Electromed (ELMD) 10-Q 15 May 17 2017 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Mar. 31, 2017	May 11, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	Electromed, Inc.
Entity Central Index Key	1,488,917
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		8,230,167
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,017

Condensed Balance Sheets (Unaud

Condensed Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2017	Jun. 30, 2016
Current Assets
Cash	$ 5,401,943	$ 5,123,355
Accounts receivable (net of allowances for doubtful accounts of $45,000)	8,933,426	7,611,437
Inventories	2,587,635	2,480,443
Prepaid expenses and other current assets	491,968	419,616
Income tax receivable		192,685
Total current assets	17,414,972	15,827,536
Property and equipment, net	3,288,480	3,375,189
Finite-life intangible assets, net	762,853	904,033
Other assets	101,441	127,759
Deferred income taxes	330,000	343,000
Total assets	21,897,746	20,577,517
Current Liabilities
Current maturities of long-term debt	50,203	46,309
Accounts payable	593,806	589,225
Accrued compensation	917,742	1,489,798
Income taxes payable	17,024
Warranty reserve	670,000	660,000
Other accrued liabilities	524,564	287,194
Total current liabilities	2,773,339	3,072,526
Long-term debt, less current maturities and net of debt issuance costs	1,108,921	1,146,395
Total liabilities	3,882,260	4,218,921
Shareholders' Equity
Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,230,167 and 8,187,112 issued and outstanding at March 31, 2017 and June 30, 2016, respectively	82,302	81,871
Additional paid-in capital	13,923,033	13,549,551
Retained earnings	4,010,151	2,727,174
Total shareholders' equity	18,015,486	16,358,596
Total liabilities and shareholders' equity	$ 21,897,746	$ 20,577,517

Condensed Balance Sheets (Unau3

Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2017	Jun. 30, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 45,000	$ 45,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	13,000,000	13,000,000
Common stock, shares issued	8,230,167	8,187,112
Common stock, shares outstanding	8,230,167	8,187,112

Condensed Statements of Operati

Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Net revenues	$ 6,669,638	$ 6,035,700	$ 18,587,243	$ 17,298,995
Cost of revenues	1,357,093	1,408,716	4,020,615	3,913,984
Gross profit	5,312,545	4,626,984	14,566,628	13,385,011
Operating expenses
Selling, general and administrative	4,195,156	3,806,885	11,979,261	10,631,539
Research and development	80,613	84,410	532,255	183,043
Total operating expenses	4,275,769	3,891,295	12,511,516	10,814,582
Operating income	1,036,776	735,689	2,055,112	2,570,429
Interest expense, net of interest income of $4,956, $4,978, $11,925 and $8,525 respectively	8,831	13,064	41,135	51,150
Net income before income taxes	1,027,945	722,625	2,013,977	2,519,279
Income tax expense	(380,000)	(256,000)	(731,000)	(644,000)
Net income	$ 647,945	$ 466,625	$ 1,282,977	$ 1,875,279
Income per share:
Basic	$ 0.08	$ 0.06	$ 0.16	$ 0.23
Diluted	$ 0.08	$ 0.06	$ 0.15	$ 0.23
Weighted-average common shares outstanding:
Basic	8,167,112	8,133,857	8,167,112	8,133,857
Diluted	8,452,942	8,287,237	8,449,201	8,215,472

Condensed Statements of Operat5

Condensed Statements of Operations (Unaudited) (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Interest income	$ 4,956	$ 4,978	$ 11,925	$ 8,525

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash Flows From Operating Activities
Net income	$ 1,282,977	$ 1,875,279
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	473,813	458,850
Amortization of finite-life intangible assets	89,813	91,815
Amortization of debt issuance costs	10,871	13,672
Share-based compensation expense	373,913	153,465
Deferred taxes	13,000	(337,000)
Loss on disposal of property and equipment	520	38,667
Loss on disposal of intangible assets	111,498	7,848
Changes in operating assets and liabilities:
Accounts receivable	(1,321,989)	(791,915)
Inventories	(65,630)	(220,417)
Prepaid expenses and other assets	(49,140)	(22,711)
Income tax receivable	192,685	(180,785)
Income tax payable	17,024	(122,657)
Accounts payable and accrued liabilities	(323,453)	706,236
Net cash provided by operating activities	805,902	1,670,347
Cash Flows From Investing Activities
Expenditures for property and equipment	(425,838)	(256,806)
Expenditures for finite-life intangible assets	(60,131)	(27,752)
Net cash used in investing activities	(485,969)	(284,558)
Cash Flows From Financing Activities
Principal payments on long-term debt including capital lease obligations	(36,473)	(36,397)
Payment of deferred financing costs	(4,872)	(13,520)
Net cash used in financing activities	(41,345)	(49,917)
Net increase in cash	278,588	1,335,872
Cash
Beginning of period	5,123,355	3,598,240
End of period	$ 5,401,943	$ 4,934,112

