Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2017 | Sep. 01, 2017 | Dec. 31, 2016 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Electromed, Inc. | ||
Entity Central Index Key | 1,488,917 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 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 | 8,260,167 | ||
Entity Public Float | $ 18,767,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Balance Sheets
Balance Sheets - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Current Assets | ||
Cash | $ 5,573,709 | $ 5,123,355 |
Accounts receivable (net of allowances for doubtful accounts of $45,000) | 9,949,759 | 7,611,437 |
Inventories | 2,559,485 | 2,480,443 |
Prepaid expenses and other current assets | 393,319 | 419,616 |
Income tax receivable | 192,685 | |
Total current assets | 18,476,272 | 15,827,536 |
Property and equipment, net | 3,303,233 | 3,375,189 |
Finite-life intangible assets, net | 721,276 | 904,033 |
Other assets | 99,868 | 127,759 |
Deferred income taxes | 460,000 | 343,000 |
Total assets | 23,060,649 | 20,577,517 |
Current Liabilities | ||
Current maturities of long-term debt | 50,703 | 46,309 |
Accounts payable | 663,376 | 589,225 |
Accrued compensation | 946,623 | 1,489,798 |
Income taxes payable | 156,524 | |
Warranty reserve | 640,000 | 660,000 |
Other accrued liabilities | 438,748 | 287,194 |
Total current liabilities | 2,895,974 | 3,072,526 |
Long-term debt, less current maturities and net of debt issuance costs | 1,097,125 | 1,146,395 |
Total liabilities | 3,993,099 | 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 June 30, 2017 and June 30, 2016, respectively | 82,302 | 81,871 |
Additional paid-in capital | 14,028,602 | 13,549,551 |
Retained earnings | 4,956,646 | 2,727,174 |
Total shareholders' equity | 19,067,550 | 16,358,596 |
Total liabilities and shareholders' equity | $ 23,060,649 | $ 20,577,517 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 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 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||
Net revenues | $ 25,861,144 | $ 22,991,999 |
Cost of revenues | 5,292,715 | 5,115,736 |
Gross profit | 20,568,429 | 17,876,263 |
Operating expenses | ||
Selling, general and administrative | 16,402,214 | 14,386,563 |
Research and development | 596,876 | 380,392 |
Total operating expenses | 16,999,090 | 14,766,955 |
Operating income | 3,569,339 | 3,109,308 |
Interest expense, net of interest income of $17,044 and $12,658, respectively | 49,867 | 66,806 |
Net income before income taxes | 3,519,472 | 3,042,502 |
Income tax expense | (1,290,000) | (830,000) |
Net income | $ 2,229,472 | $ 2,212,502 |
Income per share: | ||
Basic | $ 0.27 | $ 0.27 |
Diluted | $ 0.26 | $ 0.27 |
Weighted-average common shares outstanding: | ||
Basic | 8,168,152 | 8,135,514 |
Diluted | 8,461,120 | 8,248,391 |
Statements of Operations (Paren
Statements of Operations (Parenthetical) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||
Interest income | $ 17,044 | $ 12,658 |
Statements of Shareholders' Equ
Statements of Shareholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings | Total |
Balance at Jun. 30, 2015 | $ 81,339 | $ 13,327,320 | $ 514,672 | $ 13,923,331 |
Balance, shares at Jun. 30, 2015 | 8,133,857 | 8,133,857 | ||
Net income | 2,212,502 | $ 2,212,502 | ||
Issuance of restricted stock | $ 532 | (532) | ||
Issuance of restricted stock, shares | 53,255 | |||
Share-based compensation expense | 222,763 | 222,763 | ||
Balance at Jun. 30, 2016 | $ 81,871 | 13,549,551 | 2,727,174 | $ 16,358,596 |
Balance, shares at Jun. 30, 2016 | 8,187,112 | 8,187,112 | ||
Net income | 2,229,472 | $ 2,229,472 | ||
Issuance of restricted stock | $ 431 | (431) | ||
Issuance of restricted stock, shares | 43,055 | |||
Share-based compensation expense | 479,482 | 479,482 | ||
Balance at Jun. 30, 2017 | $ 82,302 | $ 14,028,602 | $ 4,956,646 | $ 19,067,550 |
Balance, shares at Jun. 30, 2017 | 8,230,167 | 8,230,167 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash Flows From Operating Activities | ||
Net income | $ 2,229,472 | $ 2,212,502 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 636,709 | 616,021 |
Amortization of finite-life intangible assets | 118,418 | 122,681 |
Amortization of debt issuance costs | 13,067 | 18,016 |
Share-based compensation expense | 479,482 | 222,763 |
Deferred income taxes | (117,000) | (343,000) |
Loss on disposal of property and equipment | 3,302 | 40,456 |
Loss on disposal of intangible assets | 132,724 | 17,706 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,338,322) | (1,092,621) |
Inventories | (28,334) | (347,623) |
Prepaid expenses and other assets | 49,864 | 18,917 |
Income tax receivable | 192,685 | (192,685) |
Income tax payable | 156,524 | (122,657) |
Accounts payable and accrued liabilities | (337,470) | 996,427 |
Net cash provided by operating activities | 1,191,121 | 2,166,903 |
Cash Flows From Investing Activities | ||
Expenditures for property and equipment | (618,763) | (534,944) |
Expenditures for finite-life intangible assets | (68,385) | (44,577) |
Net cash used in investing activities | (687,148) | (579,521) |
Cash Flows From Financing Activities | ||
Principal payments on long-term debt including capital lease obligations | (48,747) | (48,747) |
Payment of deferred financing costs | (4,872) | (13,520) |
Net cash used in financing activities | (53,619) | (62,267) |
Net increase in cash | 450,354 | 1,525,115 |
Cash | ||
Beginning of period | 5,123,355 | 3,598,240 |
End of period | 5,573,709 | 5,123,355 |
Supplemental Disclosures of Cash Flow Information | ||
Cash paid for interest | 59,233 | 61,560 |
