Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2021 | Feb. 11, 2022 | |
Cover [Abstract] | ||
Entity Central Index Key | 0000033533 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2021 | |
Entity File Number | 1-4383 | |
Document Transition Report | false | |
Entity Registrant Name | ESPEY MFG & ELECTRONICS CORP | |
Entity Incorportion, State or Country Code | NY | |
Trading Symbol | ESP | |
Entity Tax Identification Number | 14-1387171 | |
Entity Address, Address Line One | 233 Ballston Avenue | |
Entity Address, City or Town | Saratoga Springs | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 12866 | |
City Area Code | 518 | |
Local Phone Number | 245-4400 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common stock, $.33-1/3 par value | |
Entity Common Stock, Shares Outstanding | 2,702,633 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
ASSETS: | ||
Cash and cash equivalents | $ 7,018,282 | $ 6,802,712 |
Investment securities | 3,057,000 | 3,092,000 |
Trade accounts receivable, net of allowance of $3,000 | 4,888,399 | 5,353,781 |
Income tax receivable | 252,643 | 249,602 |
Inventories: | ||
Raw materials | 2,074,883 | 2,111,058 |
Work-in-process | 242,094 | 326,198 |
Costs related to contracts in process | 17,012,234 | 16,354,636 |
Total inventories | 19,329,211 | 18,791,892 |
Prepaid expenses and other current assets | 808,857 | 700,297 |
Total current assets | 35,354,392 | 34,990,284 |
Property, plant and equipment, net | 2,833,961 | 2,990,519 |
Total assets | 38,188,353 | 37,980,803 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable | 2,585,174 | 2,718,173 |
Accrued expenses: | ||
Salaries and wages | 649,089 | 475,667 |
Vacation | 656,292 | 672,611 |
ESOP payable | 168,318 | |
Other | 57,037 | 126,014 |
Payroll and other taxes withheld | 278,924 | 409,881 |
Contract liabilities | 2,904,746 | 3,077,605 |
Total current liabilities | 7,299,580 | 7,479,951 |
Deferred tax liabilities | 134,649 | 168,557 |
Total liabilities | 7,434,229 | 7,648,508 |
Commitments and contingencies (see Note 5) | ||
Common stock, par value $.33-1/3 per share Authorized 10,000,000 shares; Issued 3,129,874 shares as of December 31, 2021 and June 30, 2021. Outstanding 2,702,633 shares as of December 31, 2021 and June 30, 2021 (includes 267,861 and 279,429 Unearned ESOP shares, respectively) | 1,043,291 | 1,043,291 |
Capital in excess of par value | 23,120,663 | 23,026,096 |
Accumulated other comprehensive loss | (2,361) | (2,361) |
Retained earnings | 17,741,992 | 17,414,730 |
Total stockholders equity before ESOP | 41,903,585 | 41,481,756 |
Less: Unearned ESOP shares | (5,110,770) | (5,110,770) |
Cost of 427,241 shares of common stock in treasury as of December 31, 2021 and June 30, 2021 | (6,038,691) | (6,038,691) |
Total stockholders' equity | 30,754,124 | 30,332,295 |
Total liabilities and stockholders' equity | $ 38,188,353 | $ 37,980,803 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowance | $ 3,000 | $ 3,000 |
Common stock, par value | $ 0.3333 | $ 0.3333 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 3,129,874 | 3,129,874 |
Common stock, shares outstanding | 2,702,633 | 2,702,633 |
Unearned ESOP, shares | 267,861 | 279,429 |
Treasury stock, shares | 427,241 | 427,241 |
Statements of Comprehensive Inc
Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||||
Net sales | $ 7,458,050 | $ 6,962,065 | $ 15,003,482 | $ 14,227,580 |
Cost of sales | 6,251,233 | 6,248,604 | 12,443,567 | 12,386,745 |
Gross profit | 1,206,817 | 713,461 | 2,559,915 | 1,840,835 |
Selling, general and administrative expenses | 1,186,168 | 945,478 | 2,180,990 | 1,860,104 |
Operating income (loss) | 20,649 | (232,017) | 378,925 | (19,269) |
Other income | ||||
Interest income | 1,716 | 1,753 | 3,312 | 16,970 |
Other | 10,105 | 13,734 | 28,076 | 16,861 |
Total other income | 11,821 | 15,487 | 31,388 | 33,831 |
Income (loss) before provision (benefit) for income taxes | 32,470 | (216,530) | 410,313 | 14,562 |
Provision (benefit) for income taxes | 11,269 | (35,524) | 83,051 | 5,745 |
Net income (loss) | 21,201 | (181,006) | 327,262 | 8,817 |
Other comprehensive income, net of tax: | ||||
Unrealized gain on investment securities | 2,712 | 1,038 | ||
Total comprehensive income (loss) | $ 21,201 | $ (178,294) | $ 327,262 | $ 9,855 |
Net income (loss) per share: | ||||
Basic | $ 0.01 | $ (0.08) | $ 0.14 | $ 0 |
Diluted | $ 0.01 | $ (0.08) | $ 0.14 | $ 0 |
Weighted average number of shares outstanding: | ||||
Basic | 2,429,051 | 2,402,665 | 2,426,159 | 2,402,649 |
Diluted | 2,429,199 | 2,402,665 | 2,426,233 | 2,404,043 |
Dividends per share: | $ 0.25 | $ 0.50 |
Statements of Changes in Stockh
Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Capital in Excess of Par Value [Member] | Accumulated Other Comprehensive (Loss) Income [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Unearned ESOP Shares [Member] | Total |
Balance, beginning at Jun. 30, 2020 | $ 1,009,958 | $ 19,073,213 | $ (3,107) | $ 18,797,589 | $ (7,650,805) | $ 31,226,848 | |
