Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2015 | Sep. 02, 2015 | Dec. 31, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | PRO DEX INC | ||
Entity Central Index Key | 788,920 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 6,400 | ||
Entity Common Stock, Shares Outstanding | 4,139,579 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 697 | $ 3,188 |
Accounts receivable, net of allowance for doubtful accounts of $36 and $29 at June 30, 2015 and 2014, respectively | 2,326 | 1,776 |
Unbilled receivables | 853 | 1,073 |
Other current receivables | 28 | 31 |
Inventory | 4,310 | 2,600 |
Prepaid expenses | 124 | 110 |
Deferred income taxes | 70 | 115 |
Total current assets | $ 8,408 | 8,893 |
Investments | 1,058 | |
Plant, equipment and leasehold improvements, net | $ 1,470 | $ 1,575 |
Investment in Ramsey property and related notes receivable | 1,652 | |
Goodwill | 353 | |
Intangibles | 547 | $ 105 |
Other assets | 86 | 77 |
Total assets | 12,516 | 11,708 |
Current liabilities: | ||
Accounts payable | 1,867 | 744 |
Accrued liabilities | 1,202 | 1,090 |
Deferred revenue | $ 594 | 232 |
Income taxes payable | $ 53 | |
Note payable | $ 24 | |
Capital lease obligations | 7 | $ 8 |
Total current liabilities | 3,694 | 2,127 |
Non-current liabilities: | ||
Deferred income taxes | 70 | 115 |
Deferred rent | 204 | $ 243 |
Note payable, net of current portion | $ 70 | |
Capital lease obligations, net of current portion | $ 7 | |
Total non-current liabilities | $ 344 | 365 |
Total liabilities | $ 4,038 | $ 2,492 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Common stock, no par value, 50,000,000 shares authorized; 4,139,579 and 4,211,019 shares issued and outstanding at June 30, 2015 and 2014, respectively | $ 18,411 | $ 18,582 |
Accumulated other comprehensive income | 202 | |
Accumulated deficit | $ (9,933) | (9,568) |
Total shareholders' equity | 8,478 | 9,216 |
Total liabilities and shareholders' equity | $ 12,516 | $ 11,708 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands, None in scaling factor is -9223372036854775296 | Jun. 30, 2015 | Jun. 30, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 36 | $ 29 |
Common shares, no par value (in dollars per share) | ||
Common shares, shares authorized | 50,000,000 | 50,000,000 |
Common shares, shares issued | 4,139,579 | 4,211,019 |
Common shares, shares outstanding | 4,139,579 | 4,211,019 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||
Net sales | $ 13,383 | $ 10,812 |
Cost of sales | 9,679 | 7,846 |
Gross profit | 3,704 | 2,966 |
Operating expenses: | ||
Selling expenses | 975 | 585 |
General and administrative expenses | 1,963 | 1,713 |
Research and development costs | 1,668 | 1,482 |
Total operating expenses | 4,606 | 3,780 |
Operating loss | (902) | (814) |
Other income (expense): | ||
Interest income | 6 | 12 |
Realized gain on sale of investments | 455 | 65 |
Gain (loss) on sale of equipment | 1 | (10) |
Interest expense | (6) | (8) |
Total other income | 456 | 59 |
Loss from continuing operations before income taxes | (446) | (755) |
Benefit from income taxes | 44 | 104 |
Net loss from continuing operations | (402) | (651) |
Income from discontinued operations, net of income taxes | 37 | 163 |
Net loss | $ (365) | (488) |
Other comprehensive income, net of tax: | ||
Unrealized gain from marketable equity investments | 262 | |
Less: Reclassification of gains included in net loss | (65) | |
Comprehensive loss | $ (365) | $ (291) |
Basic and diluted income (loss) per share: | ||
Net loss from continuing operations (in dollars per share) | $ (0.10) | $ (0.19) |
Income from discontinued operations (in dollars per share) | 0.01 | 0.05 |
Net loss (in dollars per share) | $ (0.09) | $ (0.14) |
Basic and diluted weighted average common shares outstanding (in shares) | 4,169,326 | 3,493,151 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Jun. 30, 2013 | $ 17,012 | $ 5 | $ (9,080) | $ 7,937 |
Balance at beginning (in shares) at Jun. 30, 2013 | 3,348,184 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | $ (488) | (488) | ||
Issuance of common stock from rights offering | $ 1,514 | 1,514 | ||
Issuance of common stock from rights offering (in shares) | 868,732 | |||
Exercise of stock options | $ 6 | $ 6 | ||
Exercise of stock options (in shares) | 4,104 | (4,104) | ||
Net change in unrealized gain from marketable equity investments | $ 197 | $ 197 | ||
Share-based compensation plan activity | $ 50 | 50 | ||
Restricted stock forfeitures (in shares) | (10,001) | |||
Balance at end at Jun. 30, 2014 | $ 18,582 | $ 202 | $ (9,568) | 9,216 |
Balance at end (in shares) at Jun. 30, 2014 | 4,211,019 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | $ (365) | $ (365) | ||
Exercise of stock options (in shares) | (48,333) | |||
Rights offering costs | $ (2) | $ (2) | ||
Repurchase of options | $ (32) | (32) | ||
Net change in unrealized gain from marketable equity investments | $ (202) | (202) | ||
Share-based compensation plan activity | $ 17 | 17 | ||
Restricted stock forfeitures (in shares) | (1,667) | |||
Share repurchases | $ (154) | $ (154) | ||
Share repurchases (in shares) | (69,773) | 69,773 | ||
Balance at end at Jun. 30, 2015 | $ 18,411 | $ (9,933) | $ 8,478 | |
Balance at end (in shares) at Jun. 30, 2015 | 4,139,579 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (365) | $ (488) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 578 | 527 |
Realized gain on sale of investments | $ (455) | (65) |
Gain on sale of real estate held for sale (Carson City facility) | (167) | |
Loss (gain) on sale or disposal of equipment | $ (1) | 10 |
Share-based compensation | 17 | 50 |
Allowance for doubtful accounts | 7 | 5 |
Changes in operating assets and liabilities: | ||
Accounts receivable and other receivables | (554) | (440) |
Unbilled receivables | 220 | (828) |
Inventory | (1,705) | 1,234 |
Prepaid expenses and other assets | (22) | 50 |
Accounts payable, accrued expenses and deferred rent | 1,196 | (313) |
Deferred revenue | 362 | 91 |
Income taxes receivable and payable | (53) | 5 |
Net cash used in operating activities | (775) | (329) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of equipment and leasehold improvements | $ (244) | (50) |
Proceeds from sale of real estate held for sale (Carson City Facility) | $ 900 | |
Business acquisitions | $ (866) | |
Purchase of notes receivable (See Note 8) | (1,652) | |
Proceeds from sale of equipment | 1 | $ 4 |
Proceeds from sale of investments | 1,324 | 228 |
Increase in intangibles | (64) | (105) |
Purchase of investments | (12) | (654) |
Net cash provided by (used in) investing activities | (1,513) | 323 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on capital lease and note payable | (15) | $ (5) |
Repurchases of common stock | (154) | |
Net proceeds received (paid) related to common stock rights offering | (2) | $ 1,513 |
Proceeds (payments) from exercise (repurchase) of stock options | (32) | 6 |
Net cash provided by (used in) financing activities | (203) | 1,514 |
Net increase (decrease) in cash and cash equivalents | (2,491) | 1,508 |
Cash and cash equivalents, beginning of year | 3,188 | 1,680 |
Cash and cash equivalents, end of year | 697 | $ 3,188 |
Noncash investing and financing activities: | ||
Promissory note issued in conjunction with a business acquisition | 100 | |
Exchange of notes receivable for real property | 1,059 | |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 7 | $ 7 |
Cash paid for interest | $ 6 | $ 8 |
Description of Business
Description of Business | 12 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | 1. Description of Business Pro-Dex, Inc. (Pro-Dex, the Company, we, us or our) specializes in the design and manufacture of powered surgical and dental instruments and multi-axis motion control systems, and serves such markets as medical, research and industrial. Pro-Dexs products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations around the world. During fiscal 2015 we acquired Fineline Molds and Huber Precision, businesses that manufacture plastic injection molds and machined parts, respectively, for a wide variety of industries. We also provide engineering consulting and placement services, as well as quality and regulatory consulting services through our Engineering Services Division. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The summary of significant accounting policies presented below is designed to assist the reader in understanding our consolidated financial statements. Such financial statements and related notes are the representations of management, who is responsible for their integrity and objectivity. In the opinion of management, these accounting policies conform to accounting principles generally accepted in the United States of America (GAAP) in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Pro-Dex Astromec, Inc. (Note 7), Pro-Dex Management, Inc., a non-operating subsidiary as well as Pro-Dex Sunfish Lake, LLC and Pro-Dex Riverside, LLC, both Delaware limited liability companies created in fiscal 2015. All significant inter-company accounts and transactions have been eliminated. Revenue Recognition Revenue on product sales is recognized upon shipment to the customer when risk of loss and title transfer to the customer and all other conditions required by GAAP, as promulgated by the Financial Accounting Standards Board (FASB) in Accounting Standards Codification (ASC) Section 605 (formerly Staff Accounting Bulletin No. 104, Revenue Recognition Certain of our contracts are development and supply contracts. Such contracts provide for billable, fixed-price, non-recurring engineering services in addition to product sales, which are considered as multiple deliverables under the provisions of ASC 605. Revenue from the non-recurring engineering service portions of such contracts is generally recognized under the completed contract method. Accordingly, revenue from product development milestone billing to our customers under such contracts is deferred. Returns of our product for credit are minimal; accordingly, we do not establish a reserve for product returns at the time of sale. Estimated Losses on Product Development Services Cost and revenue estimates related to the product development service portions of development and supply contracts are reviewed and updated quarterly. When it is probable that total costs from the development portion of such contracts will exceed product development service revenue, the expected loss is recognized immediately in cost of sales. Contract costs include all direct material, labor and those indirect costs related to contract performance. Due to the complexity of many of the contracts we have undertaken, the cost estimation process requires significant judgment. It is based upon the knowledge and experience of our project managers, engineers, and finance professionals. Factors that are considered in estimating the cost of work to be completed and ultimate profitability of the fixed price product development portion of development and supply contracts include, among others, the nature and complexity of the work to be performed, availability and productivity of labor, the effect of change orders, the availability of materials, performance of subcontractors, and expected costs for specific regulatory approvals. Warranties Certain of our products are sold with a warranty that provides for repairs or replacement of any defective parts for a period, generally one to two years, after the sale. At the time of the sale, we accrue an estimate of the cost of providing the warranty based on prior experience with such factors as return rates and repair costs, which factors are reviewed quarterly. The warranty accrual is based on historical costs of warranty repairs and expected future identifiable warranty expenses, and is included in accrued expenses in the accompanying consolidated balance sheets. Warranty expenses are included in cost of sales in the accompanying consolidated statements of operations. Changes in estimates to previously established warranty accruals result from current period updates to assumptions regarding repair costs and warranty return rates, and are included in current period warranty expense. Comprehensive Income Comprehensive income encompasses all changes in equity other than those with shareholders and consists of net income (loss) and unrealized gain (loss) on marketable equity investments. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of ninety days or less to be cash equivalents. At June 30, 2015 there were no cash equivalents included in the cash and cash equivalents balance. At June 30, 2014 cash equivalents consisted of investments in money market funds. Accounts Receivable and Unbilled Receivables Trade receivables are stated at their original invoice amounts, less an allowance for doubtful portions of such accounts. Management determines the allowance for doubtful accounts based on facts and circumstances related to specific accounts and on historical experience related to the age of accounts. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously reserved are offset against the allowance when received. Unbilled receivables reflect revenues from non-recurring engineering services not yet billable to customers under the terms of the related development and supply contracts. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or market value. Reductions to estimated market value are recorded, and charged to cost of sales, when indicated based on a formula that compares on-hand quantities to estimated demand over the ensuing 12 months from the measurement date. Investments Investments reported on the June 30, 2014 balance sheet consist of marketable equity securities of publicly held companies. Management intended to hold such securities for a sufficient period in which to realize a reasonable return, which periods may range between one and several years, although there is no assurance that positive returns will be realized or that such securities will not be liquidated in a shorter-than-expected time frame to accommodate future liquidity requirements. Accordingly, investments were classified as non-current and available-for-sale in conformity with ASC Section 320. Investments are marked to market at each measurement date, with unrealized gains and losses presented as adjustments to accumulated other comprehensive income or loss. Long-lived Assets We review the recoverability of long-lived assets, consisting of plant, equipment and leasehold improvements, when events or changes in circumstances occur that indicate carrying values may not be recoverable. Plant, equipment and leasehold improvements are recorded at historical cost and depreciation is provided using the straight-line method over the following periods: Equipment Three to ten years Leasehold improvements Shorter of the lease term or the assets estimated useful life Investment in Ramsey Property and Related Notes Receivable During the fourth quarter of fiscal 2015, as disclosed in a Form 8-K filed with the SEC on May 13, 2015, we entered a settlement agreement such that we received the deed to the land and building located in Ramsey, Minnesota (the Ramsey Property) which had previously been held as security for certain notes receivable. The related notes receivable (as further described in Note 8) are accounted for under ASC Section 310-30 Loans and Debt Securities Acquired with Deteriorated Credit Quality. The notes are recorded at their purchase price and since the notes remain in default, they are considered impaired and have been placed on nonaccrual status, meaning there is no accrual for interest earnings. No interest has been collected or recognized since the date of purchase. Due to uncertainties relating to future cash flows projected to be received on the notes, no accretable yield has been recorded. The notes are considered impaired because we do not believe the contractual payments will be collected pursuant to contract terms. Accordingly, the recorded investment is reflected at the lesser of the purchase price or the estimated fair value of the collateral (with appropriate reductions for estimated disposal costs). Goodwill & Intangibles We recorded $353,000 of goodwill and $54,000 of trade name in conjunction with the asset purchase of Fineline Molds. Accordingly, subsequent to the measurement period described below under business combinations, we will assess potential impairment of goodwill and trade name annually, or more frequently if there are events or changes in circumstances that may indicate potential impairment. Intangibles consist of legal fees incurred in connection with patent applications, capitalized software development costs, covenant not to compete, trade name, and customer lists including backlog. The patent costs will be amortized over the life of the applicable patent upon its issuance and the capitalized software development costs will be amortized over the estimated product life of the underlying product which was released for sale during the fourth quarter of fiscal 2015. The covenant not to compete and customer list including backlog relate to assets acquired in conjunction with the purchase of Huber Precision and Fineline Molds and will be amortized over their estimated useful lives. Variable Interest Entities The Company has a variable interest in Riverside Manufacturing, Inc. (Riverside) because of extending financing in the form of promissory notes and a revolving loan. Therefore, Riverside is considered a variable interest entity (VIE) under GAAP. VIEs are legal entities in which the equity investors do not have sufficient equity at risk for the entity to independently finance its activities or the collective holders do not have the power through voting or similar rights to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the expected losses of the entity, or the right to receive expected residual returns of the entity. Consolidation of a VIE is considered appropriate if a reporting entity is the primary beneficiary, the party that has both significant influence and control over the VIE. Management periodically performs a qualitative analysis to determine if the Company is the primary beneficiary of a VIE. This analysis includes review of the VIEs capital structure, contractual terms, and primary activities, including the Companys ability to direct the activities of the VIE and obligations to absorb losses, or the right to receive benefits, significant to the VIE. Additionally, changes in our investments may result in a reconsideration event that may necessitate consolidation in the future. Business Combinations We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, useful lives and discount rates. Managements estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Income Taxes We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along with net operating losses and tax credit carryovers. Deferred tax assets at both June 30, 2015 and 2014 consisted primarily of basis differences related to research and development tax credit utilization, intangible assets, accrued expenses and inventories. Significant management judgment is required in determining the provision for income taxes and the recoverability of deferred tax assets. Such determination is based on historical taxable income, with consideration given to estimates of future taxable income and the periods over which deferred tax assets will be recoverable. We record a valuation allowance against deferred tax assets to reduce the net carrying value to an amount that we believe is more likely than not to be realized. When we establish or reduce the valuation allowance against deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. Shipping and Handling Payments from customers for shipping and handling are included in net sales . Concentration of Credit Risk Financial instruments that potentially subject us to credit risk consist principally of cash and trade receivables. We place our cash with major financial institutions. At June 30, 2015 and 2014, and throughout the fiscal years then ended, we had deposits in excess of federally insured limits. Credit sales are made to original equipment manufacturers and resellers throughout the world, and sales to such customers account for a substantial portion of our trade receivables. While such receivables are not collateralized, we evaluate their collectability based on several factors including customers payment histories. Compensation Plans Share-Based Plans We recognize compensation expense for all share-based awards made to employees and directors. The fair value of share-based awards is estimated at the grant date using the Black-Scholes option-pricing model. The portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period using the straight-line single option method. The determination of fair value using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends, projected employee stock option exercise behaviors and forfeitures. We estimate stock price volatility based on two factors: (a) the measurement date (typically the grant date) and (b) the expected life of the option, which we calculate using the Staff Accounting Bulletin No. 107 simplified method. Cash-Based Plans Our Annual Incentive Plan (AIP) provides annual cash-based incentive opportunities for our key employees based upon the attainment of certain performance goals. Compensation expense is recognized in the year in which awards under the terms of the AIP are earned. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our operations are affected by numerous factors including market acceptance of our products, changes in technologies, and new laws, government regulations and policies. We cannot predict what impact, if any, the occurrence of these or other events might have on our operations. Significant estimates and assumptions made by management include, but are not limited to, revenue recognition, the allowance for doubtful accounts, accrued warranty expense, inventory valuation, the carrying value of long-lived assets, and the recovery of deferred income tax assets. Basic and Diluted Per Share Information Basic per share amounts are computed on the basis of the weighted-average number of common shares outstanding during each period presented. Diluted per share amounts assume the exercise of all potential common stock equivalents, consisting solely of options to purchase common stock as discussed in Note 12, unless the effect of such exercise is to increase income, or decrease loss, per common share. Fair Value Measurements Fair value is measured based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. Cash and cash equivalents: Investments: Investment in Ramsey property and related notes receivable: Although the methods above may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values, we believe our valuation methods are appropriate. Advertising Advertising costs are charged to selling expense as incurred and amounted to $51,000 and $61,000 for the fiscal years ended June 30, 2015 and 2014, respectively. Recent Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue depicting the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced revenue related disclosures. In July 2015, the FASB deferred the effective date to fiscal years beginning after December 15, 2018 and early adoption of the standard is permitted, but not before the original effective date of December 15, 2017. This update permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial StatementsGoing Concern (Subtopic 205-40). This guidance defines managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue as a going concern and to provide related footnote disclosures. Under the guidance, management is required to evaluate, for each annual and interim reporting period, whether it is probable that the entity will not be able to meet its obligations as they become due within one year after the date that the financial statements are issued or are available to be issued. When management identifies substantial doubt about the entitys ability to continue as a going concern, additional disclosures are required. This guidance will be effective for annual reporting periods beginning after December 15, 2016. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures. In February 2015, the FASB issued ASU 2015-02, Consolidation. This guidance amends existing consolidation guidance in which a reporting entity might be required to consolidate another legal entity in situations in which the reporting entitys contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entitys voting rights, or the reporting entity is not exposed to a majority of the legal entitys economic benefits or obligations. The guidance: · modifies the evaluations of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities; · eliminates the presumption that a general partner should consolidate a limited partner; · affects the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships; and · provides a scope exception from consolidation guidance for reporting entities with interests in certain investment funds. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the Companys consolidated results of operations, financial position or cash flows. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs to simplify the presentation of debt issuance costs. The amendments in this accounting standard update require debt issuance costs be presented on the balance sheet as a direct reduction from the carrying amount of the related debt liability. The amendments in this accounting standard update are to be applied retrospectively and are effective for interim and annual reporting periods beginning after December 15, 2015. We do not expect the adoption of this accounting standard update to have a material impact on our balance sheet. Reclassifications Certain prior period balances have been reclassified to conform to the current period presentation. |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Business Acquisitions | 3. Business Acquisitions During the fiscal year ended June 30, 2015, we completed two acquisitions. On December 1, 2014, we completed the acquisition of Huber Precision (Huber), a manufacturer of machined parts, primarily for the oil and electronics industry. The aggregate purchase price paid was $209,000. On February 1, 2015, we completed the acquisition of Fineline Molds (Fineline), a manufacturer of plastic injection molds for a variety of industries. The aggregate purchase price was $757,000, of which $657,000 was paid in cash at closing and $100,000 of which is to be paid by the Company under the terms of a four-year promissory note issued to Fineline at closing, which bears interest at 4% per annum and requires sixteen equal quarterly payments of principal and accrued interest in the amount on $6,794. The note is secured by all of the assets acquired by us from Fineline. The following summarizes the consideration paid and the estimated fair values of the assets acquired for each acquisition as of the respective acquisition date (in thousands): Huber Purchase Price Allocation Fineline Purchase Price Allocation Consideration: Cash $ 209 $ 657 Promissory note payable to seller 100 Total consideration $ 209 $ 757 Fair value of assets acquired: Inventory $ 5 $ Fixed Assets 37 149 Covenant not to compete 30 22 Trade name 54 Customer list and backlog 137 179 Net assets acquired $ 209 $ 404 Goodwill $ $ 353 The acquisitions were completed to support expansion of the business and broaden the Companys customer base. We have accounted for these acquisitions as business combinations using the acquisition method of accounting. This method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. There were no liabilities assumed as part of either the Huber or Fineline acquisitions. Pro forma historical results of operations related to both acquisitions during the period prior to the acquisition date have not been presented because they are not material to our consolidated statements of operations and comprehensive income (loss). The results of operations related to the businesses acquired have been included in the Companys consolidated statements of operations since the date of acquisition, respectively. The fair value determination of assets recorded are those of management. The fair value determination of the customer list and backlog was based on the excess of earnings method which is based on the prospective net cash flows of the existing customers. The fair value determination of the trade name was based upon a relief from royalty approach which assesses the royalty savings an entity realizes since it owns the asset and isnt required to pay a third party license for its use. The fair value determination of the covenants no to compete was based upon a discounted cash flow model. |
Composition of Certain Financia