Cash paid for income taxes | $ 1,089,791 | $ 1,494,512 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | Note 1. Nature of Business and Summary of Significant Accounting Policies Nature of business: A summary of the Company’s significant accounting policies follows: Use of estimates: Revenue recognition: Direct patient sales are recorded at amounts to be received from patients under reimbursement arrangements with third-party payers, including private insurers, prepaid health plans, Medicare and Medicaid. In addition, the Company records an estimate for selling price adjustments that often arise from changes in a patient’s insurance coverage, changes in a patient’s domicile, insurance company coverage limitations or patient death. Other than the installment sales as discussed below, the Company expects to receive payment on the vast majority of accounts receivable within one year and therefore has classified all accounts receivable as current. However, in some instances, payment for direct patient sales can be delayed or interrupted, resulting in a portion of collections occurring later than one year. During fiscal 2017, the Company entered into a settlement agreement with the Centers for Medicare and Medicaid Services with respect to approximately 700 Medicare fee-for-service claims submitted between calendar years 2012 through 2015, resulting in approximately $703,000 of net recognized revenue. Certain third-party reimbursement agencies pay the Company on a monthly installment basis, which can span over several years. Due to the length of time over which cash is collected and the inherent uncertainty of collectability with these installment sales, the Company cannot make a reasonable estimate of revenue at the time of sale and does not record accounts receivable or revenue at the time of product shipment. Under the installment method, the Company defers the revenue associated with the sale and, as each installment is received, that amount is recognized as revenue. Deferred costs associated with the sale are amortized to cost of revenue ratably over the estimated period in which collections are scheduled to occur. Sales made under the installment method were approximately as follows: Years Ended June 30, 2017 2016 Revenue recognized under installment sales $ 1,246,000 $ 1,555,000 Amortized cost of revenues recognized 161,000 188,000 Unrecognized installment method sales were approximately as follows: June 30, 2017 2016 Estimated unrecognized sales, net of discounts $ 1,814,000 $ 1,977,000 Unamortized costs of revenues included in prepaid and other current assets and other assets 209,000 263,000 Shipping and handling expense: Cash: Accounts receivable: Inventories: Property and equipment: Finite-life intangible assets: Long-lived assets: If the Company believes the carrying value is unrecoverable, it would recognize an impairment charge necessary to reduce the unamortized balance to the estimated fair value of the asset or asset group. The amount of such impairment would be charged to operations in the current period. Warranty liability: Changes in the Company’s warranty liability were approximately as follows: Years Ended June 30, 2017 2016 Beginning warranty reserve $ 660,000 $ 660,000 Accrual for products sold 129,000 152,000 Expenditures and costs incurred for warranty claims (149,000 ) (152,000 ) Ending warranty reserve $ 640,000 $ 660,000 Income taxes: The Company recognizes tax liabilities when the Company believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. Research and development: Advertising costs: Share-based payments: Fair value of financial instruments: Basic and diluted earnings per 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 has evaluated that ASU 105-11 will have no material impact on its financial statements or financial statement disclosures upon adoption. 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 has evaluated that ASU 2016-02 will have no material impact on its financial statements or financial statement disclosures upon adoption based on current facts and circumstances. 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. ASU 2016-09 will be effective for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. The Company has evaluated that ASU 2016-09 will have no material impact on its financial statements or financial statement disclosures upon adoption. Reclassifications: |
Inventories
Inventories | 12 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 2. Inventories The components of inventories at June 30, 2017 and 2016 were approximately as follows: June 30, 2017 2016 Parts inventory $ 1,789,000 $ 1,615,000 Work in process 205,000 165,000 Finished goods 745,000 850,000 Less: Reserve for obsolescence (180,000 ) (150,000 ) Total $ 2,559,000 $ 2,480,000 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3. Property and Equipment Property and equipment, including assets under capital leases, were approximately as follows: Estimated Useful Lives (Years) June 30, 2017 2016 Building and building improvements 15-39 $ 2,236,000 $ 2,236,000 Land N/A 200,000 200,000 Land improvements 15 166,000 166,000 Equipment 3-7 2,982,000 2,755,000 Demonstration and rental equipment 3 959,000 1,040,000 6,543,000 6,397,000 Less: Accumulated depreciation (3,240,000 ) (3,022,000 ) Net property and equipment $ 3,303,000 $ 3,375,000 During the fiscal years ended June 30, 2017 and 2016, the Company impaired or disposed of certain property and equipment, no longer in use, with a net value of approximately $3,000 and $40,000, respectively, which was included as an expense in cost of goods sold or selling, general and administrative expense on the statements of operations. During the year ended June 30, 2016, there was approximately $17,000 of impairment charges associated with tooling that will no longer be used to produce SmartVest SQL parts as new, more cost-effective manufacturing processes were implemented. |
Finite-life Intangible Assets
