x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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Delaware
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39-1168275
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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4129 North Port Washington Avenue, Milwaukee, Wisconsin
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53212
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock $0.005 par value per share
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The Nasdaq Stock Market LLC
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NONE
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
x
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(Do not check if a smaller reporting company)
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|
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Page
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PART I
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|
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PART II
|
|
|
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Part III
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|
|
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PART IV
|
|
|
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2015
|
|
2014
|
||||
United States
|
|
$
|
16,779,312
|
|
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$
|
15,514,051
|
|
Sweden
|
|
3,677,225
|
|
|
2,310,064
|
|
||
Canada
|
|
498,026
|
|
|
604,971
|
|
||
Russia
|
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478,012
|
|
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377,135
|
|
||
United Kingdom
|
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465,647
|
|
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707,724
|
|
||
Czech Republic
|
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441,754
|
|
|
1,309,697
|
|
||
Cyprus
|
|
414,787
|
|
|
1,975,736
|
|
||
All other countries
|
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1,475,293
|
|
|
1,041,504
|
|
||
Net sales
|
|
$
|
24,230,056
|
|
|
$
|
23,840,882
|
|
|
|
|
|
|
|
Per Share
|
||||||
Quarter Ended
|
|
High
|
|
Low
|
|
Dividend
|
||||||
September 30, 2013
|
|
$
|
5.35
|
|
|
$
|
4.88
|
|
|
$
|
0.06
|
|
December 31, 2013
|
|
$
|
5.26
|
|
|
$
|
4.75
|
|
|
$
|
0.06
|
|
March 31, 2014
|
|
$
|
6.59
|
|
|
$
|
4.38
|
|
|
$
|
0.06
|
|
June 30, 2014
|
|
$
|
5.15
|
|
|
$
|
2.86
|
|
|
$
|
—
|
|
September 30, 2014
|
|
$
|
3.45
|
|
|
$
|
1.85
|
|
|
$
|
—
|
|
December 31, 2014
|
|
$
|
2.15
|
|
|
$
|
1.26
|
|
|
$
|
—
|
|
March 31, 2015
|
|
$
|
2.90
|
|
|
$
|
1.80
|
|
|
$
|
—
|
|
June 30, 2015
|
|
$
|
3.50
|
|
|
$
|
2.21
|
|
|
$
|
—
|
|
Period (2015)
|
|
Total
Number
of Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plan (1)
|
|
Approximate Dollar Value of
Shares Available under
Repurchase Plan
|
||||||
April 1-April 30
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
2,139,753
|
|
May 1-May 31
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
2,139,753
|
|
June 1-June 30
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
2,139,753
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
•
|
Net sales increased
1.6%
to
$24,230,056
on volume gains at a Scandinavian distributor as well as at US distributors offsetting declines in certain export markets.
|
•
|
Gross profit as a percent of sales increased
36.1%
to
34.9%
due to the impairment charge, relating to capitalized software, tooling and inventory, incurred during fiscal year
2014
, and reduction in operating costs in fiscal year
2015
.
|
•
|
Selling, general and administrative spending was lower due to a reduction in spending on Wifi product development, reduction of the 401k match, closure of the sales office in Switzerland, lower outside service fees and the favorable impact of various cost reduction efforts.
|
•
|
Unauthorized transaction related recoveries decreased as sale of seized property winds down.
