v3.20.4
Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Impact of Coronavirus Aid, Relief, and Economic Security Act

Impact of Coronavirus Aid, Relief, and Economic Security Act

 

The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted in March 2020 in response to the COVID-19 pandemic. The CARES Act and related rules and guidelines include several significant provisions, including delaying certain payroll tax payments, mandatory transition tax payments, and estimated income tax payments that we are deferring to future periods.  As a result, the Company delayed payment of certain payroll tax payments in the amount of $19,517 as of December 31, 2020 and June 30, 2020, respectively. 

 

In April 2020, the Company applied for an unsecured loan (the "PPP Loan") under the Paycheck Protection Program (PPP). The PPP was established under The CARES Act and is administered by the U.S. Small Business Administration (SBA). The PPP loan was approved and funded, and the Company entered into an unsecured loan of approximately $311,000. The PPP loan matures in April 2022 and accrues interest at an annual rate of 0.98%. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults and provisions of the promissory note. In accordance with the requirements of the CARES Act, the Company used the proceeds from the PPP Loan primarily for payroll costs. See Note 6.

 

In May 2020, the Company received a loan from the SBA under Section 7(b) of the Small Business Act. The $150,000 secured loan matures in May 2050 and accrues interest at an annual rate of 3.75%. The promissory note is collateralized by a security interest in substantially all assets of the Company. The loan proceeds are to fund working capital needs due to economic injury caused by the COVID-19 pandemic. See Note 6.
Corporate History, Nature of Business, Mergers and Acquisitions

Corporate History, Nature of Business, Mergers and Acquisitions

 

Galaxy is a manufacturer and U.S. distributor of interactive learning technology hardware and software that allows the presenter and participant to engage in a fully collaborative instructional environment. Galaxy's products include Galaxy's own private-label interactive touch screen panel as well as numerous other national and international branded peripheral and communication devices. New technologies like Galaxy's own touchscreen panels are sold along with renowned brands such as Google Chromebooks, Microsoft Surface Tablets, Lenovo and Acer computers, Verizon WiFi and more. Galaxy's distribution channel consists of approximately 30 resellers across the U.S. who primarily sell its products within the commercial and educational market. Galaxy does not control where the resellers focus their resell efforts; however, the K-12 education market is the largest customer base for Galaxy products comprising nearly 90% of Galaxy's sales. In addition, Galaxy also possesses its own reseller channel where it sells directly to the K-12 market, primarily throughout the Southeast region of the United States.

 

Solutions and Concepts are Utah-based audio design and manufacturing companies creating innovative products that provide fundamental tools for building notification systems primarily to K-12 education market customers located primarily in the north and northwest United States. These products and services allow institutions access to intercom, scheduling, and notification systems with improved ease of use. The products provide an open architecture solution to customers which allows the products to be used in both existing and new environments. Intercom, public announcement (PA), bell and control solutions are easily added and integrated within the open architecture design and software model. These products combine elements over a common internet protocol (IP) network, which minimizes infrastructure requirements and reduces costs by combining systems.

 

On October 15, 2020, the Company entered into an Asset Purchase Agreement (AP), to acquire the assets of Classroom Technologies Solutions, Inc. (“Classroom Tech”) for consideration of (a) paying off a secured Classroom Tech loan, not to exceed the greater of 50% of the value of the Classroom Tech assets acquired or $120,000; (b) the issuance of a promissory note in the amount of $44,526 to a Classroom Tech designee; and (c) the issuance of 10 million shares of common stock to the seller of Classroom Tech. Classroom Tech provides cutting-edge presentation products to schools, training facilities, churches, corporations and retail establishments. Their high quality solutions are customized to meet a variety of needs and budgets in order to provide the best in education and presentation technology. Classroom Tech direct-sources and imports many devices and components which allows the Company to be innovative, nimble and capable of delivering a broad range of cost-effective solutions. Classroom Tech also offers in-house service and repair facilities and carries many top brands.
Basis of Presentation and Interim Financial Information

Basis of Presentation and Interim Financial Information

 

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by GAAP for complete financial statements and, therefore, should be read in conjunction with the Consolidated Financial Statements and notes thereto in our June 30, 2020 Annual Report on Form 10-K and other current filings with the SEC. In the opinion of management, all adjustments, consisting of those of a normal recurring nature, necessary to present fairly the results of the periods presented have been included. The results of operations for the interim periods presented may not necessarily be indicative of the results to be expected for the full year.
Principles of Consolidation

Principles of Consolidation

 

The financial statements include the consolidated assets and liabilities of the combined company (collectively Galaxy Next Generation, Inc., Classroom Technology Solutions Inc., Interlock Concepts, Inc., and Ehlert Solutions Group, Inc. referred to collectively as the "Company"). See Note 14.

 

All intercompany transactions and accounts have been eliminated in the consolidation.