Finite-life Intangible Assets | 12 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Finite-life Intangible Assets | Note 4. 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 years ended June 30, 2017 and 2016, the Company abandoned certain domestic and foreign patents with a net value of approximately $133,000 and $18,000, respectively, which was 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 the Company’s 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 approximately $790,000 and $820,000 at June 30, 2017 and 2016, respectively. The activity and balances of finite-life intangible assets were approximately as follows: Years Ended June 30, 2017 2016 Balance, beginning $ 904,000 $ 1,000,000 Additions 68,000 45,000 Abandonments (133,000 ) (18,000 ) Amortization expense (118,000 ) (123,000 ) Balance, ending $ 721,000 $ 904,000 Based on the carrying value at June 30, 2017, future amortization expense is expected to be approximately $112,000 annually. |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Note 5. 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 June 30, 2017 or June 30, 2016. Interest on borrowings under the line of credit, if any, would accrue at the prime rate (4.25% at June 30, 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 June 30, 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 $1,154,000 at June 30, 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 $6,000 and $10,000 as of June 30, 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. Long-term debt consisted of approximately the following as of June 30, 2017 and 2016: June 30, 2017 2016 Mortgage note payable with bank, due in monthly installments of $7,932, including interest at 3.88%, remaining due December 2018, secured by land and building $ 1,154,000 $ 1,200,000 Capital lease obligation, due in monthly installments of $648, including interest at 6.99%, to November 2016, secured by equipment — 2,000 Total 1,154,000 1,202,000 Less: Current portion 51,000 46,000 Less: Debt issuance costs, net 6,000 10,000 Long-term debt $ 1,097,000 $ 1,146,000 Approximate future maturities of long-term debt, net of debt issuance costs, as of June 30, 2017 were as follows: Fiscal year ending June 30: 2018 $ 51,000 2019 1,097,000 Total $ 1,148,000 Capital leases: At June 30, 2017 and 2016, the carrying value of assets under these capital leases was approximately as follows: June 30, 2017 2016 Fixtures and office equipment $ 33,000 $ 33,000 Less: Accumulated depreciation (19,000 ) (16,000 ) Total $ 14,000 $ 17,000 Depreciation expense for these assets was approximately $3,000 for each of the years ended June 30, 2017 and 2016. |
Common Stock
Common Stock | 12 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Common Stock | Note 6. Common Stock Authorized shares: |
Share-Based Payments
Share-Based Payments | 12 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Payments | Note 7. Share-Based Payments Share-based compensation expense for the years ended June 30, 2017 and 2016 was approximately $479,000 and $223,000, respectively, related to employee options and restricted stock awards. At June 30, 2017, the Company had approximately $252,000 of unrecognized compensation expense related to non-vested equity awards, which is expected to be recognized over a weighted-average period of 0.8 years. Employee options: 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: Years Ended June 30, 2017 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 % The following table presents employee option activity for the years ended June 30, 2017 and 2016: Number of Weighted- Weighted- Weighted- Remaining Contractual Life (in Years) Options outstanding at June 30, 2015 450,800 $ 1.74 $ 2.80 5.15 Granted 163,500 1.55 2.05 — Canceled or Forfeited (14,500 ) 1.37 1.80 — Options outstanding at June 30, 2016 599,800 1.70 2.62 5.38 Granted 176,500 3.09 3.91 — Canceled or Forfeited (28,666 ) 2.46 3.14 — Options outstanding at June 30, 2017 747,634 2.00 2.91 5.31 Options exercisable at June 30, 2017 584,469 1.80 2.76 4.35 The aggregate intrinsic value of options outstanding was $1,961,000 and options exercisable were $1,621,000 at June 30, 2017. There were no options exercised during the years ended June 30, 2017 and 2016. Options issued in conjunction with the initial public offering: Warrants issued with convertible debt: Restricted stock: The Company issued restricted stock awards to employees totaling 30,000 during each of the years ended June 30, 2017 and 2016, with a vesting term of one to three years and a fair value of $3.82 and $1.80 per share, respectively. During the years ended June 30, 2017 and 2016, the Company issued restricted stock awards to directors totaling 13,055 and 23,255 shares of common stock, respectively, with a vesting term of six months and a fair value of $3.83 and $2.15 per share, respectively. Restricted stock transactions during the years ended June 30, 2017 and 2016 are summarized as follows: Restricted Stock Weighted- Outstanding at June 30, 2015 — — Granted 53,255 $ 1.95 Vested (33,256 ) $ 2.04 Outstanding at June 30, 2016 19,999 $ 1.80 Granted 43,055 $ 3.82 Vested (33,056 ) $ 3.21 Outstanding at June 30, 2017 29,998 $ 3.15 |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8. Income Taxes Components of the provision for income taxes for the years ended June 30, 2017 and 2016 were as follows: Years Ended June 30, 2017 2016 Current $ 1,407,000 $ 1,173,000 Deferred (117,000 ) (343,000 ) Total $ 1,290,000 $ 830,000 The total income tax expense differed from the expected tax expense, computed by applying the federal statutory rate to the Company’s pretax income, as follows: Years Ended June 30, 2017 2016 Tax expense at statutory federal rate $ 1,197,000 $ 1,034,000 State income tax expense, net of federal tax effect 131,000 114,000 Change in valuation allowance on deferred tax assets — (308,000 ) Change in uncertain tax positions (32,000 ) (6,000 ) Other permanent items (6,000 ) (4,000 ) Income tax expense $ 1,290,000 $ 830,000 The effective tax rates for the years ended June 30, 2017 and 2016 were 36.7% and 