Balance, beginning, shares at Jun. 30, 2020 | 2,402,633 | 627,241 | |||||
Comprehensive income (loss): | |||||||
Net income (loss) | 8,817 | 8,817 | |||||
Other comprehensive income, net of tax | 1,038 | 1,038 | |||||
Total comprehensive income (loss) | 9,855 | ||||||
Stock-based compensation | 80,874 | 80,874 | |||||
Dividends paid on common stock per share | (1,201,316) | (1,201,316) | |||||
Sale of stock to ESOP | $ 33,333 | 3,841,553 | $ 1,612,114 | (5,487,000) | |||
Sale of stock to ESOP, shares | 300,000 | (200,000) | |||||
Balance, ending at Dec. 31, 2020 | $ 1,043,291 | 22,995,640 | (2,069) | 17,605,090 | $ (6,038,691) | (5,487,000) | 30,116,261 |
Balance, ending, common shares at Dec. 31, 2020 | 2,702,633 | 427,241 | |||||
Balance, beginning at Sep. 30, 2020 | $ 1,009,958 | 19,120,380 | (4,781) | 18,386,755 | $ (7,650,805) | 30,861,507 | |
Balance, beginning, shares at Sep. 30, 2020 | 2,402,633 | 627,241 | |||||
Comprehensive income (loss): | |||||||
Net income (loss) | (181,006) | (181,006) | |||||
Other comprehensive income, net of tax | 2,712 | 2,712 | |||||
Total comprehensive income (loss) | (178,294) | ||||||
Stock-based compensation | 33,707 | 33,707 | |||||
Dividends paid on common stock per share | (600,659) | (600,659) | |||||
Sale of stock to ESOP | $ 33,333 | 3,841,553 | $ 1,612,114 | (5,487,000) | |||
Sale of stock to ESOP, shares | 300,000 | (200,000) | |||||
Balance, ending at Dec. 31, 2020 | $ 1,043,291 | 22,995,640 | (2,069) | 17,605,090 | $ (6,038,691) | (5,487,000) | 30,116,261 |
Balance, ending, common shares at Dec. 31, 2020 | 2,702,633 | 427,241 | |||||
Balance, beginning at Jun. 30, 2021 | $ 1,043,291 | 23,026,096 | (2,361) | 17,414,730 | $ (6,038,691) | (5,110,770) | $ 30,332,295 |
Balance, beginning, shares at Jun. 30, 2021 | 2,702,633 | 427,241 | 2,702,633 | ||||
Comprehensive income (loss): | |||||||
Net income (loss) | 327,262 | $ 327,262 | |||||
Other comprehensive income, net of tax | |||||||
Total comprehensive income (loss) | 327,262 | ||||||
Stock-based compensation | 94,567 | 94,567 | |||||
Balance, ending at Dec. 31, 2021 | $ 1,043,291 | 23,120,663 | (2,361) | 17,741,992 | $ (6,038,691) | (5,110,770) | $ 30,754,124 |
Balance, ending, common shares at Dec. 31, 2021 | 2,702,633 | 427,241 | 2,702,633 | ||||
Balance, beginning at Sep. 30, 2021 | $ 1,043,291 | 23,078,872 | (2,361) | 17,720,791 | $ (6,038,691) | (5,110,770) | $ 30,691,132 |
Balance, beginning, shares at Sep. 30, 2021 | 2,702,633 | 427,241 | |||||
Comprehensive income (loss): | |||||||
Net income (loss) | 21,201 | 21,201 | |||||
Other comprehensive income, net of tax | |||||||
Total comprehensive income (loss) | 21,201 | ||||||
Stock-based compensation | 41,791 | 41,791 | |||||
Balance, ending at Dec. 31, 2021 | $ 1,043,291 | $ 23,120,663 | $ (2,361) | $ 17,741,992 | $ (6,038,691) | $ (5,110,770) | $ 30,754,124 |
Balance, ending, common shares at Dec. 31, 2021 | 2,702,633 | 427,241 | 2,702,633 |
Statements of Changes in Stoc_2
Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended |
Dec. 31, 2020 | Dec. 31, 2020 | |
Stock Transactions, Parenthetical Disclosures [Abstract] | ||
Other comprehensive income, tax portion | $ 721 | $ 276 |
Dividends declared per share | $ 0.25 | $ 0.50 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows from Operating Activities: | ||
Net income | $ 327,262 | $ 8,817 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation | 94,567 | 80,874 |
Depreciation | 253,846 | 271,341 |
ESOP compensation expense | 168,318 | 56,274 |
Deferred income tax benefit | (33,908) | (35,524) |
Changes in assets and liabilities: | ||
Decrease in trade accounts receivable | 465,382 | 4,805,803 |
Increase in income taxes receivable | (3,041) | (86,274) |
Increase in ESOP receivable due to dividends on unallocated shares | (18,726) | |
Increase in inventories | (537,319) | (1,706,735) |
Increase in prepaid expenses and other current assets | (108,560) | (109,615) |
(Decrease) increase in accounts payable | (132,999) | 392,287 |
Increase (decrease) in accrued salaries and wages | 173,422 | (125,060) |
Decrease in vacation accrual | (16,319) | (23,674) |
Decrease in ESOP Payable | (56,274) | |
Decrease in other accrued expenses | (68,977) | (228,136) |
(Decrease) increase in payroll and other taxes withheld | (130,957) | 276,315 |
Decrease in contract liabilities | (172,859) | (524,947) |
Decrease in income taxes payable | (47,707) | |
Net cash provided by operating activities | 277,858 | 2,929,039 |
Cash Flows from Investing Activities: | ||
Additions to property, plant and equipment | (97,288) | (29,173) |
Purchase of investment securities | (2,061,000) | (2,391,686) |
Proceeds from sale/maturity of investment securities | 2,096,000 | 4,331,407 |
Net cash (used in) provided by investing activities | (62,288) | 1,910,548 |
Cash Flows from Financing Activities: | ||
Dividends on common stock | (1,201,316) | |
Net cash used in financing activities | (1,201,316) | |
Increase in cash and cash equivalents | 215,570 | 3,638,271 |
Cash and cash equivalents, beginning of period | 6,802,712 | 5,402,122 |