Interim Financial Reporting

Interim Financial Reporting	9 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Interim Financial Reporting	Note 1. Interim Financial Reporting Basis of presentation: The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations as required by Regulation S-X. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by U.S. GAAP for annual reports. This interim report should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 (“fiscal 2016”). A summary of the Company’s significant accounting policies follows: Use of estimates: Net income per common share: New accounting pronouncements: In April 2015, FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This standard became effective on July 1, 2016 for the Company and requires that debt issuance costs be presented as a direct deduction from the carrying amount of long-term debt on the balance sheet. The new guidance aligns the presentation of debt issuance costs with debt discounts and premiums. The Company adopted this guidance retrospectively effective as of July 1, 2016. As a result, the Company presented $10,000 of unamortized debt issuance costs that had been included in “Other assets” on its condensed balance sheet as of June 30, 2016 as a direct deduction from the carrying amounts of the related long-term debt liability. In July 2015, FASB issued ASU 2015-11, “Inventory (Topic 330) Related to Simplifying the Measurement of Inventory,” which applies to all inventory except that which is measured using last-in, first-out (“LIFO”) or the retail inventory method. Inventory measured using first-in, first-out (“FIFO”) or average cost is within the scope of the new guidance and should be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments will be effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The new guidance should be applied prospectively, and earlier application is permitted as of the beginning of an interim or annual reporting period. The Company is evaluating the impact of the standard on its financial statements. In February 2016, FASB issued ASU 2016-02, “Leases.” This standard requires the recognition of all lease transactions with terms in excess of 12 months on the balance sheet as a lease liability and a right-of-use asset (as defined in the standard). ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. Upon adoption, the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. The Company is currently assessing the effect the standard will have on its financial statements. In March 2016, FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which reduces complexity in accounting standards related to share-based payment transactions, including, among others, (1) accounting for income taxes, (2) classification of excess tax benefits on the statement of cash flow, (3) forfeitures, and (4) statutory tax withholding requirements. The ASU will be effective for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods, with earlier application permitted. The Company is evaluating the impact of the standard on its financial statements. Reclassifications:

Inventories

Inventories	9 Months Ended
	Mar. 31, 2017
Inventory Disclosure [Abstract]
Inventories	Note 2. Inventories The components of inventory were approximately as follows: March 31, 2017 June 30, 2016 Parts inventory $ 1,800,000 $ 1,615,000 Work in process 175,000 165,000 Finished goods 793,000 850,000 Less: Reserve for obsolescence (180,000 ) (150,000 ) Total $ 2,588,000 $ 2,480,000

Finite-life Intangible Assets

Finite-life Intangible Assets	9 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Finite-life Intangible Assets	Note 3. Finite-life Intangible Assets The carrying value of patents and trademarks includes the original cost of obtaining the patents, periodic renewal fees, and other costs associated with maintaining and defending patent and trademark rights. Patents and trademarks are amortized over their estimated useful lives, generally 15 and 12 years, respectively. During the nine months ended March 31, 2017 and the year ended June 30, 2016, the Company abandoned certain domestic and foreign patents with net values of approximately $111,000 and $18,000, respectively, which were included as an expense in selling, general and administrative expense on the statements of operations. The majority of the pending patents that were abandoned related to the initial development of our SQL SmartVest technology. During a review of the Company’s patent portfolio it was determined that certain patents proved redundant to a subsequent SQL patent filing and were therefore abandoned. A smaller portion of expense was related to patents that covered technology that management considered outdated, and was no longer in use. Accumulated amortization was $818,000 and $820,000 at March 31, 2017 and June 30, 2016, respectively. The activity and balances of finite-life intangible assets were approximately as follows: March 31, 2017 June 30, 2016 Balance, beginning $ 904,000 $ 1,000,000 Additions 60,000 45,000 Abandonments (111,000 ) (18,000 ) Amortization expense (90,000 ) (123,000 ) Balance, ending $ 763,000 $ 904,000

