Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Sep. 09, 2019 | Dec. 31, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | LIGHTPATH TECHNOLOGIES INC | ||
Entity Central Index Key | 0000889971 | ||
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 | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 25,827,265 | ||
Entity Public Float | $ 30,121,560 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 4,604,701 | $ 5,508,620 |
Restricted cash | 0 | 1,000,000 |
Trade accounts receivable, net of allowance of $29,406 and $13,364 | 6,210,831 | 5,370,508 |
Inventories, net | 7,684,527 | 6,404,741 |
Other receivables | 353,695 | 46,574 |
Prepaid expenses and other assets | 754,640 | 1,058,610 |
Total current assets | 19,608,394 | 19,389,053 |
Property and equipment, net | 11,731,084 | 11,809,241 |
Intangible assets, net | 7,837,306 | 9,057,970 |
Goodwill | 5,854,905 | 5,854,905 |
Deferred tax assets | 652,000 | 624,000 |
Other assets | 289,491 | 381,945 |
Total assets | 45,973,180 | 47,117,114 |
Current liabilities: | ||
Accounts payable | 2,227,768 | 2,032,834 |
Accrued liabilities | 871,912 | 685,430 |
Accrued payroll and benefits | 1,730,658 | 1,228,120 |
Deferred rent, current portion | 539,151 | 86,560 |
Loan payable, current portion | 581,350 | 1,458,800 |
Capital lease obligation, current portion | 404,424 | 307,199 |
Total current liabilities | 6,355,263 | 5,798,943 |
Capital lease obligation, less current portion | 640,284 | 550,127 |
Deferred rent, less current portion | 518,364 | 290,804 |
Loan payable, less current portion | 5,000,143 | 5,119,796 |
Total liabilities | 12,514,054 | 11,759,670 |
Stockholders' equity: | ||
Preferred stock: Series D, $.01 par value, voting; 500,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock: Class A, $.01 par value, voting; 44,500,000 shares authorized; 25,813,895 and 25,764,544 shares issued and outstanding | 258,139 | 257,645 |
Additional paid-in capital | 230,321,324 | 229,874,823 |
Accumulated other comprehensive income | 808,518 | 473,508 |
Accumulated deficit | (197,928,855) | (195,248,532) |
Total stockholders' equity | 33,459,126 | 35,357,444 |
Total liabilities and stockholders' equity | $ 45,973,180 | $ 47,117,114 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful trade accounts receivable | $ 29,406 | $ 13,364 |
Preferred stock: Series D, par value | $ .01 | $ 0.01 |
Preferred stock: Series D, shares authorized | 500,000 | 500,000 |
Preferred stock: Series D, shares issued | 0 | 0 |
Preferred stock: Series D, shares outstanding | 0 | 0 |
Common stock: Class A, par value | $ 0.01 | $ 0.01 |
Common stock: Class A, shares authorized | 44,500,000 | 44,500,000 |
Common stock: Class A, shares issued | 25,813,895 | 25,764,544 |
Common stock: Class A, shares outstanding | 25,813,895 | 25,764,544 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Revenues, net | $ 33,749,088 | $ 32,525,471 |
Cost of sales | 21,230,168 | 19,997,740 |
Gross margin | 12,518,920 | 12,527,731 |
Operating expenses: | ||
Selling, general and administrative | 10,498,651 | 9,218,346 |
New product development | 2,016,615 | 1,618,994 |
Amortization of intangibles | 1,220,664 | 1,317,082 |
Gain on disposal of property and equipment | (77,047) | (258) |
Total operating costs and expenses | 13,658,883 | 12,154,164 |
Operating income (loss) | (1,139,963) | 373,567 |
Other income (expense): | ||
Interest expense, net | (697,113) | (186,948) |
Change in fair value of warrant liability | 0 | (194,632) |
Other income (expense), net | (388,041) | 241,040 |
Total other income (expense), net | (1,085,154) | (140,540) |
Income (loss) before income taxes | (2,225,117) | 233,027 |
Income tax provision (benefit) | 455,206 | (827,077) |
Net income (loss) | (2,680,323) | 1,060,104 |
Foreign currency translation adjustment | 335,010 | 178,112 |
Comprehensive income (loss) | $ (2,345,313) | $ 1,238,216 |
Earnings (loss) per common share (basic) | $ (0.10) | $ 0.04 |
Number of shares used in per share calculation (basic) | 25,794,669 | 25,006,467 |
Earnings (loss) per common share (diluted) | $ (0.10) | $ 0.04 |
Number of shares used in per share calculation (diluted) | 25,794,669 | 26,811,468 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) | Class A Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
Balance, beginning, shares at Jun. 30, 2017 | 24,215,733 | ||||
Balance, beginning at Jun. 30, 2017 | $ 242,157 | $ 225,492,252 | $ 295,396 | $ (196,308,636) | $ 29,721,169 |
Issuance of common stock for: | |||||
Exercise of warrants, shares | 433,810 | ||||
Exercise of warrants | $ 4,338 | 529,980 | 534,318 | ||
Employee Stock Purchase Plan, shares | 19,980 | ||||
Employee Stock Purchase Plan | $ 200 | 48,391 | $ 48,591 | ||
Exercise of stock options, shares | 127,813 | 127,813 | |||
Exercise of stock options | $ 1,278 | 224,723 | $ 226,001 | ||
Settlement of Sellers Note, shares | 967,208 | ||||
Settlement of Sellers Note | $ 9,672 | 2,237,392 | 2,247,064 | ||
Reclassification of warrant liability upon exercise | 685,132 | 685,132 | |||
Stock-based compensation on stock options and RSUs | 656,953 | 656,953 | |||
Foreign currency translation adjustment | 178,112 | 178,112 | |||
Net income | 1,060,104 | 1,060,104 | |||
Balance, ending, shares at Jun. 30, 2018 | 25,764,544 | ||||
Balance, ending at Jun. 30, 2018 | $ 257,645 | 229,874,823 | 473,508 | (195,248,532) | 35,357,444 |
Issuance of common stock for: | |||||
Employee Stock Purchase Plan, shares | 20,871 | ||||
Employee Stock Purchase Plan | $ 209 | 38,229 | $ 38,438 | ||
Exercise of stock options, shares | 28,480 | 17,610 | |||
Exercise of stock options | $ 285 | 13,482 | $ 13,767 | ||
Stock-based compensation on stock options and RSUs | 394,790 | 394,790 | |||
Foreign currency translation adjustment | 335,010 | 335,010 | |||
Net income | (2,680,323) | (2,680,323) | |||
Balance, ending, shares at Jun. 30, 2019 | 25,813,895 | ||||
Balance, ending at Jun. 30, 2019 | $ 258,139 | $ 230,321,324 | $ 808,518 | $ (197,928,855) | $ 33,459,126 |
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 (loss) income | $ (2,680,323) | $ 1,060,104 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 3,464,156 | 3,403,581 |
Interest from amortization of debt costs | 117,261 | 19,685 |
Gain on disposal of property and equipment | (77,047) | (258) |
Stock-based compensation on stock options & RSUs, net | 394,790 | 373,554 |
Provision for doubtful accounts receivable | (6,658) | (16,417) |
Change in fair value of warrant liability | 0 | 194,632 |
Change in fair value of Sellers Note | 0 | (396,163) |
Deferred rent amortization | 370,701 | (81,475) |
Inventory write-offs to reserves | 125,234 | 187,547 |
Deferred tax benefit | (28,000) | (533,806) |
Changes in operating assets and liabilities: | ||
Trade accounts receivables | (833,665) | 618,393 |
Other receivables | (306,348) | (15,997) |
Inventories | (1,405,020) | (1,330,994) |
Prepaid expenses and other assets | 392,925 | (685,260) |
Accounts payable and accrued liabilities | 883,179 | (178,138) |
Net cash provided by operating activities | 411,185 | 2,618,988 |
Cash flows from investing activities | ||
Purchase of property and equipment | (1,931,835) | (2,517,685) |
Proceeds from sale of equipment | 683,250 | 0 |
Net cash used in investing activities | (1,248,585) | (2,517,685) |
Cash flows from financing activities | ||
Proceeds from exercise of stock options | 13,767 | 226,001 |
Proceeds from sale of common stock from employee stock purchase plan | 38,438 | 48,591 |
Loan costs | (92,860) | (61,253) |
Borrowings on loan payable | 5,813,500 | 2,942,583 |
Proceeds from exercise of warrants, net of costs | 0 | 534,318 |
Payments on loan payable | (6,831,503) | (4,716,536) |
Payments on capital lease obligations | (342,871) | (287,354) |
Net cash used in financing activities | (1,401,529) | (1,313,650) |
Effect of exchange rate on cash and cash equivalents | 335,010 | (364,048) |
Change in cash and cash equivalents and restricted cash | (1,903,919) | (1,576,395) |
Cash and cash equivalents and restricted cash, beginning of period | 6,508,620 | 8,085,015 |
Cash and cash equivalents, end of period | 4,604,701 | 6,508,620 |
Supplemental disclosure of cash flow information: | ||
Interest paid in cash | 500,985 | 546,306 |
Income taxes paid | 406,526 | 386,471 |
Supplemental disclosure of non-cash investing & financing activities: | ||
Purchase of equipment through capital lease arrangements | 530,253 | 763,247 |
Landlord credits for leasehold improvements | 309,450 | 0 |
Reclassification of warrant liability upon exercise | 0 | 685,132 |
Derecognition of liability associated with stock option grants | 0 | 283,399 |
Conversion of Sellers Note to common stock | $ 0 | $ 2,247,064 |
Organization and History
Organization and History | 12 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and History | LightPath Technologies, Inc. (“LightPath”, the “Company”, “we”, “us” or “our”) was incorporated in Delaware in 1992. It was the successor to LightPath Technologies Limited Partnership formed in 1989, and its predecessor, Integrated Solar Technologies Corporation formed in 1985. On April 14, 2000, the Company acquired Horizon Photonics, Inc. (“Horizon”). On September 20, 2000, the Company acquired Geltech, Inc. (“Geltech”). The Company completed its initial public offering during fiscal 1996. In November 2005, we formed LightPath Optical Instrumentation (Shanghai) Co., Ltd (“LPOI”), a wholly-owned subsidiary located in Jiading, People’s Republic of China. In December 2013, we formed LightPath Optical Instrumentation (Zhenjiang) Co., Ltd (“LPOIZ”), a wholly-owned subsidiary located in Zhenjiang, Jiangsu Province, People’s Republic of China. In December 2016, we acquired ISP Optics Corporation, a New York corporation (“ISP”), and its wholly-owned subsidiary, ISP Optics Latvia, SIA, a limited liability company founded in 1998 under the Laws of the Republic of Latvia (“ISP Latvia”). LightPath is a manufacturer of optical components and higher-level assemblies, including precision molded glass aspheric optics, molded and diamond-turned infrared aspheric lenses, and other optical components used to produce products that manipulate light. LightPath designs, develops, manufactures, and distributes optical components and assemblies utilizing advanced optical manufacturing processes. LightPath products are incorporated into a variety of applications by customers in many industries, including defense products, medical devices, laser aided industrial tools, automotive safety applications, barcode scanners, optical data storage, hybrid fiber coax datacom, telecommunications, machine vision and sensors, among others. As used herein, the terms “LightPath,” the “Company,” “we,” “us” or “our,” refer to LightPath individually or, as the context requires, collectively with its subsidiaries on a consolidated basis. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Consolidated Financial Statements Reclassifications. Management estimates. Cash and cash equivalents Restricted cash Allowance for accounts receivable Inventories, Property and equipment Long-lived assets Goodwill and Intangible Assets The Company will assess the qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the goodwill impairment test is performed. The first step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step would need to be performed; otherwise, no further steps are required. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount of the goodwill. Any excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. During fiscal year 2018, the Company adopted ASU 2017-4, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-4”), which amends the goodwill impairment test to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, up to the total amount of goodwill allocated to that reporting unit. The Company did not record any goodwill impairment during the fiscal years ended June 30, 2019 or 2018. Deferred rent Income taxes The Company has not recognized a liability for uncertain tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits or penalties has not been provided since there has been no unrecognized benefit or penalty. If there were an unrecognized tax benefit or penalty, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company files United States (“U.S.”) Federal income tax returns, as well as tax returns in various states and foreign jurisdictions. Open tax years subject to examination by the Internal Revenue Service generally remain open for three years from the filing date. Tax years subject to examination by the state jurisdictions generally remain open for up to four years from the filing date. In Latvia, tax years subject to examination remain open for up to five years from the filing date, and, in China, tax years subject to examination remain open for up to ten years from the filing date. Our cash, cash equivalents totaled $4.6 million at June 30, 2019. Of this amount, approximately 71% was held by our foreign subsidiaries in China and Latvia. These foreign funds were generated in China and Latvia as a result of foreign earnings. With respect to the funds generated by our foreign subsidiaries in China, the retained earnings in China must equal at least 150% of the registered capital before any funds can be repatriated. As of June 30, 2019, we have retained earnings in China of approximately $3.3 million and we need to have $11.3 million before repatriation will be allowed. Accumulated earnings from the Company’s non-U.S. subsidiaries were subject to inclusion in the Company’s current period U.S. and state income tax returns as a result of the impact of the U.S. tax law changes. However, no income tax was due on the inclusion of these earnings due to utilization of net operating losses. See Note 9, Income Taxes, to these Consolidated Financial Statements for additional information. The Company currently intends to permanently invest earnings generated from its foreign Chinese operations and, therefore, has not previously provided for future Chinese withholding taxes on such related earnings. However, if in the future the Company changes such intention, the Company would provide for and pay additional foreign taxes, if any, at that time. Revenue recognition VAT New product development Stock-based compensation Fair value of financial instruments. Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable. Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include receivables, accounts payable and accrued liabilities. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of the Company’s capital lease obligations and loans payable approximate their carrying values, based upon current rates available to us. On January 16, 2018, the Company satisfied in full a note payable to the sellers of ISP, in the aggregate original principal amount of $6 million (the “Sellers Note”). Therefore, the Sellers Note was not included in loans payable as of June 30, 2018. The carrying value of the Sellers Note included a fair value premium based on a risk-adjusted discount rate, a Level 2 fair value measurement. Upon satisfaction of the Sellers Note, the fair value adjustment liability was reversed and is included in interest expense, net, in the Consolidated Statement of Operations for the year ended June 30, 2018. See Note 18, Loans Payable, to these Consolidated Financial Statements for additional information. The Company valued its warrant liabilities based on open-form option pricing models which, based on the relevant inputs, render the fair value measurement at Level 3. The Company based its estimates of fair value for warrant liabilities on the amount it would pay a third-party market participant to transfer the liability and incorporated inputs, such as equity prices, historical and implied volatilities, dividend rates and prices of convertible securities issued by comparable companies, maximizing the use of observable inputs when available. See Note 17, Derivative Financial Instruments (Warrant Liability), to these Consolidated Financial Statements for additional information. The Company does not have any other financial or non-financial assets or liabilities that would be characterized as Level 1, Level 2 or Level 3 instruments. Debt issuance costs Derivative financial instruments. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. The Company issued warrants in connection with our June 2012 private placement (the “June 2012 Warrants”). The fair value of the June 2012 Warrants was estimated using the Lattice option-pricing model. See Note 17, Derivative Financial Instruments (Warrant Liability), to these Consolidated Financial Statements for additional information. Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability. Comprehensive income Business segments. Recent accounting pronouncements. Leases The Company expects to adopt the new lease standard on July 1, 2019 by applying the standard at the adoption date and recognizing a cumulative-effect adjustment, if any, to the opening balance of retained earnings. The Company also intends to elect the package of practical expedients permitted by the standard, which, among other things, allows it to carry forward the historical lease classification. The Company’s current real estate lease arrangements are classified as operating leases under existing GAAP lease guidance, and the Company expects they will continue to be classified as operating leases under the new standard. The Company’s current capital lease arrangements are expected to be classified as finance leases under the new standard. The Company has made progress in executing its implementation plan, and it is in the process of measuring the right-of-use assets and liabilities for leases in effect at the adoption date. The adoption of this guidance is expected to have a material impact on the Company's consolidated balance sheets and disclosures in consolidated financial statements. The Company does not expect that the adoption of this standard will have a material impact on its results of operations, cash flows, or debt covenant compliance. No other new accounting pronouncement recently issued or newly effective had or is expected to have a material impact on the Consolidated Financial Statements. |
Revenue
Revenue | 12 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | On July 1, 2018, the Company adopted ASU 2014-9 using the modified retrospective method, which required a cumulative effect adjustment, if any, to be recorded at the date of adoption. The adoption did not have a material impact on the Company’s Consolidated Financial Statements and, as a result, no changes were made to prior reporting periods presented. Product Revenue The Company manufactures optical components and higher-level assemblies, including precision molded glass aspheric optics, molded and diamond-turned infrared aspheric lenses, and other optical components used to produce products that manipulate light. The Company designs, develops, manufactures, and distributes optical components and assemblies utilizing advanced optical manufacturing processes. The Company also performs research and development for optical solutions for a wide range of optics markets. Revenue is derived primarily from the sale of optical components and assemblies. Revenue Recognition Revenue is generally recognized upon transfer of control, including the risks and rewards of ownership, of products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company generally bears all costs, risk of loss, or damage and retains title to the goods up to the point of transfer of control of products to customers. Shipping and handling costs are included in the cost of goods sold. Revenue is presented net of sales taxes and any similar assessments. Customary payment terms are granted to customers, based on credit evaluations. The Company does not have any contracts where revenue is recognized, but the customer payment is contingent on a future event. Deferred revenue is recorded when cash payments are received or due in advance of the Company’s performance. Deferred revenue was immaterial as of June 30, 2019 and 2018. Nature of Products Revenue from the sale of optical components and assemblies is recognized upon transfer of control, including the risks and rewards of ownership, to the customer. The performance obligations for the sale of optical components and assemblies are satisfied at a point in time. Product development agreements are generally short term in nature, with revenue recognized upon satisfaction of the performance obligation, and transfer of control of the agreed-upon deliverable. The Company has organized its products in three groups: precision molded optics (“PMO”), infrared, and specialty products. Revenues from product development agreements are included in specialty products. The Company’s revenue by product group for the years ended June 30, 2019 and 2018 was as follows: Years Ended June 30, 2019 2018 PMO $ 14,098,157 $ 13,522,458 Infrared Products 17,271,590 15,979,888 Specialty Products 2,379,341 3,023,125 Total revenue $ 33,749,088 $ 32,525,471 |
Inventories, net
Inventories, net | 12 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories, net | The components of inventories include the following: June 30, 2019 June 30, 2018 Raw materials $ 3,467,105 $ 2,309,454 Work in process 2,288,226 2,506,891 Finished goods 2,704,471 2,263,121 Allowance for obsolescence (775,275 ) (674,725 ) $ 7,684,527 $ 6,404,741 During fiscal 2019 and 2018, the Company evaluated all allowed items and disposed of approximately $125,000 and $188,000, respectively, of inventory parts and wrote them off against the allowance for obsolescence. The value of tooling in raw materials was approximately $2.2 million and $1.6 million at June 30, 2019 and 2018, respectively. |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and equipment consist of the following: Estimated June 30, June 30, Lives (Years) 2019 2018 Manufacturing equipment 5 - 10 $ 17,412,136 $ 16,534,124 Computer equipment and software 3 - 5 706,840 513,681 Furniture and fixtures 5 293,582 199,872 Leasehold improvements 5 - 7 2,074,069 1,350,482 Construction in progress 697,126 954,317 Total property and equipment 21,183,753 19,552,476 Less accumulated depreciation and amortization (9,452,669 ) (7,743,235 ) Total property and equipment, net $ 11,731,084 $ 11,809,241 During fiscal 2015, the Company extended the term of its Orlando lease and received a tenant improvement allowance from the landlord of $420,014. During fiscal 2019, the Company received a tenant improvement allowance from the landlord related to the new portion of the Orlando facility in the amount of $309,450. These allowances were used to construct improvements and were recorded as leasehold improvements and deferred rent liability. The balances are being amortized over the corresponding lease terms. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | In connection with the December 2016 acquisition of ISP, the Company identified intangible assets, which were recorded at fair value and are being amortized on a straight-line basis over their useful lives. The excess purchase price over the fair values of all identified assets and liabilities was recorded as goodwill, attributable primarily to expected synergies and the assembled workforce of ISP. There were no changes in the net carrying value of goodwill during the years ended June 30, 2019 and 2018, and there have been no events or changes in circumstances that indicate the carrying value of goodwill may not be recoverable. Identifiable intangible assets were comprised of: Useful June 30, June 30, Lives (Years) 2019 2018 Customer relationships 15 $ 3,590,000 $ 3,590,000 Backlog 2 366,000 366,000 Trade secrets 8 3,272,000 3,272,000 Trademarks 8 3,814,000 3,814,000 Non-compete agreement 3 27,000 27,000 Total intangible assets 11,069,000 11,069,000 Less accumulated amortization (3,231,694 ) (2,011,030 ) Total intangible assets, net $ 7,837,306 $ 9,057,970 Future amortization of identifiable intangibles is as follows: Fiscal year ending: June 30, 2020 $ 1,129,342 June 30, 2021 1,125,083 June 30, 2022 1,125,083 June 30, 2023 1,125,083 June 30, 2024 and later 3,332,715 $ 7,837,306 |
Accounts Payable
Accounts Payable | 12 Months Ended |
Jun. 30, 2019 | |
Accounts Payable [Abstract] | |
Accounts Payable | The accounts payable balance includes $91,000 and $82,000 of earned but unpaid board of directors’ fees, as of June 30, 2019 and 2018, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jun. 30, 2019 | |
Stockholders' equity: | |
Stockholders' Equity | The Company’s authorized capital stock consists of 55,000,000 shares, comprised of 50,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share. Of the 5,000,000 shares of preferred stock authorized, the board of directors has previously designated: ● 250 shares of preferred stock as Series A Preferred Stock, all previously outstanding shares of which have been previously redeemed or converted into shares of our Class A common stock and may not be reissued; ● 300 shares of preferred stock as Series B Preferred Stock, all previously outstanding shares of which have been previously redeemed or converted into shares of our Class A common stock and may not be reissued; ● 500 shares of preferred stock as Series C Preferred Stock, all previously outstanding shares of which have been previously redeemed or converted into shares of our Class A common stock and may not be reissued; ● 500,000 shares of preferred stock as Series D Preferred Stock, none of which have been issued; however, in 1998, the board of directors declared a dividend distribution as a right to purchase one share of Series D Preferred Stock for each outstanding share of Class A common stock upon occurrence of certain events. The rights will be exercisable only if a person or group acquires twenty percent (20%) or more of the Class A common stock or announces a tender offer, the consummation of which would result in ownership by a person or group of twenty percent (20%) or more of the Class A common stock. As of the date of the filing of this Annual Report on Form 10-K, no such triggering event has occurred. If, in the future, any Series D Preferred Stock is issued, the stockholders of Series D Preferred Stock are entitled to one vote for each share held; and ● 500 shares of our preferred stock as Series F Preferred Stock, all previously outstanding shares of which have been previously redeemed or converted into shares of our Class A common stock and may not be reissued. Of the 50,000,000 shares of common stock authorized, the board of directors has previously designated 44,500,000 shares authorized as Class A common stock. The stockholders of Class A common stock are entitled to one vote for each share held. The remaining 5,500,000 shares of authorized common stock were designated as Class E-1 common stock, Class E-2 common stock, or Class E-3 common stock, all previously outstanding shares of which have been previously redeemed or converted into shares of Class A common stock. During fiscal 2018, the Company received approximately $534,000 in net proceeds from the exercise of the June 2012 Warrants. The Company issued 433,810 shares of Class A common stock during fiscal 2018, in connection with these exercises. The June 2012 Warrants expired on December 11, 2017. There were no outstanding warrants as of June 30, 2019 or 2018. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | For financial reporting purposes, income before income taxes includes the following components: Year Ended June 30, 2019 2018 Pretax income: United States $ (4,649,593 ) $ 359,027 Foreign 2,424,476 (126,000 ) Income before income taxes $ (2,225,117 ) $ 233,027 The components of the provision for income taxes are as follows: Year Ended June 30, 2019 2018 Current: Federal tax $ (9,352 ) $ 57,315 State 23,423 - Foreign 469,135 (117,852 ) Total current 483,206 (60,537 ) Deferred: Federal tax 21,803 (510,125 ) State (49,803 ) (72,875 ) Foreign - (183,540 ) Total deferred (28,000 ) (766,540 ) Total income tax (benefit) $ 455,206 $ (827,077 ) The reconciliation of income tax computed at the U.S. federal statutory rates to income tax expense is as follows: Year Ended June 30, 2019 2018 U.S. federal statutory tax rate 21.0 % 27.5 % Income tax provision reconciliation: Tax at statutory rate: $ (467,275 ) $ 64,082 Net foreign income subject to lower tax rate (303,288 ) 25,927 State income taxes, net of federal benefit (26,380 ) (107,997 ) Valuation allowance 652,262 (11,763,000 ) Changes in statutory income tax rates - 9,114,886 IRC 965 repatriation 202,026 1,809,603 GILTI 251,869 - Federal research and development and other credits (84,440 ) (163,165 ) Stock-based compensation 3,034 43,818 Change in fair value of derivative warrants - 53,524 Other permanent differences 74,099 30,758 Other, net 153,299 64,487 $ 455,206 $ (827,077 ) Tax Cuts and Jobs Act In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “TCJA”), which changes existing U.S. tax law and includes various provisions that are expected to affect companies. Among other things, the TCJA: (i) changes U.S. corporate tax rates, (ii) generally reduces a company’s ability to utilize accumulated net operating losses, and (iii) requires the calculation of a one-time transition tax on certain foreign earnings and profits (“foreign E&P”) that had not been previously repatriated. As of June 30, 2018, the Company had not fully completed our accounting for the income tax impact of enactment of the TCJA. In accordance with SEC Staff Accounting Bulletin No.118, the Company recognized provisional amounts for income tax effects of the TCJA that it was able to reasonably estimate. Implementation of the TCJA required the Company to calculate a one-time transition tax on certain foreign E&P that had not been previously repatriated. During fiscal 2018, the Company provisionally determined its foreign E&P inclusion, and anticipated that it would not owe any one-time transition tax due to utilization of U.S. net operating loss (“NOL”) carryforward benefits against these earnings. During fiscal 2019, the Company completed its analysis of the TCJA, and although the Company did not owe any one-time transition tax, the deferred tax asset related to its NOL carryforwards was impacted by approximately $202,000. This amount is offset by a valuation allowance for a net impact of zero to its provision for income taxes for the year ended June 30, 2019. Income Tax Law of the People’s Republic of China The Company’s Chinese subsidiaries, LPOI and LPOIZ, are governed by the Income Tax Law of the People’s Republic of China concerning the privately run and foreign invested enterprises, which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments. During the three months ended December 31, 2017, the statutory tax rate applicable to LPOIZ was lowered from 25% to 15% in accordance with an incentive program for technology companies. The lower rate applies to LPOIZ’s 2017 tax year, beginning January 1, 2017. Accordingly, the Company recorded a tax benefit of approximately $100,000 during the year ended June 30, 2018 related to this retroactive rate change. For the fiscal year ended June 30, 2019, income taxes were accrued at the applicable rates. No deferred tax provision has been recorded for China, as the effect is deemed de minimis. The Company currently intends to permanently invest earnings generated from its foreign Chinese operations and, therefore, has not previously provided for future Chinese withholding taxes on such related earnings. However, if in the future, the Company changes such intention, the Company would provide for and pay additional foreign taxes, if any, at that time. Law of Corporate Income Tax of Latvia The Company’s Latvian subsidiary, ISP Latvia, is governed by the Law of Corporate Income Tax of Latvia. Until December 31, 2017, ISP Latvia was subject to a statutory income tax rate of 15%. Effective January 1, 2018, the Republic of Latvia enacted tax reform with the following key provisions: (i) corporations are no longer subject to income tax, but are instead subject to a distribution tax on distributed profits (or deemed distributions, as defined), and (ii) the tax rate was changed to 20%; however, distribution amounts are first divided by 0.8 to arrive at the taxable amount of profit, resulting in an effective tax rate of 25%. As a transitional measure, distributions made from earnings prior to January 1, 2018, distributed prior to December 31, 2019, are not subject to tax. As such, any distributions of profits from ISP Latvia to ISP, its U.S. parent company, will be from earnings prior to January 1, 2018 and, therefore, will not be subject to tax. The Company currently does not intend to distribute any current earnings generated after January 1, 2018. If, in the future, the Company changes such intention, distribution taxes, if any, will be accrued as profits are generated. With this change, the concept of taxable income and tax basis in assets and liabilities was eliminated and is no longer relevant for determining income taxes; therefore, the previously recorded net deferred tax liability related to ISP Latvia was adjusted to zero during the fiscal year ended June 30, 2018, resulting in a tax benefit of approximately $184,000. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows at June 30: 2019 2018 Deferred tax assets: Net operating loss and credit carryforwards $ 16,044,000 $ 16,282,000 Stock-based compensation 822,000 710,000 R&D and other credits 2,014,000 1,899,000 Capitalized R&D expenses 476,000 373,000 Inventory 156,000 143,000 Accrued expenses and other 111,000 83,000 Gross deferred tax assets 19,623,000 19,490,000 Valuation allowance for deferred tax assets (16,725,000 ) (16,123,000 ) Total deferred tax assets 2,898,000 3,367,000 Deferred tax liabilities: Depreciation and other (277,000 ) (563,000 ) Intangible assets (1,969,000 ) (2,180,000 ) Total deferred tax liabilities (2,246,000 ) (2,743,000 ) Net deferred tax asset $ 652,000 $ 624,000 As of June 30, 2019, the Company has also recorded a non-current income tax receivable of $214,000 related to previously paid alternative minimum tax that is expected to be recovered within the next five years pursuant to certain provisions of the TCJA. In assessing the potential future recognition of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, the Company will need to generate future taxable income of approximately $74 million prior to the expiration of NOL carry-forwards from 2020 through 2035. Based on the level of historical taxable income, management has provided for a valuation adjustment against the deferred tax assets of $16,725,000 at June 30, 2019, an increase of approximately $602,000 as compared to June 30, 2018. The increase in the valuation allowance for deferred tax assets as compared to the prior year is primarily the result of the various movements in the current year deferred items. The net deferred tax asset of $652,000 results from federal and state tax credits with indefinite carryover periods, and approximately $510,000 in federal NOL carryforwards that management expects to utilize in a future period. State income tax expense disclosed on the effective tax rate reconciliation above includes state deferred taxes that are offset by a full valuation allowance. At June 30, 2019, in addition to net operating loss carry forwards, the Company also has research and development credit carry forwards of approximately $2,014,000, which will expire from 2022 through 2039. A portion of the NOL carry forwards may be subject to certain limitations of the Internal Revenue Code Sections 382 and 383, which would restrict the annual utilization in future periods due principally to changes in ownership in prior periods. |
Compensatory Equity Incentive P
Compensatory Equity Incentive Plan and Other Equity Incentives | 12 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Compensatory Equity Incentive Plan and Other Equity Incentives | Share-based payment arrangements — The LightPath Technologies, Inc. Employee Stock Purchase Plan (“2014 ESPP”) was adopted by the Company’s board of directors on October 30, 2014 and approved by the Company’s stockholders on January 29, 2015. The 2014 ESPP permits employees to purchase Class A common stock through payroll deductions, which may not exceed 15% of an employee’s compensation, at a price not less than 85% of the market value of the Class A common stock on specified dates (June 30 and December 31). In no event can any participant purchase more than $25,000 worth of shares of Class A common stock in any calendar year and an employee cannot purchase more than 8,000 shares on any purchase date within an offering period of 12 months and 4,000 shares on any purchase date within an offering period of six months. This discount of approximately $3,900 and $4,900 for fiscal 2019 and 2018, respectively, is included in the selling, general and administrative expense in the accompanying Consolidated Statements Comprehensive Income (Loss), which represents the value of the 10% discount given to the employees purchasing stock under the 2014 ESPP. These plans are summarized below: Equity Compensation Arrangement Award Shares Authorized Outstanding at June 30, 2019 Available for Issuance at June 30, 2019 SICP (or Omnibus Plan) 5,115,625 2,844,451 1,416,691 2014 ESPP 400,000 — 337,137 5,515,625 2,844,451 1,753,828 Grant Date Fair Values and Underlying Assumptions; Contractual Terms— For stock options and RSUs granted in the years ended June 30, 2019 and 2018, the Company estimated the fair value of each stock award as of the date of grant using the following assumptions: Year Ended June 30, 2019 2018 Weighted-average expected volatility 69.5% 63% - 75% Dividend yields 0% 0% Weighted-average risk-free interest rate 3.00% 1.28% - 2.82% Weighted-average expected term, in years 7.50 7.27 The assumed forfeiture rates used in calculating the fair value of options and restricted stock unit grants with both performance and service conditions were 20% for each of the years ended June 30, 2019 and 2018. The volatility rate and expected term are based on seven-year historical trends in Class A common stock closing prices and actual forfeitures. The interest rate used is the U.S. Treasury interest rate for constant maturities. Information Regarding Current Share-Based Payment Awards — Restricted Stock Options Stock Units (RSUs) Weighted- Weighted- Weighted- Average Average Average Exercise Remaining Remaining Shares Price Contract Shares Contract June 30, 2017 1,096,186 $ 1.68 6.3 1,508,782 0.9 Granted 68,849 $ 3.88 9.4 140,571 2.2 Exercised (127,813 ) $ 1.80 — — — Cancelled/Forfeited (32,093 ) $ 2.62 — — — June 30, 2018 1,005,129 $ 1.77 6.3 1,649,353 0.9 Granted 13,058 $ 2.10 9.4 229,509 2.4 Exercised (17,610 ) $ 1.08 — (14,336 ) — Cancelled/Forfeited (20,652 ) $ 1.17 — — — June 30, 2019 979,925 $ 1.80 5.5 1,864,526 0.9 Awards exercisable/ vested as of June 30, 2019 869,230 $ 1.70 5.2 1,464,382 — Awards unexercisable/ unvested as of June 30, 2019 110,695 $ 2.56 7.7 400,144 0.9 979,925 1,864,526 The total intrinsic value of stock options exercised for the years ended June 30, 2019 and 2018 was approximately $580 and $1,000, respectively. The total intrinsic value of stock options outstanding and exercisable at June 30, 2019 and 2018 was approximately $320 and $573,000, respectively. The total fair value of stock options vested during the years ended June 30, 2019 and 2018 was approximately $170,000 and $103,000, respectively. The total intrinsic value of RSUs exercised during the years ended June 30, 2019 and 2018 was approximately $26,000 and $0, respectively. The total intrinsic value of RSUs outstanding and exercisable at June 30, 2019 and 2018 was approximately $1.3 million and $3.0 million, respectively. The total fair value of RSUs vested during the years ended June 30, 2019 and 2018 was approximately $393,000 and $320,000, respectively. As of June 30, 2019, there was approximately $523,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including share options and RSUs, granted under the Omnibus Plan. The expected compensation cost to be recognized is as follows: Stock Options RSUs Total Year ending June 30, 2020 $ 8,926 $ 289,944 $ 298,870 Year ending June 30, 2021 5,939 169,978 175,917 Year ending June 30, 2022 2,021 46,654 48,675 $ 16,886 $ 506,576 $ 523,462 The table above does not include shares under the Company’s 2014 ESPP, which has purchase settlement dates in the second and fourth fiscal quarters. The Company’s 2014 ESPP is not administered with a look-back option provision and, as a result, there is not a population