27.3%, respectively. For the year ended June 30, 2017, the Company recorded an income tax expense of $1,290,000. This amount included a current tax expense of $1,439,000, a deferred benefit of $117,000 and a discrete tax benefit of $32,000 as a result of the lapse of the statute of limitations on uncertain tax positions. For the year ended June 30, 2016, the Company recorded an income tax expense of $830,000. This amount included a current tax expense of $1,179,000, a deferred benefit of $55,000 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. net federal and state deferred tax assets during the year. The significant components of deferred income taxes were as follows: June 30, 2017 2016 Deferred tax assets (liabilities): Revenue recognition and accounts receivable $ 143,000 $ 154,000 Accrued liabilities 280,000 282,000 Property and equipment (534,000 ) (518,000 ) Finite-life intangible assets 6,000 (17,000 ) Stock options 443,000 326,000 Tax credits and net operating loss carryforwards 46,000 43,000 Other 76,000 73,000 Net deferred tax assets $ 460,000 $ 343,000 As of June 30, 2017, the Company has state net operating loss carryforwards of $2,000 which, if unused, will expire in calendar 2034. The Company has state tax credit carryforwards of $45,000 and which if unused, will expire in years 2027 and 2032. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a “more likely than not” standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessments, more weight was given to evidence that could be objectively verified. Future sources of taxable income considered in determining the amount of recorded valuation allowance included: ● Taxable income in prior carryback years, if carryback is permitted under the tax law; ● Future reversals of existing taxable temporary differences, excluding those related to indefinite-lived intangible assets; ● Tax planning strategies; and ● Future taxable income exclusive of reversing temporary differences and carryforwards. Based on the evaluation of these factors the Company evaluated all positive and negative evidence, as described above, in determining if the valuation allowance is fairly stated. At December 31, 2015, the Company determined that, based on the profitability it had achieved, historical cumulative profits and estimates of future income, there was sufficient positive evidence to conclude that the likelihood of realization of deferred tax assets outweigh the negative evidence. The full valuation allowance was released, which resulted in the recognition of $288,000 in net deferred tax assets and a decrease in income tax expense for the year ended June 30, 2016. The Company applies the accounting standard for uncertain tax positions pursuant to which a more-likely-than-not threshold is utilized to determine the recognition and derecognition of uncertain tax positions. Once the more-likely-than-not threshold is met, the amount of benefit to be recognized is the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in earnings in the period of such a change. The Company does not believe there will be significant changes to the estimates in the next 12 month period. Due to the complexity of some of these uncertainties, the ultimate settlement may result in payments that are different from The Company’s current estimate of tax liabilities, resulting in the recognition of additional charges or benefits to income tax expense. Changes in the Company’s unrecognized tax benefits were approximately as follows: Years Ended June 30, 2017 2016 Beginning balance of unrecognized tax benefits $ 32,000 $ 38,000 Lapse of statute of limitations (32,000 ) (6,000 ) Ending balance of unrecognized tax benefits $ — $ 32,000 The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the fiscal years ended June 30, 2017 and 2016, the amount of recognized interest expense, net of tax benefit, and accrued interest on a gross basis was insignificant. The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. With limited exceptions, tax years prior to fiscal 2014 are no longer open to federal, state and local examination by taxing authorities. |
Commitments and Contingencies a
Commitments and Contingencies and Subsequent Events | 12 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies and Subsequent Events | Note 9. Commitments and Contingencies and Subsequent Events Operating leases: Approximate future minimum operating lease payments as of June 30, 2017, were as follows: Fiscal years ending June 30: 2018 $ 186,000 2019 191,000 2020 18,000 2021 9,000 Total $ 404,000 Litigation: 401(k) Profit Sharing Plan: Employment Agreements: |
Nature of Business and Summar17
Nature of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Use Of Estimates | Use of estimates: |
Revenue Recognition | Revenue recognition: Direct patient sales are recorded at amounts to be received from patients under reimbursement arrangements with third-party payers, including private insurers, prepaid health plans, Medicare and Medicaid. In addition, the Company records an estimate for selling price adjustments that often arise from changes in a patient’s insurance coverage, changes in a patient’s domicile, insurance company coverage limitations or patient death. Other than the installment sales as discussed below, the Company expects to receive payment on the vast majority of accounts receivable within one year and therefore has classified all accounts receivable as current. However, in some instances, payment for direct patient sales can be delayed or interrupted, resulting in a portion of collections occurring later than one year. During fiscal 2017, the Company entered into a settlement agreement with the Centers for Medicare and Medicaid Services with respect to approximately 700 Medicare fee-for-service claims submitted between calendar years 2012 through 2015, resulting in approximately $703,000 of net recognized