Composition of Certain Financial Statement Items | 12 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Composition of Certain Financial Statement Items | 4. Composition of Certain Financial Statement Items Inventory Inventory is stated at the lower of cost (first-in, first-out) or market and consists of the following (in thousands): June 30, 2015 2014 Raw materials /purchased components $ 2,025 $ 878 Work in process 1,030 525 Sub-assemblies /finished components 1,095 823 Finished goods 160 374 Total inventory $ 4,310 $ 2,600 Investments During the fiscal year ended June 30, 2015, we liquidated our investment portfolio to fund our working capital requirements, especially our inventory requirements, as we prepared to launch production of two new products. We recorded realized gains of $455,000 during fiscal 2015 upon the sale of our investments in marketable equity securities of publicly held companies. Our investments at June 30, 2014 amounted to $1,058,000 which represented an aggregate cost basis of $857,000, gross unrealized gains aggregating $209,000 and unrealized losses of $7,000. During the fiscal year ended June 30, 2014, we sold certain of our investments in marketable equity securities of publicly held companies and recorded realized gains of $65,000. Equipment and Leasehold Improvements Equipment and leasehold improvements consist of the following (in thousands): June 30, 2015 2014 Office furnishings and fixtures $ 2,008 $ 2,054 Machinery and equipment 4,803 4,574 Leasehold improvements 2,086 2,312 Total 8,897 8,940 Less: Accumulated depreciation and amortization (7,427 ) (7,365 ) $ 1,470 $ 1,575 Depreciation expense, which includes capital lease amortization, for the years ended June 30, 2015 and 2014 amounted to $534,000 and $527,000, respectively. Intangibles Intangibles consist of the following (in thousands): June 30, June 30, Capitalized software development costs $ 73 $ 37 Covenant not to compete 52 Trade name 54 Customer list and backlog 316 Patent-related costs 96 68 Total intangibles $ 591 $ 105 Less accumulated amortization (44 ) $ 547 $ 105 Capitalized software development costs relate to internally developed software, which will be amortized over the estimated product life of the underlying product which was released for sale during the fourth quarter of fiscal 2015. Both the covenant not to compete and the customer list and backlog relate to assets acquired in conjunction with the business acquisitions more fully described in Note 3 above and will be amortized over various periods not to exceed ten years. The trade name relates exclusively to Fineline Molds and has an indefinite life, subject to impairment loss consideration if certain conditions exist. Patent-related costs consist of legal fees incurred in connection with patent applications, and will be amortized over the life of the applicable patent upon its issuance, or expensed immediately in the event the patent office denies the issuance of the patent. Expected amortization expense for the next five fiscal years ending June 30 are as follows (in thousands): Fiscal Year: Amortization Expense 2016 $117 2017 53 2018 53 2019 53 2020 47 Total expected amortization $323 Accrued Liabilities Accrued liabilities consist of the following (in thousands): June 30, 2015 2014 Warranty $ 261 $ 237 Payroll and related items 302 240 Accrued legal and professional fees 46 13 Accrued sales, use and excise taxes 36 8 Accrued losses on development contracts 385 468 Accrued inventory in transit 83 22 Other 89 102 $ 1,202 $ 1,090 Accumulated Other Comprehensive Income Accumulated other comprehensive income consists of the following (in thousands): June 30, 2015 2014 Unrealized gain on marketable equity securities $ $ 262 Less: Reclassification of gains included in net loss (65 ) Unrealized gain on marketable securities, net $ $ 197 |
Warranty Accrual
Warranty Accrual | 12 Months Ended |
Jun. 30, 2015 | |
Product Warranties Disclosures [Abstract] | |
Warranty Accrual | 5. Warranty Accrual Information relating to the accrual for warranty costs for the years ended June 30, 2015 and 2014 is as follows (in thousands): June 30, 2015 2014 Balance at beginning of year $ 237 $ 323 Accruals during the year 372 225 Change in estimates of prior period accruals (208 ) (108 ) Warranty amortization (140 ) (203 ) Balance at end of year $ 261 $ 237 Warranty expense relating to new product sales and changes to estimates was $164,000 and $117,000, respectively, for the fiscal years ended June 30, 2015 and 2014. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 6. Income Taxes The provision for (benefit from) income taxes from continuing operations consists of the following amounts (in thousands): Years Ended June 30, 2015 2014 Current: Federal $ $ State (44 ) 3 Deferred: Federal (84 ) State (23 ) Benefit from income taxes $ (44 ) $ (104 ) The effective income tax rate on loss from continuing operations differs from the United States statutory income tax rates for the reasons set forth in the table below (in thousands, except percentages). Years Ended June 30, 2015 2014 Amount Percent Pretax Income Amount Percent Pretax Income Loss from continuing operations before income taxes $ (446 ) 100 % $ (755 ) 100 % Computed expected income tax benefit on loss from continuing operations before income taxes $ 152 34 % $ 257 34 % State tax, net of federal benefit 30 7 % (10 ) (1 %) Tax incentives 88 20 % 30 4 % Change in valuation allowance (227 ) (51 %) (154 ) (21 %) Permanent differences (31 ) (4 %) State income tax rate adjustment 12 2 % Other 1 Income tax benefit $ 44 10 % $ 104 14 % The total income tax expense recorded for the years ended June 30, 2015 and 2014 was as follows (in thousands): June 30, 2015 2014 Tax benefit from continuing operations $ (44 ) $ (104 ) Tax expense from discontinued operations 107 $ (44 ) $ 3 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at June 30, 2015 and 2014 are as follows (in thousands): June 30, 2015 2014 Deferred tax assets/(liabilities) current: Accrued expenses $ 385 $ 253 Inventory 457 486 Other 6 Net operating losses 119 State taxes (3 ) 1 Less: valuation allowance (775 ) (744 ) Net deferred tax assets $ 70 $ 115 June 30, 2015 2014 Deferred tax assets/(liabilities) non-current: Income tax credit carry forwards $ 1,562 $ 1,443 Net operating losses 1,592 1,299 Intangible assets 251 287 Deferred rent 132 Other 28 State taxes 22 16 Property and equipment, principally due to differing depreciation methods (316 ) (458 ) Goodwill (4 ) Federal impact of state taxes (20 ) Share based compensation 16 Unrealized gain on investment (85 ) Total gross deferred tax assets 3,115 2,650 Less: valuation allowance (3,185 ) (2,765 ) Net deferred tax liabilities $ (70 ) $ (115 ) We have federal net operating loss carry forwards at June 30, 2015 and 2014 in the amount of $2,983,000 and $2,556,000, respectively, which begin to expire in 2034. Fiscal 2015 federal net operating losses include $17,000 of losses which have been created from excess stock compensation deductions. State net operating loss carry forwards at June 30, 2015 and 2014 amount to $6,543,000 and $6,339,000, respectively, and begin to expire in 2025. Federal tax credit carry forwards at June 30, 2015 and 2014 amount to $1,072,000 and $884,000, respectively, and begin to expire in 2026. State tax credit carry forwards at June 30, 2015 and 2014 amount to $773,000 and $559,000, respectively, the majority of which do not expire. Significant management judgment is required in determining our provision for income taxes and the recoverability of our deferred tax asset. Such determination is based primarily on our historical taxable income, with some consideration given to our estimates of future taxable income by jurisdictions in which we operate and the period over which our deferred tax assets will be recoverable. Due to cumulative taxable losses in recent years, we have maintained a full valuation allowance against our deferred tax assets at June 30, 2015 and 2014, information related to which is as follows (in thousands): Valuation Allowance Balance at July 1, 2014 $ (3,509 ) Increase in deferred tax asset valuation allowance (451 ) Balance at June 30, 2015 $ (3,960 ) As of June 30, 2015, we have accrued $399,000 of unrecognized tax benefits related to federal and state income tax matters that would reduce the Companys income tax expense if recognized. However, since we currently have a full valuation allowance against our deferred tax assets the timing of the favorable effective tax rate impact will be delayed until such time, if ever, that the valuation allowance is eliminated. Information with respect to our accrual for unrecognized tax benefits is as follows (in thousands): June 30, 2015 2014 Unrecognized tax benefits: Beginning balance $ 363 $ 347 Additions based on federal tax positions related to the current year 8 21 Additions based upon state tax positions related to the current year 15 Additions for tax positions of prior years 13 Reductions for tax positions of prior years (5 ) Ending balance $ 399 $ 363 Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next twelve months due to tax examinations, settlement activities, expirations of statute of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities, we do not anticipate any significant changes to unrecognized tax benefits over the next twelve months. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense when applicable. As of June 30, 2015, no interest or penalties applicable to our unrecognized tax benefits have been accrued since we have sufficient tax attributes available to fully offset any potential assessment of additional tax. We are subject to U.S. federal income tax, as well as income tax of multiple state tax jurisdictions. We are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended June 30, 2012 and later. Our state income tax returns are open to audit under the statute of limitations for the years ended June 30, 2011 and later. |
Discontinued Operations and Rea
Discontinued Operations and Real Estate Held for Sale | 12 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations and Real Estate Held for Sale | 7. Discontinued Operations and Real Estate Held for Sale In February 2012, we completed the sale of our fractional horsepower motor product line located in Carson City, Nevada, operating under the name Pro-Dex Astromec (Astromec) pursuant to an Asset Purchase Agreement (the APA). Under the terms of the APA, we received earnout payments based on revenues generated from the sale of certain products as defined in the APA. Such earnout payments, if and when earned, were paid to us within 30 days following the end of each of our fiscal quarters during the three years subsequent to the February 2012 closing date, and amount to 6%, 4% and 2% of the eligible sales in the first, second and third such years, respectively. The earnout payments are recognized in the quarter in which we become entitled to receive them. For the years ended June 30, 2015 and 2014, we recognized income from earnout payments of $53,000 and $120,000, respectively, of which $17,000 was included in trade receivables in the accompanying June 30, 2014 balance sheet, and was received in July 2014. We have recognized an aggregate of $404,000 in income from such earnout payments since the February 2012 closing date. In addition, as a result of the sale of the Astromec product line, we listed for sale the land and building constituting the facility in Carson City, Nevada, which was presented as real estate held for sale in the June 30, 2013 consolidated balance sheet with an aggregate carrying amount of $733,000. On July 5, 2013, we completed the sale of the Carson City facility. The sales price of the property was $980,000, of which we received net proceeds of $900,000, after deductions for expenses related to the sale, primarily consisting of broker commissions and fees, aggregating approximately $80,000, resulting in a gain of $167,000. Based on the foregoing, and in conformity with applicable accounting guidance, the Astromec product line qualifies as a discontinued operation. Accordingly, financial results of Astromec have been reported as discontinued operations in the accompanying consolidated statements of operations for all periods presented. Information regarding revenue and operating results of Astromec included in discontinued operations is as follows (in thousands): Years Ended June 30, 2015 2014 Revenues $ 53 $ 120 Income before provision for income taxes of $0 and $107,000, respectively $ 37 $ 270 We do not expect to receive any future revenue or incur any future expenses related to the sale of Astromec. |
Investment in Ramsey Property a
Investment in Ramsey Property and Related Notes Receivable & Variable Interest Entity Considerations | 12 Months Ended |
Jun. 30, 2015 | |
Receivables [Abstract] | |
Investment in Ramsey Property and Related Notes Receivable & Variable Interest Entity Considerations | 8. Investment in Ramsey Property and Related Notes Receivable & Variable Interest Entity Considerations In November 2014, the Company purchased two promissory notes through a Loan Purchase and Sale Agreement in the amount of $1.2 million. The promissory notes were cross-collateralized and originally secured by (collectively, the Collateral), among other things, real property consisting of 2.3 acres of land and an approximate 30,000 square foot industrial building and a security interest in substantially all of the assets of Riverside Manufacturing, Inc. (Riverside) (consisting primarily of machine shop equipment and accounts receivable). The notes were recorded at their purchase price and since the notes remain in default, they have been placed on nonaccrual status, and therefore, the Company has not collected or recognized any interest income since the date of purchase. Additionally, due to uncertainties relating to future cash flows projected to be received on the notes, no accretable yield has been recorded. During the third quarter of fiscal 2015, we entered into forbearance agreements with Riverside whereby we agreed to forbear from enforcing our rights under the promissory notes until July 31, 2015. Additionally, we entered into a revolving loan agreement, whereby we have agreed to advance Riverside from time-to-time up to an aggregate amount of $200,000 at any time prior to July 31, 2015. During the fourth quarter of fiscal 2015, we amended the revolving loan agreement to provide for advances to Riverside of up to an aggregate amount of $300,000 under a Revolving Loan Modification Agreement filed herewith. Additionally, during the fourth quarter of fiscal 2015, as disclosed in a Form 8-K filed with the SEC on May 13, 2015, we entered a settlement agreement such that we received the deed to the land and building located in Ramsey, Minnesota which had previously been held as security for notes receivable. The notes are considered impaired because we do not believe the contractual payments will be collected pursuant to contract terms. Accordingly, the recorded investment is reflected at the lesser of the purchase price or the estimated fair value of the collateral (with appropriate reductions for estimated disposal costs). As of June 30, 2015, we obtained third party appraisals of the land and building as well as the equipment which is security for the notes, less estimates of liquidation costs and have determined that no impairment charge is necessary. As of June 30, 2015, the Company has evaluated whether or not the investments in Riverside create a variable interest entity (VIE) requiring