Cash and cash equivalents, end of period | 7,018,282 | 9,040,393 |
Supplemental Schedule of Cash Flow Information: | ||
Income taxes paid | $ 120,000 | $ 175,250 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Dec. 31, 2021 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation In the opinion of management the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for such periods. The results for any interim period are not necessarily indicative of the results to be expected for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventories, income taxes, and stock-based compensation. Specific to inventories, including work-in-process and contracts in process, management evaluates, quarterly, those estimates used in determining the cost to complete for each contract on Espey Mfg. & Electronics Corp. (the “Company”) sales backlog. The change in estimates may affect the reported amount of inventories and gross profit in the current or a future period. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These financial statements should be read in conjunction with the Company's most recent audited financial statements included in its report on Form 10-K for the year ended June 30, 2021. Certain reclassifications may have been made to the prior year financial statements to conform to the current year presentation. |
Investment Securities
Investment Securities | 6 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Note 2. Investment Securities Accounting Standards Codification (“ASC”) 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: ▪ Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. ▪ Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ▪ Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The carrying amounts of financial instruments, including cash and cash equivalents, short term investments, accounts receivable, accounts payable and accrued expenses, approximated fair value as of December 31, 2021 and June 30, 2021 because of the immediate or short-term maturity of these financial instruments. Investment securities at December 31, 2021 and June 30, 2021 consist of certificates of deposit which are classified as available-for-sale securities and have been determined to be level 1 assets. The cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities by major security type at December 31, 2021 and June 30, 2021 are as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2021 Certificates of deposit $ 3,057,000 $ — $ — $ 3,057,000 June 30, 2021 Certificates of deposit $ 3,092,000 $ — $ — $ 3,092,000 The portfolio is diversified and highly liquid and primarily consists of investment grade fixed income instruments. At December 31, 2021, the Company did not have any investments in individual securities that have been in a continuous loss position considered to be other than temporary. 8 Index As of December 31, 2021 and June 30, 2021, the remaining contractual maturities of available-for-sale securities were as follows: Years to Maturity Less than One to One Year Five Years Total December 31, 2021 Available-for-sale $ 3,057,000 $ — $ 3,057,000 June 30, 2021 Available-for-sale $ 3,092,000 $ — $ 3,092,000 |
Net Income per Share
Net Income per Share | 6 Months Ended |
Dec. 31, 2021 | |
Net Income per Share [Abstract] | |
Net Income per Share | Note 3. Net Income per Share Basic net income per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company. The computation of diluted net income per share, excluded options to purchase 316,912 shares of our common stock for the three and six months ended December 31, 2021 and the computation of diluted net (loss) income per share, excluded options to purchase 315,337 and 253,312 shares for the three and six months ended December 31, 2020, as the effect of including them would be anti-dilutive. As unearned shares owned by the Company’s sponsored leveraged employee stock ownership plan (the “ESOP”) are released or committed-to-be-released, the shares become outstanding for earnings-per-share computations. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Note 4. Stock Based Compensation The Company follows ASC 718 in establishing standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, as well as transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements based on the fair value of the share-based payment. ASC 718 establishes fair value as the measurement objective in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans. Total stock-based compensation expense recognized in the statements of comprehensive income for the three-month periods ended December 31, 2021 and 2020 was $41,791 and $33,707, respectively, before income taxes. The amount of this stock-based compensation expense related to non-qualified stock options (“NQSO”) for the three-month periods ended December 31, 2021 and 2020, was $8,757 and $5,143, respectively. The deferred tax benefit related to the NQSO’s as of December 31, 2021 and 2020 was approximately $1,839 and $1,080, respectively. Total stock-based compensation