Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Dec. 31, 2017 | Feb. 12, 2018 | |
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 | Dec. 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 | 8,286,409 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Condensed Balance Sheets (Unaud
Condensed Balance Sheets (Unaudited) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 |
Current Assets | ||
Cash | $ 6,840,237 | $ 5,573,709 |
Accounts receivable (net of allowances for doubtful accounts of $45,000) | 9,680,369 | 9,949,759 |
Inventories | 2,393,639 | 2,559,485 |
Prepaid expenses and other current assets | 379,713 | 393,319 |
Total current assets | 19,293,958 | 18,476,272 |
Property and equipment, net | 3,215,369 | 3,303,233 |
Finite-life intangible assets, net | 674,704 | 721,276 |
Other assets | 102,577 | 99,868 |
Deferred income taxes | 417,000 | 460,000 |
Total assets | 23,703,608 | 23,060,649 |
Current Liabilities | ||
Current maturities of long-term debt | 1,124,745 | 50,703 |
Accounts payable | 704,105 | 663,376 |
Accrued compensation | 835,907 | 946,623 |
Income tax payable | 84,110 | 156,524 |
Warranty reserve | 670,000 | 640,000 |
Other accrued liabilities | 360,538 | 438,748 |
Total current liabilities | 3,779,405 | 2,895,974 |
Long-term debt, less current maturities and net of debt issuance costs | 1,097,125 | |
Total liabilities | 3,779,405 | 3,993,099 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,270,167 and 8,230,167 issued and outstanding at December 31, 2017 and June 30, 2017, respectively | 82,702 | 82,302 |
Additional paid-in capital | 14,414,450 | 14,028,602 |
Retained earnings | 5,427,051 | 4,956,646 |
Total shareholders' equity | 19,924,203 | 19,067,550 |
Total liabilities and shareholders' equity | $ 23,703,608 | $ 23,060,649 |
Condensed Balance Sheets (Unau3
Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 |
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 | 8,270,167 | 8,230,167 |
Common stock, shares outstanding | 8,270,167 | 8,230,167 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||||
Net revenues | $ 6,984,626 | $ 6,372,243 | $ 13,366,405 | $ 11,917,606 |
Cost of revenues | 1,398,001 | 1,445,786 | 2,843,286 | 2,663,522 |
Gross profit | 5,586,625 | 4,926,457 | 10,523,119 | 9,254,084 |
Operating expenses | ||||
Selling, general and administrative | 4,759,652 | 4,096,197 | 9,463,163 | 7,784,107 |
Research and development | 56,794 | 100,801 | 127,458 | 451,641 |
Total operating expenses | 4,816,446 | 4,196,998 | 9,590,621 | 8,235,748 |
Operating income | 770,179 | 729,459 | 932,498 | 1,018,336 |
Interest expense, net of interest income of $8,888, $3,603, $18,517 and $6,969, respectively | 4,894 | 15,598 | 9,093 | 32,304 |
Net income before income taxes | 765,285 | 713,861 | 923,405 | 986,032 |
Income tax expense | 416,000 | 270,000 | 453,000 | 351,000 |
Net income | $ 349,285 | $ 443,861 | $ 470,405 | $ 635,032 |
Income per share: | ||||
Basic | $ 0.04 | $ 0.05 | $ 0.06 | $ 0.08 |
Diluted | $ 0.04 | $ 0.05 | $ 0.05 | $ 0.08 |
Weighted-average common shares outstanding: | ||||
Basic | 8,200,167 | 8,167,112 | 8,200,167 | 8,167,112 |
Diluted | 8,648,866 | 8,426,996 | 8,645,987 | 8,440,698 |
Condensed Statements of Operat5
Condensed Statements of Operations (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||||
Interest income | $ 8,888 | $ 3,603 | $ 18,517 | $ 6,969 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows From Operating Activities | ||
Net income | $ 470,405 | $ 635,032 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 329,719 | 312,075 |
Amortization of finite-life intangible assets | 56,610 | 60,963 |
Amortization of debt issuance costs | 4,394 | 9,216 |
Share-based compensation expense | 386,248 | 234,634 |
Deferred income taxes | 43,000 | 13,000 |
Loss on disposal of intangible assets | 111,497 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 269,390 | (673,458) |
Inventories | 183,617 | (53,894) |
Prepaid expenses and other assets | 8,461 | 7,046 |
Income tax receivable | 189,789 | |
Income tax payable | (72,414) | |
Accounts payable and accrued liabilities | (149,647) | (807,188) |
Net cash provided by operating activities | 1,529,783 | 38,712 |
Cash Flows From Investing Activities | ||
Expenditures for property and equipment | (228,176) | (267,117) |
Expenditures for finite-life intangible assets | (10,038) | (44,518) |
Net cash used in investing activities | (238,214) | (311,635) |
Cash Flows From Financing Activities | ||
Principal payments on long-term debt including capital lease obligations | (25,041) | (24,056) |