revenue. Certain third-party reimbursement agencies pay the Company on a monthly installment basis, which can span over several years. Due to the length of time over which cash is collected and the inherent uncertainty of collectability with these installment sales, the Company cannot make a reasonable estimate of revenue at the time of sale and does not record accounts receivable or revenue at the time of product shipment. Under the installment method, the Company defers the revenue associated with the sale and, as each installment is received, that amount is recognized as revenue. Deferred costs associated with the sale are amortized to cost of revenue ratably over the estimated period in which collections are scheduled to occur. Sales made under the installment method were approximately as follows: Years Ended June 30, 2017 2016 Revenue recognized under installment sales $ 1,246,000 $ 1,555,000 Amortized cost of revenues recognized 161,000 188,000 Unrecognized installment method sales were approximately as follows: June 30, 2017 2016 Estimated unrecognized sales, net of discounts $ 1,814,000 $ 1,977,000 Unamortized costs of revenues included in prepaid and other current assets and other assets 209,000 263,000 |
Shipping And Handling Expense | Shipping and handling expense: |
Cash | Cash: |
Accounts Receivable | Accounts receivable: |
Inventories | Inventories: |
Property And Equipment | Property and equipment: |
Finite-life Intangible Assets | Finite-life intangible assets: |
Long-lived Assets | Long-lived assets: If the Company believes the carrying value is unrecoverable, it would recognize an impairment charge necessary to reduce the unamortized balance to the estimated fair value of the asset or asset group. The amount of such impairment would be charged to operations in the current period. |
Warranty Liability | Warranty liability: Changes in the Company’s warranty liability were approximately as follows: Years Ended June 30, 2017 2016 Beginning warranty reserve $ 660,000 $ 660,000 Accrual for products sold 129,000 152,000 Expenditures and costs incurred for warranty claims (149,000 ) (152,000 ) Ending warranty reserve $ 640,000 $ 660,000 |
Income Taxes | Income taxes: The Company recognizes tax liabilities when the Company believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. |
Research And Development | Research and development: |
Advertising Costs | Advertising costs: |
Share-Based Payments | Share-based payments: |
Fair Value of Financial Instruments | Fair value of financial instruments: |
Basic And Diluted Earnings Per Share | Basic and diluted earnings per 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 has evaluated that ASU 105-11 will have no material impact on its financial statements or financial statement disclosures upon adoption. 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 has evaluated that ASU 2016-02 will have no material impact on its financial statements or financial statement disclosures upon adoption based on current facts and circumstances. 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. ASU 2016-09 will be effective for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. The Company has evaluated that ASU 2016-09 will have no material impact on its financial statements or financial statement disclosures upon adoption. |
Reclassifications | Reclassifications: |
Nature of Business and Summar18
Nature of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of sales made under the installment method | Sales made under the installment method were approximately as follows: Years Ended June 30, 2017 2016 Revenue recognized under installment sales $ 1,246,000 $ 1,555,000 Amortized cost of revenues recognized 161,000 188,000 |
Summary of unrecognized installment method sales | Unrecognized installment method sales were approximately as follows: June 30, 2017 2016 Estimated unrecognized sales, net of discounts $ 1,814,000 $ 1,977,000 Unamortized costs of revenues included in prepaid and other current assets and other assets 209,000 263,000 |
Schedule of warranty liability activity | Changes in the Company’s warranty liability were approximately as follows: Years Ended June 30, 2017 2016 Beginning warranty reserve $ 660,000 $ 660,000 Accrual for products sold 129,000 152,000 Expenditures and costs incurred for warranty claims (149,000 ) (152,000 ) Ending warranty reserve $ 640,000 $ 660,000 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventories | The components of inventories at June 30, 2017 and 2016 were approximately as follows: June 30, 2017 2016 Parts inventory $ 1,789,000 $ 1,615,000 Work in process 205,000 165,000 Finished goods 745,000 850,000 Less: Reserve for obsolescence (180,000 ) (150,000 ) Total $ 2,559,000 $ 2,480,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, including assets under capital leases | Property and equipment, including assets under capital leases, were approximately as follows: Estimated Useful Lives (Years) June 30, 2017 2016 Building and building improvements 15-39 $ 2,236,000 $ 2,236,000 Land N/A 200,000 200,000 Land improvements 15 166,000 166,000 Equipment 3-7 2,982,000 2,755,000 Demonstration and rental equipment 3 959,000 1,040,000 6,543,000 6,397,000 Less: Accumulated depreciation (3,240,000 ) (3,022,000 ) Net property and equipment $ 3,303,000 $ 3,375,000 |
Finite-life Intangible Assets (
Finite-life Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 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: Years Ended June 30, 2017 2016 Balance, beginning $ 904,000 $ 1,000,000 Additions 68,000 45,000 Abandonments (133,000 ) (18,000 ) Amortization expense (118,000 ) (123,000 ) Balance, ending $ 721,000 $ 904,000 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consisted of approximately the following as of June 30, 2017 and 2016: June 30, 2017 2016 Mortgage note payable with bank, due in monthly installments of $7,932, including interest at 3.88%, remaining due December 2018, secured by land and building $ 1,154,000 $ 1,200,000 Capital lease obligation, due in monthly installments of $648, including interest at 6.99%, to November 2016, secured by equipment — 2,000 Total 1,154,000 1,202,000 Less: Current portion 51,000 46,000 Less: Debt issuance costs, net 6,000 10,000 Long-term debt $ 1,097,000 $ 1,146,000 |