of outstanding option grants during the employee contribution period. RSU awards vest immediately or from two to four years from the grant date. The Company issues new shares of Class A common stock upon the exercise of stock options. The following table is a summary of the number and weighted-average grant date fair values regarding our unexercisable/unvested awards as of June 30, 2019 and 2018 and changes during the two years then ended: Unexercisable/Unvested Awards Stock Options Shares RSU Shares Total Shares Weighted-Average Grant Date Fair Values (per share) June 30, 2017 244,511 438,912 683,423 $ 1.39 Granted 68,849 140,571 209,420 $ 3.61 Vested (85,191 ) (217,500 ) (302,691 ) $ 3.78 Cancelled/Forfeited (9,750 ) - (9,750 ) $ 2.36 June 30, 2018 218,419 361,983 580,402 $ 1.53 Granted 13,058 229,509 242,567 $ 1.80 Vested (118,282 ) (191,348 ) (309,630 ) $ 1.79 Cancelled/Forfeited (2,500 ) - (2,500 ) $ 0.97 June 30, 2019 110,695 400,144 510,839 $ 2.09 Acceleration of Vesting — Financial Statement Effects and Presentation — Year Ended June 30, 2019 2018 Stock options $ 36,461 $ 38,572 RSUs 358,329 334,982 Total $ 394,790 $ 373,554 The amounts above were included in: Selling, general & administrative $ 393,352 $ 366,407 Cost of sales 1,620 5,910 New product development (182 ) 1,237 $ 394,790 $ 373,554 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Basic earnings per share is computed by dividing net income by the weighted-average number of shares of Class A common stock outstanding during each period presented. Diluted earnings per share is computed similarly to basic earnings per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue shares of Class A common stock were exercised or converted into shares of Class A common stock. The computations for basic and diluted earnings (loss) per common share are described in the following table: Year Ended June 30, 2019 2018 Net income (loss) $ (2,680,323 ) $ 1,060,104 Weighted-average common shares outstanding: Basic number of shares 25,794,669 25,006,467 Effect of dilutive securities: Options to purchase common stock - 331,985 RSUs - 1,387,348 Common stock warrants - 85,668 Diluted number of shares 25,794,669 26,811,468 Earnings (loss) per common share: Basic $ (0.10 ) $ 0.04 Diluted $ (0.10 ) $ 0.04 The following weighted-average potential dilutive shares were not included in the computation of diluted earnings (loss) per common share, as their effects would be anti-dilutive: Year Ended June 30, 2019 2018 Options to purchase common stock 999,612 739,864 RSUs 1,755,893 216,946 Common stock warrants - 85,018 2,755,505 1,041,828 |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Jun. 30, 2019 | |
Defined Benefit Plan, Additional Information [Abstract] | |
Defined Contribution Plan | The Company provides retirement benefits to its U.S.-based employees through a defined contribution retirement plan. Until April 12, 2018, these benefits were offered under the ADP Total Source 401(k) plan (the “ADP Plan”). The ADP Plan was a defined 401(k) contribution plan, administered by a third party, that all U.S. employees, over the age of 21, were eligible to participate in after three months of employment. Under the ADP Plan, annual discretionary contributions could be made by the Company to match a portion of the funds contributed by employees. Effective April 12, 2018, all plan assets were transferred to the Insperity 401(k) plan (the “Insperity Plan”). The Insperity Plan is a defined 401(k) contribution plan that all employees, over the age of 21, are eligible to participate in after three months of employment. Under the Insperity Plan, the Company matches 100% of the first 2% of employee contributions. As of June 30, 2019, there were 55 employees who are enrolled in this plan. The Company made matching contributions of approximately $107,000 and $34,000 during the years ended June 30, 2019 and 2018, respectively. |
Lease Commitments
Lease Commitments | 12 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lease Commitments | The Company has operating leases for its manufacturing and office space. At June 30, 2019, the Company has two lease agreements for its corporate headquarters and manufacturing facilities in Orlando, Florida. The first lease (the “Orlando Lease”) is for approximately 26,000 square feet, has a seven-year original term with renewal options, and expires in April 2022. Minimum rental rates for the extension term were established based on annual increases of two- and one-half percent starting in the third year of the extension period. Additionally, there is one five-year extension option exercisable by the Company. The minimum rental rates for such additional extension option will be determined at the time an option is exercised and will be based on a “fair market rental rate,” as determined in accordance with the Orlando Lease, as amended. On April 20, 2018, the Company entered into a lease agreement for an additional 12,378 square feet in Orlando, Florida (the “Orlando Lease II”). The Orlando Lease II provides additional manufacturing and office space near the Company’s corporate headquarters. The commencement date of the Orlando Lease II was November 1, 2018, and it has a four-year original term with one renewal option for an additional five-year term. The Company received a $420,000 tenant improvement allowance in fiscal 2015 with respect to the Orlando Lease. In fiscal 2019, the Company received a tenant improvement allowance of $309,450 with respect to the Orlando Lease II. These amounts are included in the property and equipment and deferred rent on the Consolidated Balance Sheets. Amortization of tenant improvements was approximately $284,000 as of June 30, 2019. The deferred rent is being amortized as a reduction in lease expense over the terms of the respective leases. As of June 30, 2019, the Company, through its wholly-owned subsidiary, LPOI, has a lease agreement for an office facility in Shanghai, China (the “Shanghai Lease”) for 1,900 square feet. The Shanghai Lease commenced in October 2015. During fiscal 2019, the Shanghai Lease was renewed for an additional one-year term, and now expires in October 2019. As of June 30, 2019, the Company, through its wholly-owned subsidiary, LPOIZ, has three lease agreements for manufacturing and office facilities in Zhenjiang, China for an aggregate of 55,000 square feet. The initial lease (the “Zhenjiang Lease I”) is for approximately 26,000 square feet, and had a five-year original term with renewal options. In fiscal 2019, the Company renewed the Zhenjiang Lease I and it now expires in June 2022. During fiscal 2018, another lease was executed for 13,000 additional square feet in this same facility (the “Zhenjiang Lease II”). The Zhenjiang Lease II has a 54-month term, and expires in December 2021. During fiscal 2019, LPOIZ entered into another lease agreement for manufacturing space near the existing facility, for an additional 16,000 square feet (the “Zhenjiang Lease III”). The Zhenjiang Lease III has a three-year term and expires in April 2022. At June 30, 2019, the Company, through its wholly-owned subsidiary ISP, has a lease agreement for a manufacturing and office facility in Irvington, New York (the “ISP Lease”) for 13,000 square feet. The ISP Lease, which is for a five-year original term with renewal options, expires in September 2020. As of June 30, 2019, the relocation of the operations formerly housed in this facility is complete and we have ceased use of this facility. See Note 20, Restructuring, to these Consolidated Financial Statements for additional information. At June 30, 2019, the Company, through ISP’s wholly-owned subsidiary ISP Latvia, has two lease agreements for a manufacturing and office facility in Riga, Latvia (the “Riga Leases”) for an aggregate of 23,000 square feet. The Riga Leases, each of which was for a five-year original term with renewal options, were set to expire in December 2019. During fiscal 2019, the Riga Leases were renewed, and now expire in December 2022. As of June 30, 2019, the Company has obligations under five capital lease agreements, entered into during fiscal years 2016, 2017, 2018 and 2019, with terms ranging from three to five years. The leases are for computer and manufacturing equipment, which are included as part of property and equipment in the accompanying Consolidated Balance Sheets. Assets under capital lease include approximately $2.0 million and $1.5 million in manufacturing equipment, with accumulated amortization of approximately $900,000 and $646,000 as of June 30, 2019 and 2018, respectively. Amortization related to assets under capital leases is included in depreciation expense. Rent expense totaled $1.7 million and $1.0 million during the years ended June 30, 2019 and 2018, respectively. For the year ended June 30, 2019, this includes an accrual of $467,000 in future lease payments due pursuant to the ISP Lease, which facility the Company ceased use of as of June 30, 2019. See Note 20, Restructuring, to these Consolidated Financial Statements for additional information. The approximate future minimum lease payments under capital and operating leases at June 30, 2019, including the aforementioned accrued but unpaid lease obligation for the ISP Lease, were as follows: Capital Leases Operating Leases Fiscal year ending June 30, 2020 $ 482,598 $ 1,093,000 2021 407,954 907,000 2022 231,783 777,000 2023 59,647 157,000 Total minimum payments 1,181,982 $ 2,934,000 Less imputed interest (137,274 ) Present value of minimum lease payments included in capital lease obligations 1,044,708 Less current portion 404,424 Non-current portion $ 640,284 |
Contingencies
Contingencies | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | The Company from time to time is involved in various legal actions arising in the normal course of business. Management, after reviewing with legal counsel all of these actions and proceedings, believes that the aggregate losses, if any, will not have a material adverse effect on the Company’s financial position or results of operations. |
Foreign Operations
Foreign Operations | 12 Months Ended |
Jun. 30, 2019 | |
Foreign Currency [Abstract] | |
Foreign Operations | Assets and liabilities denominated in non-U.S. currencies are translated at rates of exchange prevailing on the balance sheet date, and revenues and expenses are translated at average rates of exchange for the period. Gains or losses on the translation of the financial statements of a non-U.S. operation, where the functional currency is other than the U.S. dollar, are reflected as a separate component of equity, which was a cumulative gain of approximately $809,000 and $474,000 as of June 30, 2019 and 2018, respectively. During the years ended June 30, 2019 and 2018, we also recognized a net foreign currency transaction loss of approximately $436,000 and a net foreign currency transaction gain of approximately $141,000, respectively, included in the Consolidated Statements of Comprehensive Income (Loss) in the line item entitled “Other income (expense), net.” Assets and net assets in foreign countries are as follows: China Latvia June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Assets $ 16.9 million $ 14.7 million $ 8.2 million $ 6.4 million Net assets $ 14.5 million $ 12.6 million $ 7.8 million $ 5.9 million |
Supplier and Customer Concentra
Supplier and Customer Concentrations | 12 Months Ended |
Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Supplier and Customer Concentrations | The Company utilizes a number of glass compositions in manufacturing its molded glass aspheres and lens array products. These glasses or equivalents are available from a large number of suppliers, including CDGM Glass Company Ltd., Ohara Corporation, and Sumita Optical Glass, Inc. Base optical materials, used in certain of the Company’s specialty products, are manufactured and supplied by a number of optical and glass manufacturers. ISP utilizes major infrared material suppliers located around the globe for a broad spectrum of infrared crystal and glass. The Company believes that a satisfactory supply of such production materials will continue to be available, at reasonable prices or, in some cases, at increased prices, although there can be no assurance in this regard. In fiscal 2019, sales to three customers comprised an aggregate of approximately 32% of the Company’s annual revenue, and 40% of accounts receivable as of June 30, 2019, with one customer at 17% of sales, another customer at 8% of sales and the third customer at 7% of sales. In fiscal 2018, sales to three customers comprised an aggregate of approximately 28% of the Company’s annual revenue, and 28% of accounts receivable as of June 30, 2018, with one customer at 16% of sales, another customer at 7% of sales and the third customer at 5% of sales. The loss of any of these customers, or a significant reduction in sales to any such customer, would adversely affect the Company’s revenues. In fiscal 2019, 62% of the Company’s net revenue was derived from sales outside of the U.S., with 94% of foreign sales derived from customers in Europe and Asia. In fiscal 2018, 58% of the Company’s net revenue was derived from sales outside of the U.S., with 84% of foreign sales derived from customers in Europe and Asia. |
Derivative Financial Instrument