expense recognized in the statements of comprehensive income for the six-month periods ended December 31, 2021 and 2020, was $94,567 and $80,874, respectively, before income taxes. The amount of this stock-based compensation expense related to non-qualified stock options (“NQSO”) for the six-month periods ended December 31, 2021 and 2020, was $16,123 and $18,131, respectively. The deferred tax benefit related to the NQSO’s as of December 31, 2021 and 2020 was approximately $3,386 and $3,808, respectively. The remaining stock option expense in each year related to incentive stock options (“ISO”) which are not deductible by the corporation when exercised, assuming a qualifying disposition and as such no deferred tax benefit was established related to these amounts. As of December 31, 2021, there was approximately $219,311 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over the next 2 years, of which $179,408 relates to ISO’s and $39,903 relates to NQSO’s. The total deferred tax benefit related to these awards is expected to be $8,380. The Company has one employee stock option plan under which options or stock awards may be granted, the 2017 Stock Option and Restricted Stock Plan (the "2017 Plan"). The Board of Directors may grant options to acquire shares of common stock to employees and non-employee directors of the Company at the fair market value of the common stock on the date of grant. The maximum aggregate number of shares of Common Stock subject to options or awards to non-employee directors is 133,000 and the maximum aggregate number of shares of Common Stock subject to options or awards granted to non-employee directors during any single fiscal year is the lesser of 13,300 and 33 1/3 9 Index ASC 718 requires the use of a valuation model to calculate the fair value of stock-based awards. The Company has elected to use the Black-Scholes option valuation model, which incorporates various assumptions including those for dividend yield, volatility, expected life and interest rates. The table below outlines the weighted average assumptions that the Company used to calculate the fair value of each option award for the six months ended December 31, 2021 and 2020. December 31, 2021 December 31, 2020 Dividend yield 0% 5.54% Company’s expected volatility 25.56% 23.41% Risk-free interest rate 0.93% 0.36% Expected term 5.4 yrs 5.4 yrs Weighted average fair value per share of options granted during the period $3.72 $1.59 Effective March 9, 2021, the Company suspended the payment of its regular quarterly dividend. For the six months ended December 31, 2020, the Company declared and paid regular cash dividends of $0.50 per share, and for the six months ended December 31, 2021 the Company paid no cash dividends. Expected stock price volatility is based on the historical volatility of the Company’s stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options. The expected option term (in years) represents the estimated period of time until exercise and is based on actual historical experience. The following table summarizes stock option activity during the six months ended December 31, 2021: Employee Stock Options Plan Weighted Number of Weighted Average Shares Average Remaining Aggregate Subject Exercise Contractual Intrinsic to Option Price Term Value Balance at July 1, 2021 304,662 $ 23.37 6.06 Granted 77,550 $ 14.76 9.56 Exercised — — — Forfeited or expired (56,100) $ 20.53 — Outstanding at December 31, 2021 326,112 $ 21.81 6.49 $ 2,116 Vested or expected to vest at December 31, 2021 307,578 $ 22.16 6.32 $ 2,029 Exercisable at December 31, 2021 220,287 $ 24.58 5.15 $ 0 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the closing sale price of the Company’s common stock as reported on the NYSE American on December 31, 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders if all option holders had exercised their options on December 31, 2021. This amount changes based on the fair market value of the Company’s common stock. The intrinsic value of options exercised during the six months ended December 31, 2021 and 2020 was $0, resulting from no option exercise activity during those periods. 10 Index The following table summarizes changes in non-vested stock options during the six months ended December 31, 2021: Weighted Number Average of Shares Subject to Option Grant Date Fair Value (per Option) Non-vested at July 1, 2021 103,450 $ 2.22 Granted 77,550 $ 3.72 Vested (43,025) $ 3.03 Forfeited or expired (32,150) $ 2.58 Non-vested at December 31, 2021 105,825 $ 2.89 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 5. Commitments and Contingencies The Company from time to time, enters into standby letters of credit agreements with financial institutions primarily relating to the guarantee of future performance on certain contracts. Contingent liabilities on outstanding standby letters of credit agreements aggregated to zero at December 31, 2021 and June 30, 2021. The Company, as a U.S. Government contractor, is subject to audits, reviews, and investigations