|
Consolidated Performance Summary
|
|
2015
|
|
2014
|
||
Net sales
|
|
$24,230,056
|
|
$23,840,882
|
||
Net increase (decrease) %
|
|
1.6
|
%
|
|
(33.3
|
)%
|
Gross profit (loss)
|
|
$8,448,567
|
|
$(281,819)
|
||
Gross profit (loss) as % of net sales
|
|
34.9
|
%
|
|
(1.2
|
)%
|
Selling, general and administrative expenses
|
|
$7,904,739
|
|
$10,468,708
|
||
Selling, general and administrative expenses as % of net sales
|
|
32.6
|
%
|
|
43.9
|
%
|
Unauthorized transaction related costs
|
|
$152,492
|
|
$388,287
|
||
Unauthorized transaction related recoveries
|
|
$(121,465)
|
|
$(1,134,082)
|
||
Unauthorized transaction related costs (recoveries), net
|
|
$31,027
|
|
$(745,795)
|
||
Income (loss) from operations
|
|
$512,801
|
|
$(10,004,732)
|
||
Income (loss) from operations as % of net sales
|
|
2.1
|
%
|
|
(42.0
|
)%
|
Other expense (income)
|
|
$12,813
|
|
$(49,589)
|
||
Income tax provision (benefit)
|
|
$17,375
|
|
$(4,401,589)
|
||
Income tax provision (benefit) as % of income before taxes
|
|
3.5
|
%
|
|
44.2
|
%
|
|
|
2015
|
|
2014
|
||||
Net income (loss)
|
|
$
|
482,613
|
|
|
$
|
(5,553,554
|
)
|
Interest expense (income)
|
|
12,813
|
|
|
(49,589
|
)
|
||
Income tax provision (benefit)
|
|
17,375
|
|
|
(4,401,589
|
)
|
||
Unauthorized transaction related costs (recoveries), net
|
|
31,027
|
|
|
(745,795
|
)
|
||
Depreciation of equipment and leasehold improvements
|
|
559,631
|
|
|
734,664
|
|
||
Amortization of product software development expenditures
|
|
—
|
|
|
364,539
|
|
||
Impairment of capitalized software, inventory and related items
|
|
—
|
|
|
6,305,947
|
|
||
Stock-based compensation expense
|
|
630,539
|
|
|
684,554
|
|
||
EBITDA from operations
|
|
$
|
1,733,998
|
|
|
$
|
(2,660,823
|
)
|
|
|
2015
|
|
2014
|
||||
Total cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
(340,590
|
)
|
|
$
|
3,591,432
|
|
Investing activities
|
|
(558,555
|
)
|
|
(779,808
|
)
|
||
Financing activities
|
|
—
|
|
|
(1,771,849
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(899,145
|
)
|
|
$
|
1,039,775
|
|
Years Ended June 30,
|
|
2015
|
|
2014
|
||||
Net sales
|
|
$
|
24,230,056
|
|
|
$
|
23,840,882
|
|
Cost of goods sold
|
|
15,781,489
|
|
|
17,816,754
|
|
||
Impairment of capitalized software, inventory and related items
|
|
—
|
|
|
6,305,947
|
|
||
Gross profit (loss)
|
|
8,448,567
|
|
|
(281,819
|
)
|
||
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
||||
Selling, general and administrative expenses
|
|
7,904,739
|
|
|
10,468,708
|
|
||
Unauthorized transaction related costs (recoveries), net
|
|
31,027
|
|
|
(745,795
|
)
|
||
Total operating expenses
|
|
7,935,766
|
|
|
9,722,913
|
|
||
|
|
|
|
|
||||
Income (loss) from operations
|
|
512,801
|
|
|
(10,004,732
|
)
|
||
|
|
|
|
|
||||
Other expense (income):
|
|
|
|
|
||||
Interest expense (income)
|
|
12,813
|
|
|
(49,589
|
)
|
||
|
|
|
|
|
||||
Income (loss) before income tax provision (benefit)
|
|
499,988
|
|
|
(9,955,143
|
)
|
||
|
|
|
|
|
||||
Income tax provision (benefit)
|
|
17,375
|
|
|
(4,401,589
|
)
|
||
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
482,613
|
|
|
$
|
(5,553,554
|
)
|
|
|
|
|
|
||||
Income (loss) per common share:
|
|
|
|
|
||||
Basic
|
|
$
|
0.07
|
|
|
$
|
(0.75
|