consolidation. VIEs are legal entities in which the equity investors do not have sufficient equity at risk for the entity to independently finance its activities or the collective holders do not have the power through voting or similar rights to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the expected losses of the entity, or the right to receive expected residual returns of the entity. Consolidation of a VIE is considered appropriate if a reporting entity is the primary beneficiary, the party that has both significant influence and control over the VIE. Management performed a qualitative analysis to determine if the Company is the primary beneficiary of Riverside. The Company performed a VIE analysis including a review of Riversides capital structure, contractual terms, and primary activities, including the Companys ability to direct the activities of Riverside and its obligations to absorb losses, or the right to receive benefits, significant to Riverside. The Company has determined that Riversides debt represented by the two promissory notes and the revolving loan constitute the majority of its financial support and continuing support for its ongoing operations, and that the equity investment at risk in Riverside was insufficient to permit financing of activities without additional financial support from the Company. Accordingly, it was determined that the Company has a variable interest in Riverside and Riverside is a variable interest entity of the Company. Based on the Companys analysis as of June 30, 2015, however, it was determined that the Company is not the primary beneficiary of Riverside because the sole shareholder of Riverside has retained the day to day management and control over all key economic decisions of the Riverside business and the Company has no authority as the primary creditor of Riverside to affect any of these management decisions nor does the Company have any obligation to absorb Riversides losses or the right to receive any benefits from Riverside. Our total investment in Riverside as of June 30, 2015 is represented by real estate and notes receivable in the amount of $1,624,000 reported on our consolidated balance sheet collectively as Investment in Ramsey property and related notes receivable. Our maximum investment at risk, inclusive of additional credit extended to Riverside between June 30, 2015 and July 31, 2015, should Riverside remain in default on the notes coupled with our inability to foreclose on the collateral and sell the land and building would be $1,710,000. During the fiscal year ended June 30, 2015 we have provided no support, financial or otherwise, to Riverside other than as contractually required by the revolving loan agreement. The payments we have advanced to Riverside under the revolving loan agreement have generally been made to fund Riversides ongoing working capital needs. Riverside is a contract manufacturer providing services to the aerospace, commercial airline, transportation and defense-related sectors and its unaudited revenues for its fiscal year ended December 31, 2014 totaled $1.9 million. The Company originally acquired the notes to achieve a return on capital upon liquidation or operation of the Riverside assets. The Company entered into the forbearance agreements with Riverside to allow further time for Riverside to improve its financial performance and for the Company to evaluate those results prior to liquidating the investment. See Note 15 Subsequent Events. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Leases We lease our office, production and warehouse facilities in Irvine, California and Beaverton, Oregon under agreements that expire in April 2018 and July 2017, respectively. Both leases require us to pay insurance, taxes, and other expenses related to the leased space. On December 13, 2013, we entered into a first amendment with respect to our Beaverton, Oregon lease which extended the lease termination from April 30, 2014 to July 31, 2017, reduced the occupied square footage, reduced the corresponding monthly base rent by $1,352 and provided for one month of rent abatement over each of the next three years of the extended lease term. On July 15, 2013, we entered into an amendment with respect to our Irvine, California lease which provides for a $4,227 reduction in the monthly base rent (as compared to the monthly base rent that would have been payable under the original lease terms) beginning on July 1, 2013 and continuing for the remainder of the term of the lease. Additionally, during the fiscal year ended June 30, 2015 we entered leases in conjunction with the acquisitions of Huber Precision and Fineline Molds, located in San Carlos, California and San Dimas, California respectively. These leases expire on November 30, 2015 and February 28, 2017, respectively. Finally, during fiscal 2015 we opened a sales office in Troy, Michigan to support our engineering services division. The lease will expire on December 31, 2015 and as a result of closing down the office during fiscal 2015, we accrued for the remaining rent expense as of June 30, 2015. Rent expense in 2015 and 2014 was $550,000 and $518,000, respectively. Minimum lease payments for future fiscal years ending June 30 are as follows (in thousands): Operating Leases Fiscal Year: 2016 $ 553 2017 552 2018 361 Total minimum lease payments $ 1,466 Compensation Arrangements Retirement Savings 401(k) Plan The Pro-Dex, Inc. Retirement Savings 401(k) Plan (the 401(k) Plan) is a defined contribution plan we administer that covers substantially all our employees and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Employees are eligible to participate in the 401(k) Plan when they have attained 19 years of age and then can enter into the 401(k) Plan on the first day of each calendar quarter. Participants are eligible to receive non-discretionary Pro-Dex matching contributions of 25% of their contributions up to 5% of eligible compensation. For the years ended June 30, 2015 and 2014, we recognized compensation expense amounting to $33,000 and $31,000, respectively, in connection with the 401(k) Plan. Annual Incentive Plan (AIP) The AIP provides annual incentive opportunities for our key employees based upon the attainment of certain performance goals. Compensation expense under the terms of the AIP amounted to $29,000 in fiscal year 2012. No compensation expense was accrued under the terms of the AIP in either fiscal year 2015 or 2014, however a reversal of approximately $5,000 and $9,000 of previously accrued compensation expense was recorded in fiscal 2015 and 2014, respectively, due to the separation from employment with us of one of the AIP participants whose separation released us from payment under the terms of the AIP. Accrued AIP awards included in accrued liabilities in the accompanying consolidated balance sheets as of June 30, 2015 and 2014 were $15,000 and $20,000, respectively. In September 2013, our Board approved an AIP that provides sets of incentives to achieve performance goals on an annual and a multi-year basis. Legal Matters We are from time to time a party to various legal proceedings incidental to our business. There can be no certainty, however, that we may not ultimately incur liability or that such liability will not be material and adverse. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | 10. Share-Based Compensation Stock Option Plans Through June 2014, we had two active stock option plans, the Second Amended and Restated 2004 Stock Option Plan (the Employees Stock Option Plan) and the Amended and Restated 2004 Directors Stock Option Plan (the Directors Stock Option Plan and, collectively with the Employees Stock Option Plan, the Option Plans), pursuant to which (i) options to purchase shares of common stock, or (ii) restricted shares of common stock, could be granted up to an aggregate amount of 1,333,333 common shares, with 1,066,667 and 266,666 shares distributed between the Employees Stock Option Plan and the Directors Stock Option Plan, respectively. The Option Plans were substantially similar, providing for a strike price equal to the closing price for a share of our common stock as of the last business day immediately prior to the Grant Date, vesting periods, as determined by the Board of Directors for the Employees Stock Option Plan and six months for the Directors Stock Option Plan, and terms of up to ten years, subject to forfeit 30 days after the holder ceases to be an employee or 90 days after the holder ceases to be director, as the case may be. At June 30, 2014, options to purchase an aggregate of 531,381 and 173,334 shares under the Employees Stock Option Plan and the Directors Stock Option Plan, respectively, were available to grant in future years. Aggregate share-based compensation expense under the Plans for the years ended June 30, 2015 and 2014 were $17,000 and $50,000, respectively. There were no stock options granted during the fiscal years ended June 30, 2015 and 2014. As of June 30, 2015, there was an aggregate of $1,000 of unrecognized compensation cost under the Option Plans related to 5,000 non-vested outstanding stock options with a per share weighted average value of $1.73. The unrecognized expense is anticipated to be recognized on a straight-line basis over a weighted average period of 2.4 months. The following is a summary of stock option activity under the Option Plans for the years ended June 30, 2015 and 2014: Outstanding Options Number of Shares Weighted-Average Exercise Price Balance, July 1, 2013 292,504 $ 2.48 Options granted Options canceled or expired (123,398 ) 2.22 Options exercised (4,104 ) 2.33 Balance, July 1, 2014 165,002 $ 2.40 Options granted Options canceled or expired (10,001 ) 4.94 Options exercised (48,333 ) 1.87 Balance, June 30, 2015 106,668 $ 2.41 Stock Options Exercisable at June 30, 2015 101,668 $ 2.44 The following table summarizes information regarding options outstanding and options exercisable under the Option Plans at June 30, 2015: Options Outstanding Options Exercisable Range of Number Outstanding Weighted-Avg. Remaining Contractual Life Weighted- Aggregate. Intrinsic Value Number Outstanding Weighted-Avg. Remaining Contractual Life Weighted- Exercise Price Average Intrinsic Value $0 to 2.50 95,000 6.39 $1.88 $ 43,850 90,000 6.35 $1.89 $ 40,800 2.5 to 5.00 3,334 1.88 4.38 3,334 1.88 4.38 7.51 to 10.00 8,334 .52 7.65 8,334 .52 7.65 Total 106,668 5.79 years $ 2.41 $ 43,850 101,668 5.72 $ 2.44 $40,800 In June 2014, our Board of Directors terminated the Employee Stock Option Plan, with the provision that options outstanding under the Employee Stock Option Plan will remain outstanding in accordance with their respective terms. At the date of termination, 531,381 shares were reserved for issuance under the Employee Stock Option Plan in excess of shares issuable pursuant to outstanding options, all of which shares will be available for issuance under the provisions of the Employee Stock Purchase Plan described below. In September 2014, our Board approved the inclusion in our proxy statement for approval by our shareholders at the 2014 Annual Meeting of Shareholders its recommendation to terminate the Directors Stock Option Plan, which proposal was approved by our shareholders at the December 3, 2014 Annual Meeting. At September 30, 2014, 173,334 shares were reserved for issuance under the Directors Stock Option Plan, all of which will be available for issuance under the provisions of the Employee Stock Purchase Plan described below. Restricted Stock The following is a summary of restricted share activity for the years ended June 30, 2015 and 2014: Outstanding Restricted Stock Units Number of Shares Weighted-Average On Grant Date Balance, June 30, 2013 32,500 $ 1.73 Granted Forfeited (10,001 ) 1.73 Vested (9,166 ) 1.73 Balance, June 30, 2014 13,333 $ 1.73 Granted Forfeited (1,667 ) 1.73 Vested (6,666 ) 1.73 Balance, June 30, 2015 5,000 $ 1.73 As of June 30, 2015, there was $1,000 in unrecognized compensation cost related to non-vested outstanding restricted shares. The unrecognized expense is anticipated to be amortized over the next 2.4 months. Employee Stock Purchase Plan Also in September 2014, our Board approved the establishment of an Employee Stock Purchase Plan (the ESPP). The ESPP conforms to the provisions of Section 423 of the Internal Revenue Code, has coterminous offering and purchase periods of six months, and bases the pricing to purchase shares of our common stock on a formula so as to result in a per share purchase price that approximates a 15% discount from the market price of a share of our common stock at the end of the purchase period. The Board of Directors also approved the provision that shares formerly reserved for issuance under the Employee Stock Option Plan in excess of shares issuable pursuant to outstanding options be reserved for issuance pursuant to the ESPP. |
Major Customers & Suppliers
Major Customers & Suppliers | 12 Months Ended |
Jun. 30, 2015 | |
Risks and Uncertainties [Abstract] | |
Major Customers | 11. Major Customers & Suppliers During fiscal year 2015 and 2014, the Company had one customer with sales totaling 49 percent of total sales each year. Accounts receivable at June 30, 2015 and 2014 from that same significant customer accounted for 30 percent and 53 percent, respectively, of total gross accounts receivable. During fiscal 2015, we had one supplier that accounted for 16 percent of total purchases. Accounts payable due to this same significant supplier represented 36 percent of total accounts payable as of June 30, 2015. We had no suppliers during fiscal 2014 who accounted for more than 10 percent of total purchases. |
Loss Per Share
Loss Per Share | 12 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Loss Per Share | 12. Loss Per Share We calculate basic loss per share by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share reflects the effects of potentially dilutive securities. Because we incurred net losses for the fiscal years ended June 30, 2015 and 2014, basic and diluted loss per share were the same as the inclusion of common shares of 22,607 and 23,519 as of June 30, 2015 and 2014, respectively, representing potentially issuable shares under the terms of outstanding stock option grants would have had an antidilutive effect. The summary of the basic and diluted earnings per share calculations for the years ended June 30, 2015 and 2014 is as follows (in thousands, except per share data): Years Ended June 30, 2015 2014 Basic & Diluted: Loss from continuing operations $ (402 ) $ (651 ) Weighted average shares outstanding 4,169 3,493 Basic and diluted loss per share from continuing operations $ (0.10 ) $ (0.19 ) Income from discontinued operations $ 37 $ 163 Weighted average shares outstanding 4,169 3,493 Basic and diluted income per share from discontinued operations $ 0.01 $ 0.05 Net loss $ (365 ) $ (488 ) Weighted average shares outstanding 4,169 3,493 Basic and diluted loss per share $ (0.09 ) $ (0.14 ) |
