UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly
period ended March 31, 2022
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-56006
GALAXY NEXT GENERATION, INC.
(Exact Name of
Registrant as Specified in Its Charter)
|
|
|
Nevada
|
|
61-1363026
|
(State of
Incorporation)
|
|
(IRS Employer
Identification No.)
|
|
|
|
285 N Big A Road Toccoa,
Georgia
|
|
30577
|
(Address of Principal
Executive Offices)
|
|
(Zip Code)
|
(706)
391-5030
(Registrant's telephone number, including area code)
SECURITIES REGISTERED
PURSUANT TO SECTION 12(b) OF THE ACT: (None)
|
|
|
|
|
Title of each
class
|
|
Trading
Symbol(s)
|
|
Name of each exchange
on which
registered
|
N/A
|
|
N/A
|
|
N/A
|
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required
to be submitted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes[X] No[ ]
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a
non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of "large accelerated filer,"
"accelerated filer," "smaller reporting company" and "emerging
growth company" in Rule 12b-2 of the Exchange Act. (Check one):
|
|
Large accelerated filer [ ]
Non-accelerated filer [X ]
|
Accelerated filer [ ]
Smaller reporting company [X]
Emerging growth company [ ]
|
If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. [ ]
Indicate by check mark whether the registrant
is a shell Company (as defined in Rule 12b-2 of the Act). Yes [ ]
No [X]
The number of shares outstanding of the
issuer's Common Stock, as of May 12, 2022 was 17,469,128.
-i-
|
|
|
|
FORM
10-Q
GALAXY NEXT GENERATION, INC.
|
|
|
Table of
Contents
|
|
|
|
Page
|
|
PART I. Financial Information
|
|
Item 1.
|
Unaudited Condensed Consolidated Financial
Statements and Footnotes
|
2
|
Item 2.
|
Management's Discussion and Analysis of
Financial Condition and Results of Operations
|
25
|
Item 3.
|
Quantitative and Qualitative Disclosures
about Market Risk
|
31
|
Item 4.
|
Controls and Procedures
|
32
|
|
PART II. Other Information
|
|
Item 1.
|
Legal Proceedings
|
32
|
Item 1A.
|
Risk Factors
|
33
|
Item 2.
|
Unregistered Sales of Equity Securities and
Use of Proceeds
|
35
|
Item 3.
|
Defaults Upon Senior Securities
|
36
|
Item 4.
|
Mine Safety Disclosures
|
36
|
Item 5.
|
Other Information
|
36
|
Item 6.
|
Exhibits
|
37
|
|
Signatures
|
38
|
The accompanying unaudited interim
condensed consolidated financial statements included herein, have
been prepared by Galaxy Next Generation, Inc. (the "Company")
pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These
condensed consolidated statements have been prepared in accordance
with the Company's accounting policies described in the Company's
Annual Report on Form 10-K for the year ended June 30, 2021 and
should be read in conjunction with the audited consolidated
financial statements and the notes thereto included in that report.
Unless the context indicates otherwise, references to the
"Company," "we, " "us," "our" or "Galaxy" means Galaxy Next
Generation, Inc. and its subsidiaries.
-1-
PART I – FINANCIAL
INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS AND FOOTNOTES
The following unaudited condensed
consolidated financial statements are included herein:
|
|
Condensed Consolidated Balance Sheets as of
March 31, 2022 (unaudited) and June 30, 2021 (audited)
|
3
|
Condensed Consolidated Statements of
Operations for the Three and Nine Months Ended March 31, 2022 and
2021 (unaudited)
|
4
|
Condensed Consolidated Statement of Changes
in Stockholders' Equity (Deficit) for the Nine Months Ended March
31, 2022 (unaudited)
|
5
|
Condensed Consolidated Statement of Changes
in Stockholders' Equity (Deficit) for the Nine Months Ended March
31, 2021 (unaudited)
|
6
|
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended March 31, 2022 and 2021
(unaudited)
|
7-8
|
Notes to the Condensed Consolidated Financial
Statements (unaudited)
|
9-24
|
-2-
|
|
|
|
|
|
|
|
|
GALAXY NEXT GENERATION, INC.
|
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
March 31,
2022
|
|
June 30, 2021
|
Assets
|
(Unaudited)
|
|
(Audited)
|
Current Assets
|
|
|
|
Cash
|
$ 479,623
|
|
$
541,591
|
Accounts receivable,
net
|
659,101
|
|
866,091
|
Inventories, net
|
946,987
|
|
3,267,667
|
Other current assets
|
3,950
|
|
3,950
|
Total Current Assets
|
2,089,661
|
|
4,679,299
|
|
|
|
|
Property and Equipment, net (Note
2)
|
359,463
|
|
86,812
|
Intangibles, net (Notes 1 and
12)
|
1,475,989
|
|
1,516,815
|
Goodwill (Note 1)
|
834,220
|
|
834,220
|
Operating right of use
asset (Note 7)
|
158,829
|
|
208,051
|
Total Assets
|
$
4,918,162
|
|
$
7,325,197
|
|
|
|
|
Liabilities and
Stockholders' Equity (Deficit)
|
|
|
|
Current Liabilities
|
|
|
|
Line of credit (Note 3)
|
|
|
$ 991,598
|
Derivative liability,
convertible debt features (Note 5)
|
|
|
1,842,000
|
Current portion long term
notes payable (Note 4)
|
2,011,550
|
|
552,055
|
Accounts payable
|
627,212
|
|
830,433
|
Accrued expenses
|
823,788
|
|
213,772
|
Deferred revenue
|
|
|
453,862
|
Short term portion of
related party notes and payables (Note 6)
|
1,238,443
|
|
3,471,755
|
Total Current
Liabilities
|
4,700,993
|
|
8,355,475
|
Noncurrent Liabilities
|
|
|
|
Related party notes
payable, less current portion (Note 6)
|
279,124
|
|
|
Notes payable, less current
portion (Note 4)
|
316,295
|
|
405,007
|
Total Liabilities
|
5,296,412
|
|
8,760,482
|
|
|
|
|
Stockholders' Equity (Deficit)
|
|
|
|
Common stock
|
320,964
|
|
280,744
|
Preferred stock- Series E,
non-redeemable
|
|
|
50
|
Preferred stock - Series F,
non-redeemable
|
11
|
|
|
Additional
paid-in-capital
|
51,110,420
|
|
46,215,049
|
Accumulated deficit
|
(51,809,645)
|
|
(47,931,128)
|
Total Stockholders' Equity
(Deficit)
|
(378,250)
|
|
(1,435,285)
|
|
|
|
|
Total Liabilities and
Stockholders' Equity (Deficit)
|
$
4,918,162
|
|
$ 7,325,197
|
See accompanying notes to the condensed consolidated
financial statements (unaudited).
-3-
GALAXY NEXT
GENERATION, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Nine Months
|
|
Ended March 31,
|
|
Ended March 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
Revenues
|
$ 1,268,447
|
$ 777,457
|
|
$ 3,857,273
|
$ 2,754,463
|
Cost of
Sales
|
1,015,843
|
356,731
|
|
2,882,705
|
1,660,971
|
|
|
|
|
|
|
Gross
Profit
|
252,604
|
420,726
|
|
974,568
|
1,093,492
|
|
|
|
|
|
|
General
and Administrative Expenses
|
|
|
|
|
|
Stock compensation and stock issued for services
|
78,102
|
2,350
|
|
110,852
|
2,778,550
|
Impairment expense (Note 1)
|
|
|
|
46,869
|
|
General and administrative
|
1,126,705
|
1,697,410
|
|
3,627,953
|
4,347,555
|
Total General and Administrative Expenses
|
1,204,807
|
1,699,760
|
|
3,785,674
|
7,126,105
|
Loss from
Operations
|
(952,203)
|
(1,279,034)
|
|
(2,811,106)
|
(6,032,613)
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
|
|
|
Other income, net
|
2,000
|
141,017
|
|
7,878
|
141,017
|
Expenses related to convertible notes payable:
|
|
|
|
|
|
Change in fair value of derivative liability
|
|
343,000
|
|
1,842,000
|
(3,153,583)
|
Interest accretion
|
(25,370)
|
|
|
(49,660)
|
(766,603)
|
Interest expense related to Equity Purchase
Agreement (Note 11)
|
|
(1,805,687)
|
|
(2,143,500)
|
(6,807,587)
|
Interest expense
|
(101,766)
|
(289,585)
|
|
(724,129)
|
(7,173,779)
|
|
|
|
|
|
|
Total Other Income (Expense)
|
(125,136)
|
(1,611,255)
|
|
(1,067,411)
|
(17,760,535)
|
|
|
|
|
|
|
Net Loss
before Income Taxes
|
(1,077,399)
|
(2,890,289)
|
|
(3,878,517)
|
(23,793,148)
|
|
|
|
|
|
|
Income taxes
(Note 9)
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
$ (1,077,339)
|
$ (2,890,289)
|
|
$ (3,878,517)
|
$ (23,793,148)
|
|
|
|
|
|
|
Net Basic
and Fully Diluted Loss Per Share
|
$ (0.0636)
|
$ (0.2048)
|
|
$ (0.2325)
|
$
(2.1424)
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
|
|
|
Basic
|
16,939,276
|
14,144,032
|
|
16,679,847
|
11,106,013
|
Fully diluted
|
16,945,205
|
16,939,839
|
|
16,683,828
|
17,165,665
|
See accompanying notes to the condensed consolidated financial
statements (unaudited).
-4-
|
|
|
|
|
|
|
GALAXY NEXT GENERATION, INC.
|
Consolidated Statement of Changes in Stockholders' Equity
(Deficit)
|
Nine Months Ended March 31, 2022
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock (1)
|
|
Preferred Stock Series E
|
|
Preferred Stock Series F
|
|
Additional
|
|
|
|
Total
|
|
Shares
|
|
Amount
|
|
Shares
|
Amount
|
|
Shares
|
Amount
|
|
Paid-in
Capital
|
|
Accumulated Deficit
|
|
Stockholders' Deficit
|
Balance
July 1, 2021
|
15,699,414
|
|
$280,744
|
|
500,000
|
$
50
|
|
|
|
|
$46,215,049
|
|
$(47,931,128)
|
|
$(1,435,285)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
issued for services
|
73,517
|
|
1,470
|
|
-
|
-
|
|
-
|
-
|
|
109,382
|
|
-
|
|
110,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issued under Equity Purchase Agreement
|
1,625,000
|
|
32,500
|
|
-
|
-
|
|
-
|
-
|
|
2,611,000
|
|
-
|
|
2,643,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Series F issued in exchange for debt
|
|
|
|
|
-
|
-
|
|
11,414
|
11
|
|
1,824,989
|
|
-
|
|
1,825,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
of Preferred Series E
|
|
|
|
|
(500,000)
|
(50)
|
|
-
|
-
|
|
-
|
|
-
|
|
(50)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment
shares issued
|
312,500
|
|
6,250
|
|
-
|
-
|
|
-
|
-
|
|
350,000
|
|
-
|
|
356,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation
of fractional shares of common stock resulting from reverse split
(Note 1)
|
(241,303)
|
|
-
|
|
-
|
-
|
|
-
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
net loss
|
-
|
|
|
|
-
|
-
|
|
-
|
-
|
|
-
|
|
(3,878,517)
|
|
(3,878,517)
|
Balance,
March 31, 2022
|
17,469,128
|
|
$320,964
|
|
|
|
|
11,414
|
$11
|
|
$51,110,420
|
|
$(51,809,645)
|
|
$(378,250)
|
(1) All share amounts, including those in the accompanying notes,
have been adjusted to reflect a 1:200 reverse split effective March
7, 2022.
See accompanying notes to the condensed consolidated financial
statements (unaudited).
-5-
GALAXY NEXT GENERATION, INC.
|
|
|
|
|
|
|
Consolidated Statement of Changes in Stockholders' Equity
(Deficit)
|
Nine Months Ended March 31, 2021
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock (1)
|
|
Preferred Stock - Class E
|
|
Additional
|
|
Accumulated
|
|
Total
Stockholders'
|
|
Shares
|
|
Amount
|
|
Shares
|
Amount
|
|
Paid-in Capital
|
|
Deficit
|
|
Deficit
|
Balance,
July 1, 2020
|
3,140,196
|
|
$ 59,539
|
|
500,000
|
$ 50
|
|
$15,697,140
|
|
$ (23,496,792)
|
|
$ (7,740,063)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issued for services
|
529,000
|
|
10,580
|
|
-
|
-
|
|
2,767,970
|
|
-
|
|
2,778,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issued for debt reduction
|
6,914,064
|
|
138,281
|
|
-
|
-
|
|
12,892,954
|
|
-
|
|
13,031,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
common stock to warrant holders
|
1,248,961
|
|
-
|
|
-
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment
shares issued
|
287,500
|
|
5,750
|
|
-
|
-
|
|
1,171,250
|
|
-
|
|
1,177,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issued under Equity Purchase Agreement
|
1,885,000
|
|
37,700
|
|
-
|
-
|
|
8,254,700
|
|
-
|
|
8,292,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issued as collateral
|
250,000
|
|
-
|
|
-
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issued in acquisition
|
50,000
|
|
1,000
|
|
-
|
-
|
|
150,000
|
|
-
|
|
151,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
net loss
|
-
|
|
|
|
-
|
-
|
|
-
|
|
(23,793,148)
|
|
(23,793,148)
|
Balance,
March 31, 2021
|
14,304,721
|
|
$252,850
|
|
500,000
|
$ 50
|
|
$ 40,934,014
|
|
$ (47,289,940)
|
|
$ (6,103,026)
|
(1) All share amounts, including those in the accompanying notes,
have been adjusted to reflect a 1:200 reverse split effective March
7, 2022.
See accompanying notes to the condensed consolidated financial
statements (unaudited).