Payment of deferred financing fees | (4,872) | |
Net cash used in financing activities | (25,041) | (28,928) |
Net increase (decrease) in cash | 1,266,528 | (301,851) |
Cash | ||
Beginning of period | 5,573,709 | 5,123,355 |
End of period | $ 6,840,237 | $ 4,821,504 |
Interim Financial Reporting
Interim Financial Reporting | 6 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [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, 2017 (“fiscal 2017”). A summary of the Company’s significant accounting policies follows: Use of estimates: Net income per common share: New accounting pronouncements: 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 are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The new guidance is applied prospectively, and earlier application is permitted as of the beginning of an interim or annual reporting period. The Company adopted ASU 2015-11 effective July 1, 2017, which had no material impact on its financial statements or financial statement disclosures. In February 2016, FASB issued ASU 2016-02, “Leases (Topic 842).” 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 ASU 2016-02 and expects that it 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 is effective for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. The Company adopted ASU 2016-09 effective July 1, 2017, which had no material impact on its previously reported financial statements in the Company’s Annual Report on Form 10-K for fiscal 2017. The Company has elected to continue to recognize estimated forfeitures as stock-based compensation expense. |
Inventories
Inventories | 6 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 2. Inventories The components of inventory were approximately as follows: December 31, 2017 June 30, 2017 Parts inventory $ 1,743,000 $ 1,789,000 Work in process 377,000 205,000 Finished goods 544,000 745,000 Less: Reserve for obsolescence (270,000 ) (180,000 ) Total $ 2,394,000 $ 2,559,000 |
Finite-life Intangible Assets
Finite-life Intangible Assets | 6 Months Ended |
Dec. 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. There were no abandonments of domestic or foreign patents that occurred during the six months ended December 31, 2017. During fiscal 2017, the Company abandoned certain domestic and foreign patents with net values of approximately $133,000, 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 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 $847,000 and $790,000 at December 31, 2017 and June 30, 2017, respectively. The activity and balances of finite-life intangible assets were approximately as follows: Six Months Ended Fiscal Year Ended Balance, beginning $ 721,000 $ 904,000 Additions 10,000 68,000 Abandonments – (133,000 ) Amortization expense (56,000 ) (118,000 ) Balance, ending $ 675,000 $ 721,000 |
Warranty Liability
Warranty Liability | 6 Months Ended |
Dec. 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: Six Months Ended Fiscal Year Ended Beginning warranty reserve $ 640,000 $ 660,000 Accrual for products sold 108,000 129,000 Expenditures and costs incurred for warranty claims (78,000 ) (149,000 ) Ending warranty reserve $ 670,000 $ 640,000 |
Income Taxes
Income Taxes | 6 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5. Income Taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises future and ongoing U.S. corporate tax obligations by, among other things, lowering U.S. corporate income tax rates. Since the Company has a June 30 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a blended U.S. statutory federal rate of approximately 28% for fiscal 2018, and 21% for subsequent fiscal years. The Tax Act also eliminates the domestic production manufacturing deduction effective for the Company’s tax year beginning July 1, 2018. For the six months ended December 31, 2017, these changes under the Tax Act resulted in a net income tax expense of approximately $160,000. 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 $416,000 and $453,000, respectively, and the effective tax rates were 54.4% and 49.1%, respectively, for the three and six months ended December 31, 2017. Estimated income tax expense for the three and six months ended December 31, 2017 includes a discrete deferred tax expense of approximately $160,000 as a result of re-measuring certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in future periods under the Tax Act. Additionally, a discrete tax benefit of approximately $2,000 and $27,000 was recognized during the three and six months ended December 31, 2017, respectively, as a result of greater federal and state research and development tax credits than what was originally estimated in the Company’s tax provision for fiscal 2017. The net impact of these discrete events increased the effective tax rate by 20.6% and 14.4% during the three and six months ended December 31, 2017, respectively. Income tax expense was estimated at $351,000 and the effective tax rate was 35.6% for the six months ended December 31, 2016. Income tax expense for the six months ended December 31, 2016 included a recognized tax benefit of approximately $22,000 as a result of the lapse of the statute of limitations on uncertain tax positions, which reduced the effective tax rate for the period by 2.2%. |