Schedule of approximate future maturities of long-term debt, net of debt issuance costs | Approximate future maturities of long-term debt, net of debt issuance costs, as of June 30, 2017 were as follows: Fiscal year ending June 30: 2018 $ 51,000 2019 1,097,000 Total $ 1,148,000 |
Schedule of carrying value of assets under these capital leases | At June 30, 2017 and 2016, the carrying value of assets under these capital leases was approximately as follows: June 30, 2017 2016 Fixtures and office equipment $ 33,000 $ 33,000 Less: Accumulated depreciation (19,000 ) (16,000 ) Total $ 14,000 $ 17,000 |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 12 Months Ended |
Jun. 30, 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: Years Ended June 30, 2017 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 employee option activity | The following table presents employee option activity for the years ended June 30, 2017 and 2016: Number of Weighted- Weighted- Weighted- Remaining Contractual Life (in Years) Options outstanding at June 30, 2015 450,800 $ 1.74 $ 2.80 5.15 Granted 163,500 1.55 2.05 — Canceled or Forfeited (14,500 ) 1.37 1.80 — Options outstanding at June 30, 2016 599,800 1.70 2.62 5.38 Granted 176,500 3.09 3.91 — Canceled or Forfeited (28,666 ) 2.46 3.14 — Options outstanding at June 30, 2017 747,634 2.00 2.91 5.31 Options exercisable at June 30, 2017 584,469 1.80 2.76 4.35 |
Schedule of restricted stock awards activity | Restricted stock transactions during the years ended June 30, 2017 and 2016 are summarized as follows: Restricted Stock Weighted- Outstanding at June 30, 2015 — — Granted 53,255 $ 1.95 Vested (33,256 ) $ 2.04 Outstanding at June 30, 2016 19,999 $ 1.80 Granted 43,055 $ 3.82 Vested (33,056 ) $ 3.21 Outstanding at June 30, 2017 29,998 $ 3.15 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of the provision for income taxes | Components of the provision for income taxes for the years ended June 30, 2017 and 2016 were as follows: Years Ended June 30, 2017 2016 Current $ 1,407,000 $ 1,173,000 Deferred (117,000 ) (343,000 ) Total $ 1,290,000 $ 830,000 |
Schedule of effective income tax reconciliation | The total income tax expense differed from the expected tax expense, computed by applying the federal statutory rate to the Company’s pretax income, as follows: Years Ended June 30, 2017 2016 Tax expense at statutory federal rate $ 1,197,000 $ 1,034,000 State income tax expense, net of federal tax effect 131,000 114,000 Change in valuation allowance on deferred tax assets — (308,000 ) Change in uncertain tax positions (32,000 ) (6,000 ) Other permanent items (6,000 ) (4,000 ) Income tax expense $ 1,290,000 $ 830,000 |
Schedule of significant components of deferred income taxes | The significant components of deferred income taxes were as follows: June 30, 2017 2016 Deferred tax assets (liabilities): Revenue recognition and accounts receivable $ 143,000 $ 154,000 Accrued liabilities 280,000 282,000 Property and equipment (534,000 ) (518,000 ) Finite-life intangible assets 6,000 (17,000 ) Stock options 443,000 326,000 Tax credits and net operating loss carryforwards 46,000 43,000 Other 76,000 73,000 Net deferred tax assets $ 460,000 $ 343,000 |
Schedule of changes in unrecognized tax benefits | Changes in the Company’s unrecognized tax benefits were approximately as follows: Years Ended June 30, 2017 2016 Beginning balance of unrecognized tax benefits $ 32,000 $ 38,000 Lapse of statute of limitations (32,000 ) (6,000 ) Ending balance of unrecognized tax benefits $ — $ 32,000 |
Commitments and Contingencies25
Commitments and Contingencies and Subsequent Events (Tables) | 12 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of the future minimum operating lease payments | Approximate future minimum operating lease payments as of June 30, 2017, were as follows: Fiscal years ending June 30: 2018 $ 186,000 2019 191,000 2020 18,000 2021 9,000 Total $ 404,000 |
Nature of Business and Summar26
Nature of Business and Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | |
Jun. 30, 2017USD ($)shares | Jun. 30, 2016USD ($)shares | |
Common stock equivalents excluded from calculation of diluted earnings per share | shares | 177,500 | 307,800 |
Net recognized revenue from settlement agreement | $ 703,000 | |
Number of 2012-2015 Medicare fee-for-service claims | 700 | |
Shipping and handling charges included in cost of goods sold | $ 363,000 | $ 333,000 |
Advertising, marketing and trade show costs | 380,000 | 331,000 |
Accounts receivable, allowance for doubtful accounts | 45,000 | 45,000 |
International [Member] | ||
Sales | $ 716,000 | $ 713,000 |
North America [Member] | ||
Warranty term | 3 years |
Nature of Business and Summar27
Nature of Business and Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Sales made under the installment method: | ||
Revenue recognized under installment sales | $ 1,246,000 | $ 1,555,000 |
Amortized cost of revenues recognized | $ 161,000 | $ 188,000 |
Nature of Business and Summar28
Nature of Business and Summary of Significant Accounting Policies (Details 1) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Unrecognized installment method sales: | ||
Estimated unrecognized sales, net of discounts | $ 1,814,000 | $ 1,977,000 |
Unamortized costs of revenues included in prepaid and other current assets and other assets | $ 209,000 | $ 263,000 |
Nature of Business and Summar29
Nature of Business and Summary of Significant Accounting Policies (Details 2) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Warranty reserve: | ||