Common Stock
Common Stock | 12 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Common Stock | 13. Common Stock Rights Offering In April 2014, we completed a common stock rights offering, whereby we received gross proceeds of approximately $1.65 million, before expenses of $140,000, through shareholder subscriptions for 868,732 shares of common stock. Of the total amount of shares issued, 317,231 and 156,189 shares were issued to AO Partners I, LP (AO Partners) and Farnam Street Partners, L.P. (Farnam Street Partners), respectively, the Companys two largest shareholders, who each exercised its full pro-rata allotment of rights in the offering. AO Partners, LLC is the General Partner of AO Partners, and Nicholas J. Swenson, a director of the Company, is the Managing Member of AO Partners. Raymond E. Cabillot, also a director of the Company, is the CEO of Farnam Street Partners. Share Repurchase Program In September 2013, our Board approved a share repurchase program authorizing the Company to repurchase up to 750,000 shares of our common stock. In accordance with, and as part of, this share repurchase program, our Board approved, on September 23, 2014, the adoption of a prearranged share repurchase plan intended to qualify for the safe harbor under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (10b5-1 Plan). The 10b5-1 Plan became effective on September 24, 2014 and terminated on March 23, 2015. Through March 23, 2015, we repurchased 69,773 shares at an aggregate cost of $154,000, inclusive of fees, under the terms of the 10b5-1 Plan. Repurchases under the 10b5-1 Plan were administered through an independent broker. |
Segment Information
Segment Information | 12 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | 14. Segment Information In fiscal 2015, the Company has four reportable segments based on its business activities and organization: · Pro-Dex located in Irvine, California providing primarily medical and dental instruments using shared production and assembly machines and workforce. This segment also incorporates Huber Precision as the revenues and assets of Huber Precision are not material to the Companys total revenues and assets. · OMS located in Beaverton, Oregon providing multi-axis motion control applications. · Fineline located in San Dimas, California. This business was purchased on February 1, 2015 and is a manufacturer of plastic injection molds for a variety of industries. · Engineering Services Division or (ESD). This division was launched in fiscal 2015 to provide permanent placement and contract services in the fields of engineering, manufacturing and quality to diverse businesses. In deciding how to allocate resources and assess performance, the Companys chief executive officer regularly evaluates the sales and operating income of these segments. Operating income is the gross margin of the segment less direct expenses of the segment. Unallocated corporate expenses include our corporate administrative cost center, which primarily includes costs associated with being a public company, as well as general and administrative expenses incurred related to our investment in the Ramsey property and related notes receivable and is a subset of total general and administrative expenses. Additionally, other costs incurred in our general and administrative expenses (G&A) including salaries and other personnel-related expenses for corporate, accounting, finance and human resource personnel, as well as costs for outsourced information technology services, are not allocated by segment internally and are included in Pro-Dex in the tables below. The following tables summarize segment performance for fiscal 2015 and 2014 (in thousands): Pro-Dex OMS Fineline ESD Corporate Unallocated Total Fiscal 2015 Net Sales $ 11,617 $ 1,394 $ 257 $ 115 $ $ 13,383 Gross Profit 2,653 927 44 80 3,704 Operating Income (loss) 75 144 (33 ) (361 ) (727 ) (902 ) Depreciation and amortization expense 536 11 31 578 Total assets 8,479 548 962 17 2,510 12,516 Pro-Dex OMS Fineline ESD Corporate Unallocated Total Fiscal 2014 Net Sales $ 9,298 $ 1,514 $ $ $ $ 10,812 Gross Profit 2,040 926 2,966 Operating Income (loss) (376 ) 103 (541 ) (814 ) Depreciation and amortization expense 513 14 527 Total assets 6,639 602 4,467 11,708 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events On August 6, 2015 we sent a notice of default to Riverside Manufacturing, Inc. (Riverside) noting defaults under the various notes more fully described in Note 8, including but not limited to, failure to pay monthly payments from March 1, 2015 to July 1, 2015, failure to pay accrued interest from March 1, 2015 to July 1, 2015 and failure to pay the principal balance due by July 31, 2015. We are prepared to pursue legal action and evict Riverside from the premises. As of the date of this filing, we do not know how long it will take to complete the eviction proceedings. In September, 2015 we entered into two separate financing transactions, as reported in the Companys Current Report on Form 8-K filed with the SEC on September 14, 2015. The Company borrowed $500,000 from Fortitude Income Funds, LLC under a promissory note dated September 8, 2015. The loan bears interest at 12 percent per annum, contains a loan origination fee of $15,000 plus expenses, and requires monthly interest only payments until its maturity on March 15, 2016. The loan contains two three-month options to extend the principal re-payment, each requiring an up-front payment of $3,750. The loan is secured by a combination mortgage, security agreement and fixture statement covering the Ramsey Property. Additionally, on September 9, 2015 we entered a Loan and Security Agreement with Summit Financial Resources LP, (the Summit Loan) whereby we can borrow up to $1.0 million against our eligible receivables, as defined in the agreement. Borrowed funds will bear interest at a rate of prime plus 2 percent, and incur an additional administrative fee of 0.7 percent on the average outstanding balance. The Summit Loan has an initial period of 18 months with successive one year renewal options and requires an annual facility fee of $10,000. Both financing agreements contain customary representations and warranties for loans of this nature. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Pro-Dex Astromec, Inc. (Note 7), Pro-Dex Management, Inc., a non-operating subsidiary as well as Pro-Dex Sunfish Lake, LLC and Pro-Dex Riverside, LLC, both Delaware limited liability companies created in fiscal 2015. All significant inter-company accounts and transactions have been eliminated. |
Revenue Recognition | Revenue Recognition Revenue on product sales is recognized upon shipment to the customer when risk of loss and title transfer to the customer and all other conditions required by GAAP, as promulgated by the Financial Accounting Standards Board (FASB) in Accounting Standards Codification (ASC) Section 605 (formerly Staff Accounting Bulletin No. 104, Revenue Recognition Certain of our contracts are development and supply contracts. Such contracts provide for billable, fixed-price, non-recurring engineering services in addition to product sales, which are considered as multiple deliverables under the provisions of ASC 605. Revenue from the non-recurring engineering service portions of such contracts is generally recognized under the completed contract method. Accordingly, revenue from product development milestone billing to our customers under such contracts is deferred. Returns of our product for credit are minimal; accordingly, we do not establish a reserve for product returns at the time of sale. |
Estimated Losses on Product Development Services | Estimated Losses on Product Development Services Cost and revenue estimates related to the product development service portions of development and supply contracts are reviewed and updated quarterly. When it is probable that total costs from the development portion of such contracts will exceed product development service revenue, the expected loss is recognized immediately in cost of sales. Contract costs include all direct material, labor and those indirect costs related to contract performance. Owing to the complexity of many of the contracts we have undertaken, the cost estimation process requires significant judgment. It is based upon the knowledge and experience of our project managers, engineers, and finance professionals. Factors that are considered in estimating the cost of work to be completed and ultimate profitability of the fixed price product development portion of development and supply contracts include, among others, the nature and complexity of the work to be performed, availability and productivity of labor, the effect of change orders, the availability of materials, performance of subcontractors, and expected costs for specific regulatory approvals. |
Warranties | Warranties Certain of our products are sold with a warranty that provides for repairs or replacement of any defective parts for a period, generally one to two years, after the sale. At the time of the sale, we accrue an estimate of the cost of providing the warranty based on prior experience with such factors as return rates and repair costs, which factors are reviewed quarterly. The warranty accrual is based on historical costs of warranty repairs and expected future identifiable warranty expenses, and is included in accrued expenses in the accompanying consolidated balance sheets. Warranty expenses are included in cost of sales in the accompanying consolidated statements of operations. Changes in estimates to previously established warranty accruals result from current period updates to assumptions regarding repair costs and warranty return rates, and are included in current period warranty expense. |
Comprehensive Income | Comprehensive Income Comprehensive income encompasses all changes in equity other than those with shareholders and consists of net income (loss) and unrealized gain (loss) on marketable equity investments. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of ninety days or less to be cash equivalents. At June 30, 2015 there were no cash equivalents included in the cash and cash equivalents balance. At June 30, 2014 cash equivalents consisted of investments in money market funds. |
Accounts Receivable and Unbilled Receivables | Accounts Receivable and Unbilled Receivables Trade receivables are stated at their original invoice amounts, less an allowance for doubtful portions of such accounts. Management determines the allowance for doubtful accounts based on facts and circumstances related to specific accounts and on historical experience related to the age of accounts. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously reserved are offset against the allowance when received. Unbilled receivables reflect revenues from non-recurring engineering services not yet billable to customers under the terms of the related development and supply contracts. |
Inventories | Inventories Inventories are stated at the lower of cost (first-in, first-out method) or market value. Reductions to estimated market value are recorded, and charged to cost of sales, when indicated based on a formula that compares on-hand quantities to estimated demand over the ensuing 12 months from the measurement date. |
Investments | Investments Investments reported on the June 30, 2014 balance sheet consist of marketable equity securities of publicly held companies. Management intended to hold such securities for a sufficient period in which to realize a reasonable return, which periods may range between one and several years, although there is no assurance that positive returns will be realized or that such securities will not be liquidated in a shorter-than-expected time frame to accommodate future liquidity requirements. Accordingly, investments have been classified as non-current and available-for-sale in conformity with ASC Section 320. Investments are marked to market at each measurement date, with unrealized gains and losses presented as adjustments to accumulated other comprehensive income or loss. |
Investment in Ramsey Property and Related Notes Receivable | Investment in Ramsey Property and Related Notes Receivable During the fourth quarter of fiscal 2015, as disclosed in a Form 8-K filed with the SEC on May 13, 2015, we entered a settlement agreement such that we received the deed to the land and building located in Ramsey, Minnesota (the Ramsey Property) which had previously been held as security for certain notes receivable. The related notes receivable (as further described in Note 8) are accounted for under ASC Section 310-30 Loans and Debt Securities Acquired with Deteriorated Credit Quality. The notes are recorded at their purchase price and since the notes remain in default, they are considered impaired and have been placed on nonaccrual status, meaning there is no accrual for interest earnings. No interest has been collected or recognized since the date of purchase. Due to uncertainties relating to future cash flows projected to be received on the notes, no accretable yield has been recorded. The notes are considered impaired because we do not believe the contractual payments will be collected pursuant to contract terms. Accordingly, the recorded investment is reflected at the lesser of the purchase price or the estimated fair value of the collateral (with appropriate reductions for estimated disposal costs). |
Long-Lived Assets | Long-lived Assets We review the recoverability of long-lived assets, consisting of plant, equipment and leasehold improvements, as well as the Investment in Ramsey property and related notes receivable when events or changes in circumstances occur that indicate carrying values may not be recoverable. Plant, equipment and leasehold improvements are recorded at historical cost and depreciation is provided using the straight-line method over the following periods: Equipment Three to ten years Leasehold improvements Shorter of the lease term or the assets estimated useful life During the fourth quarter of fiscal 2015, as disclosed in a Form 8-K filed with the SEC on May 13, 2015, we entered a settlement agreement such that we received the deed to the land and building located in Ramsey, Minnesota (the Ramsey Property) which had previously been held as security for certain notes receivable. The related notes receivable (as further described in Note 8) are accounted for under ASC Section 310-30 Loans and Debt Securities Acquired with Deteriorated Credit Quality. The notes are recorded at their purchase price and since the notes remain in default, they are considered impaired and have been placed on nonaccrual status, meaning there is no accrual for interest earnings. No interest has been collected or recognized since the date of purchase. Due to uncertainties relating to future cash flows projected to be received on the notes, no accretable yield has been recorded. The notes are considered impaired because we do not believe the contractual payments will be collected pursuant to contract terms. Accordingly, the recorded investment is reflected at the lesser of the purchase price or the estimated fair value of the collateral (with appropriate reductions for estimated disposal costs). |