Financing Arrangements
Financing Arrangements | 6 Months Ended |
Dec. 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, 2017, the Company renewed its $2,500,000 revolving line of credit. There was no outstanding principal balance on the line of credit as of December 31, 2017 or June 30, 2017. Interest on borrowings under the line of credit, if any, would accrue at the prime rate less 0.25% (4.25% at December 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, 2018, if not renewed. At December 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 $1,129,000 at December 31, 2017 and $1,154,000 as of June 30, 2017. 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 $4,000 and $6,000 as of December 31, 2017 and June 30, 2017, 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 | 6 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Note 7. Stock-Based Compensation In November 2017, the Company’s shareholders approved the 2017 Omnibus Incentive Plan (the “2017 Plan”) which supersedes the 2014 Equity Incentive Plan (the “2014 Plan”). The 2017 Plan allows the Company’s Board of Directors to grant stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards, as well as cash incentive awards to all employees, non-employee directors, and advisors or consultants of the Company. The vesting schedule and term for each award are determined by the Board upon each grant. The maximum number of shares of common stock available for issuance under the 2017 Plan is 900,000. There were 918,300 options granted under the 2014 Plan and prior plans outstanding as of December 31, 2017. There were no options and 10,000 restricted shares issued under the 2017 Plan outstanding and 890,000 available for grant under the 2017 Plan as of December 31, 2017. The Company recorded approximately $386,000 and $235,000 of compensation expense related to current and past grants of stock options and restricted stock for the six months ended December 31, 2017 and 2016, respectively. This expense is included in selling, general and administrative expense. As of December 31, 2017, approximately $1,026,000 of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of approximately 0.9 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: Six Months Ended Fiscal Year Ended Risk-free interest rate 1.77% - 2.07% 1.14% - 1.27% Expected term (years) 6 6 Expected volatility 125.2% - 141.2% 100.5% - 105.8% Stock Options The Company issued 182,250 stock options pursuant to the 2014 Plan during the six months ended December 31, 2017. Stock option transactions during the six months ended December 31, 2017 are summarized as follows: Number of Shares Weighted Average Outstanding at June 30, 2017 747,634 $ 2.91 Granted 182,250 $ 5.64 Exercised – – Cancelled or Forfeited (11,584 ) $ 3.51 Outstanding at December 31, 2017 918,300 $ 3.44 The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. At December 31, 2017, the weighted average remaining contractual term for all outstanding stock options was 5.70 years and their aggregate intrinsic value was approximately $2,817,000. Outstanding at December 31, 2017 were 918,300 stock options issued to employees, of which 586,303 were exercisable and had an aggregate intrinsic value of approximately $2,178,000. Restricted Stock The 2017 Plan permits, and the 2014 Plan permitted, 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 six months ended December 31, 2017, the Company issued restricted stock awards to employees totaling 40,000 shares of common stock, with a vesting term of one to three years and a fair value of $5.59 per share. The restricted stock’s fair value per share represents the closing price of the Company’s common stock on the date the grants were made. Restricted stock transactions during the six months ended December 31, 2017 are summarized as follows: Number of Shares Weighted Average Unvested shares at June 30, 2017 29,998 $ 3.15 Granted 40,000 $ 5.59 Vested – – Forfeited – – Unvested at December 31, 2017 69,998 $ 4.54 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 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) | 6 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of estimates: |
