Member] | |||
Range of exercise prices | 0.27 to 7.75 | ||
Number of shares outstanding | 1,078,400 | 1,136,000 | 1,079,079 |
Weighted average contractual life | 7 years 4 days | 8 years | 8 years 5 months 16 days |
Weighted average exercise price | $ 0.78 | $ 0.79 | $ 1.43 |
Exercisable number of shares | 953,400 | ||
Exercisable weighted average exercise price | $ 0.81 | ||
Option 1 [Member] | |||
Range of exercise prices | 0.27 | ||
Number of shares outstanding | 40,000 | ||
Weighted average contractual life | 4 years 15 days | ||
Weighted average exercise price | $ 0.27 | ||
Exercisable number of shares | 40,000 | ||
Exercisable weighted average exercise price | $ 0.27 | ||
Option 2 [Member] | |||
Range of exercise prices | 0.4 | ||
Number of shares outstanding | 15,000 | ||
Weighted average contractual life | 9 years 9 months 29 days | ||
Weighted average exercise price | $ 0.4 | ||
Exercisable number of shares | 5,000 | ||
Exercisable weighted average exercise price | $ 0.4 | ||
Option 3 [Member] | |||
Range of exercise prices | 0.48 | ||
Number of shares outstanding | 60,000 | ||
Weighted average contractual life | 8 years 9 months | ||
Weighted average exercise price | $ 0.48 | ||
Exercisable number of shares | 40,000 | ||
Exercisable weighted average exercise price | $ 0.48 | ||
Option 4 [Member] | |||
Range of exercise prices | 0.5 | ||
Number of shares outstanding | 100,000 | ||
Weighted average contractual life | 8 years 11 months 23 days | ||
Weighted average exercise price | $ 0.5 | ||
Exercisable number of shares | 65,000 | ||
Exercisable weighted average exercise price | $ 0.5 | ||
Option 5 [Member] | |||
Range of exercise prices | 0.55 | ||
Number of shares outstanding | 29,500 | ||
Weighted average contractual life | 4 years 7 months 13 days | ||
Weighted average exercise price | $ 0.55 | ||
Exercisable number of shares | 29,500 | ||
Exercisable weighted average exercise price | $ 0.55 | ||
Option 6 [Member] | |||
Range of exercise prices | 0.73 | ||
Number of shares outstanding | 539,500 | ||
Weighted average contractual life | 7 years 10 months 17 days | ||
Weighted average exercise price | $ 0.73 | ||
Exercisable number of shares | 479,500 | ||
Exercisable weighted average exercise price | $ 0.73 | ||
Option 7 [Member] | |||
Range of exercise prices | 0.85 | ||
Number of shares outstanding | 9,000 | ||
Weighted average contractual life | 5 years 6 months 3 days | ||
Weighted average exercise price | $ 0.85 | ||
Exercisable number of shares | 9,000 | ||
Exercisable weighted average exercise price | $ 0.85 | ||
Option 8 [Member] | |||
Range of exercise prices | 0.9 | ||
Number of shares outstanding | 9,000 | ||
Weighted average contractual life | 6 years 6 months 3 days | ||
Weighted average exercise price | $ 0.9 | ||
Exercisable number of shares | 9,000 | ||
Exercisable weighted average exercise price | $ 0.9 | ||
Option 9 [Member] | |||
Range of exercise prices | 0.95 | ||
Number of shares outstanding | 65,000 | ||
Weighted average contractual life | 7 years 11 days | ||
Weighted average exercise price | $ 0.95 | ||
Exercisable number of shares | 65,000 | ||
Exercisable weighted average exercise price | $ 0.95 | ||
Option 10 [Member] | |||
Range of exercise prices | 1.2 | ||
Number of shares outstanding | 207,800 | ||
Weighted average contractual life | 4 years 8 months 2 days | ||
Weighted average exercise price | $ 1.2 | ||
Exercisable number of shares | 207,800 | ||
Exercisable weighted average exercise price | $ 1.2 | ||
Option 11 [Member] | |||
Range of exercise prices | 1.25 | ||
Number of shares outstanding | 1,200 | ||
Weighted average contractual life | 1 year 4 months 28 days | ||
Weighted average exercise price | $ 1.25 | ||
Exercisable number of shares | 1,200 | ||
Exercisable weighted average exercise price | $ 1.25 | ||
Option 12 [Member] | |||
Range of exercise prices | 1.35 | ||
Number of shares outstanding | 1,200 | ||
Weighted average contractual life | 2 years 4 months 24 days | ||
Weighted average exercise price | $ 1.35 | ||
Exercisable number of shares | 1,200 | ||
Exercisable weighted average exercise price | $ 1.35 | ||
Option 13 [Member] | |||
Range of exercise prices | 7.75 | ||
Number of shares outstanding | 1,200 | ||
Weighted average contractual life | 4 months 28 days | ||
Weighted average exercise price | $ 7.75 | ||
Exercisable number of shares | 1,200 | ||
Exercisable weighted average exercise price | $ 7.75 |
3. STOCKHOLDERS' EQUITY (Deta32
3. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock-based compensation costs | $ 201,612 | $ 241,388 | |
Unrecognized compensation costs related to options vesting | 0 | ||
Aggregate intrinsic value of "in the money" outstanding | 34,875 | ||
Aggregate intrinsic value of "in the money" exercisable | $ 26,975 | ||
2011 Plan [Member] | |||
Shares authorized for issuance under the plan | 1,825,000 | ||
Stock options outstanding | 954,602 | ||
Shares available for future grants | 870,398 | ||
2006 Plan [Member] | |||
Shares authorized for issuance under the plan | 139,898 | ||
Stock options outstanding | 123,798 | ||
Stock options cancelled | 23,100 | ||
Shares available for future grants | 0 | ||
1997 Plan [Member] | |||
Stock options outstanding | 0 | ||
Shares available for future grants | 0 | ||
Warrants [Member] | |||
Warrants outstanding | 3,661,560 | ||
Warrant weighted average exercise price | $ 0.75 | ||
Warrants [Member] | September 2012 [Member] | |||
Warrant weighted average exercise price | $ 1.06 | ||
Warrants authorized for issuance | 2,558,519 | 2,293,013 | |
Warrants [Member] | September 2012-2 [Member] | |||
Warrant weighted average exercise price | $ 0.83 | ||
Warrants authorized for issuance | 249,627 | 222,559 | |
Investors [Member] | |||
Common stock sold, shares issued | 1,333,334 | 1,044,776 | |
Proceeds from sale of stock | $ 780,000 | $ 700,000 | |
Hershey Stategic [Member] | |||
Common stock sold, shares issued | 125,000 | 37,313 | |
Proceeds from sale of stock | $ 75,000 | $ 25,000 | |
Stock Options [Member] | |||
Options granted | 15,000 | 160,000 | |
Stock options outstanding | 1,078,400 | 1,136,000 | 1,079,079 |
Stock options cancelled | 72,600 | 103,079 | |
Selling, General and Administrative Expenses [Member] | |||
Stock-based compensation costs | $ 134,984 | $ 123,370 | |
Cost of Goods Sold [Member] | |||
Stock-based compensation costs | 34,676 | 60,680 | |
Research and Development Expenses [Member] | |||
Stock-based compensation costs | $ 31,952 | $ 57,338 |
4. INCOME TAXES (Details - Inco
4. INCOME TAXES (Details - Income tax rate) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income tax reconcilation | ||
Income tax expense (benefit) at federal statutory rate | (34.00%) | (34.00%) |
Increase (decrease) in tax resulting from: | ||
State taxes, net of federal benefit | (5.40%) | (6.30%) |
Change in valuation allowance | 30.90% | 30.60% |
Stock based compensation | 8.00% | 9.30% |
Nondeductible items | 0.20% | 0.40% |
Prior-year tax adjustments | 0.20% | 0.80% |
Other | 0.00% | (0.90%) |
Effective tax rate | (0.10%) | (0.10%) |
4. INCOME TAXES (Details - Defe
4. INCOME TAXES (Details - Deferred taxes) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Deferred tax assets: | ||
Net operating loss carry forwards | $ 3,716,000 | $ 3,396,000 |
Tax credit carry forwards | 404,000 | 439,000 |
Reserves and accruals not yet deducted for tax purposes | 383,000 | 362,000 |
Total deferred tax assets | 4,503,000 | 4,197,000 |
Valuation allowance | (4,503,000) | (4,197,000) |
Net deferred tax asset | $ 0 | $ 0 |
4. INCOME TAXES (Details Narrat
4. INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Provision for income taxes | $ 912 | $ 912 |
Increase in valuation allowance | $ 311,000 | |
Operating loss carryforwards expiration dates | Operating losses expire at various dates from 2017 through 2036 and losses from Hong Kong operations carry forward indefinitely. | |
Federal [Member] | ||
Operating loss carryforwards | $ 9,220,000 | |
State [Member] | ||
Operating loss carryforwards | 3,520,000 | |
Hong Kong operations [Member] | ||
Operating loss carryforwards | $ 2,252,000 |
5. PROFIT SHARING PLAN (Details
5. PROFIT SHARING PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Retirement Benefits [Abstract] | ||
Employer matching contribution | $ 0 | $ 0 |
6. SALE OF ASSETS (Details Narr
6. SALE OF ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Property, Plant and Equipment Assets Held-for-sale Disclosure [Abstract] | ||
Proceeds from sale of assets | $ 1,515 | $ 32,707 |
Gain on sale of assets | $ 1,515 | $ 32,707 |
7. OTHER INCOME (Details Narrat
7. OTHER INCOME (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Other income | $ 0 | $ 22,050 |
Gain on settlement of liabilities for services [Member] | ||
Other income | $ 22,050 | |
Gain on settlement of liabilities for services [Member] | May 2016 [Member] | ||
Stock issued for settlement of liabilities for services | 105,000 |