by the U.S. Government related to its negotiation and performance of government contracts and its accounting for such contracts. Failure to comply with applicable U.S. Government standards by a contractor may result in suspension from eligibility for award of any new government contract and a guilty plea or conviction may result in debarment from eligibility for awards. The government may, in certain cases, also terminate existing contracts, recover damages, and impose other sanctions and penalties. As a result of contract audits the Company will determine a range of possible outcomes and in accordance with ASC 450 “Contingencies” the Company will accrue amounts within a range that appears to be its best estimate of a possible outcome. Adjustments are made to accruals, if any, periodically based on current information. We are party to various litigation matters and claims arising from time to time in the ordinary course of business. While the results of such matters cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows. Currently, there are no matters pending. |
Revenue
Revenue | 6 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 6. Revenue The Company follows ASC 606 “Revenue from Contracts with Customers” to determine the recognition of revenue. This standard requires entities to assess the products or services promised in contracts with customers at contract inception to determine the appropriate unit at which to record revenues. Revenue is recognized when control of the promised products or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those products or services. Significant judgment is required in determining the satisfaction of performance obligations. Revenues from our performance obligations are satisfied over time using the output method which considers the appraisal of results achieved and milestones reached or units delivered based on contractual shipment terms, typically shipping point. Revenue is recognized when, or as, the customer takes control of the product or services. The output method best depicts the transfer of control to the customer as the output method represents work completed. Control is typically transferred to the customer at the shipping point as the Company has a present right to payment, the customer has legal title to the asset, the customer has the significant risks and rewards of ownership of the asset, and in most instances the customer has accepted the asset. Total revenue recognized for the three and six months ended December 31, 2021 based on units delivered was $6,100,228 and $12,592,464, respectively, compared to $5,865,878 and $11,724,584 for the same periods in fiscal year 2021. Total revenue recognized for the three and six months ended December 31, 2021 based on milestones achieved was $1,357,822 and $2,411,018, respectively, compared to $1,096,187 and $2,502,996 for the same periods in fiscal year 2021. 11 Index The Company offers a standard one-year product warranty. Product warranties offered by the Company are classified as assurance-type warranties, which means, the warranty only guarantees that the good or service functions as promised. Based on this, the provided warranty is not considered to be a distinct performance obligation. The impact of variable consideration has been considered but none identified which would be required to be allocated to the transaction price as of December 31, 2021. Our payment terms are generally 30-60 days. Contract liabilities were $2,904,746 and $3,077,605 as of December 31, 2021 and June 30, 2021, respectively. The decrease in contract liabilities is primarily due to revenue recognized, offset in part by, the advance collection of cash on specific contracts. The Company used the practical expedient to expense incremental costs incurred to obtain a contract when the contract term is less than one year. The Company’s backlog at December 31, 2021 totaling approximately $70.1 million is projected, based on expected due dates, to be recognized in the following fiscal years: 30% in 2022; 43% in 2023; 21% in 2024, and 6% thereafter. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Dec. 31, 2021 | |
Recently Issued Accounting Standards [Abstract] | |
Recently Issued Accounting Standards | Note 7. Recently Issued Accounting Standards Recent Accounting Pronouncements Adopted In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 amends ASC 740 to simplify the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations, and adding guidance to reduce complexity in the accounting standard under the FASB’s simplification initiative. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020. Upon adoption, the amendments in ASU 2019-12 should be applied on a prospective basis to all periods presented. The Company adopted the new guidance under ASU 2019-12 in the first quarter of fiscal year 2021 and removed the exception for intraperiod allocations from its interim period tax provision calculation, accordingly. The removal of the exception for intraperiod allocations did not have a material impact on the Company. |