Net income per common share | Net income per common share: |
New Accounting Pronouncements | New accounting pronouncements: 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 are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The new guidance is applied prospectively, and earlier application is permitted as of the beginning of an interim or annual reporting period. The Company adopted ASU 2015-11 effective July 1, 2017, which had no material impact on its financial statements or financial statement disclosures. In February 2016, FASB issued ASU 2016-02, “Leases (Topic 842).” 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 ASU 2016-02 and expects that it 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 is effective for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. The Company adopted ASU 2016-09 effective July 1, 2017, which had no material impact on its previously reported financial statements in the Company’s Annual Report on Form 10-K for fiscal 2017. The Company has elected to continue to recognize estimated forfeitures as stock-based compensation expense. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventories | The components of inventory were approximately as follows: December 31, 2017 June 30, 2017 Parts inventory $ 1,743,000 $ 1,789,000 Work in process 377,000 205,000 Finished goods 544,000 745,000 Less: Reserve for obsolescence (270,000 ) (180,000 ) Total $ 2,394,000 $ 2,559,000 |
Finite-life Intangible Assets (
Finite-life Intangible Assets (Tables) | 6 Months Ended |
Dec. 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: Six Months Ended Fiscal Year Ended Balance, beginning $ 721,000 $ 904,000 Additions 10,000 68,000 Abandonments – (133,000 ) Amortization expense (56,000 ) (118,000 ) Balance, ending $ 675,000 $ 721,000 |
Warranty Liability (Tables)
Warranty Liability (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Product Warranties Disclosures [Abstract] | |
Schedule of changes in warranty liability | Changes in the Company’s warranty liability were approximately as follows: Six Months Ended Fiscal Year Ended Beginning warranty reserve $ 640,000 $ 660,000 Accrual for products sold 108,000 129,000 Expenditures and costs incurred for warranty claims (78,000 ) (149,000 ) Ending warranty reserve $ 670,000 $ 640,000 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Dec. 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: Six Months Ended Fiscal Year Ended Risk-free interest rate 1.77% - 2.07% 1.14% - 1.27% Expected term (years) 6 6 Expected volatility 125.2% - 141.2% 100.5% - 105.8% |
Schedule of employee option activity | Stock option transactions during the six months ended December 31, 2017 are summarized as follows: Number of Shares Weighted Average Outstanding at June 30, 2017 747,634 $ 2.91 Granted 182,250 $ 5.64 Exercised – – Cancelled or Forfeited (11,584 ) $ 3.51 Outstanding at December 31, 2017 918,300 $ 3.44 |
Schedule of restricted stock awards activity | Restricted stock transactions during the six months ended December 31, 2017 are summarized as follows: Number of Shares Weighted Average Unvested shares at June 30, 2017 29,998 $ 3.15 Granted 40,000 $ 5.59 Vested – – Forfeited – – Unvested at December 31, 2017 69,998 $ 4.54 |
Interim Financial Reporting (De
Interim Financial Reporting (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Common stock equivalents excluded from calculation of diluted earnings per share | 177,500 | 196,500 |
International [Member] | ||
Sales | $ 267,000 | $ 332,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Parts inventory | $ 1,743,000 | $ 1,789,000 |
Work in process | 377,000 | 205,000 |
Finished goods | 544,000 | 745,000 |
Less: Reserve for obsolescence | (270,000) | (180,000) |
Total | $ 2,393,639 | $ 2,559,485 |
Finite-life Intangible Assets22
Finite-life Intangible Assets (Details Narrative) - USD ($) | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated amortization | $ 847,000 | $ 790,000 | |
Patents [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 15 years | ||
Abandoned patents | $ 133,000 | ||
Trademarks [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 12 years |
Finite-life Intangible Assets23
Finite-life Intangible Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance, beginning | $ 721,276 | $ 904,000 |
Additions | 10,000 | 68,000 |