Warranty Liability

Warranty Liability	9 Months Ended
	Mar. 31, 2017
Product Warranties Disclosures [Abstract]
Warranty Liability	Note 4. Warranty Liability The Company provides a lifetime warranty on its products to the prescribed patient for sales within the U.S. and a three-year warranty for all institutional sales and sales to individuals outside the U.S. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time the product is shipped. Factors that affect the Company’s warranty liability include the number of units shipped, historical and anticipated rates of warranty claims, the product’s useful life and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. Changes in the Company’s warranty liability were approximately as follows: Nine Months Ended Fiscal Year Ended March 31, 2017 June 30, 2016 Beginning warranty reserve $ 660,000 $ 660,000 Accrual for products sold 124,000 152,000 Expenditures and costs incurred for warranty claims (114,000 ) (152,000 ) Ending warranty reserve $ 670,000 $ 660,000

Income Taxes

Income Taxes	9 Months Ended
	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Note 5. Income Taxes On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate. As the year progresses, the Company refines its estimate based on the facts and circumstances by each tax jurisdiction. Income tax expense was estimated at approximately $731,000 and the effective tax rate was 36.3% for the nine months ended March 31, 2017. Estimated income tax expense for the nine months ended March 31, 2017 includes a recognized tax benefit of approximately $32,000 as a result of the lapse of the statute of limitations on uncertain tax positions, which reduced the effective tax rate by 1.6% for that period. Income tax expense was estimated at approximately $644,000 and the effective tax rate was 25.5% for the nine months ended March 31, 2016. Estimated income tax expense during the nine months ended March 31, 2016 includes a current tax expense of $938,000 and a discrete tax benefit of $294,000 due primarily to the Company’s release of the full valuation allowance against all of its net U.S. federal and state deferred tax assets.