Derivative Financial Instruments (Warrant Liability) | 12 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments (Warrant Liability) | On June 11, 2012, the Company executed a Securities Purchase Agreement with respect to a private placement of an aggregate of 1,943,852 shares of its Class A common stock at $1.02 per share and the June 2012 Warrants to purchase up to 1,457,892 shares of its Class A common stock at an initial exercise price of $1.32 per share, which was subsequently reduced to $1.26, and then to $1.22 on December 21, 2016 as a result of our public offering. The June 2012 Warrants were exercisable for a period of five years beginning on December 11, 2012. The Company accounted for the June 2012 Warrants issued to investors in accordance with ASC 815-10. ASC 815-10 provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock. This applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative under ASC 815-10, including any freestanding financial instrument that is potentially settled in an entity’s own stock. Due to certain adjustments that could be made to the exercise price of the June 2012 Warrants if the Company issued or sold shares of its Class A common stock at a price that was less than the then-current warrant exercise price, the June 2012 Warrants have been classified as a liability, as opposed to equity, in accordance with ASC 815-10, as it was determined that the June 2012 Warrants were not indexed to the Company’s Class A common stock. The fair value of the outstanding June 2012 Warrants was re-measured at the end of each reporting period to reflect the then-current fair market value. The fair value was also re-measured upon each warrant exercise, to determine the fair value adjustment to the warrant liability related to the warrant exercise. The June 2012 Warrants expired on December 11, 2017. All warrants that required fair value re-measurement were exercised prior to expiration, and, as such, the warrant liability was reduced to zero as of that date. The change in fair value of the June 2012 Warrants is recorded in the Consolidated Statements of Comprehensive Income (Loss), as estimated using the Lattice option-pricing model using the following range of assumptions for the year ended June 30, 2018: Year Ended June 30, 2018 Inputs into Lattice model for warrants: Equivalent volatility 21.06% - 162.92% Equivalent interest rate 0.95% - 1.14% Floor $1.15 Stock price $2.56 - $2.60 Probability price < strike price 0.00% Fair value of call $1.13 - $2.79 Probability of fundamental transaction occurring 0% The warrant liabilities were considered recurring Level 3 financial instruments. The following table summarizes the activity of Level 3 financial instruments measured on a recurring basis for the year ended June 30, 2018: Warrant Liability Fair value, June 30, 2017 490,500 Reclassification of warrant liability upon exercise (685,132 ) Change in fair value of warrant liability 194,632 Fair value, June 30, 2018 $ - All warrants issued by the Company other than the above noted June 2012 Warrants were classified as equity. There were no outstanding warrants as of June 30, 2019 or 2018. |
Loans Payable
Loans Payable | 12 Months Ended |
Jun. 30, 2019 | |
Loans Payable [Abstract] | |
Loans Payable | Avidbank Loan Until February 26, 2019, the Company was party to the Second Amended and Restated Loan and Security Agreement (the “LSA”) entered into on December 21, 2016 with Avidbank Corporate Finance, a division of Avidbank (“Avidbank”), as amended by the First Amendment to the LSA dated December 20, 2017 (the “First Amendment”), the Second Amendment to the LSA dated January 16, 2018 (the “Second Amendment”), the Third Amendment to the LSA dated May 11, 2018 (the “Third Amendment”), the Fourth Amendment to the LSA dated September 7, 2018 (the “Fourth Amendment”), and the Fifth Amendment to the LSA dated October 30, 2018 (the “Fifth Amendment” and, together with the LSA, First Amendment, the Second Amendment, the Third Amendment, and the Fourth Amendment, the “Amended LSA”). The Amended LSA provided for an acquisition term loan in the original principal amount of $5,000,000 (the “Term I Loan”). Pursuant to the Second Amendment, Avidbank paid a single cash advance to the Company in an original principal amount of $7,294,000 (the “Term II Loan”), the proceeds of which were used to repay all amounts owing with respect to the Term Loan, which was approximately $4.4 million, with the remaining $2.9 million in proceeds used to repay the amounts owing under the note payable to the sellers (the “Sellers”) of ISP (the “Sellers Note”). The Term II Loan was for a five-year term, and bore interest at a per annum rate equal to two percent (2.0%) above the Prime Rate; provided, however, that at no time would the applicable rate be less than five-and-one-half percent (5.50%) per annum. The Amended LSA also provided for a working capital revolving line of credit (the “Revolving Line”). Pursuant to the Amended LSA, Avidbank agreed to, in its discretion, make loan advances under the Revolving Line to the Company up to a maximum aggregate principal amount outstanding not to exceed the lesser of (i) One Million Dollars ($1,000,000), or (ii) eighty percent (80%) (the “Maximum Advance Rate”) of the aggregate balance of the Company’s eligible accounts receivable, as determined by Avidbank in accordance with the Amended LSA. Amounts borrowed under the Revolving Line could be repaid and re-borrowed at any time prior to the Revolving Maturity Date (as defined below), at which time all amounts would be immediately due and payable. There were no borrowings under the Revolving Line during the year ended June 30, 2019. As of February 26, 2019, the date on which the Company terminated the Amended LSA, there was no outstanding balance under the Revolving Line. The Company’s obligations under the Amended LSA were collateralized by a first priority security interest (subject to permitted liens) in cash, U.S. inventory, accounts receivable and equipment. In addition, the Company’s wholly-owned subsidiary, Geltech, Inc., guaranteed the Company’s obligations under the Amended LSA. The Amended LSA contained customary covenants, including, but not limited to: (i) limitations on the disposition of property; (ii) limitations on changing the Company’s business or permitting a change in control; (iii) limitations on additional indebtedness or encumbrances; (iv) restrictions on distributions; (v) limitations on certain investments; and (vi) limitations on the amount of cash held in financial institutions in Latvia. Additionally, the Amended LSA required the Company to maintain a fixed charge coverage ratio (as defined in the Amended LSA) of at least 1.15 to 1.00 and an asset coverage ratio (as defined in the Amended LSA) of at least 1.50 to 1.00. The Third Amendment (i) amended the definition of “Permitted Indebtedness” and (ii) amended Section 6.8(a) of the Amended LSA to require that the Company, and each of its domestic subsidiaries, maintain all of its domestic depository and operating accounts with Avidbank beginning on June 1, 2018, and to prohibit the Company from maintaining a domestic account balance outside of Avidbank that exceeds Ten Thousand Dollars ($10,000) during the transition period. The Third Amendment also amended Section 6.9(a) of the Amended LSA to require that the Company maintain a fixed charge coverage ratio, as measured on June 30, 2018, of at least 1.10 to 1.00 and, thereafter, beginning with the quarter ended September 30, 2018, to maintain a fixed charge coverage ratio of at least 1.15 to 1.00. Additionally, pursuant to the Third Amendment, Avidbank granted the Company a waiver of default arising prior to the Third Amendment from its failure to comply with the fixed charge coverage ratio measured on March 31, 2018. Pursuant to the Fourth Amendment, Avidbank granted the Company a waiver of default arising prior to the Fourth Amendment from its failure to comply with the fixed charge coverage ratio covenant measured on June 30, 2018. Based on the waiver, the Company was no longer in default on the Term II Loan or the Revolving Line. The Fourth Amendment also provided for the restriction of $1 million of the Company’s cash, which would be released upon two consecutive quarters of compliance with the fixed charge coverage ratio covenant, and so long as no event of default has occurred that is continuing on that date. The Fourth Amendment also provided that during the restrictive period, the calculation of the fixed charge coverage ratio would be determined as if the outstanding principal amount of the Term II Loan was $1 million less than the actual outstanding principal amount of the Term II Loan. On October 30, 2018, the Company entered into the Fifth Amendment, which amended the definition of “Adjusted EBITDA” to allow for the addback of certain one-time expenses for purposes of determining the fixed charge coverage ratio and compliance with the related covenant. The Fifth Amendment also extended the maturity date of the Revolving Line from December 21, 2018 to March 21, 2019. As discussed in more detail below, on February 26, 2019, the Company entered into the Loan Agreement (as defined below) with BankUnited, N.A. (“BankUnited”), and used the proceeds from the BankUnited Term Loan (as defined below) to pay in full, all outstanding amounts owed pursuant to the Term II Loan. Accordingly, as of June 30, 2019, there was no outstanding balance under the Term II Loan. BankUnited Loan On February 26, 2019, the Company entered into a Loan Agreement (the “Loan Agreement”) with BankUnited for (i) a revolving line of credit up to maximum amount of $2,000,000 (the “BankUnited Revolving Line”), (ii) a term loan in the amount of up to $5,813,500 (“BankUnited Term Loan”), and (iii) a non-revolving guidance line of credit up to a maximum amount of $10,000,000 (the “Guidance Line” and, together with the BankUnited Revolving Line and BankUnited Term Loan, the “BankUnited Loans”). Each of the BankUnited Loans is evidenced by a promissory note in favor of BankUnited (the “BankUnited Notes”). On May 6, 2019, the Company entered into that certain First Amendment to Loan Agreement, effective February 26, 2019, with BankUnited (the “Amendment” and, together with the Loan Agreement, the “Amended Loan Agreement”). The Amendment amended the definition of the fixed charge coverage ratio to more accurately reflect the parties’ understandings at the time the Loan Agreement was executed. BankUnited Revolving Line Pursuant to the Amended Loan Agreement, BankUnited will make loan advances under the BankUnited Revolving Line to the Company up to a maximum aggregate principal amount outstanding not to exceed $2,000,000, which proceeds will be used for working capital and general corporate purposes. Amounts borrowed under the BankUnited Revolving Line may be repaid and re-borrowed at any time prior to February 26, 2022, at which time all amounts will be immediately due and payable. The advances under the BankUnited Revolving Line bear interest, on the outstanding daily balance, at a per annum rate equal to 2.75% above the 30-day LIBOR. Interest payments are due and payable, in arrears, on the first day of each month. BankUnited Term Loan Pursuant to the Amended Loan Agreement, BankUnited advanced the Company $5,813,500 to satisfy in full the amounts owed to Avidbank, including the Term II Loan, and to pay the fees and expenses incurred in connection with closing of the BankUnited Loans. The BankUnited Term Loan is for a 5-year term, but co-terminus with the BankUnited Revolving Line. The BankUnited Term Loan bears interest at a per annum rate equal to 2.75% above the 30-day LIBOR. Equal monthly principal payments of $48,445.83, plus accrued interest, are due and payable, in arrears, on the first day of each month during the term. Upon maturity, all principal and interest shall be immediately due and payable. As of June 30, 2019, the applicable interest rate was 5.19%. Guidance Line Pursuant to the Amended Loan Agreement, BankUnited, in its sole discretion, may make loan advances to the Company under the Guidance Line up to a maximum aggregate principal amount outstanding not to exceed $10,000,000, which proceeds will be used for capital expenditures and approved business acquisitions. Such advances must be in minimum amounts of $1,000,000 for acquisitions and $500,000 for capital expenditures, and will be limited to 80% of cost or as otherwise determined by BankUnited. Amounts borrowed under the Guidance Line may not re-borrowed. The advances under the Guidance Line bear interest, on the outstanding daily balance, at a per annum rate equal to 2.75% above the 30-day LIBOR. Interest payments are due and payable, in arrears, on the first day of each month. On each anniversary of the Amended Loan Agreement, monthly principal payments become payable, amortized based on a ten-year term. Security and Guarantees The Company’s obligations under the Amended Loan Agreement are collateralized by a first priority security interest (subject to permitted liens) in all of its assets and the assets of the Company’s U.S. subsidiaries, GelTech, and ISP, pursuant to a Security Agreement granted by GelTech, ISP, and the Company in favor of BankUnited. The Company’s equity interests in, and the assets of, its foreign subsidiaries are excluded from the security interest. In addition, all of the Company’s subsidiaries have guaranteed the Company’s obligations under the Amended Loan Agreement and related documents, pursuant to Guaranty Agreements executed by the Company and its subsidiaries in favor of BankUnited. General Terms The Amended Loan Agreement contains customary covenants, including, but not limited to: (i) limitations on the disposition of property; (ii) limitations on changing the Company’s business or permitting a change in control; (iii) limitations on additional indebtedness or encumbrances; (iv) restrictions on distributions; and (v) limitations on certain investments. The Amended Loan Agreement also contains certain financial covenants, including obligations to maintain a fixed charge coverage ratio of 1.25 to 1.00 and a total leverage ratio of 4.00 to 1.00. As of June 30, 2019, the Company was in compliance with all required covenants. We may prepay any or all of the BankUnited Loans in whole or in part at any time, without penalty or premium. Late payments are subject to a late fee equal to five percent (5%) of the unpaid amount. Amounts outstanding during an event of default accrue interest at a rate of five percent (5%) above the 30-day LIBOR applicable immediately prior to the occurrence of the event of default. The Amended Loan Agreement contains other customary provisions with respect to events of default, expense reimbursement, and confidentiality. Financing costs incurred were recorded as a discount on debt and will be amortized over the term. Amortization of approximately $117,000 and $13,700 is included in interest expense for the years ended June 30, 2019 and 2018, respectively. For the year ended June 30, 2019, this includes approximately $94,000 of previously unamortized financing costs related to the Term II Loan, which were expensed as of February 26, 2019 when this note was paid in full. Future maturities of loans payable are as follows: BankUnited Term Loan Unamortized Debt Costs Total Fiscal year ending: June 30, 2020 $ 581,350 $ (17,334 ) $ 564,016 June 30, 2021 581,350 (17,334 ) 564,016 June 30, 2022 581,350 (17,334 ) 564,016 June 30, 2023 581,350 (17,334 ) 564,016 June 30, 2024 3,342,763 (17,334 ) 3,325,429 Total payments $ 5,668,163 $ (86,670 ) $ 5,581,493 Less current portion (581,350 ) Non-current portion $ 5,000,143 |