Abandonments | (133,000) | |
Amortization expenses | (56,000) | (118,000) |
Balance, ending | $ 674,704 | $ 721,276 |
Warranty Liability (Details)
Warranty Liability (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Jun. 30, 2017 | |
Product Warranties Disclosures [Abstract] | ||
Warranty reserve, beginning | $ 640,000 | $ 660,000 |
Accrual for products sold | 108,000 | 129,000 |
Expenditures and costs incurred for warranty claims | (78,000) | (149,000) |
Warranty reserve, ending | $ 670,000 | $ 640,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Dec. 22, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
U.S. statutory federal rate | 28.00% | ||||
Effective tax rate | 54.40% | 49.10% | 35.60% | ||
Income tax expense | $ 416,000 | $ 270,000 | $ 453,000 | $ 351,000 | |
Re-measurement of deferred tax assets and liabilities | 160,000 | 160,000 | |||
Tax benefit on research and development | $ 2,000 | $ 27,000 | |||
Tax benefit on uncertain tax positions | $ 22,000 | ||||
Impact of of discrete events on effective tax rate | 20.60% | 14.40% | (2.20%) | ||
Subsequent Fiscal Years [Member] | |||||
U.S. statutory federal rate | 21.00% |
Financing Arrangements (Details
Financing Arrangements (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 17, 2016 | |
Term Loan [Member] | ||||
Interest rate | 3.88% | 3.88% | 5.00% | |
Principal loan amount | $ 1,129,000 | $ 1,129,000 | $ 1,154,000 | |
Unamortized debt issuance cost | 4,000 | 4,000 | $ 6,000 | |
Monthly payments of principal and interest | 7,900 | |||
Final payment of principal and interest | 1,085,000 | $ 1,085,000 | ||
Term loan maturity date | Dec. 18, 2018 | |||
Minimum tangible net worth to be maintained | 10,125,000 | $ 10,125,000 | ||
Credit Facility [Member] | ||||
Maximum borrowing capacity | $ 2,500,000 | $ 2,500,000 | ||
Credit facility effective date | Dec. 18, 2017 | |||
Credit facility expiration date | Dec. 18, 2018 | |||
Basis spread on rate | 0.25% | |||
Effective interest rate | 4.25% | 4.25% | ||
Borrowing capacity of eligible accounts receivable | $ 2,500,000 | $ 2,500,000 | ||
Borrowing capacity of eligible accounts receivable (percent) | 57.00% | 57.00% | ||
Available borrowing capacity | $ 2,500,000 | $ 2,500,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Nov. 01, 2017 | |
Share-based compensation expense | $ 386,248 | $ 234,634 | |
Unrecognized compensation expense | $ 1,026,000 | ||
Unrecognized compensation expense, period for recognition | 10 months 25 days | ||
Weighted average remaining contractual term of outstanding options | 5 years 8 months 12 days | ||
Options outstanding, intrinsic value | $ 2,817,000 | ||
Options exercisable | 586,303 | ||
Options exercisable, intrinsic value | $ 2,178,000 | ||
Issuance of restricted stock awards (shares) | 10,000 | ||
Restricted Stock [Member] | Minimum [Member] | |||
Award vesting term | 1 year | ||
Restricted Stock [Member] | Maximum [Member] | |||
Award vesting term | 3 years | ||
2017 Plan [Member] | |||
Shares available for issuance | 900,000 | ||
Available for grant, shares | 890,000 |
Stock-Based Compensation (Det28
Stock-Based Compensation (Details) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Jun. 30, 2017 | |
Risk free interest rate - minimum | 1.14% | |
Risk free interest rate - maximum | 1.27% | |
Expected term (year) | 6 years | |
Expected volatility - minimum | 100.50% | |
Expected volatility - maximum | 105.80% | |
Stock Options [Member] | ||
Risk free interest rate - minimum | 1.77% | |
Risk free interest rate - maximum | 2.07% | |
Expected term (year) | 6 years | |
Expected volatility - minimum | 125.20% | |
Expected volatility - maximum | 141.20% |
Stock-Based Compensation (Det29
Stock-Based Compensation (Details 1) - Stock Options [Member] | 6 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Shares | |
Options outstanding, beginning | shares | 747,634 |
Granted | shares | 182,250 |
Cancelled or Forfeited | shares | (11,584) |
Options outstanding, ending | shares | 918,300 |
Weighted Average Exercise Price | |
Options outstanding, beginning | $ / shares | $ 2.91 |
Granted | $ / shares | 5.64 |
Cancelled or Forfeited | $ / shares | 3.51 |
Options outstanding, ending | $ / shares | $ 3.44 |
Stock-Based Compensation (Det30
Stock-Based Compensation (Details 2) - Restricted Stock [Member] | 6 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Shares | |
Outstanding, beginning | 29,998 |
Granted | 40,000 |
Outstanding, ending | 69,998 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning | $ / shares | $ 3.15 |
Outstanding, ending | $ / shares | $ 4.54 |