-6-
GALAXY NEXT GENERATION, INC.
|
|
|
|
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
Nine Months Ended
March 31,
|
|
2022
|
|
2021
|
Cash
Flows from Operating Activities
|
|
|
|
Net
loss
|
$ (3,878,517)
|
|
$ (23,793,148)
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation and amortization
|
387,421
|
|
278,949
|
Amortization of convertible debt discounts
|
49,660
|
|
265,953
|
Impairment expense
|
46,869
|
|
|
Change in fair value of derivative liability
|
(1,842,000)
|
|
3,827,600
|
Stock issued for services
|
(1,350,217)
|
|
2,789,130
|
Stock issued under Equity Purchase Agreement
|
2,676,000
|
|
13,826,684
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
Accounts receivable
|
206,990
|
|
(472,892)
|
Inventories
|
2,320,680
|
|
(1,260,363)
|
Intangibles
|
(48,894)
|
|
|
Right of use assets
|
49,222
|
|
|
Accounts payable
|
(203,221)
|
|
(1,979,801)
|
Accrued expenses
|
610,016
|
|
62,253
|
Deferred revenue
|
(453,862)
|
|
(318,778)
|
|
|
|
|
Net cash
used in operating activities
|
(1,429,853)
|
|
(6,774,413)
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
|
Acquisition of business, net of cash
|
|
|
38,836
|
Capitalization of development costs
|
(363,319)
|
|
(120,404)
|
Purchases of property and equipment
|
(194,326)
|
|
|
|
|
|
|
Net
cash used in investing activities
|
(557,645)
|
|
(81,568)
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
Proceeds from notes payable
|
500,000
|
|
322,500
|
Principal payments on notes payable
|
(217,546)
|
|
(1,878)
|
Payments on advances from stockholder, net
|
(74,026)
|
|
(140,596)
|
Proceeds from convertible notes payable
|
1,075,000
|
|
1,956,000
|
Payments on convertible notes payable
|
|
|
(110,000)
|
Proceeds from convertible notes payable related party
|
|
|
543,613
|
Payments on line of credit, net
|
(991,598)
|
|
(245,000)
|
Proceeds from sale of common stock under Equity Purchase
Agreement
|
1,633,700
|
|
4,851,333
|
|
|
|
|
|
|
|
|
Net cash
provided by financing activities
|
1,925,530
|
|
7,185,972
|
|
|
|
|
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(61,968)
|
|
329,991
|
|
|
|
|
Cash,
Beginning of Period
|
541,591
|
|
412,391
|
Cash, End
of Period
|
$ 479,623
|
|
$ 742,382
|
|
|
|
|
-7-
|
|
|
|
Supplemental and Non Cash Disclosures
|
|
|
|
Noncash additions related to convertible debt
|
$ 78,750
|
|
$ 228,020
|
|
|
|
|
Cash
paid for interest
|
$ 54,756
|
|
$
163,314
|
|
|
|
|
Interest on shares issued under Equity Purchase Agreement
|
$ 2,143,500
|
|
$
6,807,587
|
|
|
|
|
Related party note payable issued for acquisition of business
|
|
|
$
194,526
|
Acquisition of goodwill and intangibles
|
|
|
$ 46,869
|
Stock issued for services
|
$ 110,852
|
|
$
2,778,550
|
|
|
|
|
Property leased with financing lease
|
$
97,253
|
|
$
25,317
|
|
|
|
|
Change in fair value of derivatives
|
$
1,842,000
|
|
$
3,895,991
|
|
|
|
|
Common stock issued in exchange for convertible debt reduction
|
|
|
$
4,117,650
|
|
|
|
|
Preferred stock issued in exchange for convertible debt
reduction
|
$ 1,825,000
|
|
|
See
accompanying notes to the condensed consolidated financial
statements (unaudited).
-8-
Note 1 - Summary of Significant Accounting
Policies
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 37 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.
Ehlert Solutions Group, Inc. ("Solutions")
and Interlock Concepts, Inc. ("Concepts") are Arizona-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. Solutions and Concepts'
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, Galaxy acquired 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.
COVID-19 Update
The Covid-19 pandemic that began in early
2020 caused shelter-in-place policies, unexpected factory closures,
supply chain disruptions, and market volatilities across the globe.
As a result of the economic disruptions and unprecedented market
volatilities and uncertainties driven by the Covid-19 outbreak, the
Company experienced some supply chain disruptions. However, the
Company has not experienced any significant payment delays or
defaults by our customers as a result of the COVID-19 pandemic.
The full impact of the Covid-19 outbreak
continues to evolve as of the date of this report. The depth and
duration of the pandemic remains unknown. Despite the availability
of vaccines, recent surges in the infection rate and the detection
of new variants of the virus have reinforced the general consensus
that the containment of Covid-19 remains a challenge. Management is
actively monitoring the global situation and its effect on its
financial condition, liquidity, operations, suppliers, industry,
and workforce.
-9-
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 the Company’s June 30, 2021 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
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
12.
All intercompany transactions and accounts
have been eliminated in the consolidation.
The Company’s common stock is traded on the
over-the-counter public company traded under the stock symbol
listing GAXY (formerly FLCR).
Reverse Stock Split
Unless otherwise noted,
all share and per share data referenced in the consolidated
financial statements and the notes thereto have been retroactively
adjusted to reflect the one-for-two hundred reverse stock split
effective March 4, 2022 of our authorized and outstanding shares of
common stock. As a result of the reverse stock split, certain
amounts in the consolidated financial statements and the notes
thereto may be slightly different than previously reported due to
rounding of fractional shares, and certain amounts within the
consolidated balance sheets were reclassified between common stock
and additional paid-in capital.
Capital Structure
The Company's capital structure is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2022
|
|
|
|
|
Authorized
|
|
Issued
|
|
Outstanding
|
|
|
Common stock
|
|
20,000,000
|
|
17,469,128
|
|
17,430,503
|
|
$.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
F
|
|
15,000
|
|
11,414
|
|
11,414
|
|
$.001 par value; no voting
rights, convertible to common stock at a fixed price of $0.37 per
share; stated value is $1,000 per share
|
-10-
|
|
|
|
|
|
|
|
|
|
|
June
30, 2021
|
|
|
|
|
Authorized
|
|
Issued
|
|
Outstanding
|
|
|
Common stock
|
|
20,000,000
|
|
15,699,414
|
|
15,449,221
|
|
$.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.
The Preferred Series D and E were retired in
December 2021.
There are 5,295,849 common shares reserved at
March 31, 2022 under terms of convertible debt agreements, the
Stock Plan and the Amended and Restated Equity Purchase Agreement,
dated December 29, 2020, with Tysadco Partners LLC ( the “Equity
Purchase Agreement”) (see Notes 6, 11 and 13).
There are 1,084,861 issued common shares that
are restricted as of March 31, 2022. The shares may become
free-trading upon satisfaction of certain terms and regulatory
conditions.
Supplier
Agreement
Contract assets and contract liabilities are
as follows:
|
|
|
|
|
March 31, 2022
|
|
June 30, 2021
|
Contract assets
|
$
436,930
|
|
$
43,360
|
Contract liabilities
|
|
|
228,514
|
For the three months ended March 31, 2022 and
2021, the Company recognized $463,301 and $214,992 of revenues
related to supplier agreements. For the nine months ended March 31,
2022 and 2021, the Company recognized $1,116,219 and $715,067 of
revenues related to supplier agreements.
Accounts Receivable
Management deemed no allowance for doubtful
accounts was necessary at March 31, 2022 and June 30, 2021. At
March 31, 2022 and June 30, 2021, $0 and $190,779 of total accounts
receivable were considered unbilled and recorded as deferred
revenue.
-11-
Inventories
Management estimates $67,635 of inventory
reserves at March 31, 2022 and June 30, 2021, respectively.
Goodwill, Intangible Assets and Product
Development Costs
Goodwill, intangible assets, and product
development costs are comprised of the following at March 31,
2022:
|
|
|
|
|
|
|
|
|
Cost
|
|
Accumulated Amortization
|
Net Book
Value
|
Impairment
|
|
Total
|
Goodwill
|
$
834,220
|
|
|
$834,220
|
|
|
$ 834,220
|
Finite-lived assets:
|
|
|
|
|
|
|
|
Customer list
|
$ 922,053
|
|
$ (420,401)
|
$ 501,652
|
$
(41,053)
|
|
$460,599
|
Vendor
relationships
|
484,816
|
|
(239,500)
|
245,316
|
(5,816)
|
|
239,500
|
Capitalized product development cost
|
1,157,596
|
|
(381,706)
|
775,890
|
|
|
775,890
|
|
$ 2,564,465
|
|
$ (1,041,607)
|
$
1,522,858
|
$
(46,869)
|
|
$1,475,989
|
Goodwill, intangible assets, and product
development costs are comprised of the following at June 30,
2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
Accumulated Amortization
|
|
Total
|
Goodwill
|
$ 834,220
|
|
|
|
$ 834,220
|
Finite-lived assets:
|
|
|
|
|
|
Customer list
|
$ 922,053
|
|
$ (314,166)
|
|
$ 607,887
|
Vendor
relationships
|
484,816
|
|
(168,474)
|
|
316,342
|
Product
development costs
|
790,118
|
|
(197,532)
|
|
592,586
|
|
$ 2,196,987
|
|
$ (680,172)
|
|
$1,516,815
|
Intangible assets such as customer lists and
vendor relationships are stated at the lower of cost or fair value.
They are amortized on a straight-line basis over periods ranging
from three to six years, representing the period over which the
Company expects to receive future economic benefits from these
assets. Amortization of these intangible assets amounted to $68,000
and $70,343 for the three months ended March 31, 2022 and 2021.
Amortization of these intangible assets amounted to $186,243 and
$208,296 for the nine months ended March 31, 2022 and 2021.
-12-
Costs incurred in designing and developing
classroom technology products are expensed as research and
development until technological feasibility has been established.
Technological feasibility is established upon completion of a
detail product design, or in its absence, completion of a working
model. Upon the achievement of technological feasibility,
development costs are capitalized and subsequently reported at the
lower of unamortized cost or net realizable value. Management's
judgment is required in determining whether a product provides new
or additional functionality, the point at which various products
enter the stages at which costs may be capitalized, assessing the
ongoing value and impairment of the capitalized costs and
determining the estimated useful lives over which the costs are
amortized.
Annual amortization expense is calculated
based on the straight-line method over the product's estimated
economic lives, which are typically three to six years.
Amortization of product development costs incurred begins when the
related products are available for general release to customers.
Amortization of product development costs of $69,042 and $26,436
for the three months ended March 31, 2022 and 2021, and $184,176
and $59,364 for the nine months ended March 31, 2022 and 2021, is
included in cost of revenues in the Company's unaudited condensed
consolidated statements of operations.
Estimated amortization expense related to
finite-lived intangible assets for the next five years is: $603,836
for fiscal year 2023, $470,584 for fiscal year 2024, $272,139 for
fiscal year 2025, $60,292 for fiscal year 2026, and $44,389 for
fiscal year 2027 and $24,748 thereafter.
Recent Accounting Pronouncements
The Company has implemented all new
applicable accounting pronouncements that are in effect and
applicable. 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.
Note 2 - Property and Equipment
Property and equipment are comprised of the
following at:
|
|
|
|
|
March
31, 2022
|
|
June
30, 2021
|
Vehicles
|
$ 212,658
|
|
$ 115,135
|
Building
|
201,823
|
|
|
Equipment
|
16,192
|
|
25,115
|
Leasehold improvements
|
31,000
|
|
31,000
|
Furniture and fixtures
|
28,321
|
|
25,085
|
|
489,994
|
|
196,335
|
Accumulated
depreciation
|
(130,531)
|
|
(109,523)
|
|
|
|
|
Property and equipment,
net
|
$
359,463
|
|
$
86,812
|
Note 3 - Lines of Credit
The Company had $1,000,000 available under a
line of credit bearing interest at prime plus 0.5% (3.75% at June
30, 2021) which expired October 29, 2021. The bank provided a
30-day grace period to repay the line to November 29, 2021. The
line of credit was collateralized by certain real estate owned by
stockholders and a family member of a stockholder, 7,026,894 shares
of the Company's common stock owned by two stockholders, personal
guarantees of two stockholders, and a key man life insurance
policy. In addition, a 20% curtailment of the outstanding balance
may occur any time prior to maturity. The outstanding balance was
$0 and $991,598 at March 31, 2022 and June 30, 2021, respectively.
The line of credit was completely paid off in November of 2021.
The Company has up to $1,000,000 available
credit line under an accounts receivable factoring agreement
through July 30, 2022. Total available credit under the factoring
agreement was $989,680 and $1,000,000 as of March 31, 2022 and June
30, 2021, respectively. See Note 11.
-13-
Note 4 - Notes Payable
Long
Term Notes Payable
|
|
|
|
|
|
|
|
|
|
March 31, 2022
|
|
June 30, 2021
|
Note payable
with a bank bearing interest at 4% and maturing on June 26, 2020.
The note was renewed by the lender with a revised maturity of June
26, 2021 and an interest rate of 3%. In July 2021, the note was
renewed by the lender with a revised maturity date of July 7, 2026.
The renewal provides for monthly interest payments and a balloon
payment of outstanding principal and interest at maturity. The note
is collateralized by a certificate of deposit owned by a related
party.
|
|
|
|
|
|
$
237,039
|
|
|
|
|
Note payable
to an investor bearing interest at 10% and maturing on January 13,
2022 with monthly installments of principal and interest of $45,294
beginning in June 2021. This note was paid in full on May 2,
2022.
|
55,551
|
|
348,456
|
|
|
|
|
Long term
loan under Section 7(b) of the Economic Injury Disaster Loan
program bearing interest at 3.75% and maturing in May 2050. Monthly
installments of principal and interest of $731 begin upon
notification by the SBA regarding note servicing. In March 2022,
SBA deferred maturity for 30 months from the date of the note.