Employee Stock Ownership Plan
Employee Stock Ownership Plan | 6 Months Ended |
Dec. 31, 2021 | |
Employee Stock Ownership Plan [Abstract] | |
Employee Stock Ownership Plan | Note 8. Employee Stock Ownership Plan The Company sponsors a leveraged employee stock ownership plan (the “ESOP”) that covers all nonunion employees who work 1,000 or more hours per year and are employed on June 30. Prior to December 1, 2020, the ESOP owned 469,119 shares, all of which were allocated to employees. On December 1, 2020, pursuant to a Stock Purchase Agreement dated as of such date, the Company, by selling 300,000 shares of its common stock, par value $ 0.33 1/3 The Board of Directors of the Company had approved a purchase price per share equal to the lesser of the trading value on the day of closing or the lowest price listed in the valuation established by the independent valuation firm plus $0.25. The valuation identified a range of $18.04 - $19.43 per share. In making the sale, the Company relied on the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended, because the shares sold were offered only to the ESOP. After giving effect to the transaction, the ESOP owned 769,119 shares of the Company's 2,702,633 outstanding shares of common stock as of December 1, 2020. The Company makes annual contributions to the ESOP equal to the ESOP's debt service less dividends on unallocated shares received by the ESOP. Any dividends on unallocated shares received by the ESOP are used to pay debt service. Any dividends on allocated ESOP shares are recorded as a reduction of retained earnings. As the debt is repaid, shares are released and allocated to active employees, based on the proportion of debt service paid in the year. The Company accounts for its ESOP in accordance with FASB ASC 718-40. Accordingly, the shares purchased by the ESOP are reported as Unearned ESOP shares in the balance sheets and the statements of changes in stockholders’ equity. As shares are released or committed-to-be-released, the Company reports compensation expense equal to the current average market price of the shares, and the shares become outstanding for earnings-per-share (EPS) computations. ESOP compensation expense was $83,812 and $56,274 for the three-month periods ended December 31, 2021 and 2020, respectively. ESOP compensation expense was $168,318 and $56,274 for the six-month periods ended December 31, 2021 and 2020, respectively. 12 Index The ESOP shares as of December 31, 2021 and 2020 were as follows: December 31, 2021 December 31, 2020 Allocated shares 478,935 468,663 Committed-to-be-released shares 11,568 2,939 Unreleased shares 267,861 297,061 Total shares held by the ESOP 758,364 768,663 Fair value of unreleased shares $ 3,806,305 $ 5,620,394 The Company may at times be required to repurchase shares at the ESOP participants’ request at the shares’ fair market value. During the three and six months ended December 31, 2021 and 2020, the Company did not repurchase shares previously held by the ESOP. The ESOP allows for eligible participants to take whole share distributions from the Plan on specific dates in accordance with the provision of the Plan. Share distributions from the ESOP during the six months ended December 31, 2021 and 2020 totaled 8,285 and 456 shares, respectively. |
Investment Securities (Tables)
Investment Securities (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Available-for-Sale Securities | Investment securities at December 31, 2021 and June 30, 2021 consist of certificates of deposit which are classified as available-for-sale securities and have been determined to be level 1 assets. The cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities by major security type at December 31, 2021 and June 30, 2021 are as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2021 Certificates of deposit $ 3,057,000 $ — $ — $ 3,057,000 June 30, 2021 Certificates of deposit $ 3,092,000 $ — $ — $ 3,092,000 |
Schedule of Contractual Maturities | As of December 31, 2021 and June 30, 2021, the remaining contractual maturities of available-for-sale securities were as follows: Years to Maturity Less than One to One Year Five Years Total December 31, 2021 Available-for-sale $ 3,057,000 $ — $ 3,057,000 June 30, 2021 Available-for-sale $ 3,092,000 $ — $ 3,092,000 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Fair Value Assumptions | The table below outlines the weighted average assumptions that the Company used to calculate the fair value of each option award for the six months ended December 31, 2021 and 2020. December 31, 2021 December 31, 2020 Dividend yield 0% 5.54% Company’s expected volatility 25.56% 23.41% Risk-free interest rate 0.93% 0.36% Expected term 5.4 yrs 5.4 yrs Weighted average fair value per share of options granted during the period $3.72 $1.59 |