Goodwill & Intangibles | Goodwill & Intangibles We recorded $353,000 of goodwill and $54,000 of trade name in conjunction with the asset purchase of Fineline Molds. Accordingly, subsequent to the measurement period described below under business combinations, we will assess potential impairment of goodwill and trade name annually. Intangibles consist of legal fees incurred in connection with patent applications, capitalized software development costs, covenant not to compete, trade name, and customer lists including backlog. The patent costs will be amortized over the life of the applicable patent upon its issuance and the capitalized software development costs will be amortized over the estimated product life of the underlying product which was released for sale during the fourth quarter of fiscal 2015. The covenant not to compete and customer list including backlog relate to assets acquired in conjunction with the purchase of Huber Precision and Fineline Molds and will be amortized over their estimated useful lives. |
Variable Interest Entities | Variable Interest Entities The Company has a variable interest in Riverside Manufacturing, Inc. (Riverside) because of extending it financing in the form of promissory notes and a revolving loan. Therefore, Riverside is considered a variable interest entity (VIE) under GAAP. VIEs are legal entities in which the equity investors do not have sufficient equity at risk for the entity to independently finance its activities or the collective holders do not have the power through voting or similar rights to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the expected losses of the entity, or the right to receive expected residual returns of the entity. Consolidation of a VIE is considered appropriate if a reporting entity is the primary beneficiary, the party that has both significant influence and control over the VIE. Management periodically performs a qualitative analysis to determine if the Company is the primary beneficiary of a VIE. This analysis includes review of the VIEs capital structure, contractual terms, and primary activities, including the Companys ability to direct the activities of the VIE and obligations to absorb losses, or the right to receive benefits, significant to the VIE. Additionally, changes in our investments may result in a reconsideration event that may necessitate consolidation in the future. |
Business Combinations | Business Combinations We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, useful lives and discount rates. Managements estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. |
Income Taxes | Income Taxes We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along with net operating losses and tax credit carryovers. Deferred tax assets at both June 30, 2015 and 2014 consisted primarily of basis differences related to research and development tax credit utilization, intangible assets, accrued expenses and inventories. Significant management judgment is required in determining the provision for income taxes and the recoverability of deferred tax assets. Such determination is based on historical taxable income, with consideration given to estimates of future taxable income and the periods over which deferred tax assets will be recoverable. We record a valuation allowance against deferred tax assets to reduce the net carrying value to an amount that we believe is more likely than not to be realized. When we establish or reduce the valuation allowance against deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. |
Shipping and Handling | Shipping and Handling Payments from customers for shipping and handling are included in net sales . |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject us to credit risk consist principally of cash and trade receivables. We place our cash with major financial institutions. At June 30, 2015 and 2014, and throughout the fiscal years then ended, we had deposits in excess of federally insured limits. Credit sales are made to original equipment manufacturers and resellers throughout the world, and sales to such customers account for a substantial portion of our trade receivables. While such receivables are not collateralized, we evaluate their collectability based on several factors including customers payment histories. |
Compensation Plans | Compensation Plans Share-Based Plans We recognize compensation expense for all share-based awards made to employees and directors. The fair value of share-based awards is estimated at the grant date using the Black-Scholes option-pricing model. The portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period using the straight-line single option method. The determination of fair value using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends, projected employee stock option exercise behaviors and forfeitures. We estimate stock price volatility based on two factors: (a) the measurement date (typically the grant date) and (b) the expected life of the option, which we calculate using the Staff Accounting Bulletin No. 107 simplified method. Cash-Based Plans Our Annual Incentive Plan (AIP) provides annual cash-based incentive opportunities for our key employees based upon the attainment of certain performance goals. Compensation expense is recognized in the year in which awards under the terms of the AIP are earned. |
Use of Estimates | Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our operations are affected by numerous factors including market acceptance of our products, changes in technologies, and new laws, government regulations and policies. We cannot predict what impact, if any, the occurrence of these or other events might have on our operations. Significant estimates and assumptions made by management include, but are not limited to, revenue recognition, the allowance for doubtful accounts, accrued warranty expense, inventory valuation, the carrying value of long-lived assets, and the recovery of deferred income tax assets. |
Basic and Diluted Per Share Information | Basic and Diluted Per Share Information Basic per share amounts are computed on the basis of the weighted-average number of common shares outstanding during each period presented. Diluted per share amounts assume the exercise of all potential common stock equivalents, consisting solely of options to purchase common stock as discussed in Note 12, unless the effect of such exercise is to increase income, or decrease loss, per common share. |
Fair Value Measurements | Fair Value Measurements Fair value is measured based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. Cash and cash equivalents: Investments: Investment in Ramsey property and related notes recivable: Although the methods above may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values, we believe our valuation methods are appropriate. |
Advertising | Advertising Advertising costs are charged to selling expense as incurred and amounted to $51,000 and $61,000 for the fiscal years ended June 30, 2015 and 2014, respectively. |
Recent Accounting Standards | Recent Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue depicting the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced revenue related disclosures. In July 2015, the FASB deferred the effective date to fiscal years beginning after December 15, 2018 and early adoption of the standard is permitted, but not before the original effective date of December 15, 2017. This update permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial StatementsGoing Concern (Subtopic 205-40). This guidance defines managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue as a going concern and to provide related footnote disclosures. Under the guidance, management is required to evaluate, for each annual and interim reporting period, whether it is probable that the entity will not be able to meet its obligations as they become due within one year after the date that the financial statements are issued or are available to be issued. When management identifies substantial doubt about the entitys ability to continue as a going concern, additional disclosures are required. This guidance will be effective for annual reporting periods beginning after December 15, 2016. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures. In February 2015, the FASB issued ASU 2015-02, Consolidation. This guidance amends existing consolidation guidance in which a reporting entity might be required to consolidate another legal entity in situations in which the reporting entitys contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entitys voting rights, or the reporting entity is not exposed to a majority of the legal entitys economic benefits or obligations. The guidance: · modifies the evaluations of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities; · eliminates the presumption that a general partner should consolidate a limited partner; · affects the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships; and · provides a scope exception from consolidation guidance for reporting entities with interests in certain investment funds. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the Companys consolidated results of operations, financial position or cash flows. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs to simplify the presentation of debt issuance costs. The amendments in this accounting standard update require debt issuance costs be presented on the balance sheet as a direct reduction from the carrying amount of the related debt liability. The amendments in this accounting standard update are to be applied retrospectively and are effective for interim and annual reporting periods beginning after December 15, 2015. We do not expect the adoption of this accounting standard update to have a material impact on our balance sheet. |
Reclassifications | Reclassifications Certain prior period balances have been reclassified to conform to the current period presentation. |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of recognized identified assets acquired and liabilities assumed | The following summarizes the consideration paid and the estimated fair values of the assets acquired for each acquisition as of the respective acquisition date (in thousands): Huber Fineline Consideration: Cash $ 209 $ 657 Promissory note payable to seller 100 Total consideration $ 209 $ 757 Fair value of assets acquired: Inventory $ 5 $ Fixed Assets 37 149 Covenant not to compete 30 22 Trade name 54 Customer list and backlog 137 179 Net assets acquired $ 209 $ 404 Goodwill $ $ 353 |
Composition of Certain Financ24
Composition of Certain Financial Statement Items (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of inventory | Inventory is stated at the lower of cost (first-in, first-out) or market and consists of the following (in thousands): June 30, 2015 2014 Raw materials /purchased components $ 2,025 $ 878 Work in process 1,030 525 Sub-assemblies /finished components 1,095 823 Finished goods 160 374 Total inventory $ 4,310 $ 2,600 |
Schedule of equipment and leasehold improvements | Equipment and leasehold improvements consist of the following (in thousands): June 30, 2015 2014 Office furnishings and fixtures $ 2,008 $ 2,054 Machinery and equipment 4,803 4,574 Leasehold improvements 2,086 2,312 Total 8,897 8,940 Less: Accumulated depreciation and amortization (7,427 ) (7,365 ) $ 1,470 $ 1,575 |
Schedule of intangibles | Intangibles consist of the following (in thousands): June 30, June 30, Capitalized software development costs $ 73 $ 37 Covenant not to compete 52 Trade name 54 Customer list and backlog 316 Patent-related costs 96 68 Total intangibles $ 591 $ 105 Less accumulated amortization (44 ) $ 547 $ 105 |
Schedule of expected amortization expense | Expected amortization expense for the next five fiscal years ending June 30 are as follows (in thousands): Fiscal Year: Amortization Expense 2016 $117 2017 53 2018 53 2019 53 2020 47 Total expected amortization $323 |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): June 30, 2015 2014 Warranty $ 261 $ 237 Payroll and related items 302 240 Accrued legal and professional fees 46 13 Accrued sales, use and excise taxes 36 8 Accrued losses on development contracts 385 468 Accrued inventory in transit 83 22 Other 89 102 $ 1,202 $ 1,090 |
Schedule of accumulated other comprehensive income | Accumulated other comprehensive income consists of the following (in thousands): June 30, 2015 2014 Unrealized gain on marketable equity securities $ $ 262 Less: Reclassification of gains included in net loss (65 ) Unrealized gain on marketable securities, net $ $ 197 |
Warranty Accrual (Tables)
Warranty Accrual (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Product Warranties Disclosures [Abstract] | |
Schedule of accrual warranty costs | Information relating to the accrual for warranty costs for the years ended June 30, 2015 and 2014 is as follows (in thousands): June 30, 2015 2014 Balance at beginning of year $ 237 $ 323 Accruals during the year 372 225 Change in estimates of prior period accruals (208 ) (108 ) Warranty amortization (140 ) (203 ) Balance at end of year $ 261 $ 237 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision (benefit) for income taxes | The provision for (benefit from) income taxes from continuing operations consists of the following amounts (in thousands): Years Ended June 30, 2015 2014 Current: Federal $ $ State (44 ) 3 Deferred: Federal (84 ) State (23 ) Benefit from income taxes $ (44 ) $ (104 ) |
Schedule of reconciliation federal statutory income tax rates | The effective income tax rate on loss from continuing operations differs from the United States statutory income tax rates for the reasons set forth in the table below (in thousands, except percentages). Years Ended June 30, 2015 2014 Amount Percent Amount Percent Loss from continuing operations before income taxes $ (446 ) 100 % $ (755 ) 100 % Computed expected income tax benefit on loss from continuing operations before income taxes $ 152 34 % $ 257 34 % State tax, net of federal benefit 30 7 % (10 ) (1 %) Tax incentives 88 20 % 30 4 % Change in valuation allowance (227 ) (51 %) (154 ) (21 %) Permanent differences (31 ) (4 %) State income tax rate adjustment 12 2 % Other 1 Income tax benefit $ 44 10 % $ 104 14 % The total income tax expense recorded for the years ended June 30, 2015 and 2014 was as follows (in thousands): June 30, 2015 2014 Tax benefit from continuing operations $ (44 ) $ (104 ) Tax expense from discontinued operations 107 $ (44 ) $ 3 |