Revised maturity date is November 2052.
|
150,000
|
|
150,000
|
|
|
|
|
Financing
lease liabilities for offices and warehouses with monthly
installments of $22,723 (ranging from $245 to $9,664) over
terms expiring through December 2024.
|
158,829
|
|
208,051
|
|
|
|
|
Note payable
with a finance company for delivery vehicle with monthly
installments totaling $679 including interest at 8.99% over a 6
year term expiring in December 2025.
|
26,921
|
|
31,016
|
|
|
|
|
Note payable
with a bank for delivery vehicle with monthly installments totaling
$844 including interest at 6% over a 4 year term expiring in August
2025.
|
31,281
|
|
|
|
|
|
|
Note payable
with a finance company for delivery vehicle with monthly
installments totaling $948 including interest at 5.9% over a 6 year
term expiring in January 2027.
|
53,827
|
|
|
|
|
|
|
Note payable
to an investor bearing interest at 12% and maturing on May 26, 2023
with monthly installments of principal and interest of $120,185
beginning in May 2022.
|
1,222,222
|
|
|
|
|
|
|
Note payable
to an investor bearing interest at 12% and maturing March 18, 2023.
Monthly installments of $22,558 beginning May 2022.
|
228,200
|
|
|
-14-
|
|
|
|
|
|
|
|
|
Note payable
to an investor bearing interest at 12% and maturing February 28,
2023. Monthly installments of $30,000 beginning May 2021.
|
360,000
|
|
|
|
|
|
|
Total Notes
Payable
|
2,502,357
|
|
974,562
|
|
|
|
|
Less:
Unamortized original issue discount
|
174,512
|
|
17,500
|
|
|
|
|
Current
Portion of Notes Payable
|
2,011,550
|
|
552,055
|
|
|
|
|
Long-term
Portion of Notes Payable
|
$
316,295
|
|
$
405,007
|
Future minimum
principal payments on the long-term notes payable to unrelated
parties are as follows:
|
|
Period ending March 31,
|
|
2023
|
$ 2,011,550
|
2024
|
144,344
|
2025
|
97,660
|
2026
|
76,067
|
2027
|
172,736
|
|
$ 2,502,357
|
Note 5 - Fair Value Measurements
The following table presents information
about the liabilities that are measured at fair value on a
recurring basis at March 31, 2022 and June 30, 2021 and indicates
the fair value hierarchy of the valuation techniques the Company
utilized to determine such fair value.
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2022
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|
Derivative liability, convertible note
features
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2021
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|
|
|
|
|
|
|
Derivative liability, convertible note
features
|
$1,842,000
|
|
|
$1,842,000
|
The Company measures the fair market value of
the Level 3 liability components using the Monte Carlo model and
projected discounted cash flows, as appropriate. These models were
prepared by an independent third party and consider management's
best estimate of the conversion price of the stock, an estimate of
the expected time to conversion, an estimate of the stock's
volatility, and the risk-free rate of return expected for an
instrument with a term equal to the duration of the convertible
note. In December 2021, the derivative liability was eliminated
when the Company entered into an agreement to convert the
convertible debt into preferred stock. (See Note 6).
-15-
The derivative liability was valued using the
Monte Carlo pricing model with the following inputs:
|
|
|
|
At June 30, 2021
|
|
|
|
Risk-free interest rate:
|
|
0.17%
|
|
Expected dividend yield:
|
|
0.00%
|
|
Expected stock price volatility:
|
|
295.00%
|
|
Expected option life in years:
|
|
.037 to .70 years
|
The following table
sets forth a reconciliation of changes in the fair value of the
Company's convertible debt components classified as Level 3 in the
fair value hierarchy at March 31, 2022 and June 30, 2021:
|
|
|
Balance at June 30, 2021
|
$
|
1,842,000
|
Realized
|
|
(1,842,000)
|
Unrealized
|
|
|
Balance at March 31, 2022
|
$
|
|
|
|
|
Balance at June 30, 2020
|
$
|
246,612
|
Convertible securities at inception
|
|
4,000
|
Realized
|
|
(80,924)
|
Unrealized
|
|
1,672,312
|
Balance at June 30, 2021
|
$
|
1,842,000
|
As of March 31, 2022 and June 30, 2021, the
only asset required to be measured on a nonrecurring basis was
goodwill and the fair value of the asset amounted to $834,220 using
level 3 valuation techniques.
Note 6 - Related Party
Transactions
Notes
Payable
|
|
|
|
|
March 31, 2022
|
|
June 30, 2021
|
Note payable to a stockholder in which the
$200,000 principal plus $10,000 of interest was payable in December
2019. Borrowings under the note increased to $400,000 and the
maturity was extended to November 13, 2021. The note bears interest
at 6% per annum and is payable in cash or common stock, at the
Company's option. If interest is paid in common stock, the
conversion price will be the market price at the time of
conversion. Principal on the note at maturity was convertible into
400,000 shares of Series D Preferred Stock. If principal was paid
prior to maturity, the right of conversion would be terminated.
Extinguished by exchange for Series F Preferred Stock on December
28, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$400,000
|
|
|
|
|
Fair value of unsecured notes payable to
seller of Concepts and Solutions, a related party, bearing interest
at 3% per year, payable in annual installments through November 30,
2021. Payment is subject to adjustment based on the achievement of
minimum gross revenues and successful completion of certain
pre-acquisition withholding tax issues of Concepts and
Solutions.
|
1,030,079
|
|
1,030,079
|
|
|
|
|
-16-
|
|
|
|
Note payable to a stockholder in which the
note principal plus 6% interest was payable on November 7, 2021.
Note was amended in March 2020 by increasing the balance to
$1,225,000. Interest is payable in cash or common stock, at the
holder's option. If interest is paid in common stock, the
conversion price was to be the market price at the time of
conversion. Principal on the note at maturity was convertible into
1,225,000 shares of Series D Preferred Stock. If principal was paid
prior to maturity, the right of conversion would be terminated.
Extinguished by exchange for Series F Preferred Stock on December
27, 2021.
|
|
|
1,225,000
|
|
|
|
|
Note payable to a stockholder in which the
note principal plus 6% interest is payable in November 13, 2021.
Interest was payable in cash or common stock, at the Company's
option. If interest was paid in common stock, the conversion price
would be the market price at the time of conversion. Principal on
the note at maturity was convertible into 200,000 shares of Series
D Preferred Stock. If principal was paid prior to maturity,
the right of conversion would be terminated. Extinguished by
exchange for Series F Preferred Stock on December 20, 2021.
|
|
|
200,000
|
|
|
|
|
Note payable to a stockholder in which the
note principal plus interest at 15% is payable the earlier of 60
days after invoicing a certain customer, or April 2022 due to an
extension granted by the lender. On December 23, 2021, an amendment
extended the maturity to March 30, 2025, changed the interest rate
to 10% with monthly payments of principal and interest of $8,823
begining in June 2022. The note is collateralized by a security
interest in a certain customer purchase order.
|
385,000
|
|
385,000
|
|
|
|
|
Note payable related to the acquisition of
Classroom Tech in which the note principal is payable in 2021 with
no interest obligations, upon the shareholder’s resolution of a
pre-acquisition liability with a bank.
|
70,000
|
|
155,690
|
|
|
|
|
Other short-term payables due to stockholders
and related parties
|
32,488
|
|
75,986
|
|
|
|
|
Total Related Party Notes Payable and Other
Payables
|
1,517,567
|
|
3,471,755
|
Current Portion of Related Party Notes
Payable and Other Payables
|
1,238,443
|
|
3,471,755
|
|
|
|
|
Long-term Portion of Related Party Notes
Payable and Other Payables
|
$ 279,124
|
|
|
As of March 31, 2022, related party notes
payable maturities are as follows:
|
|
Period ending March
31,
|
|
2023
|
$1,238,443
|
2024
|
105,876
|
2025
|
173,248
|
|
$1,517,567
|
-17-
In December of 2021, $1,825,000 of related
party convertible notes and 500,000 shares of Series E preferred
stock were eliminated upon the execution of an agreement to
exchange them for Series F preferred shares. In addition, the
agreement of the exchange of the notes resulted in the elimination
of the derivative liability related to the conversion features of
the notes into Series D Preferred stock. The derivative liability
was reduced by $1,842,000 resulting in additional paid in capital
of approximately $1,825,000. On March 31, 2022, the recorded
derivative liability is $0.
Related Party Leases
The Company leases property used in
operations from a related party under terms of a financing lease.
The term of the lease expired on December 31, 2021 and is
continuing on a month to month basis. The monthly lease payment is
$9,664 plus maintenance and property taxes, as defined in the lease
agreement. Rent expense for this lease was $28,992 and $89,500
for the three months ended March 31, 2022 and 2021, respectively
and $86,976 and $98,500 for the nine months ended March 31, 2022
and 2021 respectively.
Other
Related Party Agreements
A related party collateralizes the Company's
short-term note with a certificate of deposit in the amount of
$274,900, held at the same bank. The related party will receive a
$7,500 collateral fee for this service (see Note 4).
Note 7 - Lease Agreements
Financing Lease Agreements
The Company leases offices, warehouses and
equipment under financing lease agreements with monthly
installments of $22,723 (ranging from $245 to $9,664), expiring
through December 2024.
|
|
|
Right-of-use assets:
|
|
|
Operating right-of-use assets
|
$158,829
|
Operating lease liabilities:
|
|
|
Current portion of long term payable
|
92,900
|
|
Financing leases payable, less current
portion
|
65,929
|
|
|
|
|
Total operating lease liabilities
|
$158,829
|
As of March 31, 2022, financing lease
maturities are as follows:
|
|
Period ending March
31,
|
|
2023
|
$92,900
|
2024
|
47,776
|
2025
|
18,153
|
|
$158,829
|
As of March 31, 2022, the weighted average
remaining lease term was 1.42 years.
Note 8 – Equity
All share amounts have been adjusted to
reflect a 1:200 reverse split effective March 7, 2022.
For the nine months ended March 31,
2022:
During the nine months ended March 31, 2022,
the Company issued 73,517 shares of common stock for services.
-18-
During the nine months ended March 31, 2022,
the Company issued 1,625,000 shares of common stock in exchange for
proceeds under the Equity Purchase Agreement. These shares were
valued at $2,643,500 upon issuance.
During the nine months ended March 31, 2022,
the Company issued 312,500 shares of common stock as commitment
shares in a structured loan agreement. These shares were valued at
$356,250 upon issuance.
During the nine months ended March 31, 2022,
the Company cancelled 241,303 shares of common stock representing
fractional shares resulting from the 200:1 reverse split.
During the nine months ended March 31, 2022,
the Company entered into exchange agreements to issue 11,414 shares
of Preferred Series F stock.
During the nine months ended March 31, 2022,
the Company cancelled 500,000 shares of Preferred Series E
stock.
For the nine months ended March 31,
2021:
During the nine months ended March 31, 2021,
the Company issued 529,000 shares of common stock for professional
consulting services. These shares were valued at $2,778,550 upon
issuance during the nine months ended March 31, 2021.
During the nine months ended March 31, 2021,
the Company issued 6,914,064 shares of common stock for debt
reduction. These shares were valued at $13,031,235 upon issuance
during the nine months ended March 31, 2021.
During the nine months ended March 31, 2021,
the Company issued 1,248,961 shares of common stock to warrant
holders in six cashless transactions.
During the nine months ended March 31, 2021,
the Company issued 287,500 shares of common stock for commitment
shares under the Equity Purchase Agreement. These shares were
valued at $1,177,000 upon issuance during the nine months ended
March 31, 2021.
During the nine months ended March 31, 2021,
the Company issued 250,000 shares of common stock as collateral for
the line of credit. The shares were held in the Company's name and
serve as collateral for a line of credit with a bank.
During the nine months ended March 31, 2021,
the Company issued 50,000 shares of common stock for the
acquisition of Classroom Technology Solutions, Inc. These shares
were valued at $151,000 upon issuance during the nine months ended
March 31, 2021.
During the nine months ended March 31, 2021,
the Company issued 1,885,000 shares of common stock in exchange for
proceeds under the Equity Purchase Agreement. These shares were
valued at $8,292,400 upon issuance during the nine months ended
March 31, 2021.
See the capital structure section in Note 1
for disclosure of the equity components included in the Company's
consolidated financial statements.
Note 9 - Income Taxes
The Company's effective tax rate differed
from the federal statutory income tax rate for the nine months
ended March 31, 2022 as follows:
|
|
|
Federal statutory rate
|
|
21%
|
State tax, net of federal tax effect
|
|
5.04%
|
Valuation allowance
|
|
-26%
|
Effective tax rate
|
|
0%
|
-19-
The Company had no federal or state income
tax (benefit) for the nine months ended March 31, 2022 or 2021.
The Company's deferred tax assets and
liabilities as of March 31, 2022 and June 30, 2021, are summarized
as follows:
|
|
|
|
|
|
|
March 31, 2022
|
|
June 30, 2021
|
|
|
|
|
|
Federal
|
|
|
|
|
Deferred tax assets
|
$
7,425,300
|
|
$ 10,226,700
|
|
Less valuation allowance
|
(7,425,300)
|
|
(10,226,700)
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
State
|
|
|
|
|
|
Deferred tax assets
|
1,876,400
|
|
2,730,800
|
|
Less valuation allowance
|
(1,876,400)
|
|
(2,730,800)
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
Net Deferred Tax Assets
|
|
|
|
The Company's policy is to provide for
deferred income taxes based on the difference between the financial
statement and tax basis of assets and liabilities using enacted tax
rates that will be in effect when the differences are expected to
reverse. The Company has not generated taxable income and has not
recorded any current income tax expense at March 31, 2022 and 2021,
respectively.
