Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2016 | Sep. 02, 2016 | Dec. 31, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | PRO DEX INC | ||
Entity Central Index Key | 788,920 | ||
Document Type | 10-K | ||
Trading Symbol | PDEX | ||
Document Period End Date | Jun. 30, 2016 | ||
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 | $ 5,900 | ||
Entity Common Stock, Shares Outstanding | 4,063,837 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 2,294 | $ 697 |
Accounts receivable, net of allowance for doubtful accounts of $20 and $36 at June 30, 2016 and 2015, respectively | 1,469 | 2,326 |
Due from factor | 1,419 | |
Deferred costs | 238 | 853 |
Other current receivables | 91 | 28 |
Inventory | 3,573 | 4,310 |
Prepaid expenses | 134 | 124 |
Deferred income taxes | 70 | |
Total current assets | 9,218 | 8,408 |
Plant, equipment and leasehold improvements, net | 1,286 | 1,470 |
Investment in Ramsey property and related notes receivable | 1,652 | |
Goodwill | 112 | 353 |
Intangibles | 451 | 547 |
Other assets | 80 | 86 |
Total assets | 11,147 | 12,516 |
Current liabilities: | ||
Accounts payable | 841 | 1,867 |
Accrued liabilities | 997 | 1,202 |
Deferred revenue | 212 | 594 |
Income taxes payable | 1 | |
Note payable | 26 | 24 |
Capital lease obligations | 7 | |
Total current liabilities | 2,077 | 3,694 |
Non-current liabilities: | ||
Deferred income taxes | 70 | |
Deferred rent | 147 | 204 |
Note payable, net of current portion | 46 | 70 |
Total non-current liabilities | 193 | 344 |
Total liabilities | 2,270 | 4,038 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Common stock, no par value, 50,000,000 shares authorized; 4,052,987 and 4,139,579 shares issued and outstanding at June 30, 2016 and 2015, respectively | 17,988 | 18,411 |
Accumulated other comprehensive income | ||
Accumulated deficit | (9,111) | (9,933) |
Total shareholders' equity | 8,877 | 8,478 |
Total liabilities and shareholders' equity | $ 11,147 | $ 12,516 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 20 | $ 36 |
Common shares, par value (in dollars per share) | $ 0 | $ 0 |
Common shares, authorized | 50,000,000 | 50,000,000 |
Common shares, issued | 4,052,987 | 4,139,579 |
Common shares, outstanding | 4,052,987 | 4,139,579 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 20,158 | $ 13,383 |
Cost of sales | 14,755 | 9,679 |
Gross profit | 5,403 | 3,704 |
Operating expenses: | ||
Selling expenses | 898 | 975 |
General and administrative expenses | 1,882 | 1,963 |
Impairment of goodwill and intangible assets | 245 | |
Research and development costs | 1,852 | 1,668 |
Total operating expenses | 4,877 | 4,606 |
Operating income (loss) | 526 | (902) |
Other income (expense): | ||
Interest income | 6 | |
Realized gain on sale of investments | 455 | |
Gain from sale of Investment in Ramsey Property | 340 | |
Gain from disposal of equipment | 18 | 1 |
Interest expense | (37) | (6) |
Total other income | 321 | 456 |
Income (loss) from continuing operations before income taxes | 847 | (446) |
Income tax expense (benefit) | 25 | (44) |
Net income (loss) from continuing operations | 822 | (402) |
Income from discontinued operations, net of income taxes | 37 | |
Net income (loss) | $ 822 | $ (365) |
Basic and diluted income (loss) per share: | ||
Net income (loss) from continuing operations (in dollars per share) | $ 0.2 | $ (0.1) |
Income from discontinued operations (in dollars per share) | 0.01 | |
Net income (loss) (in dollars per share) | $ 0.2 | $ (0.09) |
Weighted average common shares outstanding: | ||
Basic (in shares) | 4,141,353 | 4,169,326 |
Diluted (in shares) | 4,173,556 | 4,169,326 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Shares [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Jun. 30, 2014 | $ 18,582 | $ 202 | $ (9,568) | $ 9,216 |
Balance at beginning (in shares) at Jun. 30, 2014 | 4,211,019 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (365) | (365) | ||
Rights offering costs | (2) | (2) | ||
Repurchase of options | (32) | (32) | ||
Net change in unrealized gain from marketable equity investments | (202) | (202) | ||
Restricted stock forfeitures | ||||
Restricted stock forfeitures (in shares) | (1,667) | |||
Exercise of stock options (in shares) | (48,333) | |||
Share-based compensation | $ 17 | $ 17 | ||
Share repurchases | $ (154) | (154) | ||
Share repurchases (in shares) | (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 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 822 | 822 | ||
Exercise of stock options | $ 16 | $ 16 | ||
Exercise of stock options (in shares) | 7,500 | (7,500) | ||
ESPP shares issued | $ 11 | $ 11 | ||
ESPP shares issued (in shares) | 5,596 | |||
Share-based compensation | $ 4 | 4 | ||
Share repurchases | $ (454) | (454) | ||
Share repurchases (in shares) | (99,688) | |||
Balance at end at Jun. 30, 2016 | $ 17,988 | $ (9,111) | $ 8,877 | |
Balance at end (in shares) at Jun. 30, 2016 | 4,052,987 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 822 | $ (365) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 614 | 578 |
Realized gain on sale of investments | (455) | |
Gain on sale of investment in Ramsey | (340) | |
Gain on sale or disposal of equipment | (18) | (1) |
Impairment of goodwill and intangible assets | 245 | |
Share-based compensation | 4 | 17 |