Note Satisfaction and Securitie
Note Satisfaction and Securities Purchase Agreement | 12 Months Ended |
Jun. 30, 2019 | |
Note Satisfaction And Securities Purchase Agreement | |
Note Satisfaction and Securities Purchase Agreement | Note Satisfaction and Securities Purchase Agreement On January 16, 2018 (the “Satisfaction Date”), the Company entered into a Note Satisfaction and Securities Purchase Agreement (the “Note Satisfaction Agreement”) with the Sellers with respect to the Sellers Note. At the closing of the acquisition of ISP, as partial consideration for the shares of ISP, the Company issued the Sellers Note in the original principal amount of $6,000,000, which principal payment amount was subsequently reduced to $5.7 million, after applying a working capital adjustment equal to approximately $293,000. Pursuant to the Note Satisfaction Agreement, the Company and the Sellers agreed to satisfy the Sellers Note in full by (i) converting 39.5% of the outstanding principal amount of the Sellers Note into shares of the Company’s Class A common stock, and (ii) paying the remaining 60.5% of the outstanding principal amount of the Sellers Note, plus all accrued but unpaid interest, in cash to the Sellers. As of the Satisfaction Date, the outstanding principal amount of the Sellers Note was $5,707,183, and there was $20,883 in accrued but unpaid interest thereon (collectively, the “Note Satisfaction Amount”). Accordingly, the Company paid approximately $3,453,582, plus all accrued but unpaid interest on the Sellers Note, in cash (the “Cash Payment”) and issued 967,208 shares of Class A common stock (the “Shares”), which represents the balance of the Note Satisfaction Amount divided by the Conversion Price. The “Conversion Price” equaled $2.33, representing the average closing bid price of the Class A common stock, as reported by Bloomberg for the five (5) trading days preceding the Satisfaction Date. The Cash Payment was paid using approximately $600,000 of cash on hand and approximately $2.9 million in proceeds from the Term II Loan from Avidbank. As of the Satisfaction Date, the Sellers Note was deemed satisfied in full and terminated. The Shares issued to the Sellers were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(a)(2) of the Act (in that the Shares were issued by us in a transaction not involving any public offering), and pursuant to Rule 506 of Regulation D as promulgated by the SEC under the Act. Registration Rights Agreement In connection with the Note Satisfaction Agreement, the Company and the Sellers also entered into a Registration Rights Agreement dated January 16, 2018, pursuant to which the Company agreed to file with the Securities and Exchange Commission by February 15, 2018, and to cause to be declared effective, a registration statement to register the resale of the Shares issued to partially pay the Note Satisfaction Amount. The Registration Statement on Form S-3 (File No. 333-223028) was declared effective by the SEC on March 8, 2018. |
Restructuring
Restructuring | 12 Months Ended |
Jun. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | In July 2018, we announced the relocation and consolidation of ISP’s New York facility (the “Irvington Facility”) into our existing facilities in Orlando, Florida and Riga, Latvia. We record charges for restructuring and other exit activities related to the closure or relocation of business activities at fair value, when incurred. Such charges include termination benefits, contract termination costs, and costs to consolidate facilities or relocate employees. For the year ended June 30, 2019, we recorded approximately $1.2 million in expenses related to the relocation of the Irvington Facility. These charges are included as a component of the “Selling, general and administrative” expenses line item in our Consolidated Statement of Comprehensive Income (Loss). These charges include approximately $467,000 for our remaining obligation under the Irvington Lease until its expiration in September 2020, as we have ceased use of this facility. Amounts accrued and included in our Consolidated Balance Sheet as of June 30, 2019 related to this activity are comprised of the remaining lease obligation of approximately $467,000, included in “Deferred rent”, and approximately $246,000 of termination benefits and other cost, included in “Accrued payroll and benefits.” |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Consolidated financial statements | Consolidated Financial Statements |
Reclassifications | Reclassifications. |
Management estimates | Management estimates. |
Cash and cash equivalents | Cash and cash equivalents |
Restricted cash | Restricted cash |
Allowance for accounts receivable | Allowance for accounts receivable |
Inventories | Inventories, |
Property and equipment | Property and equipment |
Long-lived assets | Long-lived assets |
Goodwill and intangible assets | Goodwill and Intangible Assets The Company will assess the qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the goodwill impairment test is performed. The first step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step would need to be performed; otherwise, no further steps are required. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount of the goodwill. Any excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. During fiscal year 2018, the Company adopted ASU 2017-4, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-4”), which amends the goodwill impairment test to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, up to the total amount of goodwill allocated to that reporting unit. The Company did not record any goodwill impairment during the fiscal years ended June 30, 2019 or 2018. |
Deferred rent | Deferred rent |
Income taxes | Income taxes The Company has not recognized a liability for uncertain tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits or penalties has not been provided since there has been no unrecognized benefit or penalty. If there were an unrecognized tax benefit or penalty, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company files United States (“U.S.”) Federal income tax returns, as well as tax returns in various states and foreign jurisdictions. Open tax years subject to examination by the Internal Revenue Service generally remain open for three years from the filing date. Tax years subject to examination by the state jurisdictions generally remain open for up to four years from the filing date. In Latvia, tax years subject to examination remain open for up to five years from the filing date, and, in China, tax years subject to examination remain open for up to ten years from the filing date. Our cash, cash equivalents totaled $4.6 million at June 30, 2019. Of this amount, approximately 71% was held by our foreign subsidiaries in China and Latvia. These foreign funds were generated in China and Latvia as a result of foreign earnings. With respect to the funds generated by our foreign subsidiaries in China, the retained earnings in China must equal at least 150% of the registered capital before any funds can be repatriated. As of June 30, 2019, we have retained earnings in China of approximately $3.3 million and we need to have $11.3 million before repatriation will be allowed. Accumulated earnings from the Company’s non-U.S. subsidiaries were subject to inclusion in the Company’s current period U.S. and state income tax returns as a result of the impact of the U.S. tax law changes. However, no income tax was due on the inclusion of these earnings due to utilization of net operating losses. See Note 9, Income Taxes, to these Consolidated Financial Statements for additional information. The Company currently intends to permanently invest earnings generated from its foreign Chinese operations and, therefore, has not previously provided for future Chinese withholding taxes on such related earnings. However, if in the future the Company changes such intention, the Company would provide for and pay additional foreign taxes, if any, at that time. |
Revenue recognition | Revenue recognition |
VAT | VAT |
New product development | New product development |
Stock-based compensation | Stock-based compensation |
Fair value of financial instruments | Fair value of financial instruments. Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable. Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include receivables, accounts payable and accrued liabilities. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of the Company’s capital lease obligations and loans payable approximate their carrying values, based upon current rates available to us. On January 16, 2018, the Company satisfied in full a note payable to the sellers of ISP, in the aggregate original principal amount of $6 million (the “Sellers Note”). Therefore, the Sellers Note was not included in loans payable as of June 30, 2018. The carrying value of the Sellers Note included a fair value premium based on a risk-adjusted discount rate, a Level 2 fair value measurement. Upon satisfaction of the Sellers Note, the fair value adjustment liability was reversed and is included in interest expense, net, in the Consolidated Statement of Operations for the year ended June 30, 2018. See Note 18, Loans Payable, to these Consolidated Financial Statements for additional information. The Company valued its warrant liabilities based on open-form option pricing models which, based on the relevant inputs, render the fair value measurement at Level 3. The Company based its estimates of fair value for warrant liabilities on the amount it would pay a third-party market participant to transfer the liability and incorporated inputs, such as equity prices, historical and implied volatilities, dividend rates and prices of convertible securities issued by comparable companies, maximizing the use of observable inputs when available. See Note 17, Derivative Financial Instruments (Warrant Liability), to these Consolidated Financial Statements for additional information. The Company does not have any other financial or non-financial assets or liabilities that would be characterized as Level 1, Level 2 or Level 3 instruments. |
Debt issuance costs | Debt issuance costs |
Derivative financial instruments | Derivative financial instruments. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. The Company issued warrants in connection with our June 2012 private placement (the “June 2012 Warrants”). The fair value of the June 2012 Warrants was estimated using the Lattice option-pricing model. See Note 17, Derivative Financial Instruments (Warrant Liability), to these Consolidated Financial Statements for additional information. Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability. |
Comprehensive income | Comprehensive income |
Business segments | Business segments. |