In assessing the realization 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 taxes is dependent
upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management
considers projected future taxable income and tax planning
strategies in making this assessment.
The Company's deferred tax assets are
primarily comprised of net operating losses ("NOL") that give rise
to deferred tax assets. The NOL carryforwards expire over a range
from 2022 to 2037, with certain NOL carryforwards that have no
expiration. There is no tax benefit for goodwill impairment, which
is permanently non-deductible for tax purposes. Additionally, due
to the uncertainty of the utilization of NOL carry forwards, a
valuation allowance equal to the net deferred tax assets has been
recorded.
-20-
The significant components of deferred tax
assets as of March 31, 2022 and June 30, 2021, are as follows:
|
|
|
|
|
|
March 31, 2022
|
|
June 30, 2021
|
Net operating loss carryforwards
|
$
9,120,300
|
|
$
12,579,200
|
Valuation allowance
|
(9,301,700)
|
|
(12,957,500)
|
Goodwill
|
16,200
|
|
(20,400)
|
Property and equipment
|
(30,300)
|
|
251,600
|
Development costs
|
112,800
|
|
27,900
|
Intangible assets
|
36,900
|
|
72,900
|
Inventory allowance
|
17,600
|
|
17,800
|
Warranty accrual and other
|
28,200
|
|
28,500
|
|
|
|
|
Net Deferred Tax
Assets
|
|
|
|
As of March 31, 2022, the Company does not
believe that it has taken any tax positions that would require the
recording of any additional tax liability nor does it believe that
there are any unrealized tax benefits that would either increase or
decrease within the next twelve months. As of March 31, 2022, the
Company's income tax returns generally remain open for examination
for three years from the date filed with each taxing
jurisdiction.
Note 10 - Commitments, Contingencies, and
Concentrations
Contingencies
Certain conditions may exist as of the date
the unaudited condensed consolidated financial statements are
issued, which may result in a loss to the Company, but which will
only be resolved when one or more future events occur or fail to
occur. The Company’s management and its legal counsel assess such
contingent liabilities, and such assessment inherently involves an
exercise of judgment. In assessing loss contingencies related to
legal proceedings that are pending against the Company or
unasserted claims that may result in such proceedings, the
Company’s legal counsel evaluates the perceived merits of any legal
proceedings or unasserted claims as well as the perceived merits of
the amount of relief sought or expected to be sought therein. If
the assessment of a contingency indicates that it is probable that
a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in
the Company’s consolidated financial statements. If the assessment
indicates that a potentially material loss contingency is not
probable, but is reasonably possible, or is probable but cannot be
estimated, then the nature of the contingent liability, together
with an estimate of the range of possible loss if determinable and
material, would be disclosed.
On September 4, 2019, the Company recorded a
pre-acquisition liability for approximately $591,000 relative
to unpaid payroll tax liabilities and associated penalties and fees
of Concepts and Solutions. The liability is included in the note
payable to seller of $1,030,079 at March 31, 2022 and June 30,
2021 (Note 6).
Concentrations
Galaxy contracts the manufacture of its
products with domestic and overseas suppliers. The Company's sales
could be adversely impacted by a supplier's inability to provide
Galaxy with an adequate supply of inventory. Galaxy has two vendors
that accounted for approximately 63% of purchases for the nine
months ended March 31, 2022. Galaxy had three vendors that
accounted for approximately 75% of purchases for the nine months
ended March 31, 2021.
Galaxy has two customers that accounted for
approximately 80% of accounts receivable at March 31, 2022 and
two customers that accounted for approximately 73% of accounts
receivable at June 30, 2021. Galaxy has two customers that
accounted for approximately 63% and one customer that accounted for
36% of total revenue for the three months ended March 31, 2022 and
2021 respectively. Galaxy has two customers that accounted for
approximately 49% and four customers that accounted for
approximately 52% of total revenue for the nine months ended March
31, 2022 and 2021, respectively.
-21-
Note 11 - Material Agreements
Manufacturer and Distributorship
Agreement
On September 15, 2018, the Company signed an
agreement with a company in China for the manufacture of Galaxy’s
SLIM series of interactive panels. The manufacturer agreed to
manufacture, and the Company agreed to be the sole distributor of
the interactive panels in the United States for a term of two
years. The agreement includes a commitment by Galaxy to purchase $2
million of product during the first year beginning September 2018.
If the minimum purchase is not met, the manufacturer can require
the Company to establish a performance improvement plan, and the
manufacturer has the right to terminate the agreement. The payment
terms are 20% in advance, 30% after the product is ready to ship,
and the remaining 50% 45 days after receipt. The manufacturer
provides Galaxy with the product, including a three-year
manufacturer’s warranty from the date of shipment. The agreement
renews automatically in two year increments unless three months’
notice is given by either party. The Company has met the
requirements of the agreement.
Equity Purchase Agreement
On May 31, 2020, the Company entered into a
two year purchase agreement (the "Equity Purchase Agreement") with
an investor, which was amended and restated on July 9, 2020 and
then again on December 29, 2020. Pursuant to the terms of the
Equity Purchase Agreement, the investor agreed to purchase up to
$10 million of the Company's common stock (subject to certain
limitations) from time to time during the term of the Equity
Purchase Agreement. During the three months ended March 31, 2022
and 2021, the Company issued 500,0000 and 675,000
shares of common stock to the investor in exchange for proceeds for
working capital. During the nine months ended March 31, 2022 and
2021, the Company issued 1,625,000 and 1,885,000 shares of common
stock to the investor in exchange for proceeds for working
capital.
Accounts Receivable Factoring Agreement
On July 30, 2020, the Company entered into a
two-year accounts receivable factoring agreement with a financial
services company to provide working capital. Pursuant the
agreement, the financial services company will pay the Company an
amount up to eighty percent (80%) of the purchase price for the
purchased accounts. Factoring fees are 2.5% of the face value of
the account receivable sold to the factoring agent per month until
collected. For collections over 90 days from the invoice date, the
fee increases to 3.5%. The agreement contains a credit line of
$1,000,000 and requires a minimum of $300,000 of factored
receivables per calendar quarter. The agreement includes early
termination fees and is guaranteed by the Company and by two of the
stockholders individually. The Company paid collection fees of
$11,216 and $2,803 during the three months ended March 31, 2022 and
2021, respectively. The Company paid collection fees of $36,224 and
$14,991 during the nine months ended March 31, 2022 and 2021,
respectively.
Employment Agreements
On January 1, 2020, the Company entered into
an employment agreement with the Chief Executive Officer (CEO) of
the Company for a two-year term which was amended on September 1,
2020. Under the amended employment agreement, the CEO will receive
annual compensation of $500,000, and an annual discretionary bonus
based on profitability and revenue growth and preferred stock to
maintain, together with the CFO, a minimum 25.5% of the total
voting rights. The agreement includes a non-compete agreement and
severance benefits of $90,000.
On January 1, 2020, the Company entered into
an employment agreement with the Chief Finance Officer/Chief
Operations Officer (CFO/COO) of the Company for a two-year term,
which was amended on September 1, 2020. Under the amended
employment agreement, the CFO/COO will receive annual compensation
of $250,000, and an annual discretionary bonus based on
profitability and revenue growth and preferred stock to maintain,
together with the CEO, a minimum 25.5% of the total voting rights.
The agreement includes a non-compete agreement and severance
benefits of $72,000.
-22-
Supplier Agreement
The Company is party to a one-year supplier
agreement to manufacture and sell audio products to a buyer. The
initial order under this supplier agreement is for 4,000 units, at
a discounted total price of $3,488,000, to be delivered over the
agreement period. If the buyer does not meet the minimum floor of
4,000 units, then the contract becomes void and the buyer must pay
the difference between the units sold and the total floor pricing
of the $3,488,000. The buyer will pay tooling costs of $25 per unit
shipped to them. The Company completed all purchase orders under
the supplier agreement during the nine months ended March 31, 2022.
The supplier agreement was not renewed.
Note 12 - Acquisition
On October 15, 2020, the Company entered into
an Asset Purchase Agreement, 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 (50,000 shares after reverse split) of common stock
to the seller of Classroom Tech.
The following table summarizes the allocation
of the fair value of the assets as of the acquisition date through
pushdown accounting.
|
|
|
|
|
|
Assets
|
|
|
Cash
|
$
38,836
|
|
Accounts receivable
|
31,710
|
|
Inventory
|
209,431
|
|
Property and equipment
|
17,530
|
|
Other assets
|
1,150
|
|
Intangibles
|
46,869
|
|
|
|
|
Total Assets
|
$
345,526
|
Consideration
|
|
|
Notes payable to seller and related party of
seller
|
$ 164,526
|
|
Bonus program
|
30,000
|
|
Stock
|
151,000
|
|
|
$ 345,526
|
Impairment expense relates to the Company's
purchase price adjustment for the Classroom Tech acquisition on
October 15, 2020. During the acquisition, customer lists and
vendor relationship intangible assets were recorded in the amount
of $46,869. In October 2021, the Company moved its Florida
operations to a new leased location. Management discovered
inventory items with missing parts that could not be sold. As
a result, the bonus payable of $30,000 to the seller of Classroom
Tech was removed, the inventory was written down and the intangible
assets were impaired.
-23-
Note 13 - Stock Plan
An Employee, Directors, and Consultants Stock
Plan was established by the Company (the "Plan"). The Plan is
intended to attract and retain employees, directors and consultants
by aligning the economic interest of such individuals more closely
with the Company's stockholders by paying fees or salaries in the
form of shares of the Company's common stock. The 2020 Plan was
effective September 16, 2020 and expired December 15, 2021. The
2019 Plan was effective December 13, 2018 and expired June 1, 2020.
Common shares of 1,961 are reserved for stock awards under the
Plans. There were 98,857,857 shares awarded under the Plans as of
March 31, 2022 and June 30, 2021. No additional shares were awarded
during the three or nine months ended March 31, 2022.
Note 14 - Going Concern
The accompanying consolidated financial
statements have been prepared assuming that the Company will
continue as a going concern. As reflected in the accompanying
consolidated financial statements, the Company had negative working
capital of approximately $2,600,000, an accumulated deficit of
approximately $51,000,000, and cash used in operations of
approximately $1,400,000 at March 31, 2022. Shareholders equity
increased from June 30, 2021 to March 31, 2022 by approximately
$1,000,000 to a deficit of approximately $400,000 at March 31,
2022.
The Company's operational activities have
primarily been funded through issuance of common stock for
services, related party advances, equity purchase agreement
transactions for proceeds, accounts receivable factoring, debt
financing and through the deferral of accounts payable and other
expenses. The Company intends to raise additional capital through
the sale of equity securities or borrowings from financial
institutions and investors and possibly from related and nonrelated
parties who may in fact lend to the Company on reasonable terms.
Management believes that its actions to secure additional funding
will allow the Company to continue as a going concern. There is no
guarantee the Company will be successful in achieving any of these
objectives. These sources of working capital are not assured, and
consequently do not sufficiently mitigate the risks and
uncertainties disclosed above. The ability of the Company to
continue as a going concern is dependent upon management's ability
to raise capital from the sale of its equity and, ultimately, the
achievement of operating revenues. The consolidated financial
statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
Note 15 - Subsequent Events
On May 1, 2022, the Company entered into a 1
year investor relations agreement, requiring payments of $10,000
per month and total restricted stock issues equivalent to $80,000
to be issued in $20,000 increments in May, June, September and
December, 2022.
On May 5, 2022, a stockholder loaned the
Company $150,000 for working capital purposes.
-24-
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Cautionary Note on Forward Looking
Statements
This Quarterly Report on Form 10-Q (this
"Report") contains forward-looking within the meaning of
Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). In particular statements
regarding future events and the future results of Galaxy Next
Generation, Inc., which we refer to as "we," "us," "our", "Galaxy,"
or the "Company," including but not limited to, statements
regarding the sufficiency of our cash, our ability to finance our
operations and business initiatives and obtain funding for such
activities and the timing of any such financing, our future results
of operations and financial position, business strategy and plan
prospects are forward-looking statements. These forward-looking
statements are based on our current expectations, estimates,
forecasts, and projections about our business, economic and market
outlook, our results of operations, the industry in which we
operate and the beliefs and assumptions of our management. Words
such as "expects," "anticipates," "targets," "goals," "projects,"
"would," "will," "could," "may," "intends," "plans," "believes,"
"seeks," "estimates," variations of such words, and similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements by their nature address
matters that are, to different degrees, uncertain, and these
forward-looking statements are only predictions and are subject to
risks, uncertainties, and assumptions that are difficult to
predict, including the duration, extent, and impact of the COVID-19
pandemic, and our ability to successfully manage the demand,
supply, and operational challenges associated with the COVID-19
pandemic. Therefore, actual results may differ materially and
adversely from those expressed in any forward-looking statements.
Factors that might cause or contribute to such differences include,
but are not limited to, those discussed in this Report under the
section entitled "Risk Factors" in Item 1A of Part II, Part I Item
1A of our Annual Report on Form 10-K for the year ended June 30,
2021 (the "Annual Report"), and in other reports we file with the
U.S. Securities and Exchange Commission (the "SEC"). In addition,
many of the foregoing risks and uncertainties are, and could be,
exacerbated by the COVID-19 pandemic and any worsening of the
global business and economic environment as a result of the
pandemic. While forward-looking statements are based on reasonable
expectations of our management at the time that they are made, you
should not rely on them. We undertake no obligation to revise or
update publicly any forward-looking statements for any reason,
except as required by applicable law. We cannot at this time
predict the extent of the impact of the COVID-19 pandemic and any
resulting business or economic impact, but it could have a material
adverse effect on our business, financial condition, results of
operations and cash flows.