)
|
Diluted
|
|
$
|
0.07
|
|
|
$
|
(0.75
|
)
|
|
|
|
|
|
||||
Dividends declared per common share
|
|
$
|
—
|
|
|
$
|
0.18
|
|
As of June 30,
|
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
1,000,266
|
|
|
$
|
1,899,411
|
|
Accounts receivable, less allowance for doubtful accounts of $26,052 and
$20,501, respectively |
|
2,823,980
|
|
|
3,160,887
|
|
||
Inventories
|
|
7,182,440
|
|
|
7,054,932
|
|
||
Prepaid expenses and other current assets
|
|
348,044
|
|
|
148,200
|
|
||
Income taxes receivable
|
|
205,531
|
|
|
1,109,276
|
|
||
Deferred income taxes
|
|
2,045,316
|
|
|
2,576,023
|
|
||
Total current assets
|
|
13,605,577
|
|
|
15,948,729
|
|
||
|
|
|
|
|
||||
Equipment and leasehold improvements, net
|
|
1,592,520
|
|
|
1,840,491
|
|
||
|
|
|
|
|
||||
Other assets:
|
|
|
|
|
|
|
||
Deferred income taxes
|
|
1,869,253
|
|
|
1,623,329
|
|
||
Cash surrender value of life insurance
|
|
5,359,663
|
|
|
4,977,409
|
|
||
Total other assets
|
|
7,228,916
|
|
|
6,600,738
|
|
||
|
|
|
|
|
||||
Total assets
|
|
$
|
22,427,013
|
|
|
$
|
24,389,958
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
2,172,254
|
|
|
$
|
2,464,755
|
|
Accrued liabilities
|
|
1,575,027
|
|
|
3,853,473
|
|
||
Income taxes payable
|
|
—
|
|
|
175,000
|
|
||
Total current liabilities
|
|
3,747,281
|
|
|
6,493,228
|
|
||
|
|
|
|
|
||||
Long-term liabilities:
|
|
|
|
|
|
|
||
Deferred compensation
|
|
2,107,486
|
|
|
2,320,091
|
|
||
Other liabilities
|
|
219,227
|
|
|
336,772
|
|
||
Total long-term liabilities
|
|
2,326,713
|
|
|
2,656,863
|
|
||
|
|
|
|
|
||||
Total liabilities
|
|
6,073,994
|
|
|
9,150,091
|
|
||
|
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
|
|
||
Common stock, $0.005 par value, authorized 20,000,000 shares; issued and
outstanding 7,382,706 shares |
|
36,914
|
|
|
36,914
|
|
||
Paid in capital
|
|
4,626,781
|
|
|
3,996,242
|
|
||
Retained earnings
|
|
11,689,324
|
|
|
11,206,711
|
|
||
Total stockholders' equity
|
|
16,353,019
|
|
|
15,239,867
|
|
||
|
|
|
|
|
||||
Total liabilities and stockholders' equity
|
|
$
|
22,427,013
|
|
|
$
|
24,389,958
|
|
Years Ended June 30,
|
|
2015
|
|
2014
|
||||
Operating activities:
|
|
|
|
|
|
|
||
Net income (loss)
|
|
$
|
482,613
|
|
|
$
|
(5,553,554
|
)
|
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities: |
|
|
|
|
||||
Provision for (recoveries of previously written off) doubtful accounts
|
|
25,725
|
|
|
(182,020
|
)
|
||
Loss on disposals of fixed assets
|
|
14,953
|
|
|
—
|
|
||
Impairment of capitalized software, inventory and related items
|
|
—
|
|
|
6,305,947
|
|
||
Depreciation of equipment and leasehold improvements
|
|
559,631
|
|
|
734,664
|
|
||
Amortization of product software development expenditures
|
|
—
|
|
|
364,539
|
|
||
Stock-based compensation expense
|
|
630,539
|
|
|
684,554
|
|
||
Deferred income taxes
|
|
284,783
|
|
|
(2,608,369
|
)
|
||
Change in cash surrender value of life insurance
|
|
(150,312
|
)
|
|
(120,627
|
)
|
||
Deferred compensation
|
|
(62,605
|
)
|
|
(210,204
|
)
|
||
Net changes in operating assets and liabilities (see note 16)
|
|
(2,125,917
|
)
|
|
4,176,502
|
|
||
Cash (used in) provided by operating activities
|
|
(340,590
|
)
|
|
3,591,432
|
|
||
|
|
|
|
|
||||
Investing activities:
|
|
|
|
|
|
|
||
Life insurance premiums paid
|
|
(231,942
|
)
|
|
(243,940
|
)
|
||
Purchase of equipment and leasehold improvements
|
|
(326,613
|
)
|
|
(535,868
|
)
|
||
Cash (used in) investing activities
|
|
(558,555
|
)
|
|
(779,808
|
)
|
||
|
|
|
|
|
||||
Financing activities:
|
|
|
|
|
|
|
||
Dividends paid to stockholders
|
|
—
|
|
|
(1,771,849
|
)
|
||
Cash (used in) financing activities
|
|
—
|
|
|
(1,771,849
|
)
|
||
|
|
|
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
|
(899,145
|
)
|
|
1,039,775
|
|
||
Cash and cash equivalents at beginning of year
|
|
1,899,411
|
|
|
859,636
|
|
||
Cash and cash equivalents at end of year
|
|
$
|
1,000,266
|
|
|
$
|
1,899,411
|
|
|
|
Common Stock
|
|
Paid in
|
|
Retained
|
|
|
|||||||||||
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Earnings
|
|
Total
|
|||||||||
Balance, July 1, 2013
|
|
7,382,706
|
|
|
$
|
36,914
|
|
|
$
|
3,263,608
|
|
|
$
|
18,089,152
|
|
|
$
|
21,389,674
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,553,554
|
)
|
|
(5,553,554
|
)
|
||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,328,887
|
)
|
|
(1,328,887
|
)
|
||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
684,554
|
|
|
—
|
|
|
684,554
|
|
||||
Income tax benefit from dividends paid to employee stock ownership plan
|
|
—
|
|
|
—
|
|
|
48,080
|
|
|
—
|
|
|
48,080
|
|
||||
Balance, June 30, 2014
|
|
7,382,706
|
|
|
$
|
36,914
|
|
|
$
|
3,996,242
|
|
|
$
|
11,206,711
|
|
|
$
|
15,239,867
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
482,613
|
|
|
482,613
|
|
||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
630,539
|
|
|
—
|
|
|
630,539
|
|
||||
Balance, June 30, 2015
|
|
7,382,706
|
|
|
$
|
36,914
|
|
|
$
|
4,626,781
|
|
|
$
|
11,689,324
|
|
|
$
|
16,353,019
|
|
|
|
2015
|
|
2014
|
||||
Legal fees incurred
|
|
$
|
152,492
|
|
|
$
|
388,287
|
|
Proceeds from asset forfeitures
|
|
(121,465
|
)
|
|
(1,134,082
|
)
|
||
Unauthorized transaction related costs (recoveries), net
|
|
$
|
31,027
|
|
|
$
|
(745,795
|
)
|
Fiscal Year Ended
June 30, |
|
Balance,
beginning
of year
|
|
Provision
charged to
expense
|
|
Amounts
written-off
|
|
Balance,
end of year
|
||||||
2015
|
|
$
|
20,501
|
|
|
25,725
|
|
|
(20,174
|
)
|
|
$
|
26,052
|
|
2014
|
|
$
|
43,405
|
|
|
(182,020
|
)
|
|
159,116
|
|
|
$
|
20,501
|
|
|
|
2014
|
||
Product software development expenditures
|
|
$
|
2,308,752
|
|
Inventories
|
|
3,451,911
|
|
|
Product design costs
|
|
246,588
|
|
|
Tooling
|
|
298,696
|
|
|
Impairment of capitalized software, inventory and related items
|
|
$
|
6,305,947
|
|
|
|
2015
|
|
2014
|
||||
Raw materials
|
|
$
|
5,374,333
|
|
|
$
|
5,593,159
|
|
Finished goods
|
|
6,246,072
|
|
|
6,327,221
|
|
||
|
|
11,620,405
|
|
|
11,920,380
|
|
||
Reserve for obsolete inventory
|
|
(4,437,965
|
)
|
|
(4,865,448
|
)
|
||
Total inventories
|
|
$
|
7,182,440
|
|
|
$
|
7,054,932
|
|
|
|
Estimated
useful lives
|
|
2015
|
|
2014
|
||||
Machinery and equipment
|
|
5-10 years
|
|
$
|
642,200
|
|
|
$
|
675,670
|
|
Furniture and office equipment
|
|
5-10 years
|
|
374,616
|
|
|
374,616
|
|
||
Tooling
|
|
5 years
|
|
4,126,850
|
|
|
3,607,314
|
|
||
Display booths
|
|
5-7 years
|
|
287,180
|
|
|
287,180
|
|
||
Computer equipment
|
|