Allowance for doubtful accounts | (16) | 7 |
Changes in operating assets and liabilities: | ||
Accounts receivable, due from factor and other current receivables | (523) | (554) |
Deferred costs | 615 | 220 |
Inventory | 737 | (1,705) |
Prepaid expenses and other assets | (5) | (22) |
Accounts payable, accrued expenses and deferred rent | (1,288) | 1,196 |
Deferred revenue | (382) | 362 |
Income taxes receivable and payable | 1 | (53) |
Net cash provided by (used in) operating activities | 466 | (775) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of equipment and leasehold improvements | (311) | (244) |
Business acquisitions | (866) | |
Purchase of notes receivable (See Note 8) | (1,652) | |
Investment in Ramsey property and related notes receivable | (87) | |
Proceeds from sale of investment in Ramsey | 1,992 | |
Proceeds from sale of equipment | 18 | 1 |
Proceeds from sale of investments | 1,324 | |
Increase in intangibles | (24) | (64) |
Purchase of investments | (12) | |
Net cash provided by (used in) investing activities | 1,588 | (1,513) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on capital lease and note payable | (530) | (15) |
Proceeds from note payable | 500 | |
Borrowings from Summit loan | 1,689 | |
Repayments on Summit loan | (1,689) | |
Repurchases of common stock | (454) | (154) |
Net proceeds paid related to common stock rights offering | (2) | |
Proceeds (payments) from exercise (repurchase) of stock options and ESPP contributions | 27 | (32) |
Net cash used in financing activities | (457) | (203) |
Net increase (decrease) in cash and cash equivalents | 1,597 | (2,491) |
Cash and cash equivalents, beginning of year | 697 | 3,188 |
Cash and cash equivalents, end of year | 2,294 | 697 |
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 | 21 | 7 |
Cash paid for interest | $ 37 | $ 6 |
Description of Business
Description of Business | 12 Months Ended |
Jun. 30, 2016 | |
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-Dex’s 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, 2016 | |
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 Sunfish Lake, LLC and Pro-Dex Riverside, LLC, both Delaware limited liability companies formed by the Company 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 Revenue from billable product development service portions of development and supply contracts is generally recognized either upon milestone completion or completion of the product development services, in conformity with ASC Section 605. We recognize revenue that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is considered substantive when the consideration payable to us for such milestone (i) is consistent with our performance necessary to achieve the milestone, (ii) relates solely to our past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. In making this assessment, we consider all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the milestone, the level of effort and investment required to achieve the milestone and whether any portion of the milestone consideration is related to future performance or deliverables. Accordingly, in certain cases, based upon the evaluation of the criteria above, we record revenue upon milestone completion and in other cases revenue from product development milestone billings to our customers is deferred until completion of all development phases or milestones. 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. 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, 2016 cash equivalents consisted of investments in money market funds. At June 30, 2015 there were no cash equivalents included in the cash and cash equivalents balance. Accounts Receivable and Deferred Costs 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. Deferred costs reflect costs incurred related to non-recurring engineering services under the terms of the related development and supply contracts. These costs get recorded to cost of sales in the period that the revenue is recognized pursuant to the terms of the underlying contract with our customer. 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 both historical usage and estimated demand over the ensuing 12 months from the measurement date. 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 asset’s estimated useful life Goodwill & Intangibles We recorded $353,000 of goodwill and $54,000 of trade name in conjunction with the asset purchase of Fineline Molds during the fiscal year ended June 30, 2015. 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. Certain of the patent costs are being amortized over a period of seven years, the estimated life of the product that is currently utilizing the patented technology. The remaining patent costs will be amortized over the estimated life of the product(s) that will be utilizing the technology, or expensed immediately in the event the patent office denies the issuance of the patent. The capitalized software development costs have been fully amortized as of June 30, 2016. 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. 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. Management’s 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, 2016 and 2015 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, 2016 and 2015, 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 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. 