The following discussion is based upon our
unaudited condensed consolidated financial statements included in
Part 1, Item I, of this Report, which were prepared in accordance
with U.S. generally accepted accounting principles (U.S. GAAP). In
the course of operating our business, we routinely make decisions
as to the timing of the payment of invoices, the collection of
receivables, the manufacturing and shipment of products, the
fulfillment of orders, the purchase of supplies, and the building
of inventory, among other matters. In making these decisions, we
consider various factors, including contractual obligations,
customer satisfaction, competition, internal and external financial
targets and expectations, and financial planning objectives. Each
of these decisions has some impact on the financial results for any
given period. To aid in understanding our operating results for the
periods covered by this Report, we have provided an executive
overview, which includes a summary of our business and market
environment along with a financial results and key performance
metrics overview. These sections should be read in conjunction with
the more detailed discussion and analysis of our condensed
consolidated financial condition and results of operations in this
Item 2, our "Risk Factors" section included in Item 1A of Part II
of this Report, and our unaudited condensed consolidated financial
statements and notes thereto included in Item 1 of Part I of this
Report, as well as our audited consolidated financial statements
and notes included in Item 8 of Part II of our Annual Report.
The following discussion and analysis should
be read in conjunction with our consolidated financial statements
and notes thereto and the other financial data appearing elsewhere
in this Quarterly Report.
-25-
Business Overview
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 product offerings
include Galaxy's own private-label interactive touch screen panel,
its own Intercom, Bell, and Paging solution, as well as an audio
amplification line of products that is currently supported by OEM
relationships. Galaxy's distribution channel consists of a direct
sales model, as well as approximately 37 resellers across the U.S.
who primarily sell the products offered by Galaxy within the
commercial and educational market. Galaxy does not control where
the resellers focus their reselling 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’s OEM
division also manufacturers products for other vendors in its
industry and white labels the products under other brands.
We believe the market space for interactive
technology in the classroom is a perpetual highway of business
opportunity, especially in light of the COVID-19 pandemic as school
systems have sought to expand their ability to operate remotely.
Public and private school systems are in a continuous race to
modernize their learning environments. Our goal is to be an early
provider of the best and most modern technology available.
We are striving to become the leader in the
market for interactive flat panel technology, associated software,
and peripheral devices for classrooms. Our goal is to provide an
intuitive system to enhance the learning environment and create
easy to use technology for the teacher, increasing student
engagement and achievement. Our products are developed and backed
by a management team with more than 30 combined years in the
classroom technology space.
We were originally organized as a corporation
in 2001. Our principal executive offices are located at 285 Big A
Road Toccoa, Georgia 30577, and our telephone number is (706)
391-5030. Our website address is www.galaxynext.us.
Information contained in our website does not form part of this
Quarterly Report and is intended for informational purposes
only.
On June 22, 2018, we consummated a reverse
triangular merger whereby Galaxy Next Generation, Inc., a private
company (co-founded by our now executives, Gary LeCroy (CEO) and
Magen McGahee (CFO)), merged with and into our newly formed
subsidiary, Galaxy MS, Inc. (Galaxy MS or Merger Sub), which was
formed specifically for the transaction. Under the terms of the
merger, the private company shareholders transferred all their
outstanding shares of common stock to Galaxy MS, in return for
shares of our Series C Preferred Stock. Prior to the merger, we
operated under the name Full Circle Registry, Inc.’s (FLCR) and our
operations were based upon our ownership of Georgetown 14 Cinemas,
a fourteen-theater movie complex located on approximately seven
acres in Indianapolis, Indiana. Prior to the merger, our sole
business and source of revenue was from the operation of the
theater, and as part of the merger agreement, we had the right to
spinout the theater to the prior shareholders of FLCR. Effective
February 6, 2019, we sold our interest in the theater to focus our
resources on our technology operations.
On September 3, 2019, we acquired 100% of the
outstanding capital stock of both Interlock Concepts, Inc.
(Concepts) and Ehlert Solutions Group, Inc. (Solutions) pursuant to
the terms of a stock purchase agreement that we entered into
with Concepts and Solutions. The purchase price for the acquisition
was 1,350,000 shares of common stock and a two year note payable to
the seller in the principal amount of $3,000,000. The note payable
to the seller is subject to adjustment based on the achievement of
certain future earnings goals and successful completion of certain
pre-acquisition withholding tax issues of Concepts and Solutions.
The note has been adjusted and is reflecting under related party
notes payable in the consolidated financial statements.
Solutions and Concepts are Arizona-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.
-26-
On October 15, 2020, we acquired 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 (50,000 shares after reverse split)
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 us 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.
This Report contains references to our
trademarks and to trademarks belonging to other entities. Solely
for convenience, trademarks and trade names referred to in this
Report, including logos, artwork and other visual displays, may
appear without the ® or TM symbols, but such references are not
intended to indicate, in any way, that we will not assert, to the
fullest extent under applicable law, our rights or the rights of
the applicable licensor to these trademarks and trade names. We do
not intend our use or display of other companies' trade names or
trademarks to imply a relationship with, or endorsement or
sponsorship of us by, any other companies.
The financial statements after the completion
of the merger and acquisition include the consolidated assets and
liabilities of the combined company (collectively Galaxy Next
Generation, Inc., Interlock Concepts, Inc., Ehlert Solutions Group,
Inc. and Classroom Tech referred to collectively as the
“Company”).
All intercompany transactions and accounts
have been eliminated in the consolidation.
Galaxy’s common stock is traded on
over-the-counter markets under the stock symbol GAXY.
Reverse Stock Split
Effective March 7, 2022, we effected a one-for-two hundred reverse
stock split of our authorized and outstanding shares of common
stock. All per share numbers reflect the one-for-two hundred
reverse stock split.
Critical Accounting Estimates
Management's Discussion and Analysis
discusses our consolidated financial statements which have been
prepared in accordance with United States Generally Accepted
Accounting Principles (U.S. GAAP). The preparation of these
consolidated financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities
at the balance sheet date and reported amounts of revenue and
expenses during the reporting period. On an ongoing basis, we
evaluate our estimates and judgments. We base our estimates and
judgments on historical experience and on various other factors
that are reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under
different assumptions or conditions.
The critical accounting policies and
estimates that affect the condensed consolidated financial
statements and the judgments and assumptions used are consistent
with those described in Note 1 to our audited consolidated
financial statements contained in our Annual Report.
Financial Results and Performance Metrics
Overview
The table below presents an analysis of
selected line items period-over-period in our interim Condensed
Consolidated Statements of Operations for the periods
indicated.
-27-
Revenue
Total revenues recognized were $1,268,447 and
$777,457 for the three months ended March 31, 2022 and 2021,
respectively, an increase of approximately 63%. Total revenues
recognized were $3,857,273 and $2,754,463 for the nine months ended
March 31, 2022 and 2021 respectively, an increase of approximately
40%. Additionally, deferred revenue amounted to $0 and $453,862 as
of March 31, 2022 and June 30, 2021, respectively. Revenues
increased during the three months and nine months ended March 31,
2022 due to the increase in the customer base for interactive
panels and related products as well as additional revenues from OEM
customers.
Cost of Sales and Gross Margin
Our cost of sales was $1,015,843 and $356,731
for the three months ended March 31, 2022 and 2021, respectively,
an increase of approximately 185%. Our cost of sales was $2,882,705
and $1,660,971 for the nine months ended March 31, 2022 and 2021,
respectively, an increase of approximately 74%. Cost of sales
consists primarily of manufacturing, freight, and installation
costs. There are no significant overhead costs which impact cost of
sales. Cost of sales increased during the three and nine months
ended March 31, 2022 due to an inventory adjustment to write off
obsolete inventory, amortization of product development costs,
shipping and supply chain delays and higher freight costs.
General and Administrative
|
|
|
|
Nine months
ended
|
March 31, 2022
|
|
March 31, 2021
|
Stock compensation and
stock issued for services
|
$
110,852
|
|
$
2,778,550
|
Impairment
|
46,869
|
|
-
|
General and
administrative
|
3,627,953
|
|
4,347,555
|
Total General and
Administrative Expenses
|
$
3,785,674
|
|
$
7,126,105
|
Total general and administrative expenses
(including stock compensation expenses) were $1,126,705 and
$1,699,760 for the three months ended March 31, 2022 and 2021,
respectively. General and administrative expenses (including stock
compensation expenses) were $3,785,674 and $7,126,105 for the nine
months ended March 31, 2022 and 2021, respectively, a decrease of
approximately 47%.
Other Income (Expense)
|
|
|
|
|
Nine months
ended
|
March 31, 2022
|
|
|
March 31, 2021
|
Other Income
|
$
7,878
|
|
|
$
141,017
|
Expenses related to
convertible notes payable:
|
|
|
|
|
Change in fair value of
derivative liability
|
1,842,000
|
|
|
(3,153,583)
|
Interest
accretion
|
(49,660)
|
|
|
(766,603)
|
Interest related to equity
purchase agreement
|
(2,143,500)
|
|
|
(6,807,587)
|
Interest expense
|
(724,129)
|
|
|
(7,173,779)
|
|
|
|
|
|
Total Other Income
(Expense)
|
$
(1,067,411)
|
|
|
$
(17,760,535)
|
Interest expense amounted to $2,867,629 and
$13,981,366 for the nine months ended March 31, 2022 and 2021,
respectively, a decrease of 79%. Interest expense of $2,143,500
during the nine months ended March 31, 2022, was due to sales of
our common stock to investors under the Equity Purchase Agreement
in exchange for proceeds of $1,633,700. Reduced interest expense of
$11,113,737 during the nine months ended March 31, 2022, is
attributed to the decrease in our overall debt.
-28-
The conversion features in our related party
preferred convertible notes payable meet the definition of a
derivative liability instrument because the conversion feature is
for a variable number of shares at a variable price. As a result,
the outstanding conversion features of the notes are recorded as a
derivative liability at fair value and marked-to-market each period
with the change in fair value charged or credited to income. A
derivative liability of $0 and $1,842,000 is recorded at March 31,
2022 and June 30, 2021. The derivative liability was reduced due to
the extinguishment of the related party preferred convertible notes
by the agreed upon exchange for Series F Preferred Stock in
December 2021.
Net Loss for the Period
Net loss incurred for the three months ended
March 31, 2022 and 2021 was $1,077,339 and $2,890,289,
respectively, a decrease of approximately 63%. Net loss incurred
for the nine months ended March 31, 2022 and 2021 was $3,878,517
and $23,793,148, respectively, a decrease of approximately 84%.
Noncash contributing factors for the net loss incurred for the
three months ended March 31, 2022 and 2021 are as follows:
a). $0 and $2,350 represent consulting fees
paid through the issuance of stock for the three months ended March
31, 2022 and 2021, respectively. $32,750 and $2,778,550 represent
consulting fees paid through the issuance of stock for the nine
months ended March 31, 2022 and 2021, respectively.
b). Interest expenses related to the equity
purchase agreement of $0 and $1,805,687 for the three months ended
March 31, 2022 and 2021, respectively. Interest expense related to
the equity purchase agreement of $2,143,500 and $6,807,587 for the
nine months ended March 31, 2022 and 2021, respectively.
c). Depreciation and amortization expenses
related to intangibles and capitalized development costs of
$137,042 and $96,779 for the three months ended March 31, 2022 and
2021, respectively. Depreciation and amortization expenses related
to intangibles and capitalized development costs of $370,419 and
$267,660 for the nine months ended March 31, 2022 and 2021,
respectively.
Liquidity and Capital
Resources
Although our revenues generated from
operations have become more sufficient, in order to support our
operational activities our revenues we may still need to be
supplemented by the proceeds from the issuance of securities,
including equity and debt issuances. At March 31, 2022, we had a
working capital deficit of $2,611,332 and an accumulated deficit of
$51,809,645. As stated in Note 14 to the notes to the unaudited
condensed consolidated financial statements included in this
Report, our ability to continue as a going concern is dependent
upon management's ability to raise capital from the sale of its
equity and, ultimately, the achievement of sufficient operating
revenues. We anticipate that our current cash and revenue generated
from operations will be sufficient for day-to-ay operations;
however, we anticipate that we will need additional capital for
business expansion and new product development. If our revenues
continue to be insufficient to support our operational activities,
we intend to raise additional capital through the sale of equity
securities or borrowings from financial institutions and possibly
from related and nonrelated parties who may in fact lend to us on
reasonable terms and ultimately generating sufficient revenue from
operations. Our operating loss continues to shrink, and investments
should allow us to continue for several months until sufficient
revenue is met. Management believes that its actions to secure
additional funding will allow us to continue as a going concern. We
currently do not have any committed sources of financing other than
our accounts receivable factoring agreement, which requires us to
meet certain requirements to utilize. There can be no assurance
that we will meet all or any of the requirements pursuant to our
line of credit, or accounts receivable factoring agreement, and
therefore those financing options may be unavailable to us. There
is no guarantee we will be successful in raising capital outside of
our current sources, and if so, that we will be able to do so on
favorable terms.
Our cash totaled $479,623 at March 31, 2022,
as compared with $541,591 at June 30, 2021, a decrease of $61,968.
Net cash of $1,429,853 and $557,645 was used in operations and
investing activities, respectively, for the nine months ended March
31, 2022. Cash used in operating activities for the nine months
ended March 31, 2022 was $1,429,853 as compared to $6,774,413 for
the nine month ended March 31, 2021. The decrease was primarily due
to increases in inventories, accounts receivables, decrease in
derivative liabilities and an overall decrease in operational
expenses.
-29-
Net cash of $1,925,530 was provided from
financing activities for the nine months ended March 31, 2022,
primarily due to proceeds from the Equity Purchase Agreement of
$1,633,700, proceeds of $1,075,000 from convertible notes issued
and proceeds of $500,000 from notes issued offset by payments of
$991,598 to repay amounts owed under the credit line and payments
of principal on notes payable of $217,546 and to a lesser extent
payments of $74,026 for payments on advances from a stockholder
.