3-5 years
|
|
1,414,517
|
|
|
1,414,517
|
|
||
Leasehold improvements
|
|
7-10 years
|
|
2,308,246
|
|
|
2,288,706
|
|
||
Assets in progress
|
|
N/A
|
|
60,600
|
|
|
259,328
|
|
||
|
|
|
|
9,214,209
|
|
|
8,907,331
|
|
||
Less: accumulated depreciation and amortization
|
|
|
|
7,621,689
|
|
|
7,066,840
|
|
||
Equipment and leasehold improvements, net
|
|
|
|
$
|
1,592,520
|
|
|
$
|
1,840,491
|
|
Year Ended June 30,
|
|
2015
|
|
2014
|
||||
Current:
|
|
|
|
|
|
|
||
Federal
|
|
$
|
(100,126
|
)
|
|
$
|
(1,863,204
|
)
|
State
|
|
(167,282
|
)
|
|
69,984
|
|
||
Deferred
|
|
284,783
|
|
|
(2,608,369
|
)
|
||
Total income tax provision (benefit)
|
|
$
|
17,375
|
|
|
$
|
(4,401,589
|
)
|
Year Ended June 30,
|
|
2015
|
|
2014
|
||||
Federal income tax expense (benefit) at statutory rate
|
|
$
|
169,996
|
|
|
$
|
(3,382,307
|
)
|
State income tax expense (benefit), net of federal income tax benefit
|
|
(21,442
|
)
|
|
(285,802
|
)
|
||
Increase in valuation allowance
|
|
—
|
|
|
148,000
|
|
||
Stock-based compensation
|
|
53,596
|
|
|
58,187
|
|
||
Adjustments for unrecognized tax benefits
|
|
(175,000
|
)
|
|
(546,113
|
)
|
||
Federal income tax credits
|
|
—
|
|
|
(187,349
|
)
|
||
Other
|
|
(9,775
|
)
|
|
(206,205
|
)
|
||
Total income tax provision (benefit)
|
|
$
|
17,375
|
|
|
$
|
(4,401,589
|
)
|
|
|
2015
|
|
2014
|
||||
Deferred income tax assets:
|
|
|
|
|
|
|
||
Deferred compensation
|
|
$
|
835,270
|
|
|
$
|
858,434
|
|
Stock-based compensation
|
|
889,325
|
|
|
714,350
|
|
||
Accrued expenses and reserves
|
|
2,075,601
|
|
|
2,701,144
|
|
||
Federal and state net operating loss carryforwards
|
|
463,237
|
|
|
371,744
|
|
||
Valuation allowance
|
|
(370,409
|
)
|
|
(370,409
|
)
|
||
Equipment and leasehold improvements
|
|
11,566
|
|
|
—
|
|
||
Other
|
|
14,650
|
|
|
22,806
|
|
||
Total deferred income tax assets
|
|
3,919,240
|
|
|
4,298,069
|
|
||
|
|
|
|
|
||||
Deferred income tax liabilities:
|
|
|
|
|
|
|
||
Equipment and leasehold improvements
|
|
—
|
|
|
(98,717
|
)
|
||
Other
|
|
(4,671
|
)
|
|
—
|
|
||
Net deferred income tax assets
|
|
$
|
3,914,569
|
|
|
$
|
4,199,352
|
|
|
|
2015
|
|
2014
|
||||
Current deferred income tax assets
|
|
$
|
2,045,316
|
|
|
$
|
2,576,023
|
|
Noncurrent deferred income tax assets
|
|
1,869,253
|
|
|
1,623,329
|
|
||
Net deferred income tax assets
|
|
$
|
3,914,569
|
|
|
$
|
4,199,352
|
|
|
|
2015
|
|
2014
|
||||
Accrued interest at beginning of year
|
|
$
|
—
|
|
|
$
|
49,150
|
|
Interest charges to expense
|
|
—
|
|
|
24,575
|
|
||
Interest charges reversed
|
|
—
|
|
|
(73,725
|
)
|
||
Accrued interest at end of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2015
|
|
2014
|
||||
Unrecognized tax benefits at beginning of year
|
|
$
|
175,000
|
|
|
$
|
696,113
|
|
Gross increases - tax positions in prior years
|
|
—
|
|
|
25,000
|
|
||
Reductions due to lapse in statute
|
|
—
|
|
|
(546,113
|
)
|
||
Reductions based on settlements with taxing authorities
|
|
(175,000
|
)
|
|
—
|
|
||
Unrecognized tax benefits at end of year
|
|
$
|
—
|
|
|
$
|
175,000
|
|
Year Ended June 30,
|
|
Balance,
beginning
of year
|
|
Increase in
valuation
allowance
|
|
Release of
valuation
allowance
|
|
Balance,
end of year
|
||||||
2015
|
|
$
|
(370,409
|
)
|