Financing Arrangements

Financing Arrangements	9 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Financing Arrangements	Note 6. Financing Arrangements The Company has a credit facility that provides for a revolving line of credit and a term loan. Effective December 18, 2016, the Company renewed its $2,500,000 revolving line of credit. There was no outstanding principal balance on the line of credit as of March 31, 2017 or June 30, 2016. Interest on borrowings under the line of credit, if any, would accrue at the prime rate (4.00% at March 31, 2017) and is payable monthly. The amount eligible for borrowing on the line of credit is limited to the lesser of $2,500,000 or 57.00% of eligible accounts receivable and the line of credit expires on December 18, 2017, if not renewed. At March 31, 2017, the maximum $2,500,000 was eligible for borrowing. The line of credit is secured by a security interest in substantially all of the tangible and intangible assets of the Company. In connection with the credit facility, the Company also has a term loan, which had an outstanding principal balance of approximately $1,166,000 at March 31, 2017 and $1,200,000 as of June 30, 2016. The term loan was refinanced effective December 18, 2016, reducing the interest rate from 5.00% to 3.88%. The unamortized debt issuance cost associated with this debt was approximately $7,000 and $10,000 as of March 31, 2017 and June 30, 2016, respectively. The term loan bears interest at 3.88%, with monthly payments of principal and interest of approximately $7,900 and a final payment of principal and interest of approximately $1,085,000 due on the maturity date of December 18, 2018. Payment obligations under the term loan are secured by a mortgage on the Company’s real property. The documents governing the line of credit and term loan contain certain financial and nonfinancial covenants that include a minimum tangible net worth covenant of not less than $10,125,000 and restrictions on the Company’s ability to incur certain additional indebtedness or pay dividends.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	Note 7. Stock-Based Compensation The Company recorded approximately $374,000 and $153,000 of compensation expense related to current and past grants of stock options and restricted stock for the nine months ended March 31, 2017 and 2016, respectively. This expense is included in selling, general and administrative expense. As of March 31, 2017, approximately $403,000 of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of approximately 0.8 years. The Company recognizes compensation expense related to share-based payment transactions in the financial statements based on the estimated fair value of the award issued. The fair value of each option is estimated using the Black-Scholes pricing model at the time of award grant. The Company estimates the expected life of options based on the expected holding period by the option holder. The risk-free interest rate is based upon observed U.S. Treasury interest rates for the expected term of the options. The Company makes assumptions with respect to expected stock price volatility based upon the volatility of its stock price. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates. Forfeitures are estimated based on the percentage of awards expected to vest, taking into consideration the seniority level of the award recipient. The following assumptions were used to estimate the fair value of options granted: Nine Months Ended March 31, 2017 Fiscal Year Ended June 30, 2016 Risk-free interest rate 1.14% - 1.27% 1.40% - 1.92% Expected term (years) 6 6 Expected volatility 100.5% - 105.8% 89.3% - 93.1% Stock Options The Company issued 176,500 stock options pursuant to its 2014 Stock Compensation Plan during the nine months ended March 31, 2017. Stock option transactions during the nine months ended March 31, 2017 are summarized as follows: Weighted Average Number of Shares Exercise Price per Share Outstanding at June 30, 2016 599,800 $2.62 Granted 176,500 $3.91 Exercised – – Cancelled or Forfeited (4,500 ) 3.82 Outstanding at March 31, 2017 771,800 $2.91 The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. At March 31, 2017, the weighted average remaining contractual term for all outstanding stock options was 5.66 years and their aggregate intrinsic value was approximately $1,559,000. Outstanding at March 31, 2017 were 771,800 stock options issued to employees, of which approximately 474,000 were exercisable and had an aggregate intrinsic value of approximately $1,006,000. Restricted Stock The Company’s 2014 Stock Compensation Plan permits the grant of other stock-based awards. Historically, the Company makes restricted stock grants to key employees and non-employee directors that vest over six months to three years. During the nine months ended March 31, 2017, the Company issued restricted stock awards to employees totaling 30,000 shares of common stock, with a vesting term of one to three years and a fair value of $3.82 per share and to directors totaling 13,055 shares of common stock, with a vesting term of six months and a fair value of $3.83 per share. The restricted stock’s fair value per share represents the closing price of its common stock on the date of the grant. Restricted stock transactions during the nine months ended March 31, 2017 are summarized as follows: Weighted Average Grant Date Fair Value Number of Shares per Share Unvested shares at June 30, 2016 19,999 $1.80 Granted 43,055 $3.82 Vested – – Forfeited – – Unvested at March 31, 2017 63,054 $3.18

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 8. Commitments and Contingencies The Company is occasionally involved in claims and disputes arising in the ordinary course of business. The Company insures its business risks where possible to mitigate the financial impact of individual claims, and establishes reserves for an estimate of any probable cost of settlement or other disposition.

Interim Financial Reporting (Po

Interim Financial Reporting (Policies)	9 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Use of Estimates	Use of estimates:
Net income per common share	Net income per common share:
New Accounting Pronouncements	New accounting pronouncements: In April 2015, FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This standard became effective on July 1, 2016 for the Company and requires that debt issuance costs be presented as a direct deduction from the carrying amount of long-term debt on the balance sheet. The new guidance aligns the presentation of debt issuance costs with debt discounts and premiums. The Company adopted this guidance retrospectively effective as of July 1, 2016. As a result, the Company presented $10,000 of unamortized debt issuance costs that had been included in “Other assets” on its condensed balance sheet as of June 30, 2016 as a direct deduction from the carrying amounts of the related long-term debt liability. In July 2015, FASB issued ASU 2015-11, “Inventory (Topic 330) Related to Simplifying the Measurement of Inventory,” which applies to all inventory except that which is measured using last-in, first-out (“LIFO”) or the retail inventory method. Inventory measured using first-in, first-out (“FIFO”) or average cost is within the scope of the new guidance and should be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments will be effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The new guidance should be applied prospectively, and earlier application is permitted as of the beginning of an interim or annual reporting period. The Company is evaluating the impact of the standard on its financial statements. In February 2016, FASB issued ASU 2016-02, “Leases.” This standard requires the recognition of all lease transactions with terms in excess of 12 months on the balance sheet as a lease liability and a right-of-use asset (as defined in the standard). ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. Upon adoption, the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. The Company is currently assessing the effect the standard will have on its financial statements. In March 2016, FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which reduces complexity in accounting standards related to share-based payment transactions, including, among others, (1) accounting for income taxes, (2) classification of excess tax benefits on the statement of cash flow, (3) forfeitures, and (4) statutory tax withholding requirements. The ASU will be effective for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods, with earlier application permitted. The Company is evaluating the impact of the standard on its financial statements.
Reclassifications	Reclassifications:

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Mar. 31, 2017
Inventory Disclosure [Abstract]
Schedule of components of inventory	The components of inventory were approximately as follows: March 31, 2017 June 30, 2016 Parts inventory $ 1,800,000 $ 1,615,000 Work in process 175,000 165,000 Finished goods 793,000 850,000 Less: Reserve for obsolescence (180,000 ) (150,000 ) Total $ 2,588,000 $ 2,480,000

Finite-life Intangible Assets (

Finite-life Intangible Assets (Tables)	9 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of finite-life intangible assets	The activity and balances of finite-life intangible assets were approximately as follows: March 31, 2017 June 30, 2016 Balance, beginning $ 904,000 $ 1,000,000 Additions 60,000 45,000 Abandonments (111,000 ) (18,000 ) Amortization expense (90,000 ) (123,000 ) Balance, ending $ 763,000 $ 904,000

Warranty Liability (Tables)

Warranty Liability (Tables)	9 Months Ended
	Mar. 31, 2017
Product Warranties Disclosures [Abstract]
Schedule of changes in warranty liability	Changes in the Company’s warranty liability were approximately as follows: Nine Months Ended Fiscal Year Ended March 31, 2017 June 30, 2016 Beginning warranty reserve $ 660,000 $ 660,000 Accrual for products sold 124,000 152,000 Expenditures and costs incurred for warranty claims (114,000 ) (152,000 ) Ending warranty reserve $ 670,000 $ 660,000

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of assumptions used to estimate fair value of options granted	The following assumptions were used to estimate the fair value of options granted: Nine Months Ended March 31, 2017 Fiscal Year Ended June 30, 2016 Risk-free interest rate 1.14% - 1.27% 1.40% - 1.92% Expected term (years) 6 6 Expected volatility 100.5% - 105.8% 89.3% - 93.1%
Schedule of stock options activity	Stock option transactions during the nine months ended March 31, 2017 are summarized as follows: Weighted Average Number of Shares Exercise Price per Share Outstanding at June 30, 2016 599,800 $2.62 Granted 176,500 $3.91 Exercised – – Cancelled or Forfeited (4,500 ) 3.82 Outstanding at March 31, 2017 771,800 $2.91
Schedule of restricted stock awards activity	Restricted stock transactions during the nine months ended March 31, 2017 are summarized as follows: Weighted Average Grant Date Fair Value Number of Shares per Share Unvested shares at June 30, 2016 19,999 $1.80 Granted 43,055 $3.82 Vested – – Forfeited – – Unvested at March 31, 2017 63,054 $3.18

Interim Financial Reporting (De

Interim Financial Reporting (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Common stock equivalents excluded from calculation of diluted earnings per share	196,500	159,000	196,500	163,500
Unamortized debt issuance costs					$ 10,000
International [Member]
Sales			$ 487,000	$ 591,000

Inventories (Details)

Inventories (Details) - USD ($)	Mar. 31, 2017	Jun. 30, 2016
Inventory Disclosure [Abstract]
Parts inventory	$ 1,800,000	$ 1,615,000
Work in process	175,000	165,000
Finished goods	793,000	850,000
Less: Reserve for obsolescence	(180,000)	(150,000)
Total	$ 2,587,635	$ 2,480,443

Finite-life Intangible Assets22

Finite-life Intangible Assets (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	$ 818,000	$ 820,000
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful life	15 years
Abandoned patents	$ 111,000	$ 18,000
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful life	12 years

Finite-life Intangible Assets23

Finite-life Intangible Assets (Details) - USD ($)	9 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Balance, beginning	$ 904,033	$ 1,000,000	$ 1,000,000
Additions	60,000		45,000
Abandonments	(111,000)		(18,000)
Amortization expense	(89,813)	$ (91,815)	(123,000)
Balance, ending	$ 762,853		$ 904,033

Warranty Liability (Details Nar

Warranty Liability (Details Narratives)	9 Months Ended
	Mar. 31, 2017
Product Warranties Disclosures [Abstract]
Warranty term for institional sales and sales outside U.S.	3 years

Warranty Liability (Details)