To implement our business plan, we may
require additional financing. Further, current or future adverse
capital and credit market conditions could limit our access to
capital. We may be unable to raise capital or bear an unattractive
cost of capital that could reduce our financial flexibility.
Our long-term liquidity requirements will
depend on many factors, including the rate at which we grow our
business and footprint in the industries. To the extent that the
funds generated from operations are insufficient to fund our
activities in the long term, we may be required to raise additional
funds through public or private financing. No assurance can be
given that additional financing will be available or that, if it is
available, it will be on terms acceptable to us.
Off-Balance Sheet Arrangements
The Company did not have off-balance sheet
arrangements or transactions as of and for the nine months ended
March 31, 2022 and 2021.
Non-GAAP Disclosure
To provide investors with additional insight
and allow for a more comprehensive understanding of the information
used by management in its financial and decision-making surrounding
pro forma operations, Galaxy supplements its consolidated financial
statements presented on a basis consistent with U.S. generally
accepted accounting principles, or GAAP, Adjusted EBITDA as a
non-GAAP financial measures of earnings. The tables below provide a
reconciliation of the non-GAAP financial measures, presented
herein, to the most directly comparable financial measures
calculated and presented in accordance with GAAP. Adjusted EBITDA
represents EBITDA (earnings before income taxes depreciation and
amortization). Galaxy management uses Adjusted EBITDA as financial
measures to evaluate the profitability and efficiency of the
business model. The Company uses these non-GAAP financial measures
to assess the strength of the underlying operations of the
business. These adjustments, and the non-GAAP financial measures
that are derived from them, provide supplemental information to
analyze our operations between periods and over time. Galaxy finds
this especially useful when reviewing pro forma results of
operations, which include large non-cash expenses including
interest on the Equity Purchase Agreement, amortization of
intangible assets and capitalized development costs and stock-based
compensation. Investors should consider its non-GAAP financial
measures in addition to, and not as a substitute for, financial
measures prepared in accordance with GAAP. The non-GAAP financial
measures should not be considered superior to, as a substitute for,
or as an alternative to, and should be considered in conjunction
with, the GAAP financial measures presented.
Non-GAAP Adjusted EBITDA financial results
for the three months ended March 31, 2022 and 2021:
-30-
During the three and nine months ended March
31, 2022, we issued 675,000 and 1,625,000 shares of common stock
respectively, in exchange for proceeds under the Equity Purchase
Agreement. We received proceeds of $1,633,700 and recorded
additional paid in capital of $2,121,000 upon issue.
|
|
|
|
Three months ended
|
March 31,
2022
|
|
March 31,
2021
|
|
|
|
|
Revenue
|
$
1,268,447
|
|
$
777,457
|
Gross Profit
|
252,604
|
|
420,726
|
General and Administrative Expenses
|
1,204,807
|
|
1,699,760
|
Loss from Operations
|
(952,203)
|
|
(1,279,034)
|
Other Income (Expense)
|
(125,136)
|
|
(1,611,255)
|
Net Loss
|
(1,077,339)
|
|
(2,890,289)
|
Interest, Taxes, Depreciation, Stock
Compensation and Amortization
|
114,660
|
|
1,909,376
|
Non-GAAP Adjusted EBITDA
|
$ (962,679)
|
|
$ (980,913)
|
Non-GAAP Adjusted EBITDA was a loss of
$962,679 for the three months ended March 31, 2022 compared to the
loss of $980,913 for the three months ended March 31, 2021.
|
|
|
|
Nine months ended
|
March 31,
2022
|
|
March 31,
2021
|
|
|
|
|
Revenue
|
$
3,857,273
|
|
$
2,754,463
|
Gross Profit
|
974,568
|
|
1,093,492
|
General and Administrative Expenses
|
3,785,674
|
|
7,126,105
|
Loss from Operations
|
(2,811,106)
|
|
(6,032,613)
|
Other Income (Expense)
|
(1,067,411)
|
|
(17,760,535)
|
Net Loss
|
(3,878,517)
|
|
(23,793,148)
|
Interest, Taxes, Depreciation, Stock
Compensation and Amortization
|
2,448,203
|
|
10,010,896
|
Non-GAAP Adjusted EBITDA
|
$ (1,430,314)
|
|
$ (13,782,252)
|
Non-GAAP Adjusted EBITDA was a loss of
$1,430,314 for the nine months ended March 31, 2022 compared to the
loss of $13,782,252 for the nine months ended March 31, 2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The information under this Item is not
required to be provided by smaller reporting companies.
-31-
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the
participation of our management, including the Chief Executive
Officer (our principal executive officer) and Chief Financial
Officer (our principal financial and accounting officer), we have
evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, as such term is defined in
Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the
period covered by this Report.
Evaluation of Disclosure Controls and
Procedures
We conducted an evaluation of the
effectiveness of the design and operation of our disclosure
controls and procedures ("Disclosure Controls") as of the end of
the period covered by this Report. The Disclosure Controls
evaluation was conducted under the supervision and with the
participation of management, including our Chief Executive Officer
(our principal executive officer) and our Chief Financial Officer
(our principal financial and accounting officer). Disclosure
Controls are controls and procedures designed to reasonably assure
that information required to be disclosed in our reports filed
under the Exchange Act, such as this Report, is recorded,
processed, summarized and reported within the time periods
specified in the SEC's rules and forms. Disclosure Controls are
also designed to provide reasonable assurance that such information
is accumulated and communicated to our management, including our
Chief Executive Officer and our Chief Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure. Based on this evaluation our Chief Executive Officer
and Chief Financial Officer have concluded that, because of a
material weakness in our internal control over financial reporting
that existed at June 30, 2021 and had not been remediated by the
end of the period covered by this Report, our disclosure controls
and procedures were not effective as of the end of the period
covered by this Report. This material weakness in the Company's
internal control over financial reporting and the Company's
remediation efforts are described below.
The material weakness relates to the fact
that our management is relying on external consultants for purposes
of preparing its financial reporting package; however, the officers
may not be able to identify errors and irregularities in the
financial reporting package before its release as a continuous
disclosure document. As a result of the deficiencies, we have
discovered it is reasonably possible that internal controls over
financial reporting may not have prevented or detected errors from
occurring that could have been material, either individually or in
the aggregate.
Remediation Measures
Management began to discontinue outsourcing
its bookkeeping beginning July 1, 2021. Outsourced
bookkeeping was still utilized to a lesser extent for bookkeeping
services through March 31, 2022 and we will continue to outsource
the preparation of the Company's tax returns and tax
provisions.
Changes in Internal Control over Financial
Reporting
There have been no changes in our internal
control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the period
covered by this Report that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
PART II - OTHER
INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be subject to
various legal proceedings and claims that arise in the ordinary
course of business litigation, regardless of the outcome could have
a material adverse impact on us because of the defense and
settlement costs, diversion of management resources and other
factors. We are not currently subject to any legal proceedings that
we believe will have a material impact on our business at this
time.
-32-
ITEM 1A. RISK FACTORS
Investing in our common stock involves a
high degree of risk. You should consider carefully the following
risks, together with the risks specified in Item 1A of Part I of
our Annual Report for the year ended June 30, 2021 and all the
other information in this Report, including our condensed
consolidated financial statements and notes thereto. If any of the
following risks materializes, our operating results, financial
condition and liquidity could be materially adversely affected. As
a result, the trading price of our common stock could decline, and
you could lose part or all of your investment. The following
information updates should be read in conjunction with the
information disclosed in Part 1, Item 1A, "Risk Factors," contained
in our Annual Report for the year ended June 30, 2021. Except as
disclosed below, there have been no material changes from the risk
factors and uncertainties disclosed in our Annual Report for the
year ended June 30, 2021.
We have incurred losses for the nine
months ended March 31, 2022 and 2021 and there can be no assurance
that we will generate net income
For the three months ended March 31, 2022 and
2021 we had a net loss of $1,077,339 and $2,890,289, respectively.
For the nine months ended March 31, 2022 and 2021 we had a net loss
of $3,878,517 and $23,793,148 respectively and for the year ended
June 30, 2021, we had a net loss of $24,434,336. For the year ended
June 30, 2020, we had a net loss of $14,026,107. There can be no
assurance that our losses will not continue in the future, even if
our revenues and expenditures for the products and solutions we
sell and distribute increase. In addition, as of March 31, 2022, we
had stockholders' deficit of approximately $400,000 and cash used
in operations of approximately $1,400,000. In addition, as of June
30, 2021, we had stockholders' deficit of approximately $1,400,000
and cash used in operations of approximately $6,300,000. These
factors raise substantial doubt regarding our ability to continue
as a going concern.
We require funds to operate and expand
our business
During the nine months ended March 31, 2022,
our operating activities used net cash of $1,429,853 and our cash
was $479,623. During the year ended June 30, 2021, our operating
activities used net cash of approximately $6.3 million and our cash
and cash equivalents was $541,591. As of March 31, 2022, our
accumulated deficit totaled approximately $52 million on a
consolidated basis. Although we have been able to mitigate our
losses during the three months ended March 31, 2022, we expect to
incur additional operating losses in the future and therefore
expect our cumulative losses to increase. We will require funds to
purchase additional inventories, pay our vendors, and build our
marketing and sales staff. If we do not succeed in raising
additional funds on acceptable terms, we may be unable to expand
our business and could default on our obligations. There can be no
assurance that such financing will be available and that the equity
interests of all of our stockholders would not be substantially
diluted. Any additional sources of financing will likely involve
the issuance of our equity or debt securities, which will have a
dilutive effect on our stockholders. To the extent that we raise
additional funds by issuing equity securities, our stockholders may
experience significant dilution. Any debt financing, if available,
may involve restrictive covenants that may impact our ability to
conduct our business. Our ability to raise capital through the sale
of securities may be limited by the rules of the SEC and the terms
of the agreements that we enter into. We currently do not
have any committed sources of financing other than our accounts
receivable factoring agreement, which requires us to meet certain
conditions to utilize and there can be no assurance that we will
meet those conditions.
We have not be able to access the full
amounts available under the Amended and
Restated Purchase Agreement, which could prevent
us from accessing the capital we need to continue our operations,
which could have an adverse effect on our business
We have generated significant losses to date
and expect to continue to incur significant operating losses. To
date, our revenue from operations have been insufficient to support
our operational activities and has been supplemented by the
proceeds from the issuance of securities. There is no guarantee
that additional equity, debt or other funding will be available to
us on acceptable terms, or at all.
-33-
Our ability to direct Tysadco Partners to
purchase up to $10.0 million of shares of our common stock over a
24-month period is expired. We may need additional capital to fully
implement our business, operating and development plans. Should the
financing we require to sustain our working capital needs be
unavailable or prohibitively expensive when we require it, the
consequences could be a material adverse effect on our business,
operating results, financial condition and prospects.
Our inability to access other financing
sources, could have a material adverse effect on our business.
Risks Relating to the COVID-19
Pandemic
Pandemics, including the COVID-19 pandemic,
could have a material adverse effect on our operations, liquidity,
financial condition, and financial results.
A serious global pandemic, including the
current COVID-19 pandemic and variants of COVID-19, can adversely
impact, shock and weaken the global economy. These impacts can
amplify other risk factors and could have a material impact on our
operations, liquidity, financial conditions, and financial
results.
COVID-19 pandemic-related risks may impact
our exposure to global regulatory, geopolitical, and societal
changes; rapid degradation of global economic conditions, creating
an increase in the volatility and the timing and level of orders;
supply chain disruptions, material shortages, and increases in the
costs of components; changes in labor force availability, which
could reduce our ability to operate across our business in
development, sales and marketing, production, installation, and
ongoing service and support; an increased risk being subjected to
contract performance claims if we are unable to deliver according
to the terms of our contract or commitments and cannot claim force
majeure to mitigate or eliminate our exposure to such claims;
increased geographic work restrictions that could impact our
ability to market, sell, manufacture and/or install our products;
an increase in our exposure to claims or litigation related to the
pandemic; reduced access to and an increase in the cost of capital;
reduced access to surety bonds or bank guarantees to secure
customer orders; volatility and changes in foreign currency rates;
delayed timing of collections and/or decreased collectability of
receivables and contract assets; and a material reduction to the
values of our assets including, but not limited to, inventory,
deferred tax assets, goodwill, intangibles, and property and
equipment.
Changes in general economic conditions,
geopolitical conditions, domestic and foreign trade policies,
monetary policies and other factors beyond our control may
adversely impact our business and operating results.
Our operations and performance depend on
global, regional and U.S. economic and geopolitical conditions.
Russia’s invasion and military attacks on Ukraine have triggered
significant sanctions from U.S. and European leaders. These events
are currently escalating and creating increasingly volatile global
economic conditions. Resulting changes in U.S. trade policy could
trigger retaliatory actions by Russia, its allies and other
affected countries, including China, resulting in a “trade war.”
Furthermore, if the conflict between Russia and Ukraine continues
for a long period of time, or if other countries, including the
U.S., become further involved in the conflict, we could face
significant adverse effects to our business and financial
condition.
-34-
The above factors, including a number of
other economic and geopolitical factors both in the U.S. and
abroad, could ultimately have material adverse effects on our
business, financial condition, results of operations or cash flows,
including the following:
|
|
|
●
|
effects of significant
changes in economic, monetary and fiscal policies in the U.S. and
abroad including currency fluctuations, inflationary pressures and
significant income tax changes;
|
●
|
supply chain
disruptions;
|
●
|
a global or regional
economic slowdown in any of our market segments;
|
●
|
changes in government
policies and regulations affecting the Company or its significant
customers;
|
●
|
industrial policies in
various countries that favor domestic industries over
multinationals or that restrict foreign companies
altogether;
|
●
|
new or stricter trade
policies and tariffs enacted by countries, such as China, in
response to changes in U.S. trade policies and tariffs;
|
●
|
postponement of spending, in response to tighter credit, financial
market volatility and other factors;
|
●
|
rapid material
escalation of the cost of regulatory compliance and
litigation;
|
●
|
difficulties protecting
intellectual property;
|
●
|
longer payment
cycles;
|
●
|
credit risks and other
challenges in collecting accounts receivable; and
|
●
|
the
impact of each of the foregoing on outsourcing and procurement
arrangements.
|
ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
For the three months ended March 31,
2022:
Except as previously reported in prior
filings with the Securities and Exchange Commission, there were no
sales of unregistered securities for the three month ended March
31, 2022.