|
—
|
|
|
—
|
|
|
$
|
(370,409
|
)
|
2014
|
|
$
|
(222,409
|
)
|
|
(148,000
|
)
|
|
—
|
|
|
$
|
(370,409
|
)
|
|
|
2015
|
|
2014
|
||||
Cooperative advertising and promotion allowances
|
|
$
|
400,114
|
|
|
$
|
750,433
|
|
Product warranty obligations
|
|
312,664
|
|
|
385,852
|
|
||
Customer credit balances
|
|
261,977
|
|
|
1,988,052
|
|
||
Current deferred compensation
|
|
150,000
|
|
|
—
|
|
||
Accrued returns
|
|
97,026
|
|
|
89,663
|
|
||
Employee benefits
|
|
93,568
|
|
|
129,518
|
|
||
Legal and professional fees
|
|
70,000
|
|
|
79,900
|
|
||
Management bonuses and profit-sharing
|
|
71,381
|
|
|
37,500
|
|
||
Sales commissions and bonuses
|
|
68,890
|
|
|
148,278
|
|
||
Accrued severance
|
|
—
|
|
|
123,720
|
|
||
Other
|
|
49,407
|
|
|
120,557
|
|
||
|
|
$
|
1,575,027
|
|
|
$
|
3,853,473
|
|
Year Ended June 30,
|
|
Balance,
beginning
of year
|
|
Provision
charged to
expense
|
|
Warranty
expenses
incurred
|
|
Balance,
end of year
|
||||||
2015
|
|
$
|
722,624
|
|
|
103,925
|
|
|
(294,658
|
)
|
|
$
|
531,891
|
|
2014
|
|
$
|
1,111,500
|
|
|
97,300
|
|
|
(486,176
|
)
|
|
$
|
722,624
|
|
|
|
2015
|
|
2014
|
||||
Interest expense (benefit) on secured credit facility
|
|
$
|
12,813
|
|
|
$
|
(587
|
)
|
Interest expense for tax positions related to unauthorized transactions
|
|
—
|
|
|
24,575
|
|
||
Interest reversals for tax positions related to unauthorized transactions
|
|
—
|
|
|
(73,725
|
)
|
||
Other interest expense
|
|
|
|
|
148
|
|
||
Interest expense (income)
|
|
$
|
12,813
|
|
|
$
|
(49,589
|
)
|
|
|
2015
|
|
2014
|
||
Expected stock price volatility
|
|
43
|
%
|
|
47
|
%
|
Risk free interest rate
|
|
1.52
|
%
|
|
1.27
|
%
|
Expected dividend yield
|
|
4.00
|
%
|
|
4.00
|
%
|
Expected forfeitures
|
|
1.50
|
%
|
|
1.50
|
%
|
Expected life of options
|
|
4.6 years
|
|
|
4.6 years
|
|
|
|
Number of
Shares |
|
Stock
Options Price Range |
|
Weighted
Average Exercise Price |
|
Weighted
Average Remaining Contractual Life - Years |
|
Aggregate
Intrinsic Value of In-The- Money Options |
|||||
Shares under option at July 1, 2013
|
|
1,741,000
|
|
|
$3.90 - $13.09
|
|
$
|
6.40
|
|
|
4.39
|
|
$
|
55,160
|
|
Granted
|
|
445,000
|
|
|
$5.30 - $5.83
|
|
$
|
5.64
|
|
|
|
|
|
||
Exercised
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
|
||
Expired
|
|
(120,000
|
)
|
|
$11.01
|
|
$
|
11.01
|
|
|
|
|
|
|
|
Forfeited
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
|
||
Shares under option at June 30, 2014
|
|
2,066,000
|
|
|
$3.90 - $13.09
|
|
$
|
5.97
|
|
|
4.13
|
|
$
|
—
|
|
Granted
|
|
470,000
|
|
|
$2.24 - $3.30
|
|
$
|
3.14
|
|
|
|
|
|
|
|
Exercised
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
|
||
Expired
|
|
(201,000
|
)
|
|
$4.97 - $13.09
|
|
$
|
7.06
|
|
|
|
|
|
|
|
Forfeited
|
|
(90,000
|
)
|
|
$3.00 - $6.00
|
|
$
|
4.69
|
|
|
|
|
|
|
|
Shares under option at June 30, 2015
|
|
2,245,000
|
|
|
$2.24 - $13.09
|
|
$
|
5.33
|
|
|
3.69
|
|
$
|
1,676
|
|
Exercisable as of June 30, 2014
|
|
904,918
|
|
|
$3.90 - $13.09
|
|
$
|
6.39
|
|
|
|
|
|
|
|
Exercisable as of June 30, 2015
|
|
1,134,500
|
|
|
$3.90 - $13.09
|
|
$
|
6.01
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
||||
Total intrinsic value of stock options exercised
