Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2018

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most sensitive accounting estimates affecting the financial statements are revenue recognition, the allowance for doubtful accounts, depreciation of long-lived assets, fair value of intangible assets and goodwill, amortization of intangible assets, income taxes and associated deferrals and valuation allowances, commitments and contingencies and measurement of derivative liabilities.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts Receivable, Net

Accounts receivable represent customer obligations due under normal trade terms, net of allowance for doubtful accounts. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience and other currently available evidence. The allowance for doubtful accounts was approximately

$960,000

and

$942,000

as of

September 30, 2018

and

June 30, 2018,

respectively.

Revenue Recognition, Policy [Policy Text Block]

Fair Value Measurements

The Company follows Accounting Standards Codification (“ASC”)

820

10,

"Fair Value Measurements and Disclosures"

, of the FASB to measure the fair value of its financial statements and disclosures about fair value of its financial instruments. ASC

820

establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC

820

establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into

three

broad levels. The

three

levels of fair value hierarchy defined by ASC

820

are described below:

	Level 1 -	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

	Level 2 -	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

	Level 3 -	Pricing inputs that are generally unobservable input and not corroborated by market data.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lower priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than

one

level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company's warrant liabilities and certain conversion features underlying the convertible debt are categorized as Level

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times,

may

exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At

September 30, 2018

and

June 30, 2018,

the Company had approximately

$320,000

and

$473,000

in excess of FDIC-insured limits. The Company has

not

experienced any losses in such accounts.

September 30, 2018,

one

customer had an accounts receivable balance of approximately

$1,116,000.

This customer’s accounts receivable balance comprises

31%

of gross accounts receivable at

September 30, 2018.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in tax laws or rates. The effect on deferred taxes and liabilities of a change in tax rates will be recognized as income or expense in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Management considers the likelihood of changes by taxing authorities in its filed income tax returns and recognizes a liability for or discloses potential changes that management believes are more likely than

not

to occur upon examination by tax authorities. Management has

not

identified any uncertain tax positions that require recognition or disclosure in the accompanying condensed consolidated financial statements.

Reclassification, Policy [Policy Text Block]

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

May 2014,

the FASB issued ASU

2014

09,

“

Revenue from Contracts with Customers

” (Topic

606

). This accounting standard outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. This standard supersedes existing revenue recognition requirements and eliminates most industry specific guidance from GAAP. The core principal of this revenue recognition standard is to require an entity to recognize as revenue the amount that reflects the consideration to which it expects to be entitled in exchange for goods or services as it transfers control to its customers. The Company has implemented this ASU using the modified retrospective method with immaterial impact. This ASU requires significantly enhanced disclosures as shown in Note

of the condensed consolidated financial statements in this Quarterly Report on Form

-Q. In compliance with this ASU, the Company records uncollectible accounts receivable amounts against revenue instead of bad debt expense. There were

material reductions in net revenue for the

three

months ended

September 30, 2018.

February 2016,

the FASB issued ASU

2016

02,

“

Leases

”

which will require recognition on the balance sheet for the rights and obligations created by leases with terms greater than

twelve

months. The new standard is effective for fiscal years and interim periods within those years beginning after

December 15, 2018,

with early adoption permitted. The Company plans to adopt this guidance at the beginning of its

first

quarter of fiscal

2020

and plans to utilize the transition option which does

not

require application of the guidance to comparative periods in the year of adoption. While the Company continues to evaluate this standard and the effect on related disclosures, the primary effect of adoption will be recording right-of-use assets and corresponding lease obligations for current operations leases. The adoption is expected to have a material impact on the Company's consolidated balance sheets, but

not

on the consolidated statements of income or cash flows. Additionally, the Company is in the process of reviewing current accounting policies, changes to business processes, systems and controls to support adoption of the new standard, which includes implementing a new lease accounting system.

August 2016,

the FASB issued ASU

2016

15,

“

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments

,” which clarifies how certain cash receipts and payments are to be presented in the statement of cash flows. The Company adopted this ASU on

July 1, 2018

with

impact on its cash flow presentation.

May 2017,

the FASB issued ASU

217

09,

“Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting”,

which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions or share-based payment awards to which an entity would be required to apply modification accounting. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after

December 15, 2017.

The Company has adopted this ASU, and it does

not

expect it to have a material impact on the

2019

fiscal year financial statements.

July 2017,

the FASB issued ASU

2017

11,

“

Earnings Per Share (Topic

260

), Distinguishing Liabilities from Equity (Topic

480

) and Derivatives and Hedging (topic

815

); Part I. Accounting for Certain Financial Instruments with Down Round Features and Part II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

”, which states that when determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature

longer precludes equity classification when assessing whether the instrument is indexed to the company’s own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option)

longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. The Company continues to evaluate the provisions of this ASU and plans to adopt this ASU effective

July 1, 2019.

December 2017,

the Securities and Exchange Commission issued Staff Accounting Bulletin

No.

118,

which is an application of ASC Topic

740,

“Income Taxes

”,

in the reporting period that includes

December

22,2017,

the date on which the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act changes existing United States tax law and includes numerous provisions that will affect business. Staff Accounting Bulletin

No.

118

implies that if a reasonable estimate can be made of the Act’s effects on the Company’s financial statements, the reasonable estimate should be reported in the period ending after

December 22, 2017.

The Company has implemented Staff Accounting Bulletin

No.

118

during fiscal year

2018

by revaluing its deferred tax asset for the lower tax rates.

August 2018,

the FASB issued ASU

2018

13.

“Fair Value Measurement (Topic

820

): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”, which adds disclosure requirements to Topic

820

for the range and weighted average of significant unobservable inputs used to develop Level

fair value measurements. The Company is evaluating the provisions of this ASU and plans to adopt this ASU effective

July 1, 2020.

- Definition

Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.

+ References + Details

- Definition

Disclosure of accounting policy for trade and other accounts receivables. This disclosure may include the basis at which such receivables are carried in the entity's statements of financial position (for example, net realizable value), how the entity determines the level of its allowance for doubtful accounts, when impairments, charge-offs or recoveries are recognized, and the entity's income recognition policies for such receivables, including its treatment of related fees and costs, its treatment of premiums, discounts or unearned income, when accrual of interest is discontinued, how the entity records payments received on nonaccrual receivables and its policy for resuming accrual of interest on such receivables. If the enterprise holds a large number of similar loans, disclosure may include the accounting policy for the anticipation of prepayments and significant assumptions underlying prepayment estimates for amortization of premiums, discounts, and nonrefundable fees and costs.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section S99
-Paragraph 1
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Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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-URI http://asc.fasb.org/extlink&oid=84158767&loc=d3e18780-107790

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
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-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

+ Details