Schedule of deferred income tax assets and liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at June 30, 2015 and 2014 are as follows (in thousands): June 30, 2015 2014 Deferred tax assets/(liabilities) current: Accrued expenses $ 385 $ 253 Inventory 457 486 Other 6 Net operating losses 119 State taxes (3 ) 1 Less: valuation allowance (775 ) (744 ) Net deferred tax assets $ 70 $ 115 June 30, 2015 2014 Deferred tax assets/(liabilities) non-current: Income tax credit carry forwards $ 1,562 $ 1,443 Net operating losses 1,592 1,299 Intangible assets 251 287 Deferred rent 132 Other 28 State taxes 22 16 Property and equipment, principally due to differing depreciation methods (316 ) (458 ) Goodwill (4 ) Federal impact of state taxes (20 ) Share based compensation 16 Unrealized gain on investment (85 ) Total gross deferred tax assets 3,115 2,650 Less: valuation allowance (3,185 ) (2,765 ) Net deferred tax liabilities $ (70 ) $ (115 ) |
Schedule of valuation allowance | Due to cumulative taxable losses in recent years, we have maintained a full valuation allowance against our deferred tax assets at June 30, 2015 and 2014, information related to which is as follows (in thousands): Valuation Allowance Balance at July 1, 2014 $ (3,509 ) Increase in deferred tax asset valuation allowance (451 ) Balance at June 30, 2015 $ (3,960 ) |
Schedule of accrual unrecognized tax benefits | Information with respect to our accrual for unrecognized tax benefits is as follows (in thousands): June 30, 2015 2014 Unrecognized tax benefits: Beginning balance $ 363 $ 347 Additions based on federal tax positions related to the current year 8 21 Additions based upon state tax positions related to the current year 15 Additions for tax positions of prior years 13 Reductions for tax positions of prior years (5 ) Ending balance $ 399 $ 363 |
Discontinued Operations and R27
Discontinued Operations and Real Estate Held for Sale (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of revenue and operating results of Astromec | Information regarding revenue and operating results of Astromec included in discontinued operations is as follows (in thousands): Years Ended June 30, 2015 2014 Revenues $ 53 $ 120 Income before provision for income taxes of $0 and $107,000, respectively $ 37 $ 270 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of operating lease minimum lease payments | Minimum lease payments for future fiscal years ending June 30 are as follows (in thousands): Operating Leases Fiscal Year: 2016 $ 553 2017 552 2018 361 Total minimum lease payments $ 1,466 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of summary of stock option activity | The following is a summary of stock option activity under the Option Plans for the years ended June 30, 2015 and 2014: Outstanding Options Number of Shares Weighted-Average Exercise Price Balance, July 1, 2013 292,504 $ 2.48 Options granted Options canceled or expired (123,398 ) 2.22 Options exercised (4,104 ) 2.33 Balance, July 1, 2014 165,002 $ 2.40 Options granted Options canceled or expired (10,001 ) 4.94 Options exercised (48,333 ) 1.87 Balance, June 30, 2015 106,668 $ 2.41 Stock Options Exercisable at June 30, 2015 101,668 $ 2.44 |
Schedule of options outstanding and options exercisable | The following table summarizes information regarding options outstanding and options exercisable under the Option Plans at June 30, 2015: Options Outstanding Options Exercisable Range of Number Outstanding Weighted-Avg. Remaining Contractual Life Weighted- Aggregate. Intrinsic Value Number Outstanding Weighted-Avg. Remaining Contractual Life Weighted- Exercise Price Average Intrinsic Value $0 to 2.50 95,000 6.39 $1.88 $ 43,850 90,000 6.35 $1.89 $ 40,800 2.5 to 5.00 3,334 1.88 4.38 3,334 1.88 4.38 7.51 to 10.00 8,334 .52 7.65 8,334 .52 7.65 Total 106,668 5.79 years $ 2.41 $ 43,850 101,668 5.72 $ 2.44 $40,800 |
Schedule of restricted share activity | The following is a summary of restricted share activity for the years ended June 30, 2015 and 2014: Outstanding Restricted Stock Units Number of Shares Weighted-Average On Grant Date Balance, June 30, 2013 32,500 $ 1.73 Granted Forfeited (10,001 ) 1.73 Vested (9,166 ) 1.73 Balance, June 30, 2014 13,333 $ 1.73 Granted Forfeited (1,667 ) 1.73 Vested (6,666 ) 1.73 Balance, June 30, 2015 5,000 $ 1.73 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of weighted average shares outstanding calculation of basic and diluted per share | The summary of the basic and diluted earnings per share calculations for the years ended June 30, 2015 and 2014 is as follows (in thousands, except per share data): Years Ended June 30, 2015 2014 Basic & Diluted: Loss from continuing operations $ (402 ) $ (651 ) Weighted average shares outstanding 4,169 3,493 Basic and diluted loss per share from continuing operations $ (0.10 ) $ (0.19 ) Income from discontinued operations $ 37 $ 163 Weighted average shares outstanding 4,169 3,493 Basic and diluted income per share from discontinued operations $ 0.01 $ 0.05 Net loss $ (365 ) $ (488 ) Weighted average shares outstanding 4,169 3,493 Basic and diluted loss per share $ (0.09 ) $ (0.14 ) |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Segment Information Tables | |
Schedule of segment performance | The following tables summarize segment performance for fiscal 2015 and 2014 (in thousands): Pro-Dex OMS Fineline ESD Corporate Unallocated Total Fiscal 2015 Net Sales $ 11,617 $ 1,394 $ 257 $ 115 $ $ 13,383 Gross Profit 2,653 927 44 80 3,704 Operating Income (loss) 75 144 (33 ) (361 ) (727 ) (902 ) Depreciation and amortization expense 536 11 31 578 Total assets 8,479 548 962 17 2,510 12,516 Pro-Dex OMS Fineline ESD Corporate Unallocated Total Fiscal 2014 Net Sales $ 9,298 $ 1,514 $ $ $ $ 10,812 Gross Profit 2,040 926 2,966 Operating Income (loss) (376 ) 103 (541 ) (814 ) Depreciation and amortization expense 513 14 527 Total assets 6,639 602 4,467 11,708 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Description of investment holding period | Management intended to hold such securities for a sufficient period in which to realize a reasonable return, which periods may range between one and several years. | |
Advertising expense | $ 51 | $ 61 |
Goodwill | 353 | |
Trade name | $ 54 | |
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 | 10 years | |
Leasehold & improvement [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Description of estimated useful lives | Shorter of the lease term or the assets estimated useful life |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Feb. 01, 2015 | Dec. 01, 2014 | Jun. 30, 2014 |
Fair value of assets acquired: | ||||
Goodwill | $ 353 | |||
Huber Precision [Member] | ||||
Consideration: | ||||
Cash | $ 209 | |||
Promissory note payable to seller | ||||
Total consideration | $ 209 | $ 209 | ||
Fair value of assets acquired: | ||||
Inventory | 5 | |||
Fixed Assets | 37 | |||
Net assets acquired | $ 209 | |||
Goodwill | ||||
Huber Precision [Member] | Covenant not to compete [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | $ 30 | |||
Huber Precision [Member] | Trade Names [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | ||||
Huber Precision [Member] | Customer list [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | $ 137 | |||
Fineline Molds [Member] | ||||
Consideration: | ||||
Cash | 657 | |||
Promissory note payable to seller | 100 | |||
Total consideration | $ 757 | $ 757 | ||
Fair value of assets acquired: | ||||
Inventory | ||||
Fixed Assets | $ 149 | |||
Net assets acquired | 404 | |||
Goodwill | 353 | |||
Fineline Molds [Member] | Covenant not to compete [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | 22 | |||
Fineline Molds [Member] | Trade Names [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | 54 | |||
Fineline Molds [Member] | Customer list [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | $ 179 |
Business Acquisitions (Details
Business Acquisitions (Details Narrative) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2015USD ($)N | Feb. 01, 2015USD ($) | Dec. 01, 2014USD ($) | |
Business Acquisition [Line Items] | |||
Number of businesses acquired | N | 2 | ||
Huber Precision [Member] | |||
Business Acquisition [Line Items] | |||
Description of acquired entity | A manufacturer of machined parts, primarily for the oil and electronics industry. | ||
Aggerate purchase price | $ 209 | $ 209 | |
Fineline Molds [Member] | |||
Business Acquisition [Line Items] | |||
Description of acquired entity | A manufacturer of plastic injection molds for a variety of industries. | ||
Aggerate purchase price | $ 757 | $ 757 |
Business Acquisitions (Detail35
Business Acquisitions (Details Narrative 1) - Feb. 01, 2015 - Fineline Molds [Member] - USD ($) $ in Thousands | Total |
Promissory note payment terms | Sixteen equal quarterly payments |
Promissory note stated percentage | 4.00% |
Promissory note payment of principal and accrued interest | $ 6,794 |
Term of promissory note | 4 years |
Composition of Certain Financ36
Composition of Certain Financial Statement Items (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials/purchased components | $ 2,025 | $ 878 |
Work in process | 1,030 | 525 |
Sub-assemblies / finished components | 1,095 | 823 |
Finished goods | 160 | 374 |
Total inventory | $ 4,310 | $ 2,600 |
Composition of Certain Financ37
Composition of Certain Financial Statement Items (Details 2) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total gross | $ 8,897 | $ 8,940 |
Accumulated depreciation | (7,427) | (7,365) |
Property, plant and equipment, net | 1,470 | 1,575 |
Office furnishings and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total gross | 2,008 | 2,054 |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total gross | 4,803 | 4,574 |
Leasehold & improvement [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total gross | $ 2,086 | $ 2,312 |
Composition of Certain Financ38
Composition of Certain Financial Statement Items (Details 3) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | $ 591 | $ 105 |
Less accumulated amortization | (44) | |
Intangible assets,net | 547 | $ 105 |
Capitalized software development costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | 73 | $ 37 |
Covenant not to compete [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | 52 | |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | 54 | |
Customer list [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | 316 | |
Patent-related costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | $ 96 | $ 68 |
Composition of Certain Financ39
Composition of Certain Financial Statement Items (Details 4) $ in Thousands | Jun. 30, 2015USD ($) |
Fiscal Year: | |
2,016 | $ 117 |
2,017 | 53 |
2,018 | 53 |
2,019 | 53 |
2,020 | 47 |
Total expected amortization | $ 323 |
Composition of Certain Financ40
Composition of Certain Financial Statement Items (Details 5) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Warranty | $ 261 | $ 237 |
Payroll and related items | 302 | 240 |
Accrued legal and professional fees | 46 | 13 |
Accrued sales, use and excise taxes | 36 | 8 |
Accrued losses on development contracts | 385 | 468 |
Accrued inventory in transit | 83 | 22 |
Other | 89 | 102 |
Total accrued expenses | $ 1,202 | $ 1,090 |
Composition of Certain Financ41
Composition of Certain Financial Statement Items (Details 6) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Composition Of Certain Financial Statement Items Details 4 | ||
Unrealized gain on marketable equity securities | $ 262 | |
Less: Reclassification of gains included in net loss | (65) | |
Unrealized gain on marketable securities, net | $ 197 |
Composition of Certain Financ42
Composition of Certain Financial Statement Items (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Marketable security investments | $ 1,058 | |
Marketable security cost | 857 | |
Marketable security unrealized, gain | 209 | |
Marketable security unrealized, loss | 7 | |
Realized gains on sale of investments | $ 455 | 65 |
Depreciation expense (Includes capital lease amortization) | $ 578 | $ 527 |
Warranty Accrual (Details)
Warranty Accrual (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Beginning balance | $ 237 | $ 323 |
Accruals during the period | 372 | 225 |
Changes in estimates of prior period warranty accruals | (208) | (108) |
Warranty amortization | (140) | (203) |
Ending balance | $ 261 | $ 237 |
Warranty Accrual (Details Narra
Warranty Accrual (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Product Warranties Disclosures [Abstract] | ||
Warranty expenses | $ 164 | $ 117 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Current: | ||
Federal | ||
State | $ (44) | $ 3 |
Deferred: | ||
Federal | (84) | |
State | (23) | |
Benefit from income taxes | $ (44) | $ (104) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||
Loss from continuing operations before income taxes | $ (446) | $ (755) |
Computed "expected" income tax benefit on loss from continuing operations before income taxes | 152 | 257 |
State tax, net of federal benefit | 30 | (10) |
Tax incentives | 88 | 30 |
Change in valuation allowance | $ (227) | (154) |
Permanent differences | (31) | |
State income tax rate adjustment | $ 12 | |
Other | $ 1 | |
Income tax benefit | $ 44 | $ 104 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Loss from continuing operations before income taxes | 100.00% | 100.00% |
Computed "expected" income tax benefit on loss from continuing operations before income taxes | 34.00% | 34.00% |
State tax, net of federal benefit | 7.00% | (1.00%) |
Tax incentives | 20.00% | 4.00% |
Change in valuation allowance | (51.00%) | (21.00%) |
Permanent differences | (4.00%) | |
State income tax rate adjustment | 2.00% | |
Other | ||
Income tax benefit | 10.00% | 14.00% |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||
Tax benefit from continuing operations | $ (44) | $ (104) |
Tax expense from discontinued operations | 107 | |
Total | $ (44) | $ 3 |
Income Taxes (Details 4)
Income Taxes (Details 4) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Deferred tax assets/(liabilities) - current: | ||
Accrued expenses | $ 385 | $ 253 |
Inventories | 457 | $ 486 |
Other | $ 6 | |
Net operating losses | $ 119 | |
State taxes | $ (3) | 1 |
Less: valuation allowance | (775) | (744) |
Net deferred tax assets | 70 | 115 |
Deferred tax assets/(liabilities) - non-current: | ||
Income tax credit carry forwards | 1,562 | 1,443 |
Net operating losses | 1,592 | 1,299 |
Intangible assets | $ 251 | 287 |