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash received from stock option exercises
|
|
$
|
—
|
|
|
$
|
—
|
|
Total fair value of stock options vested
|
|
$
|
696,958
|
|
|
$
|
586,342
|
|
|
|
2015
|
|
2014
|
||||
Accounts receivable
|
|
$
|
311,182
|
|
|
$
|
9,206,295
|
|
Inventories
|
|
(127,508
|
)
|
|
(5,672
|
)
|
||
Income taxes receivable
|
|
903,745
|
|
|
(1,109,276
|
)
|
||
Prepaid expenses and other current assets
|
|
(199,844
|
)
|
|
317,389
|
|
||
Income taxes payable
|
|
(175,000
|
)
|
|
(2,509,444
|
)
|
||
Accounts payable
|
|
(292,501
|
)
|
|
(467,581
|
)
|
||
Accrued liabilities
|
|
(2,428,446
|
)
|
|
(851,981
|
)
|
||
Other liabilities
|
|
(117,545
|
)
|
|
(403,228
|
)
|
||
Net change
|
|
$
|
(2,125,917
|
)
|
|
$
|
4,176,502
|
|
|
|
|
|
|
||||
Net cash (refunded) paid during the year for:
|
|
|
|
|
|
|
||
Income taxes
|
|
$
|
(985,585
|
)
|
|
$
|
1,867,181
|
|
Interest
|
|
$
|
12,813
|
|
|
$
|
2,185
|
|
|
|
2015
|
|
2014
|
||||
United States
|
|
$
|
16,779,312
|
|
|
$
|
15,514,051
|
|
Sweden
|
|
3,677,225
|
|
|
2,310,064
|
|
||
Canada
|
|
498,026
|
|
|
604,971
|
|
||
Russia
|
|
478,012
|
|
|
377,135
|
|
||
United Kingdom
|
|
465,647
|
|
|
707,724
|
|
||
Czech Republic
|
|
441,754
|
|
|
1,309,697
|
|
||
Cyprus
|
|
414,787
|
|
|
1,975,736
|
|
||
All other countries
|
|
1,475,293
|
|
|
1,041,504
|
|
||
Net sales
|
|
$
|
24,230,056
|
|
|
$
|
23,840,882
|
|
•
|
On February 18, 2010, the Company filed an action against American Express Company, American Express Travel Related Services Company, Inc., AMEX Card Services Company, Decision Science, and Pamela S. Hopkins in Superior Court of Maricopa County, Arizona, case no. CV2010-006631. The claims alleged include aiding and abetting breach of fiduciary duty, aiding and abetting fraud, and conversion relating to the unauthorized transactions. The case is proceeding in the Superior Court with respect to those claims.
|
•
|
On December 17, 2010, the Company filed an action against Park Bank in Circuit Court of Milwaukee County, Wisconsin alleging claims of negligence and breach of the Uniform Fiduciaries Act relating to the unauthorized transactions. In 2015, Park Bank filed third party claims based on contribution and subrogation against Grant Thornton LLP and Michael Koss. The Court granted motions to dismiss the contribution claims against Grant Thornton LLP and Michael Koss, but determined that it was premature to decide the subrogation claims at this stage of the proceedings. The case is proceeding in the Circuit Court.
|
KOSS CORPORATION
|
|
||
|
|
||
By:
|
/s/ Michael J. Koss
|
|
August 27, 2015
|
|
Michael J. Koss
|
|
|
|
Chairman
|
|
|
|
President
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ David D. Smith
|
|
August 27, 2015
|
|
David D. Smith
|
|
|
|
Executive Vice President
|
|
|
|
Chief Financial Officer
|
|
|
|
Principal Accounting Officer
|
|
|
|
Secretary
|
|
|
/s/ John C. Koss
|
|
/s/ Michael J. Koss
|
John C. Koss, Director
|
|
Michael J. Koss, Director
|
|
|
|
|
|
|
/s/ Lawrence S. Mattson
|
|
/s/ John J. Stollenwerk
|
Lawrence S. Mattson, Director
|
|
John J. Stollenwerk, Director
|
|
|
|
|
|
|
/s/ Thomas L. Doerr
|
|
/s/ Theodore H. Nixon
|
Thomas L. Doerr, Director
|
|
Theodore H. Nixon, Director
|
Exhibit No.