Warranty reserve, beginning | $ 660,000 | $ 660,000 |
Accrual for products sold | 129,000 | 152,000 |
Expenditures and costs incurred for warranty claims | (149,000) | (152,000) |
Warranty reserve, ending | $ 640,000 | $ 660,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Inventory Disclosure [Abstract] | ||
Parts inventory | $ 1,789,000 | $ 1,615,000 |
Work in process | 205,000 | 165,000 |
Finished goods | 745,000 | 850,000 |
Less: Reserve for obsolescence | (180,000) | (150,000) |
Total | $ 2,559,485 | $ 2,480,443 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2017 | |
Impairment charges associated with tooling no longer used | $ 17,000 | |
Property and Equipment [Member] | ||
Value of assets impaired or disposed, net | $ 40,000 | $ 3,000 |
Property and Equipment (Detai32
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 6,543,000 | $ 6,397,000 |
Less: Accumulated depreciation | (3,240,000) | (3,022,000) |
Net property and equipment | 3,303,233 | 3,375,189 |
Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,236,000 | 2,236,000 |
Building and Building Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 15 years | |
Building and Building Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 39 years | |
Land Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 166,000 | 166,000 |
Estimated useful life | 15 years | |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,982,000 | 2,755,000 |
Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 3 years | |
Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 7 years | |
Demonstration and Rental Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 959,000 | 1,040,000 |
Estimated useful life | 3 years | |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 200,000 | $ 200,000 |
Finite-life Intangible Assets33
Finite-life Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated amortization | $ 790,000 | $ 820,000 |
Future amortization expense | $ 112,000 | |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 15 years | |
Abandoned patents | $ 133,000 | $ 18,000 |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 12 years |
Finite-life Intangible Assets34
Finite-life Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance, beginning | $ 904,033 | $ 1,000,000 |
Additions | 68,000 | 45,000 |
Abandonments | (133,000) | (18,000) |
Amortization expense | (118,418) | (122,681) |
Balance, ending | $ 721,276 | $ 904,033 |
Financing Arrangements (Details
Financing Arrangements (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Principal loan amount | $ 1,154,000 | $ 1,202,000 |
Unamortized debt issuance cost | $ 6,000 | $ 1,000 |
Term Loan [Member] | ||
Interest rate | 3.88% | 5.00% |
Principal loan amount | $ 1,154,000 | $ 1,200,000 |
Unamortized debt issuance cost | 6,000 | $ 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 | 4.25% | |
Borrowing capacity of eligible accounts receivable | $ 2,500,000 | |
Borrowing capacity of eligible accounts receivable (percent) | 57.00% | |
Office Equipment under Capital Leases [Member] | ||
Depreciation | $ 3,000 |
Financing Arrangements (Detai36
Financing Arrangements (Details) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Debt | $ 1,154,000 | $ 1,202,000 |
Less: Current portion | 50,703 | 46,309 |
Unamortized debt issuance cost | 6,000 | 1,000 |
Long-term debt | 1,097,125 | 1,146,395 |
Mortgage Note Payable [Member] | ||
Debt | $ 1,154,000 | 1,200,000 |
Capital Lease Obligations [Member] | ||
Debt | $ 2,000 |
Financing Arrangements (Detai37
Financing Arrangements (Details 1) | Jun. 30, 2017USD ($) |
Year ending June 30: | |
2,018 | $ 51,000 |
2,019 | 1,097,000 |
Total | $ 1,148,000 |
Financing Arrangements (Detai38
Financing Arrangements (Details 2) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Office Equipment under capital leases: | ||
Fixtures and office equipment | $ 33,000 | $ 33,000 |
Less: Accumulated depreciation | (19,000) | (16,000) |
Total | $ 14,000 | $ 17,000 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - $ / shares | Jun. 30, 2017 | Jun. 30, 2016 |
Common stock, shares authorized | 13,000,000 | 13,000,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Undesignated Stock [Member] | ||
Common stock, shares authorized | 2,000,000 | |
Common Stock [Member] | ||
Common stock, shares authorized | 13,000,000 | |
Common stock, par value | $ 0.01 | |
Capital Stock [Member] | ||
Common stock, shares authorized | 15,000,000 |
Share-Based Payments (Details N
Share-Based Payments (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2010 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based compensation expense | $ 479,482 | $ 222,763 | ||
Unrecognized compensation expense | $ 252,000 | |||
Unrecognized compensation expense, period for recognition | 9 months 18 days | 1 year 4 months | ||
Options issued in conjunction with public offering | 190,000 | |||
Exercise price of options issued | $ 4.80 | |||
Warrants outstanding | 44,000 | |||
Exercise price of warrants | $ 3 | |||
2014 Equity Incentive Plan [Member] | ||||
Shares available for issuance | 650,000 | |||
Options outstanding, ending | 296,384 | |||
Options granted, shares | 340,000 | |||
Available for grant, shares | 237,251 | |||
2012 and Prior Equity Incentive Plan [Member] | ||||
Options outstanding, ending | 450,800 | 450,800 | ||
Employee Stock Options [Member] | ||||
Award vesting period | 5 years | |||
Options outstanding, intrinsic value | $ 1,961,000 | |||
Options exercisable | 584,469 | |||
Options exercisable, intrinsic value | $ 1,621,000 | |||
Exercise price of options issued | $ 3.91 | $ 2.05 | ||
Options outstanding, ending | 747,634 | 599,800 | 450,800 | |
Options granted, shares | 176,500 | 163,500 | ||
Employee Stock Options [Member] | Minimum [Member] | ||||
Option expiration term | 4 years | |||