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 13, 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: 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 $21,000 and $51,000 for the fiscal years ended June 30, 2016 and 2015, 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 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. The adoption of this accounting standard did not have a material impact on our balance sheet. In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ” In February 2016, the FASB issued ASU 2016-02, (Topic 842) “Leases”. The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718) “Improvements to Employee Share-Based Payment Accounting”. This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. Reclassifications Certain prior period balances have been reclassified as it relates to our income tax disclosures in Note 7 to conform to the current period presentation. |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Jun. 30, 2016 | |
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 and is subordinate to the security interest created by the Summit Loan (as defined and described in Note 9). 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 The acquisitions were completed to support expansion of the business and broaden the Company’s customer base. We 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. The results of operations related to the businesses acquired have been included in the Company’s 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 isn’t 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. |
Goodwill and Indefinite-Lived A
Goodwill and Indefinite-Lived Assets | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Indefinite-Lived Assets | 4. Goodwill and Indefinite-Lived Assets Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of acquired businesses. Indefinite-lived intangibles are intangible assets whose useful lives are indefinite in that their lives extend beyond the foreseeable horizon – that is there is no foreseeable limit on the period of time over which they are expected to contribute to the cash flows of the reporting entity. The Company accounts for these items in accordance with Accounting Standards Codification (“ASC”) 350 Intangibles – Goodwill and Other, which requires that impairment testing for goodwill is performed at least annually at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). We perform our annual impairment test as of January 31 st The following table presents the changes in the carrying amount of the Fineline goodwill and trade name (in thousands): Goodwill Trade name Balance at July 1, 2014 $ — $ — Purchased 353 54 Balance at July 1, 2015 353 54 Impairment charge (241 ) (4 ) Balance at June 30, 2016 $ 112 $ 50 The impairment test for goodwill uses a two-step approach. Step one compares the fair value of the reporting unit to its carrying value including goodwill. If the carrying value exceeds the fair value, there is a potential impairment and step two must be performed. Step two compares the carrying value of the reporting unit’s goodwill to its implied value (i.e., the fair value of the reporting unit less the fair value of the unit’s assets and liabilities, including identifiable intangible assets). If the carrying value of goodwill exceeds its implied value, the excess is recorded as an impairment. Under Step 1 of the impairment test the Company determined that the carrying value of the reporting unit including goodwill exceeded the fair value, requiring us to perform Step 2 of the goodwill impairment test to measure the amount of impairment loss, if any. The Company then performed Step 2 of the impairment test, and determined the implied value of Fineline goodwill was $112,000, which was less than its carrying value and, as a result, the Company recognized a non-cash, pre-tax charge of $241,000 during the fiscal year ended June 30, 2016. Additionally, our analysis indicated that the estimated fair value of the trade name acquired was $50,000 and therefore we recognized an impairment charge of $4,000 during the fiscal year ended June 30, 2016. These impairment charges are included under the caption “Impairment of goodwill and long-lived assets” in our consolidated statements of operations. There were no impairment charges recognized during the fiscal year ended June 30, 2015. The valuation methods utilized to value the long-lived assets and the goodwill discussed above are based on the amount and timing of expected future cash flows and growth rates and include a determination of an appropriate discount rate. The cash flows utilized in the discounted cash flow analyses were based on financial forecasts developed internally by management. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized. Determining the fair value using a discounted cash flow method requires significant estimates and assumptions, including market conditions, discount rates, and long-term projections of cash flows. The Company’s estimates are based upon historical experience, current market trends, projected future volumes and other information. The Company believes that the estimates and assumptions underlying the valuation methodology are reasonable; however, different estimates and assumptions could result in a different estimate of fair value. |