Schedule of Stock Option Activity | The following table summarizes stock option activity during the six months ended December 31, 2021: Employee Stock Options Plan Weighted Number of Weighted Average Shares Average Remaining Aggregate Subject Exercise Contractual Intrinsic to Option Price Term Value Balance at July 1, 2021 304,662 $ 23.37 6.06 Granted 77,550 $ 14.76 9.56 Exercised — — — Forfeited or expired (56,100) $ 20.53 — Outstanding at December 31, 2021 326,112 $ 21.81 6.49 $ 2,116 Vested or expected to vest at December 31, 2021 307,578 $ 22.16 6.32 $ 2,029 Exercisable at December 31, 2021 220,287 $ 24.58 5.15 $ 0 |
Schedule of Changes in Non-Vested Stock Options | The following table summarizes changes in non-vested stock options during the six months ended December 31, 2021: Weighted Number Average of Shares Subject to Option Grant Date Fair Value (per Option) Non-vested at July 1, 2021 103,450 $ 2.22 Granted 77,550 $ 3.72 Vested (43,025) $ 3.03 Forfeited or expired (32,150) $ 2.58 Non-vested at December 31, 2021 105,825 $ 2.89 |
Employee Stock Ownership Plan (
Employee Stock Ownership Plan (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Employee Stock Ownership Plan [Abstract] | |
Schedule of ESOP shares | The ESOP shares as of December 31, 2021 and 2020 were as follows: December 31, 2021 December 31, 2020 Allocated shares 478,935 468,663 Committed-to-be-released shares 11,568 2,939 Unreleased shares 267,861 297,061 Total shares held by the ESOP 758,364 768,663 Fair value of unreleased shares $ 3,806,305 $ 5,620,394 |
Investment Securities (Schedule
Investment Securities (Schedule of Available-for-Sale Securities) (Details) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | $ 3,057,000 | $ 3,092,000 |
Certificates of Deposit [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 3,057,000 | 3,092,000 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | ||
Fair Value | $ 3,057,000 | $ 3,092,000 |
Investment Securities (Schedu_2
Investment Securities (Schedule of Contractual Maturities) (Details) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
Contractual maturities of available-for-sale securities | ||
Less than One Year | $ 3,057,000 | $ 3,092,000 |
One to Five Years | ||
Fair Value | $ 3,057,000 | $ 3,092,000 |
Net Income per Share (Details)
Net Income per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Income per Share [Abstract] | ||||
Anti-dilutive securities | 316,912 | 315,337 | 316,912 | 253,312 |
Stock Based Compensation (Narra
Stock Based Compensation (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock based compensation expense | $ 41,791 | $ 33,707 | $ 94,567 | $ 80,874 | |
Deferred tax benefit related to stock based compensation | 1,839 | $ 1,080 | 3,386 | $ 3,808 | |
Unrecognized compensation costs | 219,311 | $ 219,311 | |||
Period in which compensation cost will be recognized | 2 years | ||||
Deferred tax benefit related to unrecognized compensation costs | $ 8,380 | $ 8,380 | |||
Granted | 77,550 | ||||
Outstanding | 326,112 | 326,112 | 304,662 | ||
Cash divided paid | $ 0.25 | $ 0.50 | |||
Aggregate intrinsic value of options exercised | $ 0 | $ 0 | |||
2017 Plan [Member] | Non employee directors [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Authorized shares under plan | 133,000 | 133,000 | |||
Percentage of total number of shares subject to options or awards, single fiscal year | 33.33% | ||||
Number of shares subject to option or award, single fiscal year | 13,300 | 13,300 | |||
2017 Plan [Member] | Individual Employee [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares subject to option or award, single fiscal year | 15,000 | 15,000 | |||
Incentive Stock Options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation costs | $ 179,408 | $ 179,408 | |||
Non-qualified stock options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock based compensation expense | 8,757 | $ 5,143 | 16,123 | $ 18,131 | |
Unrecognized compensation costs | $ 39,903 | $ 39,903 | |||
Stock Option Plans [Member] | 2017 Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 2 years | ||||
Expiration period | 10 years | ||||
Authorized shares under plan | 400,000 | 400,000 | |||
Granted | 303,904 | ||||
Outstanding | 228,062 | 228,062 | |||
Shares remain available for grant | 171,938 | 171,938 | |||
Stock Option Plans [Member] | 2007 Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares vested and exercisable | 98,050 | 98,050 |
Stock Based Compensation (Sched
Stock Based Compensation (Schedule of Fair Value Assumptions) (Details) - $ / shares | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Weighted average assumptions to calculation option fair value | ||
Dividend yield | 0.00% | 5.54% |
Company's expected volatility | 25.56% | 23.41% |
Risk-free interest rate | 0.93% | 0.36% |
Expected term | 5 years 4 months 24 days | 5 years 4 months 24 days |
Weighted average fair value per share of options granted during the period | $ 3.72 | $ 1.59 |
Stock Based Compensation (Sch_2
Stock Based Compensation (Schedule of Stock Option Activity) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Jun. 30, 2021 | |
Number of Shares Subject To Option | ||
Balance at July 1, 2021 | 304,662 | |
Granted | 77,550 | |