|
Exhibit Description
|
|
|
3.1
|
Amended and Restated Certificate of Incorporation of Koss Corporation, as in effect on November 19, 2009. Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2009 and incorporated herein by reference.
|
|
|
3.2
|
By-Laws of Koss Corporation. Filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1996 and incorporated herein by reference.
|
|
|
10.1
|
Death Benefit Agreement with John C. Koss. Filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1996 and incorporated herein by reference. *
|
|
|
10.2
|
Stock Purchase Agreement with John C. Koss. Filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1996 and incorporated herein by reference. *
|
|
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10.3
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Salary Continuation Resolution for John C. Koss. Filed as Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1996 and incorporated herein by reference. *
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10.4
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1983 Incentive Stock Option Plan. Filed as Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1996 and incorporated herein by reference. *
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10.5
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1990 Flexible Incentive Plan. Filed as Exhibit 25 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1990 and incorporated herein by reference. *
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10.6
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Consent of Directors (Supplemental Executive Retirement Plan for Michael J. Koss dated March 7, 1997). Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by reference. *
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10.7
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Credit Agreement dated May 12, 2010, between Koss Corporation and JPMorgan Chase Bank, N.A. Filed as Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and incorporated by reference herein.
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10.8
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Pledge and Security Agreement dated May 12, 2010, between Koss Corporation and JPMorgan Chase Bank, N.A. Filed as Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and incorporated by reference herein.
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10.9
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Koss Corporation 2012 Omnibus Incentive Plan (Incorporated by reference to Appendix B to Koss Corporation's Definitive Proxy Statement on Schedule 14A filed on August 27, 2012). *
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10.10
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Amendment No. 2 dated July 24, 2013 to Credit Agreement dated May 12, 2010, between Koss Corporation and JPMorgan Chase Bank, N.A. Filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended June 30, 2014, and incorporated by reference herein.
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10.11
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Amendment No. 3 dated July 23, 2014 to Credit Agreement dated May 12, 2010, between Koss Corporation and JPMorgan Chase Bank, N.A. Filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended June 30, 2014, and incorporated by reference herein.
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10.12
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Amendment No. 4 dated July 29, 2015 to Credit Agreement dated May 12, 2010, between Koss Corporation and JPMorgan Chase Bank, N.A. **
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14
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Koss Corporation Code of Ethics. Filed as Exhibit 14 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2011 and incorporated by reference herein.
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23.1
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Consent of Baker Tilly Virchow Krause, LLP. **
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31.1
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Rule 13a -14(a)/15d-14(a) Certification of Chief Executive Officer. **
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31.2
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Rule 13a -14(a)/15d-14(a) Certification of Chief Financial Officer. **
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32.1
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Section 1350 Certification of Chief Executive Officer. ***
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32.2
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Section 1350 Certification of Chief Financial Officer. ***
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101
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The following financial information from Koss Corporation's Annual Report on Form 10-K for the year ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended June 30, 2015 and 2014, (ii) Consolidated Balance Sheets as of June 30, 2015 and 2014, (iii) Consolidated Statements of Cash Flows for the years ended June 30, 2015 and 2014, (iv) Consolidated Statements of Stockholders' Equity for the years ended June 30, 2015 and 2014 and (v) the Notes to Consolidated Financial Statements.
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*
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Denotes a management contract or compensatory plan or arrangement
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**
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Filed herewith
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***
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Furnished herewith
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a.
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All references to the Credit Agreement in the Credit Agreement or any of the Loan Documents shall refer to the Credit Agreement as amended hereby.
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b.
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Section 1.01 (Defined Terms) shall be amended as follows:
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c.
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A new Section 3.17 shall be added to read in its entirety as follows:
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d.
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Section 5.07 (Compliance with Laws) shall be amended to add the following sentence to the end of such section:
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e.
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Section 5.08 (Use of Proceeds and Letter of Credit) will be amended to add the following s to the end of such section:
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f.
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Section 6.12(a) shall be amended in its entirety to read as follows:
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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August 27, 2015
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/s/ Michael J. Koss
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Michael J. Koss
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Chief Executive Officer and President
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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August 27, 2015
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/s/ David D. Smith
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David D. Smith
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Executive Vice President and
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Chief Financial Officer
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/s/ Michael J. Koss
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Michael J. Koss
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Chief Executive Officer and President
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August 27, 2015
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/s/ David D. Smith
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David D. Smith
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Executive Vice President and
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Chief Financial Officer
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August 27, 2015
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