Recent accounting pronouncements | Recent accounting pronouncements. Leases The Company expects to adopt the new lease standard on July 1, 2019 by applying the standard at the adoption date and recognizing a cumulative-effect adjustment, if any, to the opening balance of retained earnings. The Company also intends to elect the package of practical expedients permitted by the standard, which, among other things, allows it to carry forward the historical lease classification. The Company’s current real estate lease arrangements are classified as operating leases under existing GAAP lease guidance, and the Company expects they will continue to be classified as operating leases under the new standard. The Company’s current capital lease arrangements are expected to be classified as finance leases under the new standard. The Company has made progress in executing its implementation plan, and it is in the process of measuring the right-of-use assets and liabilities for leases in effect at the adoption date. The adoption of this guidance is expected to have a material impact on the Company's consolidated balance sheets and disclosures in consolidated financial statements. The Company does not expect that the adoption of this standard will have a material impact on its results of operations, cash flows, or debt covenant compliance. No other new accounting pronouncement recently issued or newly effective had or is expected to have a material impact on the Consolidated Financial Statements. |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by product group | Years Ended June 30, 2019 2018 PMO $ 14,098,157 $ 13,522,458 Infrared Products 17,271,590 15,979,888 Specialty Products 2,379,341 3,023,125 Total revenue $ 33,749,088 $ 32,525,471 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventory | June 30, 2019 June 30, 2018 Raw materials $ 3,467,105 $ 2,309,454 Work in process 2,288,226 2,506,891 Finished goods 2,704,471 2,263,121 Allowance for obsolescence (775,275 ) (674,725 ) $ 7,684,527 $ 6,404,741 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and quipment | Estimated June 30, June 30, Lives (Years) 2019 2018 Manufacturing equipment 5 - 10 $ 17,412,136 $ 16,534,124 Computer equipment and software 3 - 5 706,840 513,681 Furniture and fixtures 5 293,582 199,872 Leasehold improvements 5 - 7 2,074,069 1,350,482 Construction in progress 697,126 954,317 Total property and equipment 21,183,753 19,552,476 Less accumulated depreciation and amortization (9,452,669 ) (7,743,235 ) Total property and equipment, net $ 11,731,084 $ 11,809,241 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Useful June 30, June 30, Lives (Years) 2019 2018 Customer relationships 15 $ 3,590,000 $ 3,590,000 Backlog 2 366,000 366,000 Trade secrets 8 3,272,000 3,272,000 Trademarks 8 3,814,000 3,814,000 Non-compete agreement 3 27,000 27,000 Total intangible assets 11,069,000 11,069,000 Less accumulated amortization (3,231,694 ) (2,011,030 ) Total intangible assets, net $ 7,837,306 $ 9,057,970 |
Schedule of future amortization of intangible assets | Fiscal year ending: June 30, 2020 $ 1,129,342 June 30, 2021 1,125,083 June 30, 2022 1,125,083 June 30, 2023 1,125,083 June 30, 2024 and later 3,332,715 $ 7,837,306 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of total tax expense and effective income tax rate | Year Ended June 30, 2019 2018 Pretax income: United States $ (4,649,593 ) $ 359,027 Foreign 2,424,476 (126,000 ) Income before income taxes $ (2,225,117 ) $ 233,027 Year Ended June 30, 2019 2018 Current: Federal tax $ (9,352 ) $ 57,315 State 23,423 - Foreign 469,135 (117,852 ) Total current 483,206 (60,537 ) Deferred: Federal tax 21,803 (510,125 ) State (49,803 ) (72,875 ) Foreign - (183,540 ) Total deferred (28,000 ) (766,540 ) Total income tax (benefit) $ 455,206 $ (827,077 ) |
Reconciliation of income tax | Year Ended June 30, 2019 2018 U.S. federal statutory tax rate 21.0 % 27.5 % Income tax provision reconciliation: Tax at statutory rate: $ (467,275 ) $ 64,082 Net foreign income subject to lower tax rate (303,288 ) 25,927 State income taxes, net of federal benefit (26,380 ) (107,997 ) Valuation allowance 652,262 (11,763,000 ) Changes in statutory income tax rates - 9,114,886 IRC 965 repatriation 202,026 1,809,603 GILTI 251,869 - Federal research and development and other credits (84,440 ) (163,165 ) Stock-based compensation 3,034 43,818 Change in fair value of derivative warrants - 53,524 Other permanent differences 74,099 30,758 Other, net 153,299 64,487 $ 455,206 $ (827,077 ) |
Deferred tax assets and liabilities | 2019 2018 Deferred tax assets: Net operating loss and credit carryforwards $ 16,044,000 $ 16,282,000 Stock-based compensation 822,000 710,000 R&D and other credits 2,014,000 1,899,000 Capitalized R&D expenses 476,000 373,000 Inventory 156,000 143,000 Accrued expenses and other 111,000 83,000 Gross deferred tax assets 19,623,000 19,490,000 Valuation allowance for deferred tax assets (16,725,000 ) (16,123,000 ) Total deferred tax assets 2,898,000 3,367,000 Deferred tax liabilities: Depreciation and other (277,000 ) (563,000 ) Intangible assets (1,969,000 ) (2,180,000 ) Total deferred tax liabilities (2,246,000 ) (2,743,000 ) Net deferred tax asset $ 652,000 $ 624,000 |
Compensatory Equity Incentive_2
Compensatory Equity Incentive Plan and Other Equity Incentives (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of share based compensation award plans | Equity Compensation Arrangement Award Shares Authorized Outstanding at June 30, 2019 Available for Issuance at June 30, 2019 SICP (or Omnibus Plan) 5,115,625 2,844,451 1,416,691 2014 ESPP 400,000 — 337,137 5,515,625 2,844,451 1,753,828 |
Schedule of stock options fair value assumptions | Year Ended June 30, 2019 2018 Weighted-average expected volatility 69.5% 63% - 75% Dividend yields 0% 0% Weighted-average risk-free interest rate 3.00% 1.28% - 2.82% Weighted-average expected term, in years 7.50 7.27 |
Schedule of share-based payment awards activity | Restricted Stock Options Stock Units (RSUs) Weighted- Weighted- Weighted- Average Average Average Exercise Remaining Remaining Shares Price Contract Shares Contract June 30, 2017 1,096,186 $ 1.68 6.3 1,508,782 0.9 Granted 68,849 $ 3.88 9.4 140,571 2.2 Exercised (127,813 ) $ 1.80 — — — Cancelled/Forfeited (32,093 ) $ 2.62 — — — June 30, 2018 1,005,129 $ 1.77 6.3 1,649,353 0.9 Granted 13,058 $ 2.10 9.4 229,509 2.4 Exercised (17,610 ) $ 1.08 — (14,336 ) — Cancelled/Forfeited (20,652 ) $ 1.17 — — — June 30, 2019 979,925 $ 1.80 5.5 1,864,526 0.9 Awards exercisable/ vested as of June 30, 2019 869,230 $ 1.70 5.2 1,464,382 — Awards unexercisable/ unvested as of June 30, 2019 110,695 $ 2.56 7.7 400,144 0.9 979,925 1,864,526 |
Schedule of share-based compensation future cost to be recognized | Stock Options RSUs Total Year ending June 30, 2020 $ 8,926 $ 289,944 $ 298,870 Year ending June 30, 2021 5,939 169,978 175,917 Year ending June 30, 2022 2,021 46,654 48,675 $ 16,886 $ 506,576 $ 523,462 |
Summary of the number and weighted average grant date fair values regarding our unexercisable/unvested awards | Unexercisable/Unvested Awards Stock Options Shares RSU Shares Total Shares Weighted-Average Grant Date Fair Values (per share) June 30, 2017 244,511 438,912 683,423 $ 1.39 Granted 68,849 140,571 209,420 $ 3.61 Vested (85,191 ) (217,500 ) (302,691 ) $ 3.78 Cancelled/Forfeited (9,750 ) - (9,750 ) $ 2.36 June 30, 2018 218,419 361,983 580,402 $ 1.53 Granted 13,058 229,509 242,567 $ 1.80 Vested (118,282 ) (191,348 ) (309,630 ) $ 1.79 Cancelled/Forfeited (2,500 ) - (2,500 ) $ 0.97 June 30, 2019 110,695 400,144 510,839 $ 2.09 |
Schedule of total stock-based compensation expense included in the consolidated statements of comprehensive income | Year Ended June 30, 2019 2018 Stock options $ 36,461 $ 38,572 RSUs 358,329 334,982 Total $ 394,790 $ 373,554 The amounts above were included in: Selling, general & administrative $ 393,352 $ 366,407 Cost of sales 1,620 5,910 New product development (182 ) 1,237 $ 394,790 $ 373,554 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of the computations for basic and diluted earnings (loss) per common share | Year Ended June 30, 2019 2018 Net income (loss) $ (2,680,323 ) $ 1,060,104 Weighted-average common shares outstanding: Basic number of shares 25,794,669 25,006,467 Effect of dilutive securities: Options to purchase common stock - 331,985 RSUs - 1,387,348 Common stock warrants - 85,668 Diluted number of shares 25,794,669 26,811,468 Earnings (loss) per common share: Basic $ (0.10 ) $ 0.04 Diluted $ (0.10 ) $ 0.04 |
Schedule of potential dilutive shares were not included in the computation of diluted earnings (loss) per common share | Year Ended June 30, 2019 2018 Options to purchase common stock 999,612 739,864 RSUs 1,755,893 216,946 Common stock warrants - 85,018 2,755,505 1,041,828 |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of future minimum lease payments under capital and operating leases | Capital Leases Operating Leases Fiscal year ending June 30, 2020 $ 482,598 $ 1,093,000 2021 407,954 907,000 2022 231,783 777,000 2023 59,647 157,000 Total minimum payments 1,181,982 $ 2,934,000 Less imputed interest (137,274 ) Present value of minimum lease payments included in capital lease obligations 1,044,708 Less current portion 404,424 Non-current portion $ 640,284 |
Foreign Operations (Tables)
Foreign Operations (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Foreign Currency [Abstract] | |
Assets and net assets in foreign countries | China Latvia June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Assets $ 16.9 million $ 14.7 million $ 8.2 million $ 6.4 million Net assets $ 14.5 million $ 12.6 million $ 7.8 million $ 5.9 million |
Derivative Financial Instrume_2
Derivative Financial Instruments (Warrant Liability) (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value inputs of derivative financial instruments | Year Ended June 30, 2018 Inputs into Lattice model for warrants: Equivalent volatility 21.06% - 162.92% Equivalent interest rate 0.95% - 1.14% Floor $1.15 Stock price $2.56 - $2.60 Probability price < strike price 0.00% Fair value of call $1.13 - $2.79 Probability of fundamental transaction occurring 0% |
Schedule of Level 3 inputs measured on a recurring basis | Warrant Liability Fair value, June 30, 2017 490,500 Reclassification of warrant liability upon exercise (685,132 ) Change in fair value of warrant liability 194,632 Fair value, June 30, 2018 $ - |
Loans Payable (Tables)
Loans Payable (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Loans Payable [Abstract] | |
Schedule of future maturities of loans payable | BankUnited Term Loan Unamortized Debt Costs Total Fiscal year ending: June 30, 2020 $ 581,350 $ (17,334 ) $ 564,016 June 30, 2021 581,350 (17,334 ) 564,016 June 30, 2022 581,350 (17,334 ) 564,016 June 30, 2023 581,350 (17,334 ) 564,016 June 30, 2024 3,342,763 (17,334 ) 3,325,429 Total payments $ 5,668,163 $ (86,670 ) $ 5,581,493 Less current portion (581,350 ) Non-current portion $ 5,000,143 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Cash and cash equivalents | $ 4,604,701 | $ 5,508,620 |
Retained earnings | (197,928,855) | $ (195,248,532) |
China | ||
Retained earnings | $ 3,300,000 |
Revenue (Details)
Revenue (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | $ 33,749,088 | $ 32,525,471 |
PMO | ||
Revenues | 14,098,157 | 13,522,458 |
Infrared Products | ||
Revenues | 17,271,590 | 15,979,888 |
Specialty Products | ||
Revenues | $ 2,379,341 | $ 3,023,125 |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,467,105 | $ 2,309,454 |
Work in process | 2,288,226 | 2,506,891 |
Finished goods | 2,704,471 | 2,263,121 |
Reserve for obsolescence | (775,275) | (674,725) |
Inventories, net | $ 7,684,527 | $ 6,404,741 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Inventory write-offs to reserves | $ 125,234 | $ 187,547 |
Raw materials | 3,467,105 | 2,309,454 |
Inventory - Tooling | ||
Raw materials | $ 2,200,000 | $ 1,600,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Total property and equipment, gross | $ 21,183,753 | $ 19,552,476 |
Less accumulated depreciation and amortization | (9,452,669) | (7,743,235) |
Total property and equipment, net | 11,731,084 | 11,809,241 |
Manufacturing Equipment | ||
Total property and equipment, gross | $ 17,412,136 | 16,534,124 |
Manufacturing Equipment | Lower Limit | ||
Estimated life | 5 years | |
Manufacturing Equipment | Upper Limit | ||
Estimated life | 10 years | |
Computer Equipment And Software | ||
Total property and equipment, gross | $ 706,840 | 513,681 |
Computer Equipment And Software | Lower Limit | ||
Estimated life | 3 years | |
Computer Equipment And Software | Upper Limit | ||
Estimated life | 5 years | |
Furniture And Fixtures | ||
Total property and equipment, gross | $ 293,582 | 199,872 |
Estimated life | 5 years | |
Leasehold Improvements | ||
Total property and equipment, gross | $ 2,074,069 | 1,350,482 |
Leasehold Improvements | Lower Limit | ||
Estimated life | 5 years | |
Leasehold Improvements | Upper Limit | ||
Estimated life | 7 years | |
Construction In Progress | ||
Total property and equipment, gross | $ 697,126 | $ 954,317 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Intangible assets, gross | $ 11,069,000 | $ 11,069,000 |
Amortization | (3,231,694) | (2,011,030) |
Intangible assets, net | 7,837,306 | 9,057,970 |
Customer Relationships | ||
Intangible assets, gross | $ 2,590,000 | 2,590,000 |
Useful life | 15 years | |
Backlog | ||
Intangible assets, gross | $ 366,000 | 366,000 |
Useful life | 2 years | |
Trade Secrets | ||
Intangible assets, gross | $ 3,272,000 | 3,272,000 |
Useful life | 8 years | |
Trademark | ||
Intangible assets, gross | $ 3,814,000 | 3,814,000 |
Useful life | 8 years | |
Non-compete Agreement | ||
Intangible assets, gross | $ 27,000 | $ 27,000 |
Useful life | 3 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Fiscal year ended: | ||
June 30, 2020 | $ 1,129,342 | |
June 30, 2021 | 1,125,083 | |
June 30, 2022 | 1,125,083 | |
June 30, 2023 | 1,125,083 | |
June 30, 2024 and later | 3,332,715 | |
Total | $ 7,837,306 | $ 9,057,970 |
Accounts Payable (Details Narra
Accounts Payable (Details Narrative) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Board of Directors [Member] | ||
Accounts payable - related parties for directors' fees | $ 91,000 | $ 82,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income before income taxes | $ (2,225,117) | $ 233,027 |