Deferred rent | $ 132 | |
Other | $ 28 | |
State taxes | 22 | $ 16 |
Property and equipment, principally due to differing depreciation methods | (316) | $ (458) |
Goodwill | (4) | |
Federal impact of state taxes | $ (20) | |
Share based compensation | $ 16 | |
Unrealized gain on investment | (85) | |
Total gross deferred tax assets | $ 3,115 | 2,650 |
Less: valuation allowance | (3,185) | (2,765) |
Net deferred tax liabilities | $ (70) | $ (115) |
Income Taxes (Details 5)
Income Taxes (Details 5) $ in Thousands | 12 Months Ended |
Jun. 30, 2015USD ($) | |
Deferred Tax Assets,Valuation Allowance [Roll Forward] | |
Beginning Balance | $ (3,509) |
Increase in deferred tax asset valuation allowance | (451) |
Ending Balance | $ (3,960) |
Income Taxes (Details 6)
Income Taxes (Details 6) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning Balance | $ 363 | $ 347 |
Additions based on federal tax positions related to the current year | 8 | $ 21 |
Additions based upon state tax positions related to the current year | 15 | |
Additions for tax positions of prior years | $ 13 | |
Reductions for tax positions of prior years | $ (5) | |
Ending Balance | $ 399 | $ 363 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Federal Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carry forward | $ 2,983 | $ 2,556 |
Operating loss carryforward, expiration year | 2,034 | |
Tax credit carryforward | $ 1,072 | 884 |
Tax credit carryforward, expiration year | 2,026 | |
Federal net operating losses excess from stock compensation deductions | $ 17 | |
States Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carry forward | $ 6,543 | 6,339 |
Operating loss carryforward, expiration year | 2,025 | |
Tax credit carryforward | $ 773 | $ 559 |
Discontinued Operations and R52
Discontinued Operations and Real Estate Held for Sale (Details) - Astromec [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Revenues | $ 53 | $ 120 |
Income before provision for income taxes | 37 | 270 |
Income tax effect | $ 0 | $ 107 |
Discontinued Operations and R53
Discontinued Operations and Real Estate Held for Sale (Details Narrative) - USD ($) $ in Thousands | Jul. 05, 2013 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2013 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Real estate held for sale | $ 733 | ||||
Gain on sale of property | $ 1 | $ (10) | |||
Aesthetic and Reconstructive Technologies, Inc. [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale of real estate held for sale | $ 980 | ||||
Net proceeds from the sale | 900 | ||||
Broker commissions and fees | 80 | ||||
Gain on sale of property | $ 167 | ||||
Astromec [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Earnout payments period | 30 days | ||||
Percentage of earnout payments in first year | 6.00% | ||||
Percentage of earnout payments in second year | 4.00% | ||||
Percentage of earnout payments in third year | 2.00% | ||||
Income from earnout payments | $ 53 | 120 | $ 404 | ||
Other receivables | $ 17 |
Investment in Ramsey Property54
Investment in Ramsey Property and Related Notes Receivable & Variable Interest Entity Considerations (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total investment | $ 1,652 | ||
Revenue | 13,383 | $ 10,812 | |
Riverside Manufacturing, Inc [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total investment | 1,624 | ||
Maximum investment at risk | 1,710 | ||
Revenue | $ 1,900 | ||
Riverside Manufacturing, Inc [Member] | Revolving Credit Facility [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Revolving loan agreement aggregate amount | $ 200 | ||
Two promissory notes (Loan Purchase and Sale Agreement) [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Description of cross collateral notes | The promissory notes were cross-collateralized and originally secured by (collectively, the Collateral), among other things, real property consisting of 2.3 acres of land and an approximate 30,000 square foot industrial building and a security interest in substantially all of the assets of Riverside Manufacturing, Inc. (Riverside) (consisting primarily of machine shop equipment and accounts receivable). |
Commitments and Contingencies55
Commitments and Contingencies (Details) $ in Thousands | Jun. 30, 2015USD ($) |
Minimum lease payment | |
2,016 | $ 553 |
2,017 | 552 |
2,018 | 361 |
Total minimum lease payments | $ 1,466 |
Commitments and Contingencies56
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2012 | Dec. 13, 2013 | Jul. 15, 2013 | |
Loss Contingencies [Line Items] | |||||
Rent expense | $ 550 | $ 518 | |||
401(k) Plan [Member] | |||||
Loss Contingencies [Line Items] | |||||
Percentage of matching contributions | 25.00% | ||||
Percentage of maximum employee contributions | 5.00% | ||||
Compensation expense | $ 33 | 31 | |||
AIP [Member] | |||||
Loss Contingencies [Line Items] | |||||
Compensation expense | $ 29 | ||||
Reversal of previously recorded compensation expense | 5 | 9 | |||
Accrued awards | $ 15 | $ 20 | |||
Beaverton Oregon [Member] | |||||
Loss Contingencies [Line Items] | |||||
Reduction in base rent (monthly) | $ 1,352 | ||||
Irvine California [Member] | |||||
Loss Contingencies [Line Items] | |||||
Reduction in base rent (monthly) | $ 4,227 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - $ / shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at beginning of period | 165,002 | 292,504 |
Options granted | ||
Options canceled or expired | (10,001) | (123,398) |
Options exercised | (48,333) | (4,104) |
Outstanding at end of period | 106,668 | 165,002 |
Stock Options Exercisable at end of period | 101,668 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Outstanding at beginning of period (in dollars per share) | $ 2.4 | $ 2.48 |
Options granted (in dollars per share) | ||
Options canceled or expired (in dollars per share) | $ 4.94 | $ 2.22 |
Options exercised (in dollars per share) | 1.87 | 2.33 |
Outstanding at end of period (in dollars per share) | 2.41 | $ 2.4 |
Stock Options Exercisable at end of period (in dollars per share) | $ 2.44 |
Share-Based Compensation (Det58
Share-Based Compensation (Details 1) - Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Thousands | Total |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | 106,668 |
Weighted-Average Remaining Contractual Life | 5 years 9 months 15 days |
Weighted-Average Exercise Price (in dollars per share) | $ 2.41 |
Aggregate Intrinsic Value | $ 43,850 |
Number Outstanding (in shares) | 101,668 |
Weighted-Average Remaining Contractual Life | 5 years 8 months 20 days |
Weighted-Average Exercise Price (in dollars per share) | $ 2.44 |
Aggregate Intrinsic Value | $ 40,800 |
$0 to $2.50 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | 95,000 |
Weighted-Average Remaining Contractual Life | 6 years 4 months 21 days |
Weighted-Average Exercise Price (in dollars per share) | $ 1.88 |
Aggregate Intrinsic Value | $ 43,850 |
Number Outstanding (in shares) | 90,000 |
Weighted-Average Remaining Contractual Life | 6 years 4 months 6 days |
Weighted-Average Exercise Price (in dollars per share) | $ 1.89 |
Aggregate Intrinsic Value | $ 40,800 |
$2.5 to $5.00 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | 3,334 |
Weighted-Average Remaining Contractual Life | 1 year 10 months 17 days |
Weighted-Average Exercise Price (in dollars per share) | $ 4.38 |
Aggregate Intrinsic Value | |
Number Outstanding (in shares) | 3,334 |
Weighted-Average Remaining Contractual Life | 1 year 10 months 17 days |
Weighted-Average Exercise Price (in dollars per share) | $ 4.38 |
Aggregate Intrinsic Value | |
$7.51 to $10.0 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | 8,334 |
Weighted-Average Remaining Contractual Life | 6 months 7 days |
Weighted-Average Exercise Price (in dollars per share) | $ 7.65 |
Aggregate Intrinsic Value | |
Number Outstanding (in shares) | 8,334 |
Weighted-Average Remaining Contractual Life | 6 months 7 days |
Weighted-Average Exercise Price (in dollars per share) | $ 7.65 |
Aggregate Intrinsic Value |
Share-Based Compensation (Det59
Share-Based Compensation (Details 2) - Restricted shares [Member] - $ / shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding at beginning of year | 13,333 | 32,500 |
Granted | ||
Forfeited | (1,667) | (10,001) |
Vested | (6,666) | (9,166) |
Outstanding at end of period | 5,000 | 13,333 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Outstanding at beginning of year (in dollars per share) | $ 1.73 | $ 1.73 |
Granted (in dollars per share) | ||
Forfeited (in dollars per share) | $ 1.73 | $ 1.73 |
Vested (in dollars per share) | 1.73 | 1.73 |
Outstanding at end of period (in dollars per share) | $ 1.73 | $ 1.73 |
Share-Based Compensation (Det60
Share-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 17 | $ 50 |
Unrecognized compensation cost | $ 1 | |
Number of nonvested stock options | 5,000 | |
Weighted average value of non vested stock options (in dollars per share) | $ 1.73 | |
Unrecognized expense recognized weighted average period | 2 months 12 days | |
Employees Stock Option Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares reserved for future issuance | 531,381 | |
Directors Stock Option Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares reserved for future issuance | 173,334 | |
ESPP [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Description of plan | Offering and purchase periods of six months, and bases the pricing to purchase shares of our common stock on a formula so as to result in a per share purchase price that approximates a 15% discount from the market price of a share of our common stock at the end of the purchase period. | |
Restricted shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized (in shares) | 1,333,333 | |
Description of vesting period | Vesting periods as determined by the Board for the Employee Stock Option Plan and six months for the Directors Stock Option Plan, and terms of up to ten years, subject to forfeit 30 days after the holder ceases to be an employee or 90 days after the holder ceases to be a director, as the case may be. | |
Unrecognized compensation cost | $ 1 | |
Unrecognized expense recognized weighted average period | 2 months 12 days | |
Restricted shares [Member] | Employees Stock Option Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized (in shares) | 1,066,667 | |
Forfeiture period of stock option in case of cessation of employment | 30 days | |
Restricted shares [Member] | Directors Stock Option Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized (in shares) | 266,666 | |
Forfeiture period of stock option in case of cessation of employment | 90 days |
Major Customers & Suppliers (De
Major Customers & Suppliers (Details Narrative) | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Sales [Member] | Customer [Member] | ||
Percentage of sales concentrations risk | 49.00% | 49.00% |
Accounts Receivable [Member] | Customer [Member] | ||
Percentage of sales concentrations risk | 30.00% | 53.00% |
Purchase [Member] | Supplier [Member] | ||
Percentage of sales concentrations risk | 16.00% | |
Accounts Payable [Member] | Supplier [Member] | ||
Percentage of sales concentrations risk | 36.00% |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Basic & Diluted: | ||
Loss from continuing operations | $ (402) | $ (651) |
Weighted average shares outstanding (in shares) | 4,169 | 3,493 |
Basic and diluted loss per share from continuing operations (in dollars per share) | $ (0.10) | $ (0.19) |
Income from discontinued operations | $ 37 | $ 163 |
Weighted average shares outstanding (in shares) | 4,169 | 3,493 |
Basic and diluted income per share from discontinued operations (in dollars per share) | $ 0.01 | $ 0.05 |
Net loss | $ (365) | $ (488) |
Weighted average common shares outstanding (in shares) | 4,169,326 | 3,493,151 |
Basic and diluted loss per share (in dollars per share) | $ (0.09) | $ (0.14) |
Loss Per Share (Details Narrati
Loss Per Share (Details Narrative) - shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||
Number of anti-dilutive securities | 22,607 | 23,519 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2013 | |
Proceeds from issuance of common stock | $ 1,324 | $ 228 | ||
Maximum number of shares authorized to be repurchased (in shares) | 750,000 | |||
Number of shares repurchsed | 69,773 | |||
Value of shares repurchased | $ 154 | |||
Right offering [Member] | ||||
Proceeds from issuance of common stock | $ 1,650 | |||
Estimated offering expenses | $ 140 | |||
Common stock shareholder subscription (in shares) | 868,732 | |||
Right offering [Member] | AO Partners [Member] | ||||
Number of rights issued (in shares) | 317,231 | |||
Right offering [Member] | Farnam Street Partners [Member] | ||||
Number of rights issued (in shares) | 156,189 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015USD ($)N | Jun. 30, 2014USD ($) | |
Net sales | $ 13,383 | $ 10,812 |
Gross profit | 3,704 | 2,966 |
Operating Income (loss) | (902) | (814) |
Depreciation and amortization expense | 578 | 527 |
Total assets | $ 12,516 | 11,708 |
Number of reportable segments | N | 4 | |
Pro-Dex [Member] | ||
Net sales | $ 11,617 | 9,298 |
Gross profit | 2,653 | 2,040 |
Operating Income (loss) | 75 | (376) |
Depreciation and amortization expense | 536 | 513 |
Total assets | 8,479 | 6,639 |
OMS [Member] | ||
Net sales | 1,394 | 1,514 |
Gross profit | 927 | 926 |
Operating Income (loss) | 144 | 103 |
Depreciation and amortization expense | 11 | 14 |
Total assets | 548 | $ 602 |
Fineline [Member] | ||
Net sales | 257 | |
Gross profit | 44 | |
Operating Income (loss) | (33) | |
Depreciation and amortization expense | 31 | |
Total assets | 962 | |
ESD [Member] | ||
Net sales | 115 | |
Gross profit | 80 | |
Operating Income (loss) | $ (361) | |
Depreciation and amortization expense | ||
Total assets | $ 17 | |
Corporate Unallocated [Member] | ||
Net sales | ||
Gross profit | ||
Operating Income (loss) | $ (541) | $ (727) |
Depreciation and amortization expense | ||
Total assets | $ 2,510 | $ 4,467 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) $ in Thousands | Sep. 09, 2015 | Sep. 08, 2015 |
Fortitude Income Funds, LLC [Member] | 12% Promissory Note Due 2016-03-15 [Member] | ||
Subsequent Event [Line Items] | ||
Debt face amount | $ 500 | |
Loan origination fee | $ 15 | |
Frequency of periodic payment | Monthly | |
Debt up-front payment | $ 3,750 | |
Description of collateral | The loan is secured by a combination mortgage, security agreement and fixture statement covering the Ramsey Property. | |
Summit Financial Resources LP [Member] | Loan and Security Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Debt face amount | $ 1,000 | |
Loan origination fee | $ 10 | |
Description of interest rate terms | Bear interest at a rate of prime plus 2 percent. | |
Percentage of administrative fee | 0.70% | |
Debt term | 18 months |