Composition of Certain Financia
Composition of Certain Financial Statement Items | 12 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Composition of Certain Financial Statement Items | 5. 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, 2016 2015 Raw materials /purchased components $ 1,596 $ 2,025 Work in process 818 1,030 Sub-assemblies /finished components 1,044 1,095 Finished goods 115 160 Total inventory $ 3,573 $ 4,310 Realized Gain on Sale of 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. We have not purchased, held or disposed of any marketable securities during fiscal 2016. Equipment and Leasehold Improvements Equipment and leasehold improvements consist of the following (in thousands): June 30, 2016 2015 Office furnishings and fixtures $ 2,007 $ 2,008 Machinery and equipment 4,953 4,803 Leasehold improvements 2,094 2,086 Total 9,054 8,897 Less: Accumulated depreciation and amortization (7,768 ) (7,427 ) $ 1,286 $ 1,470 Depreciation expense for the years ended June 30, 2016 and 2015 amounted to $497,000 and $534,000, respectively. Intangibles Intangibles consist of the following (in thousands): June 30, 2016 June 30, 2015 Capitalized software development costs $ 73 $ 73 Covenant not to compete 52 52 Trade name 50 54 Customer list and backlog 316 316 Patent-related costs 121 96 Total intangibles $ 612 $ 591 Less accumulated amortization (161 ) (44 ) $ 451 $ 547 Amortization expense for the years ended June 30, 2016 and 2015 amounted to $117,000 and $44,000 respectively. Capitalized software development costs relate to internally developed software, which was amortized over minimum unit sales of the underlying product and has been fully amortized as of June 30, 2016. Both the covenant not to compete and the customer list and backlog relate to assets acquired in conjunction with the business acquisitions of Huber and Fineline more fully described in Note 3 above and are being amortized over various periods not to exceed ten years. The trade name relates exclusively to Fineline 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 both patent applications and a patent issuance, and will be amortized over the estimated life of the product(s) that is or will be utilizing the technology, 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): Amortization Expense Fiscal Year: 2017 $ 62 2018 65 2019 65 2020 60 2021 55 Thereafter 94 Total expected amortization $ 401 Accrued Liabilities Accrued liabilities consist of the following (in thousands): June 30, 2016 2015 Warranty $ 365 $ 261 Payroll and related items 443 302 Accrued legal and professional fees 60 46 Accrued sales, use and excise taxes 7 36 Accrued losses on development contracts 28 385 Accrued inventory in transit 11 83 Other 83 89 $ 997 $ 1,202 |
Due from Factor
Due from Factor | 12 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Due from Factor | 5. Due from Factor On September 9, 2015, we entered a Loan and Security Agreement (the “Summit Loan”) with Summit Financial Resources LP, (the “Factor”) whereby we can borrow up to $1.0 million against our eligible receivables, on a revolving basis, 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 monthly 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. As of June 30, 2016, the total amount of receivables assigned to the Factor pursuant to the Summit Loan was $1.4 million and we bear the risk of loss in the event of non-payment by the customers. During the fiscal year ended June 30, 2016, we borrowed $1.7 million, on a revolving basis, under the Summit Loan, which amounts were paid in full by June 30, 2016. Therefore, at June 30, 2016, we had no outstanding borrowings against the Summit Loan. |
Warranty Accrual
Warranty Accrual | 12 Months Ended |
Jun. 30, 2016 | |
Product Warranties Disclosures [Abstract] | |
Warranty Accrual | 6. Warranty Accrual Information relating to the accrual for warranty costs for the years ended June 30, 2016 and 2015 is as follows (in thousands): June 30, 2016 2015 Balance at beginning of year $ 261 $ 237 Accruals during the year 350 372 Change in estimates of prior period accruals (154 ) (208 ) Warranty amortization (92 ) (140 ) Balance at end of year $ 365 $ 261 Warranty expense relating to new product sales and changes to estimates was $196,000 and $164,000, respectively, for the fiscal years ended June 30, 2016 and 2015. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes The provision for income tax expense (benefit) from continuing operations consists of the following amounts (in thousands): Years Ended June 30, 2016 2015 Current: Federal $ 11 $ — State 14 (44 ) Deferred: Federal — — State — — Income tax expense (benefit) $ 25 $ (44 ) 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, 2016 2015 Amount Percent Pretax Income Amount Percent Pretax Income Income (loss) from continuing operations before income taxes $ 847 100 % $ (446 ) 100% Computed “expected” income tax expense (benefit) on income (loss) from continuing operations before income taxes $ 288 34 % $ (152 ) (34 %) State tax, net of federal benefit 9 1 % (30 ) (7 %) Tax incentives (133 ) (16 %) (88 ) (20 %) Change in valuation allowance (141 ) (17 %) 227 51 % Permanent differences — — — — State