-35-
For nine months ended March 31,
2022:
During the nine months ended March 31, 2022,
the Company issued 73,517 shares of common stock for services.
During the nine months ended March 31, 2022,
the Company issued 1,625,000 shares of common stock in exchange for
proceeds under the Equity Purchase Agreement. These shares were
valued at $2,643,500 upon issuance.
During the nine months ended March 31, 2022,
the Company issued 312,500 shares of common stock as commitment
shares in a structured loan agreement. These shares were valued at
$356,250 upon issuance.
During the nine months ended March 31, 2022,
the Company entered into exchange agreements to issue 11,414 shares
of Preferred Series F stock in exchange for Preferred Series D and
E stock.
See the capital structure section in Note 1
for disclosure of the equity components included in the Company's
consolidated financial statements.
All sales in each of the transactions set
forth above were issued relying on the exemption provided by
Section 4(a)(2) of the Securities Act and Regulation D promulgated
thereunder for the offer and sale of securities not involving a
public offering, except for Preferred Series F stock
exchanges which were effected relying on Section 3(a)(9) of
the Securities Act as the common stock was exchanged by us with our
existing security holders exclusively and no commission or other
remuneration was paid or given directly or indirectly for
soliciting such exchange. The recipients of securities in each of
these transactions relying on Section 4(a)(2) of the Securities Act
and/or Rule 506 promulgated thereunder acquired the securities for
investment only and not with a view to or for sale in connection
with any distribution thereof, and appropriate legends were affixed
to the securities issued in these transactions. Each of the
recipients of securities in these transactions was an accredited
investor within the meaning of Rule 501 of Regulation D under the
Securities Act and had adequate access, through employment,
business or other relationships, to information about us.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
-36-
ITEM 6. EXHIBITS
|
|
|
|
|
|
|
|
|
|
|
Exhibit No.
|
Description
|
3.1
|
Amended and Restated Articles of
Incorporation (incorporated herein by reference to Exhibit 3.1 to
Amendment No. 1 to the Annual Report on Form 10-K/A, File No.
000-56006, filed with the Securities and Exchange Commission on
October 16, 2020 )
|
3.2
|
Bylaws (incorporated herein by reference to
Exhibit 3.2 to the Registrant's Form 8A-12G, File No. 000-56006,
filed with the Securities and Exchange Commission on December 3,
2018)
|
3.3
|
Certificate of Designation for Series D
Preferred Stock (incorporated herein by reference to Exhibit
3.3 to the Annual Report on Form 10-K, File No. 000-56006, filed
with the Securities and Exchange Commission on filed on September
28, 2020)
|
3.4
|
Certificate of Designation for Series E
Preferred Stock (incorporated herein by reference to Exhibit 3.4 to
the Annual Report on Form 10-K, File No. 000-56006, filed with the
Securities and Exchange Commission on filed on September 28,
2020)
|
3.5
|
Certificate of
Designation of Series F Convertible Preferred Stock (incorporated
herein by reference to Exhibit 3.1 to the Current Report on Form
8-K, File No. 000-56006, filed with the Securities and Exchange
Commission filed February 14, 2022).
|
3.6
|
Certificate of Change (incorporated
herein by reference to Exhibit 3.1 to the Current Report on Form
8-K, File No. 000-56006, filed with the Securities and Exchange
Commission filed March 8, 2022). |
31.1*
|
Certification of CEO pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
|
31.2*
|
Certification of CFO pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
|
32.1*
|
Certification of CEO Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
32.2*
|
Certification of CFO Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
101.INS*
|
XBRL Instance Document - the instance
document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document.*
|
101.SCH*
|
Inline XBRL Taxonomy Extension Schema*
|
101.CAL*
|
Inline XBRL Taxonomy Extension Calculation
Linkbase**
|
101.DEF*
|
Inline XBRL Taxonomy Extension Definition
Linkbase*
|
101.LAB*
|
Inline XBRL
Taxonomy Extension Label Linkbase*
|
101.PRE*
|
Inline XBRL Taxonomy Extension Presentation
Linkbase*
|
104
|
Cover Page Interactive Data File (formatted
as Inline XBRL and contained in Exhibit 101)*
|
*Filed herewith
-37-
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
GALAXY NEXT GENERATION, INC.
Date: May 16, 2022
/s/
Gary LeCroy
Gary LeCroy
Chief Executive Officer (Principal Executive
Officer)
Date: May 16, 2022
/s/Magen McGahee
Magen McGahee
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
-38-
Exhibit 31.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
I, Gary LeCroy, certify that:
1. I have reviewed this Quarterly Report on
Form 10-Q (this "report") of Galaxy Next Generation, Inc. (the
"registrant");
2. 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;
3. Based on my knowledge, the 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;
4.The registrant's other certifying
officer(s) and I are 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 13-a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;
(b) Designed such internal control over
financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the
registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in
the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying
officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over
financial reporting which are reasonable likely to adversely affect
the registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that
involved management or other employees who have a significant role
in the registrant's internal control over financial reporting.
Dated: May 16, 2022
Galaxy Next Generation, Inc.
By:/s/ Gary LeCroy
Gary LeCroy
Chief Executive Officer
(Principal Executive Officer)
-39-
Exhibit 31.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER
I, Magen McGahee, certify that:
1. I have reviewed this Quarterly Report on
Form 10-Q (this "report") of Galaxy Next Generation, Inc. (the
"registrant");
2.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;
3. Based on my knowledge, the 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;
4. The registrant's other certifying
officer(s) and I are 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 13-a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;
(b) Designed such internal control over
financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the
registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in
the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying
officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over
financial reporting which are reasonable likely to adversely affect
the registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that
involved management or other employees who have a significant role
in the registrant's internal control over financial reporting.
Dated: May 16, 2022
Galaxy Next Generation, Inc.
By: /s/ Magen McGahee
Magen McGahee
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
-40-
Exhibit 32.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly
Report on Form 10-Q of Galaxy Next Generation, Inc. (the "Company")
for the quarter ending March 31, 2022, I, Gary LeCroy, Chief
Executive Officer of the Company hereby certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief,
that:
1.Such Quarterly Report on Form 10-Q for the
fiscal quarter ending March 31, 2022, fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
2. The information contained in such
Quarterly Report on Form 10-Q for the quarter ending March 31,
2022, fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: May 16, 2022
Galaxy Next Generation, Inc.
By:/s/ Gary LeCroy
Gary LeCroy
Chief Executive Officer
(Principal Executive Officer)
-41-
Exhibit 32.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly
Report on Form 10-Q of Galaxy Next Generation, Inc. (the "Company")
for the quarter ending March 31, 2022, I, Magen McGahee, Chief
Financial Officer of the Company hereby certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief,
that:
1.Such Quarterly Report on Form 10-Q for the
fiscal quarter ending March 31, 2022, fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
2. The information contained in such
Quarterly Report on Form 10-Q for the quarter ending March 31,
2022, fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: May 16, 2022
Galaxy Next Generation, Inc.
By: /s/ Magen McGahee
Magen McGahee
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer.)
-42-
NONE July 7, 2026 0.03 0.04 November,
2052 May, 2050 679 844 2021-11-13 2021-11-13 200000 200000 400000
400000 400000 400000 10000 10000 0.06 0.06 2022-04-30 2022-04-30
5000000 false --06-30 Q3 2022 0001127993 0001127993 2021-07-01
2022-03-31 0001127993 2022-05-12 0001127993 2022-03-31 0001127993
2021-06-30 0001127993 2022-01-01 2022-03-31 0001127993 2021-01-01
2021-03-31 0001127993 2020-07-01 2021-03-31 0001127993
us-gaap:CommonStockMember 2021-06-30 0001127993
us-gaap:PreferredStockMember 2021-06-30 0001127993
gaxy:SeriesFPreferredSharesMember 2021-06-30 0001127993
us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001127993
us-gaap:RetainedEarningsMember 2021-06-30 0001127993
us-gaap:CommonStockMember 2021-07-01 2022-03-31 0001127993
us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2022-03-31
0001127993 gaxy:SeriesFPreferredSharesMember 2021-07-01 2022-03-31
0001127993 us-gaap:PreferredStockMember 2021-07-01 2022-03-31
0001127993 us-gaap:RetainedEarningsMember 2021-07-01 2022-03-31
0001127993 us-gaap:CommonStockMember 2022-03-31 0001127993
us-gaap:PreferredStockMember 2022-03-31 0001127993
gaxy:SeriesFPreferredSharesMember 2022-03-31 0001127993
us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001127993
us-gaap:RetainedEarningsMember 2022-03-31 0001127993
us-gaap:CommonStockMember 2020-06-30 0001127993
us-gaap:PreferredStockMember 2020-06-30 0001127993
us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001127993
us-gaap:RetainedEarningsMember 2020-06-30 0001127993 2020-06-30
0001127993 us-gaap:CommonStockMember 2020-07-01 2021-03-31
0001127993 us-gaap:AdditionalPaidInCapitalMember 2020-07-01
2021-03-31 0001127993 us-gaap:RetainedEarningsMember 2020-07-01
2021-03-31 0001127993 us-gaap:CommonStockMember 2021-03-31
0001127993 us-gaap:PreferredStockMember 2021-03-31 0001127993
us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001127993
us-gaap:RetainedEarningsMember 2021-03-31 0001127993 2021-03-31
0001127993
gaxy:AssetPurchaseAgreementWithClassroomTechnologiesSolutionsIncMember
2020-10-15 0001127993
gaxy:AssetPurchaseAgreementWithClassroomTechnologiesSolutionsIncMember
2020-10-01 2020-10-15 0001127993 pf0:MinimumMember 2021-07-01
2022-03-31 0001127993 pf0:MaximumMember 2021-07-01 2022-03-31
0001127993 us-gaap:PreferredClassAMember 2022-03-31 0001127993
us-gaap:PreferredClassAMember 2021-07-01 2022-03-31 0001127993
us-gaap:PreferredClassBMember 2022-03-31 0001127993
us-gaap:PreferredClassBMember 2021-07-01 2022-03-31 0001127993
gaxy:PreferredClassCMember 2022-03-31 0001127993
gaxy:PreferredClassCMember 2021-07-01 2022-03-31 0001127993
gaxy:PreferredClassFMember 2022-03-31 0001127993
gaxy:PreferredClassFMember 2021-07-01 2022-03-31 0001127993
2020-07-01 2021-06-30 0001127993 us-gaap:PreferredClassAMember
2021-06-30 0001127993 us-gaap:PreferredClassAMember 2020-07-01
2021-06-30 0001127993 us-gaap:PreferredClassBMember 2021-06-30
0001127993 us-gaap:PreferredClassBMember 2020-07-01 2021-06-30
0001127993 gaxy:PreferredClassCMember 2021-06-30 0001127993
gaxy:PreferredClassCMember 2020-07-01 2021-06-30 0001127993
gaxy:PreferredClassDMember 2021-06-30 0001127993
gaxy:PreferredClassDMember 2020-07-01 2021-06-30 0001127993
gaxy:PreferredClassEMember 2021-06-30 0001127993
gaxy:PreferredClassEMember 2020-07-01 2021-06-30 0001127993
us-gaap:GoodwillMember 2022-03-31 0001127993 us-gaap:GoodwillMember