Exercised | ||
Forfeited or expired | (56,100) | |
Outstanding at December 31, 2021 | 326,112 | 304,662 |
Vested or expected to vest at December 31, 2021 | 307,578 | |
Exercisable at December 31, 2021 | 220,287 | |
Weighted Average Exercise Price | ||
Balance at July 1, 2021 | $ 23.37 | |
Granted | 14.76 | |
Exercised | ||
Forfeited or expired | 20.53 | |
Outstanding at December 31, 2021 | 21.81 | $ 23.37 |
Vested or expected to vest at December 31, 2021 | 22.16 | |
Exercisable at December 31, 2021 | $ 24.58 | |
Weighted Average Remaining Contractual Term | ||
Outstanding | 6 years 5 months 26 days | 6 years 21 days |
Granted | 9 years 6 months 21 days | |
Vested or expected to vest at December 31, 2021 | 6 years 3 months 25 days | |
Exercisable at December 31, 2021 | 5 years 1 month 24 days | |
Aggregate Intrinsic Value | ||
Outstanding at December 31, 2021 | $ 2,116 | |
Vested or expected to vest at December 31, 2021 | 2,029 | |
Exercisable at December 31, 2021 | $ 0 |
Stock Based Compensation (Sch_3
Stock Based Compensation (Schedule of Changes in Non-Vested Stock Options) (Details) | 6 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Number of Shares Subject to Option | |
Non-vested at July 1, 2021 | shares | 103,450 |
Granted | shares | 77,550 |
Vested | shares | (43,025) |
Forfeited or expired | shares | (32,150) |
Non-vested at December 31, 2021 | shares | 105,825 |
Weighted Average Grant Date Fair Value (per Option) | |
Non-vested at July 1, 2021 | $ / shares | $ 2.22 |
Granted | $ / shares | 3.72 |
Vested | $ / shares | 3.03 |
Forfeited or expired | $ / shares | 2.58 |
Non-vested at December 31, 2021 | $ / shares | $ 2.89 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 |
Standby Letters of Credit [Member] | ||
Contingent liabilities | $ 0 | $ 0 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | $ 7,458,050 | $ 6,962,065 | $ 15,003,482 | $ 14,227,580 | |
ASC 606 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Contract liabilities | 2,904,746 | 2,904,746 | $ 3,077,605 | ||
ASC 606 [Member] | Units Delivered [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | 6,100,228 | 5,865,878 | 12,592,464 | 11,724,584 | |
ASC 606 [Member] | Milestones Achieved [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue | 1,357,822 | $ 1,096,187 | 2,411,018 | $ 2,502,996 | |
ASC 606 [Member] | Backlog [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Intangible assets | $ 70,100,000 | $ 70,100,000 | |||
Percentage of estimated shipments | 30% in 2022; 43% in 2023; 21% in 2024, and 6% thereafter |
Employee Stock Ownership Plan_2
Employee Stock Ownership Plan (Narrative) (Details) | Dec. 01, 2020$ / sharesshares | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)shares | Dec. 31, 2021USD ($)h$ / sharesshares | Dec. 31, 2020USD ($)shares | Sep. 30, 2021shares | Jun. 30, 2021shares | Sep. 30, 2020shares | Jun. 30, 2020shares |
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||||||||
Number of shares allocated to employees | 478,935 | 468,663 | 478,935 | 468,663 | |||||
Number of shares owned | 758,364 | 768,663 | 758,364 | 768,663 | |||||
Common stock, shares outstanding | 2,702,633 | 2,702,633 | 2,702,633 | ||||||
ESOP compensation expense | $ | $ 83,812 | $ 56,274 | $ 168,318 | $ 56,274 | |||||
Common Stock [Member] | |||||||||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||||||||
Common stock, shares outstanding | 2,702,633 | 2,702,633 | 2,702,633 | 2,702,633 | 2,702,633 | 2,702,633 | 2,402,633 | 2,402,633 | |
Employee Stock Ownership Plan [Member] | |||||||||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||||||||
Number of hours worked per year to quality for the plan | h | 1,000 | ||||||||
Number of shares allocated to employees | 469,119 | ||||||||
Period of services rendered | 15 years | ||||||||
Price per share | $ / shares | $ 18.29 | $ 18.29 | |||||||
Aggregate purchase price | $ | $ 5,487,000 | ||||||||
Loan, frequency of periodic payment | annual | ||||||||
Number of loan repayment annual installments | 15 | 15 | |||||||
Interest rate on loan | 3.00% | 3.00% | |||||||
Purchase price per share, lower range limit | $ / shares | $ 18.04 | ||||||||
Purchase price per share, upper range limit | $ / shares | $ 19.43 | ||||||||
Number of shares owned | 769,119 | ||||||||
Common stock, shares outstanding | 2,702,633 | ||||||||
Shares distributed | 8,285 | 456 | |||||||
Employee Stock Ownership Plan [Member] | Common Stock [Member] | |||||||||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||||||||
Number of shares sold | 300,000 | ||||||||
Sale of stock, price per share | $ / shares | $ 0.3333 |
Employee Stock Ownership Plan_3
Employee Stock Ownership Plan (Schedule of ESOP shares) (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Employee Stock Ownership Plan [Abstract] | ||
Allocated shares | 478,935 | 468,663 |
Committed-to-be-released shares | 11,568 | 2,939 |
Unreleased shares | 267,861 | 297,061 |
Total shares held by the ESOP | 758,364 | 768,663 |
Fair value of unreleased shares | $ 3,806,305 | $ 5,620,394 |