United States | ||
Income before income taxes | (4,649,593) | 359,027 |
Foreign | ||
Income before income taxes | $ 2,424,476 | $ (126,000) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Current: | ||
Federal tax | $ (9,352) | $ 57,315 |
State | 23,423 | 0 |
Foreign | 469,135 | (117,852) |
Total current | 483,206 | (60,537) |
Deferred: | ||
Federal tax | 21,803 | (510,125) |
State | (49,803) | (72,875) |
Foreign | 0 | (183,540) |
Total deferred | (28,000) | (766,540) |
Total income tax (benefit) | $ 455,206 | $ (827,077) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory tax rate | 21.00% | 27.50% |
Income tax provision reconciliation: | ||
Tax at statutory rate: | $ (467,275) | $ 64,082 |
Net foreign income subject to lower tax rate | (303,288) | 25,927 |
State income taxes, net of federal benefit | (26,380) | (107,997) |
Valuation allowance | 652,262 | (11,763,000) |
Changes in statutory income tax rates | 0 | 9,114,886 |
IRC 965 repatriation | 202,026 | 1,809,603 |
GILTI | 251,869 | 0 |
Federal research and development and other credits | (84,440) | (163,165) |
Stock-based compensation | 3,034 | 43,818 |
Change in fair value of derivative warrants | 0 | 53,524 |
Other permanent differences | 74,099 | 30,758 |
Other, net | 153,299 | 64,487 |
Total income tax (benefit) | $ 455,206 | $ (827,077) |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Deferred tax assets: | ||
Net operating loss and credit carryforwards | $ 16,044,000 | $ 16,282,000 |
Stock-based compensation | 822,000 | 710,000 |
R&D and other credits | 2,014,000 | 1,899,000 |
Capitalized R&D expenses | 476,000 | 373,000 |
Inventory | 156,000 | 143,000 |
Accrued expenses and other | 111,000 | 83,000 |
Gross deferred tax assets | 19,623,000 | 19,490,000 |
Valuation allowance for deferred tax assets | (16,725,000) | (16,123,000) |
Total deferred tax assets | 2,898,000 | 3,367,000 |
Deferred tax liabilities: | ||
Depreciation and other | (277,000) | (563,000) |
Intangible assets | (1,969,000) | (2,180,000) |
Total deferred tax liabilities | (2,246,000) | (2,743,000) |
Net deferred tax asset | $ 652,000 | $ 624,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Statutory income tax rate | 21.00% | 27.50% |
Income tax benefit | $ 455,206 | $ (827,077) |
CHINA | ||
Income tax benefit | 100,000 | |
LATVIA | ||
Income tax benefit | $ 184,000 | |
LPOIZ | CHINA | ||
Statutory income tax rate | 15.00% |
Compensatory Equity Incentive_3
Compensatory Equity Incentive Plan and Other Equity Incentives (Details) | Jun. 30, 2019shares |
Award shares, authorized | 5,515,625 |
Award shares, outstanding | 2,844,451 |
Available for issuance | 1,753,828 |
SICP (or Omnibus Plan) | |
Award shares, authorized | 5,115,625 |
Award shares, outstanding | 2,844,451 |
Available for issuance | 1,416,691 |
2014 ESPP | |
Award shares, authorized | 400,000 |
Award shares, outstanding | 0 |
Available for issuance | 337,137 |
Compensatory Equity Incentive_4
Compensatory Equity Incentive Plan and Other Equity Incentives (Details 1) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Weighted average expected volatility | 69.50% | |
Weighted average expected volatility - minimum | 63.00% | |
Weighted average expected volatility - maximum | 75.00% | |
Dividend yields | 0.00% | 0.00% |
Weighted average risk free interest rate | 3.00% | |
Weighted average risk free interest rate - minimum | 1.28% | |
Weighted average risk free interest rate - maximum | 2.82% | |
Weighted average expected term, in years | 7 years 6 months | 7 years 3 months 7 days |
Compensatory Equity Incentive_5
Compensatory Equity Incentive Plan and Other Equity Incentives (Details 2) - $ / shares | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Options | ||
Balance, beginning, shares | 1,005,129 | 1,096,186 |
Granted, shares | 13,058 | 68,849 |
Exercised, shares | (17,610) | (127,813) |
Cancelled/Forfeited, shares | (20,652) | (32,093) |
Balance ending, shares | 979,925 | 1,005,129 |
Balance ending, shares exercisable and vested | 869,230 | |
Balance ending, shares unexercisable and unvested | 110,695 | 218,419 |
Weighted average exercise price - Stock Options | ||
Balance Beginning | $ 1.77 | $ 1.68 |
Granted | 2.10 | 3.88 |
Exercised | 1.08 | 1.80 |
Cancelled/Forfeited | 1.17 | 2.62 |
Balance Ending | 1.80 | $ 1.77 |
Exercisable - Balance Ending | 1.70 | |
Unexercisable/unvested - Balance Ending | $ 2.56 | |
Weighted average remaining contract life - Stock Options | ||
Balance Beginning | 6 years 3 months 18 days | 6 years 3 months 18 days |
Granted | 9 years 4 months 24 days | 9 years 4 months 24 days |
Balance Ending | 5 years 6 months | 6 years 3 months 18 days |
Exercisable/vested | 5 years 2 months 12 days | |
Unexercisable/unvested | 7 years 8 months 12 days | |
RSU Shares | ||
Balance, beginning | 1,649,353 | 1,508,782 |
Granted | 229,509 | 140,571 |
Exercised | (14,336) | 0 |
Cancelled/forfeited | 0 | 0 |
Balance, ending | 1,864,526 | 1,649,353 |
Balance, ending, shares exercisable and vested | 1,464,382 | |
Balance, ending, shares unexercisable/unvested | 400,144 | 361,983 |
Weighted average remaining contract life - Restricted Stock Units, beginning | 10 months 24 days | 10 months 24 days |
Weighted average remaining contract life - Restricted Stock Units, granted | 2 years 4 months 24 days | 2 years 4 months 24 days |
Weighted average remaining contract life - Restricted Stock Units, ending | 10 months 24 days | 10 months 24 days |
Weighted average remaining contract life unexercisable/unvested - Restricted Stock Units | 10 months 24 days |
Compensatory Equity Incentive_6
Compensatory Equity Incentive Plan and Other Equity Incentives (Details 3) | Jun. 30, 2019USD ($) |
Stock options | $ 16,886 |
Restricted stock units | 506,576 |
Total unrecognized compensation cost | 523,462 |
Year ended June 30, 2020 | |
Stock options | 8,926 |
Restricted stock units | 289,944 |
Total unrecognized compensation cost | 298,870 |
Year ended June 30, 2021 | |
Stock options | 5,939 |
Restricted stock units | 169,978 |
Total unrecognized compensation cost | 175,917 |
Year ended June 30, 2022 | |
Stock options | 2,021 |
Restricted stock units | 46,654 |
Total unrecognized compensation cost | $ 48,675 |
Compensatory Equity Incentive_7
Compensatory Equity Incentive Plan and Other Equity Incentives (Details 4) - $ / shares | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Options | ||
Beginning Balance | 218,419 | 244,511 |
Granted | 13,058 | 68,849 |
Vested | (118,282) | (85,191) |
Cancelled/Forfeited | (2,500) | (9,750) |
Balance ending, shares unexercisable and unvested | 110,695 | 218,419 |
RSU Shares | ||
Beginning Balance | 361,983 | 438,912 |
Granted | 229,509 | 140,571 |
Vested | (191,348) | (217,500) |
Cancelled/Forfeited | 0 | 0 |
Balance, ending, shares unexercisable/unvested | 400,144 | 361,983 |
Total Shares | ||
Beginning Balance | 580,402 | 683,423 |
Granted | 242,567 | 209,420 |
Vested | (309,630) | (302,691) |
Cancelled/Forfeited | (2,500) | (9,750) |
Balance ending | 510,839 | 580,402 |
Weighted Average Grant Date Fair Values (per share) | ||
Beginning Balance | $ 1.53 | $ 1.39 |
Granted | 1.80 | 3.61 |
Vested | 1.79 | 3.78 |
Cancelled/Forfeited | .97 | 2.36 |
Ending Balance | $ 2.09 | $ 1.53 |
Compensatory Equity Incentive_8
Compensatory Equity Incentive Plan and Other Equity Incentives (Details 5) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Stock-based compensation | $ 394,790 | $ 373,554 |
Selling, General & Administrative | ||
Stock-based compensation | 393,352 | 366,407 |
Cost of Sales | ||
Stock-based compensation | 1,620 | 5,910 |
New Product Development | ||
Stock-based compensation | (182) | 1,237 |
Stock Options | ||
Stock-based compensation | 36,461 | 38,572 |
Restricted Stock Units | ||
Stock-based compensation | $ 358,329 | $ 334,982 |
Compensatory Equity Incentive_9
Compensatory Equity Incentive Plan and Other Equity Incentives (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Intrinsic value of options exercised | $ 580 | $ 1,000 |
Intrinsic value of options outstanding and exercisable | 320 | 573,000 |
Fair value of options vested | 170,000 | 103,000 |
Intrinsic value of RSUs exercised | 26,000 | 0 |
Intrinsic value of RSUs outstanding and exercisable | 1,300,000 | 3,000,000 |
Fair value of RSUs Vested | 393,000 | $ 320,000 |
Unrecognized compensation costs | $ 523,462 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ (2,680,323) | $ 1,060,104 |
Basic number of shares | 25,794,669 | 25,006,467 |
Effect of dilutive securities: | ||
Options to purchase common stock | 0 | 331,985 |
RSUs | 0 | 1,387,348 |
Common stock warrants | 0 | 85,668 |
Diluted number of shares | 25,794,669 | 26,811,468 |
Earnings (loss) per common share: | ||
Basic | $ (0.10) | $ 0.04 |
Diluted | $ (0.10) | $ 0.04 |
Earnings Per Share (Details 1)
Earnings Per Share (Details 1) - shares | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Antidilutive securities | 2,755,505 | 1,041,828 |
Warrant | ||
Antidilutive securities | 0 | 85,018 |
Restricted Stock Units | ||
Antidilutive securities | 1,755,893 | 216,946 |
Stock Option | ||
Antidilutive securities | 999,612 | 739,864 |
Lease Commitments (Details)
Lease Commitments (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Capital Lease - Fiscal year ending June 30, | ||
2020 | $ 482,598 | |
2021 | 407,954 | |
2022 | 231,783 | |
2023 | 59,647 | |
Total minimum payments | 1,181,982 | |
Less imputed interest | (137,274) | |
Present value of minimum lease payments included in capital lease obligations | 1,044,708 | |
Less current portion | 404,424 | $ 307,199 |
Non-current portion | 640,284 | $ 550,127 |
Operating Lease - Fiscal Year ending June 30, | ||
2020 | 1,093,000 | |
2021 | 907,000 | |
2022 | 777,000 | |
2023 | 157,000 | |
Total Minimum Payments | $ 2,934,000 |
Lease Commitments (Details Narr
Lease Commitments (Details Narrative) | 12 Months Ended | |
Jun. 30, 2019USD ($)ft² | Jun. 30, 2018USD ($) | |
Assets under capital lease - computer and manufacturing equipment | $ | $ 2,000,000 | $ 1,500,000 |
Accumulated amortization of assets under capital leases - computer and manufacturing equipment | $ | 900,000 | 646,000 |
Rent expense | $ | $ 1,700,000 | $ 1,000,000 |
Orlando Lease | ||
Square footage of leased office space | 26,000 | |
Amortization of leasehold improvements | $ | $ 284,000 | |
Lease expiration | Apr. 30, 2022 | |
Orlando Lease II | ||
Square footage of leased office space | 12,378 | |
Tenant improvement allowance received | $ | $ 309,450 | |
Shanghai Lease | ||
Square footage of leased office space | 1,900 | |
Lease expiration | Oct. 31, 2019 | |
Zhenjiang Lease 1 | ||
Square footage of leased office space | 26,000 | |
Lease expiration | Jun. 30, 2022 | |
Zhenjiang Lease 2 | ||
Square footage of leased office space | 13,000 | |
Lease expiration | Dec. 31, 2021 | |
Zhenjiang Lease 3 | ||
Square footage of leased office space | 16,000 | |
Lease expiration | Apr. 30, 2022 | |
ISP Lease | ||
Square footage of leased office space | 13,000 | |
Lease expiration | Sep. 30, 2020 | |
Riga Lease | ||
Square footage of leased office space | 23,000 | |
Lease expiration | Dec. 31, 2022 |
Foreign Operations (Details)
Foreign Operations (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Assets | $ 45,973,180 | $ 47,117,114 |
CHINA | ||
Assets | 16,900,000 | 14,700,000 |
Net assets | 14,500,000 | 12,600,000 |
LATVIA | ||
Assets | 8,200,000 | 6,400,000 |
Net assets | $ 7,800,000 | $ 5,900,000 |
Foreign Operations (Details Nar
Foreign Operations (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Foreign Currency [Abstract] | ||
Gain (loss) on foreign currency | $ (436,000) | $ 141,000 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Warrant Liability) (Details) - Warrant | 12 Months Ended |
Jun. 30, 2018$ / shares$ / Unit | |
Floor | $ / Unit | 1.15 |
Probability price less than strike price | 0.00% |
Probability of fundamental transaction occuring | 0.00% |
Lower Limit | |
Equivalent volatility | 21.06% |
Equivalent interest rate | 0.95% |
Stock price | $ 2.56 |
Fair value of call | $ 1.13 |
Upper Limit | |
Equivalent volatility | 162.92% |
Equivalent interest rate | 1.14% |
Stock price | $ 2.60 |
Fair value of call | $ 2.79 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Warrant Liability) (Details 1) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Level 3 inputs activity | ||
Reclassification of warrant liability upon exercise | $ 0 | $ 685,132 |
Warrant | Level 3 | ||
Level 3 inputs activity | ||
Balance, beginning | $ 0 | 490,500 |
Reclassification of warrant liability upon exercise | (685,132) | |
Change in fair value of warrant liability | 194,632 | |
Balance, ending | $ 0 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Fiscal year ending June 30, | ||
2020 | $ 564,016 | |
2021 | 564,016 | |
2022 | 564,016 | |
2023 | 564,016 | |
2024 | 3,325,429 | |
Total payments | 5,581,493 | |
Less current portion | (581,350) | $ (1,458,800) |
Non-current portion | 5,000,143 | $ 5,119,796 |
Unamortized Debt Costs | ||
Fiscal year ending June 30, | ||
2020 | (17,334) | |
2021 | (17,334) | |
2022 | (17,334) | |
2023 | (17,334) | |
2024 | (17,334) | |
Total payments | (86,670) | |
BankUnited Term Loan | ||
Fiscal year ending June 30, | ||
2020 | 581,350 | |
2021 | 581,350 | |
2022 | 581,350 | |
2023 | 581,350 | |
2024 | 3,342,763 | |
Total payments | $ 5,668,163 |
Loans Payable (Details Narrativ
Loans Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Loans Payable [Abstract] | ||
Amortization of debt costs | $ 117,261 | $ 19,685 |