2021-07-01 2022-03-31 0001127993 us-gaap:CustomerListsMember
2022-03-31 0001127993 us-gaap:CustomerListsMember 2021-07-01
2022-03-31 0001127993 gaxy:VendorRelationshipsMember 2022-03-31
0001127993 gaxy:VendorRelationshipsMember 2021-07-01 2022-03-31
0001127993 gaxy:ProductDevelopmentCostsMember 2022-03-31 0001127993
gaxy:ProductDevelopmentCostsMember 2021-07-01 2022-03-31 0001127993
us-gaap:GoodwillMember 2021-06-30 0001127993
us-gaap:CustomerListsMember 2021-06-30 0001127993
gaxy:VendorRelationshipsMember 2021-06-30 0001127993
gaxy:ProductDevelopmentCostsMember 2021-06-30 0001127993
us-gaap:VehiclesMember 2022-03-31 0001127993 us-gaap:VehiclesMember
2021-06-30 0001127993 us-gaap:BuildingMember 2022-03-31 0001127993
us-gaap:BuildingMember 2021-06-30 0001127993
us-gaap:EquipmentMember 2022-03-31 0001127993
us-gaap:EquipmentMember 2021-06-30 0001127993
us-gaap:LeaseholdImprovementsMember 2022-03-31 0001127993
us-gaap:LeaseholdImprovementsMember 2021-06-30 0001127993
us-gaap:FurnitureAndFixturesMember 2022-03-31 0001127993
us-gaap:FurnitureAndFixturesMember 2021-06-30 0001127993
gaxy:LineOfCreditInterestBearingMember 2021-07-01 2022-03-31
0001127993 gaxy:LineOfCreditInterestBearingMember 2021-06-30
0001127993 2021-10-01 2021-10-29 0001127993
gaxy:AccountsReceivableFactoringAgreementMember 2022-03-31
0001127993 gaxy:AccountsReceivableFactoringAgreementMember
2021-06-30 0001127993 gaxy:NotesPayablesOtherPayablesMember
2021-06-30 0001127993 gaxy:NotesPayablesOtherPayablesMember
2022-03-31 0001127993 gaxy:NotesPayablesOtherPayablesMember
2021-07-01 2021-07-31 0001127993
gaxy:NotesPayableOtherPayablesOneMember 2022-03-31 0001127993
gaxy:NotesPayableOtherPayablesOneMember 2021-06-30 0001127993
gaxy:NotesPayableOtherPayablesOneMember 2021-07-01 2022-03-31
0001127993 gaxy:NotesPayableOtherPayablesTwoMember 2022-03-31
0001127993 gaxy:NotesPayableOtherPayablesTwoMember 2021-06-30
0001127993 gaxy:NotesPayableOtherPayablesTwoMember 2021-07-01
2022-03-31 0001127993 gaxy:NotesPayableOtherPayablesThreeMember
2022-03-31 0001127993 gaxy:NotesPayableOtherPayablesThreeMember
2021-06-30 0001127993 gaxy:NotesPayableOtherPayablesThreeMember
2021-07-01 2022-03-31 0001127993 pf0:MinimumMember
gaxy:NotesPayableOtherPayablesThreeMember 2021-07-01 2022-03-31
0001127993 pf0:MaximumMember
gaxy:NotesPayableOtherPayablesThreeMember 2021-07-01 2022-03-31
0001127993 gaxy:NotesPayableOtherPayablesFourMember 2022-03-31
0001127993 gaxy:NotesPayableOtherPayablesFourMember 2021-06-30
0001127993 gaxy:NotesPayableOtherPayablesFourMember 2021-07-01
2022-03-31 0001127993 gaxy:NotesPayableFiveMember 2022-03-31
0001127993 gaxy:NotesPayableFiveMember 2021-06-30 0001127993
gaxy:NotesPayableFiveMember 2021-07-01 2022-03-31 0001127993
gaxy:NotesPayableSixMember 2022-03-31 0001127993
gaxy:NotesPayableSixMember 2021-06-30 0001127993
gaxy:NotesPayableSixMember 2021-07-01 2022-03-31 0001127993
gaxy:NotesPayableSevenMember 2022-03-31 0001127993
gaxy:NotesPayableSevenMember 2021-06-30 0001127993
gaxy:NotesPayableSevenMember 2021-07-01 2022-03-31 0001127993
gaxy:NotesPayableEightMember 2022-03-31 0001127993
gaxy:NotesPayableEightMember 2021-06-30 0001127993
gaxy:NotesPayableEightMember 2021-07-01 2022-03-31 0001127993
gaxy:NotesPayableNineMember 2022-03-31 0001127993
gaxy:NotesPayableNineMember
2021-06-30 0001127993 gaxy:NotesPayableNineMember 2021-07-01
2022-03-31 0001127993 us-gaap:LongTermDebtMember 2022-03-31
0001127993 us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsNonrecurringMember 2022-03-31
0001127993 us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsNonrecurringMember 2021-06-30
0001127993 us-gaap:FairValueMeasurementsRecurringMember 2022-03-31
0001127993 us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001127993
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001127993
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001127993
us-gaap:FairValueMeasurementsRecurringMember 2021-06-30 0001127993
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember 2021-06-30 0001127993
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember 2021-06-30 0001127993
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember 2021-06-30 0001127993
us-gaap:MeasurementInputRiskFreeInterestRateMember 2020-07-01
2021-06-30 0001127993
us-gaap:MeasurementInputExpectedDividendRateMember 2020-07-01
2021-06-30 0001127993 us-gaap:MeasurementInputPriceVolatilityMember
2020-07-01 2021-06-30 0001127993
us-gaap:MeasurementInputExpectedTermMember 2020-07-01 2021-06-30
0001127993 us-gaap:FairValueInputsLevel3Member 2021-06-30
0001127993 us-gaap:FairValueInputsLevel3Member 2021-07-01
2022-03-31 0001127993 us-gaap:FairValueInputsLevel3Member
2022-03-31 0001127993 us-gaap:FairValueInputsLevel3Member
2020-06-30 0001127993 us-gaap:FairValueInputsLevel3Member
2020-07-01 2021-06-30 0001127993 2021-12-31 0001127993
us-gaap:SeriesEPreferredStockMember 2021-12-01 2021-12-31
0001127993 gaxy:OtherAgreementsMember 2021-07-01 2022-03-31
0001127993 gaxy:LongTermNotePayableToRelatedParty1Member 2022-03-31
0001127993 gaxy:LongTermNotePayableToRelatedParty1Member 2021-06-30
0001127993 gaxy:LongTermNotePayableToRelatedParty1Member
us-gaap:SeriesDPreferredStockMember 2021-07-01 2022-03-31
0001127993 gaxy:LongTermNotePayableToRelatedParty1Member
us-gaap:SeriesDPreferredStockMember 2020-10-01 2021-06-30
0001127993 gaxy:LongTermNotePayableToRelatedParty1Member 2021-07-01
2022-03-31 0001127993 gaxy:LongTermNotePayableToRelatedParty1Member
2020-10-01 2021-06-30 0001127993
gaxy:LongTermNotePayableToRelatedParty2Member 2022-03-31 0001127993
gaxy:LongTermNotePayableToRelatedParty2Member 2021-06-30 0001127993
gaxy:LongTermNotePayableToRelatedParty2Member 2021-07-01 2022-03-31
0001127993 gaxy:LongTermNotePayableToRelatedParty2Member 2020-10-01
2021-06-30 0001127993 gaxy:LongTermNotePayableToRelatedParty3Member
2022-03-31 0001127993 gaxy:LongTermNotePayableToRelatedParty3Member
2021-06-30 0001127993 gaxy:LongTermNotePayableToRelatedParty3Member
2021-07-01 2022-03-31 0001127993
gaxy:LongTermNotePayableToRelatedParty3Member 2020-10-01 2021-06-30
0001127993 gaxy:LongTermNotePayableToRelatedParty3Member
us-gaap:SeriesDPreferredStockMember 2021-07-01 2022-03-31
0001127993 gaxy:LongTermNotePayableToRelatedParty3Member
us-gaap:SeriesDPreferredStockMember 2020-10-01 2021-06-30
0001127993 gaxy:LongTermNotePayableToRelatedParty4Member 2022-03-31
0001127993 gaxy:LongTermNotePayableToRelatedParty4Member 2021-06-30
0001127993 gaxy:LongTermNotePayableToRelatedParty4Member 2021-07-01
2022-03-31 0001127993 gaxy:LongTermNotePayableToRelatedParty4Member
2020-10-01 2021-06-30 0001127993
gaxy:LongTermNotePayableToRelatedParty4Member
us-gaap:SeriesDPreferredStockMember 2021-07-01 2022-03-31
0001127993 gaxy:LongTermNotePayableToRelatedParty4Member
us-gaap:SeriesDPreferredStockMember 2020-10-01 2021-06-30
0001127993 gaxy:LongTermNotePayableToRelatedParty5Member 2022-03-31
0001127993 gaxy:LongTermNotePayableToRelatedParty5Member 2021-06-30
0001127993 gaxy:LongTermNotePayableToRelatedParty5Member 2021-07-01
2022-03-31 0001127993 gaxy:LongTermNotePayableToRelatedParty5Member
2020-10-01 2021-06-30 0001127993 gaxy:December232021Member
gaxy:LongTermNotePayableToRelatedParty5Member 2021-07-01 2022-03-31
0001127993 gaxy:December232021Member
gaxy:LongTermNotePayableToRelatedParty5Member 2020-10-01 2021-06-30
0001127993 gaxy:December232021Member
gaxy:LongTermNotePayableToRelatedParty5Member 2022-03-31 0001127993
gaxy:December232021Member
gaxy:LongTermNotePayableToRelatedParty5Member 2021-06-30 0001127993
gaxy:LongTermNotePayableToRelatedParty6Member 2022-03-31 0001127993
gaxy:LongTermNotePayableToRelatedParty6Member 2021-06-30 0001127993
gaxy:FinancialInstitutionMember 2021-07-01 2022-03-31 0001127993
pf0:MinimumMember gaxy:FinancialInstitutionMember 2021-07-01
2022-03-31 0001127993 pf0:MaximumMember
gaxy:FinancialInstitutionMember 2021-07-01 2022-03-31 0001127993
2022-03-01 2022-03-08 0001127993
gaxy:SharesOfCommonStockForServicesMember 2021-07-01 2022-03-31
0001127993 gaxy:SharesIssuedStockPurchaseAgreementMember 2021-07-01
2022-03-31 0001127993 gaxy:SharesIssuedStockLoanAgreementMember
2021-07-01 2022-03-31 0001127993 gaxy:ConsultingServicesMember
2021-07-01 2022-03-31 0001127993 gaxy:PreferredClassEMember
2021-07-01 2022-03-31 0001127993
gaxy:ProfessionalConsultingServicesMember 2020-07-01 2021-03-31
0001127993 gaxy:CommonStockDebtReductionMember 2020-07-01
2021-03-31 0001127993 gaxy:WarrantHoldersMember 2020-07-01
2021-03-31 0001127993
gaxy:CommitmentSharesUnderEquityPurchaseAgreementMember 2020-07-01
2021-03-31 0001127993 us-gaap:LineOfCreditMember 2020-07-01
2021-03-31 0001127993 gaxy:ClassroomTechnologySolutionsIncMember
2020-07-01 2021-03-31 0001127993 gaxy:EquityPurchaseAgreementMember
2020-07-01 2021-03-31 0001127993 us-gaap:DomesticCountryMember
2022-03-31 0001127993 us-gaap:DomesticCountryMember 2021-06-30
0001127993 us-gaap:StateAndLocalJurisdictionMember 2022-03-31
0001127993 us-gaap:StateAndLocalJurisdictionMember 2021-06-30
0001127993 gaxy:ConceptsandSolutionsMember 2019-09-04 0001127993
gaxy:ConceptsandSolutionsMember 2022-03-31 0001127993
gaxy:ConceptsandSolutionsMember 2021-06-30 0001127993
gaxy:TwoVendorsMember us-gaap:AccountsReceivableMember
us-gaap:CustomerConcentrationRiskMember 2021-07-01 2022-03-31
0001127993 gaxy:ThreeVendorsMember us-gaap:AccountsReceivableMember
us-gaap:CustomerConcentrationRiskMember 2020-07-01 2021-03-31
0001127993 gaxy:TwoCustomerMember us-gaap:AccountsReceivableMember
us-gaap:CustomerConcentrationRiskMember 2021-07-01 2022-03-31
0001127993 gaxy:TwoCustomerMember us-gaap:AccountsReceivableMember
us-gaap:CustomerConcentrationRiskMember 2020-07-01 2021-06-30
0001127993 gaxy:TwoCustomerMember us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember 2021-07-01 2022-03-31
0001127993 gaxy:OneCustomerMember us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember 2020-07-01 2021-03-31
0001127993 gaxy:TwoCustomerMember us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember gaxy:GalaxyMember
2021-07-01 2022-03-31 0001127993 gaxy:FourCustomersMember
us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember gaxy:GalaxyMember
2020-07-01 2021-03-31 0001127993
gaxy:ManufacturingAndDistributorshipAgreementMember 2018-09-01
2018-09-15 0001127993 2018-09-01 2018-09-15 0001127993
gaxy:EquityPurchaseAgreementMember 2020-05-01 2020-05-31 0001127993
gaxy:EquityPurchaseAgreementMember 2022-01-01 2022-03-31 0001127993
gaxy:EquityPurchaseAgreementMember 2021-01-01 2021-03-31 0001127993
gaxy:EquityPurchaseAgreementMember 2021-07-01 2022-03-31 0001127993
gaxy:EquityPurchaseAgreementMember 2020-07-01 2021-03-31 0001127993
gaxy:AccountsReceivableFactoringAgreementMember 2020-07-01
2020-07-30 0001127993 2020-07-01 2020-07-30 0001127993
gaxy:AccountsReceivableFactoringAgreementMember 2022-01-01
2022-03-31 0001127993
gaxy:AccountsReceivableFactoringAgreementMember 2021-01-01
2021-03-31 0001127993
gaxy:AccountsReceivableFactoringAgreementMember 2021-07-01
2022-03-31 0001127993
gaxy:AccountsReceivableFactoringAgreementMember 2020-07-01
2021-03-31 0001127993 pf0:ChiefExecutiveOfficerMember 2021-07-01
2022-03-31 0001127993 pf0:ChiefFinancialOfficerMember 2021-07-01
2022-03-31 0001127993 pf0:ChiefExecutiveOfficerMember 2022-03-31
0001127993 pf0:ChiefFinancialOfficerMember 2022-03-31 0001127993
gaxy:SupplyAgreementMember 2021-07-01 2022-03-31 0001127993
2020-10-01 2020-10-15 0001127993 2021-10-31 0001127993 2020-10-15
0001127993 gaxy:ClassroomTechnologiesSolutionsMember 2020-10-01
2020-10-15 0001127993 gaxy:StockPlanMember 2022-03-31 0001127993
gaxy:StockPlanMember 2021-07-01 2022-03-31 0001127993
gaxy:StockPlanMember 2020-07-01 2021-06-30 0001127993
us-gaap:SubsequentEventMember 2022-05-01 2022-05-01 0001127993
us-gaap:SubsequentEventMember 2022-05-01 2022-05-31 0001127993
us-gaap:SubsequentEventMember 2022-05-05 0001127993
us-gaap:SubsequentEventMember 2022-06-01 2022-06-30 0001127993
us-gaap:SubsequentEventMember 2022-09-01 2022-09-30 0001127993
us-gaap:SubsequentEventMember 2022-12-01 2022-12-31 xbrli:shares
iso4217:USD iso4217:USD xbrli:shares xbrli:pure