Employee Stock Options [Member] | Maximum [Member] | ||||
Option expiration term | 10 years | |||
Employees Restricted Stock Awards [Member] | ||||
Restricted stock awards - granted | 30,000 | 30,000 | ||
Fair value of restricted stock granted | $ 3.82 | $ 1.80 | ||
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 Units [Member] | ||||
Restricted stock awards - granted | 43,055 | 53,255 | ||
Fair value of restricted stock granted | $ 3.82 | $ 1.95 | ||
Restricted Stock Units [Member] | Directors [Member] | ||||
Award vesting period | 6 months | 6 months | ||
Restricted stock awards - granted | 13,055 | |||
Fair value of restricted stock granted | $ 3.83 | |||
Issuance of restricted stock awards, shares | 13,055 | 23,255 | ||
Fair value of restricted stock awards | $ 3.83 | $ 2.15 | ||
Restricted Stock Units [Member] | Minimum [Member] | ||||
Award vesting period | 1 year | |||
Restricted Stock Units [Member] | Maximum [Member] | ||||
Award vesting period | 3 years |
Share-Based Payments (Details)
Share-Based Payments (Details) - Employee Stock Options [Member] | 12 Months Ended | |
Jun. 30, 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% |
Share-Based Payments (Details 1
Share-Based Payments (Details 1) - $ / shares | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2010 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
Weighted Average Exercise Price | ||||
Granted | $ 4.80 | |||
Employee Stock Options [Member] | ||||
Number of Shares | ||||
Options outstanding, beginning | 599,800 | 450,800 | ||
Granted | 176,500 | 163,500 | ||
Cancelled or Forfeited | (28,666) | (14,500) | ||
Options outstanding, ending | 747,634 | 599,800 | 450,800 | |
Options exercisable, ending | 584,469 | |||
Weighted Average Grant Date Fair Value | ||||
Options outstanding, beginning | $ 1.70 | $ 1.74 | ||
Granted | 3.09 | 1.55 | ||
Cancelled or Forfeited | 2.46 | 1.37 | ||
Options outstanding, ending | 2 | 1.70 | $ 1.74 | |
Options exercisable, ending | 1.80 | |||
Weighted Average Exercise Price | ||||
Options outstanding, beginning | 2.62 | 2.80 | ||
Granted | 3.91 | 2.05 | ||
Cancelled or Forfeited | 3.14 | 1.80 | ||
Options outstanding, ending | 2.91 | $ 2.62 | $ 2.80 | |
Options exercisable, ending | $ 2.76 | |||
Weighted-Average Remaining Contractual Life | ||||
Options outstanding | 5 years 3 months 22 days | 5 years 4 months 17 days | 5 years 1 month 24 days | |
Options exercisable | 4 years 4 months 6 days |
Share-Based Payments (Details 2
Share-Based Payments (Details 2) - Restricted Stock Units [Member] - $ / shares | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Number of Shares | ||
Outstanding, beginning | 19,999 | |
Granted | 43,055 | 53,255 |
Vested | (33,056) | (33,256) |
Outstanding, ending | 29,998 | 19,999 |
Weighted Average Grant Date Fair Value | ||
Outstanding, beginning | $ 1.80 | |
Granted | 3.82 | 1.95 |
Vested | 3.21 | 2.04 |
Outstanding, ending | $ 3.15 | $ 1.80 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Effective tax rate | 36.70% | 27.30% |
Income tax expense | $ 1,290,000 | $ 830,000 |
Current income tax expense | 1,439,000 | 1,179,000 |
Deferred benefit | (117,000) | (55,000) |
Recognized tax benefit on uncertain tax positions | (32,000) | |
Release of full valuation allowance of deferred tax assets | (294,000) | |
Change in deferred valuation allowance | $ 308,000 | |
State Jurisdiction [Member] | ||
Net operating loss carryforwards | 2,000 | |
Tax credit carryforwards | $ 45,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Components for provision of income taxes: | ||
Current | $ 1,407,000 | $ 1,173,000 |
Deferred | (117,000) | (343,000) |
Income tax expense | $ 1,290,000 | $ 830,000 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Tax expense at statutory federal rate | $ 1,197,000 | $ 1,034,000 |
State income tax expense, net of federal tax benefit | 131,000 | 114,000 |
Change in valuation allowance on deferred tax assets | (308,000) | |
Change in unceratin tax positions | (32,000) | (6,000) |
Other permanent items | (6,000) | (4,000) |
Income tax expense | $ 1,290,000 | $ 830,000 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Deferred tax assets (liabilities): | ||
Revenue recognition and accounts receivable | $ 143,000 | $ 154,000 |
Accrued liabilities | 280,000 | 282,000 |
Property and equipment | (534,000) | (518,000) |
Finite-life intangible assets | 6,000 | (17,000) |
Stock options | 443,000 | 326,000 |
Tax credits and net operating loss carryforwards | 46,000 | 43,000 |
Other | 76,000 | 73,000 |
Net deferred tax assets | $ 460,000 | $ 343,000 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Beginning balance of unrecognized tax benefits | $ 32,000 | $ 38,000 |
Lapse of statute of limitations | $ (32,000) | (6,000) |
Ending balance of unrecognized tax benefits | $ 32,000 |
Commitments and Contingencies49
Commitments and Contingencies and Subsequent Events (Details Narrative) | 12 Months Ended | |
Jun. 30, 2017USD ($)h | Jun. 30, 2016USD ($) | |
Number of operating leases | 4 | |
Lease expiration | Jul. 31, 2019 | |
Rent expense | $ 175,000 | $ 164,000 |
401K Profit Sharing Plan [Member] | ||
Employee benefit plan, minimum age requirement | 21 years | |
Employee benefit plan, requisite service hours | h | 1,000 | |
Employee benefit plan, employer contribution | $ 248,000 | $ 195,000 |
Maximum matching contribution of employee's salary | 4.00% | |
Minimum [Member] | ||
Escalating payments per month | $ 3,800 | |
Maximum [Member] | ||
Escalating payments per month | $ 9,900 | |
Vehicles [Member] | ||
Lease expiration | Dec. 31, 2015 | |
Office Equipment [Member] | ||
Lease expiration | Dec. 31, 2021 | |
Monthly lease payment | $ 1,500 |
Commitments and Contingencies50
Commitments and Contingencies and Subsequent Events (Details) | Jun. 30, 2017USD ($) |
Year ending June 30: | |
2,018 | $ 186,000 |
2,019 | 191,000 |
2,020 | 18,000 |
2,022 | 9,000 |
Total | $ 404,000 |