 

The Company is an over-the-counter public company traded under the stock symbol listing GAXY.
Capital Structure

Capital Structure

 

In accordance with ASC 505, Equity, the Company's capital structure is as follows:

 

 

 

December 31, 2020

 

 

 

 

 

 

 

Authorized

 

Issued

 

Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

     4,000,000,000

 

2,720,894,203

 

   2,670,855,578

 

$.0001 par value, one vote per share

 

 

Preferred stock

 

        200,000,000

 

                  -   

 

                      -   

 

$.0001 par value, one vote per share

 

 

Preferred stock - Class A

 

               750,000

 

                  -   

 

                      -   

 

$.0001 par value; no voting rights

 

 

Preferred stock - Class B

 

            1,000,000

 

                  -   

 

                      -   

 

Voting rights of 10 votes for

Preferred B share; 2% preferred dividend payable annually

 

Preferred stock - Class C

 

            9,000,000

 

                  -   

 

                      -   

 

$.0001 par value; 500 votes per share, convertible to common stock

 

 

 

Preferred stock - Class D

 

           

  1,000,000

 

               

   -   

 

              

        -   

 

$.0001 par value; no voting

 rights, convertible to common stock, mandatory conversion to common stock 18 months after issue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock - Class E

 

               500,000

 

          500,000

 

             500,000

 

$.0001 par value; no voting

rights, convertible to common

stock

 

 

 

 

June 30, 2020

 

 

 

 

 

 

Authorized

 

Issued

 

Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

       4,000,000,000

 

628,039,242

 

628,000,617

 

$.0001 par value, one vote per share

 

 

     

 

 

 

 

Preferred stock

 

200,000,000

 

                  -   

 

                      -   

 

$.0001 par value, one vote per share

 

 

     

 

 

 

 

Preferred stock - Class A

 

               750,000

 

                  -   

 

                      -   

 

$.0001 par value; no voting rights

 

 

     

 

 

 

 

Preferred stock - Class B

 

 1,000,000

 

 -

 

 -

 

Voting rights of 10 votes for 1 Preferred B share; 2% preferred dividend payable annually

 

 

     

 

 

 

 

Preferred stock - Class C

 

             9,000,000

 

                  -   

 

                      -   

 

$.0001 par value; 500 votes per share, convertible to common stock

 

Preferred stock - Class D

 

 

 

  1,000,000

 

 

 

  -

 

                  

 

   -   

 

 

$.0001 par value; no voting

rights, convertible to common stock, mandatory conversion to common stock 18 months after issue

 

 

     

 

 

 

     

 

 

 

 

Preferred stock - Class E

 

               500,000

 

        500,000

 

       500,000

 

$.0001 par value; no voting rights, convertible to common stock

 

There is no publicly traded market for the preferred shares.

 

There are 392,143 common shares reserved at December 31, 2020 under terms of the convertible debt agreements, Stock Plan and Equity Purchase Agreement (see Notes 6, 13 and 15).

 

There are 165,680,020 issued common shares that are restricted as of December 31, 2020. The shares may become free-trading upon satisfaction of certain terms and regulatory conditions.
Accounts Receivable

Accounts Receivable

 

Management deemed no allowance for doubtful accounts was necessary at December 31, 2020 and June 30, 2020. At December 31, 2020 and June 30, 2020, $836,819 and $670,031 of total accounts receivable were considered unbilled and recorded as deferred revenue.

 

The Company factored approximately $487,000 and $0 of accounts receivable as of December 31, 2020 and June 30, 2020, respectively. For the three months and six months ended December 31, 2020, expenses on sale of trade receivables was inconsequential. For the three and six months ended December 31, 2019, the Company did not factor accounts receivable.
Inventories

Inventories

 

Management estimates $67,635 of inventory reserves at December 31, 2020 and June 30, 2020.
Goodwill and Intangible Assets

Goodwill and Intangible Assets

 

Management of the Company determined that a triggering event to assess goodwill impairment occurred during the year ended June 30, 2020 due to the separation of a key executive associated with their acquisition of Concepts and Solutions. While there was no single determinative event, the consideration in totality of several factors that developed led management to conclude that it was more likely than not that the fair values of certain intangible assets and goodwill acquired as part of that acquisition were below their carrying amounts. These factors included: a) former key executive separating from the Company; b) respective former key executive violating his noncompete changing the use and value of it; c) sustained decrease in the Company's share price which reduced market capitalization; and d) uncertainty in the United States and global economies due to Covid-19. As a result, the Company recorded a non-cash impairment loss of approximately $2,000,000, including $800,287 related to goodwill and $1,200,000 related to finite-lived intangible assets. No such impairment charge was recorded during the three or six months ended December 31, 2020 and 2019. 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In January 2020, the FASB issued ASU No. 2020-01, "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815." The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2020-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company is currently evaluating the impacts of adoption of the new guidance to its consolidated financial statements.

 

In December 2019, the FASB issued ASU No. 2019-12 "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12") by removing certain exceptions to the general principles. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective or prospective basis. The Company is currently evaluating the impacts of adoption of the new guidance to its consolidated financial statements.

 

In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity's Own Equity”, which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity's own equity and modifies the guidance on diluted EPS calculations as a result of these changes. The guidance in this ASU can be adopted using either a full or modified retrospective approach and becomes effective for annual reporting periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

 

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity's own equity and modifies the guidance on diluted EPS calculations as a result of these changes. The guidance in this ASU can be adopted using either a full or modified retrospective approach and becomes effective for annual reporting periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

 

The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.