Warranty Liability (Details) - USD ($)	9 Months Ended	12 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Product Warranties Disclosures [Abstract]
Warranty reserve, beginning	$ 660,000	$ 660,000
Accrual for products sold	124,000	152,000
Expenditures and costs incurred for warranty claims	(114,000)	(152,000)
Warranty reserve, ending	$ 670,000	$ 660,000

Income Taxes (Details Narrative

Income Taxes (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Effective tax rate			36.30%	25.50%
Income tax expense	$ 380,000	$ 256,000	$ 731,000	$ 644,000
Recognized tax benefit on uncertain tax positions			$ 32,000
Effective tax rate, change in uncertain tax positions			(1.60%)
Current income tax expense				938,000
Change in deferred valuation allowance				$ 294,000

Financing Arrangements (Details

Financing Arrangements (Details Narrative) - USD ($)	9 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Term Loan [Member]
Interest rate	3.88%	5.00%
Principal loan amount	$ 1,166,000	$ 1,200,000
Unamortized debt issuance cost	7,000	$ 10,000
Monthly payments of principal and interest	7,900
Final payment of principal and interest	$ 1,085,000
Term loan maturity date	Dec. 18, 2018
Minimum tangible net worth to be maintained	$ 10,125,000
Credit Facility [Member]
Maximum borrowing capacity	$ 2,500,000
Credit facility effective date	Dec. 18, 2016
Credit facility expiration date	Dec. 18, 2017
Effective interest rate	4.00%
Borrowing capacity of eligible accounts receivable	$ 2,500,000
Borrowing capacity of eligible accounts receivable (percent)	57.00%

Stock-Based Compensation (Detai

Stock-Based Compensation (Details Narrative) - USD ($)	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based compensation expense	$ 373,913	$ 153,465
Unrecognized compensation expense	$ 403,000
Unrecognized compensation expense, period for recognition	9 months 18 days
Employee Stock Options [Member]
Weighted average remaining contractual term of options outstanding	5 years 7 months 28 days
Options outstanding, intrinsic value	$ 1,559,000
Options exercisable	474,000
Options exercisable, intrinsic value	$ 1,006,000
Employees Restricted Stock Awards [Member]
Granted	30,000
Fair value of restricted stock granted	$ 3.82
Employees Restricted Stock Awards [Member] | Minimum [Member]
Award vesting period	1 year
Employees Restricted Stock Awards [Member] | Maximum [Member]
Award vesting period	3 years
Restricted Stock Awards [Member]
Granted	43,055
Fair value of restricted stock granted	$ 3.82
Restricted Stock Awards [Member] | Directors [Member]
Award vesting period	6 months
Granted	13,055
Fair value of restricted stock granted	$ 3.83

Stock-Based Compensation (Det29

Stock-Based Compensation (Details) - Employee Stock Options [Member]	9 Months Ended	12 Months Ended
	Mar. 31, 2017	Jun. 30, 2016
Risk free interest rate - minimum	1.14%	1.40%
Risk free interest rate - maximum	1.27%	1.92%
Expected term (year)	6 years	6 years
Expected volatility - minimum	100.50%	89.30%
Expected volatility - maximum	105.80%	93.10%

Stock-Based Compensation (Det30

Stock-Based Compensation (Details 1) - 2014 Stock Compensation Plan [Member]	9 Months Ended
	Mar. 31, 2017$ / sharesshares
Number of Shares
Options outstanding, beginning | shares	599,800
Granted | shares	176,500
Cancelled or Forfeited | shares	(4,500)
Options outstanding, ending | shares	771,800
Weighted Average Exercise Price
Options outstanding, beginning | $ / shares	$ 2.62
Granted | $ / shares	3.91
Cancelled or Forfeited | $ / shares	3.82
Options outstanding, ending | $ / shares	$ 2.91

Stock-Based Compensation (Det31

Stock-Based Compensation (Details 2) - Restricted Stock Awards [Member]	9 Months Ended
	Mar. 31, 2017$ / sharesshares
Number of Shares
Outstanding, beginning | shares	19,999
Granted | shares	43,055
Outstanding, ending | shares	63,054
Weighted Average Grant Date Fair Value
Outstanding, beginning | $ / shares	$ 1.80
Granted | $ / shares	3.82
Outstanding, ending | $ / shares	$ 3.18