income tax rate adjustment — — — — Other 2 — (1 ) — Income tax expense (benefit) $ 25 2 % $ (44 ) (10 %) Deferred income taxes reflect the net effects of loss and credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities for federal and state income taxes are as follows (in thousands): June 30, 2016 2015 Deferred tax assets: Federal & State NOL carryforward $ 1,144 $ 1,592 Research & other credits 1,790 1,562 Reserves and accruals 337 407 Inventory 432 457 Other intangibles 237 252 Goodwill 89 — Other 5 34 Total gross deferred tax assets $ 4,034 $ 4,304 Less: valuation allowance (3,773 ) (3,961 ) Total deferred tax assets 261 343 June 30, 2016 2015 Deferred tax liabilities: Property and equipment, principally due to differing depreciation methods $ (261 ) $ (316 ) Goodwill — (4 ) Other intangibles — (1 ) Other — (22 ) Total gross deferred tax liabilities (261 ) (343 ) Net deferred tax assets $ — $ — As of June 30, 2016 we had a net operating loss carry forward in the amount of approximately $1,899,000 including $22,000 of losses which have been created from excess stock compensation deductions, portions of which begin to expire in 2033. As of June 30, 2016 we have state net operating loss carry forwards of approximately $5,876,000, which will begin to expire in 2026. Federal research and development and alternative minimum tax credit carry forwards at June 30, 2016 amount to $1,356,000, and begin to expire in 2027. State tax research credit carry forwards at June 30, 2016 amount to $870,000, 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, 2016 and 2015. The valuation allowance decreased by $188,000 and increased by $451,000 during the years ended June 30, 2016 and 2015, respectively. As of June 30, 2016, we have accrued $446,000 of unrecognized tax benefits related to federal and state income tax matters that would reduce the Company’s 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, 2016 2015 Unrecognized tax benefits: Beginning balance $ 399 $ 363 Additions based on federal tax positions related to the current year 15 8 Additions based upon state tax positions related to the current year 13 15 Additions for tax positions of prior years 19 13 Reductions for tax positions of prior years — — Ending balance $ 446 $ 399 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, 2016, 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, 2013 and later. However, because of net operating losses and research credit carryovers, substantially all of our tax years are open to audit. |
Investment in Ramsey Property a
Investment in Ramsey Property and Related Notes Receivable | 12 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
Investment in Ramsey Property and Related Notes Receivable | 8. Investment in Ramsey Property and Related Notes Receivable 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 remained in default, they were placed on nonaccrual status and therefore, the Company did not collect or recognize 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 was 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 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. Additionally, during the fourth quarter of fiscal 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 the notes receivable. The notes were considered impaired because we did not believe the contractual payments would be collected pursuant to contract terms. Accordingly, the recorded investment was reflected at the lesser of the purchase price or the estimated fair value of the collateral (with appropriate reductions for estimated disposal costs). On September 22, 2015 we sent Riverside a proposal to accept the collateral in full satisfaction of Riverside’s debt. On October 13, 2015, title to the collateral transferred to the Company by operation of law. Therefore, on October 13, 2015, we took possession of all assets secured by the revolving loan agreement and promissory notes and Riverside ceased to operate. During the third quarter ended March 31, 2016 we sold the Ramsey Property for an aggregate purchase price of $1,653,000, collecting $1,441,000 upon close of escrow. Additionally, during fiscal 2016 we liquidated the Riverside machine shop equipment and collected some accounts receivable of Riverside that served as Collateral in the gross amount of $529,000. Therefore, during fiscal 2016 we recorded a gain on the sale of Investment in Ramsey in the amount of $340,000, which included a final accrual in the amount of $86,000 to be released from escrow upon completion of voluntary foreclosure proceedings. Accordingly, the $86,000 remaining to be collected as of June 30, 2016, has been recorded as other current receivables in our accompanying consolidated balance sheet. |
Notes Payable and Financing Tra
Notes Payable and Financing Transactions | 12 Months Ended |
Jun. 30, 2016 | |
Notes Payable [Abstract] | |
Notes Payable and Financing Transactions | 9. Notes Payable and Financing Transactions Fortitude Income Funds The Company borrowed $500,000 from Fortitude Income Funds, LLC under a promissory note dated September 8, 2015. The loan bore interest at 12 percent per annum, contained a loan origination fee of $15,000 plus expenses, and required monthly interest only payments until its original maturity scheduled on March 15, 2016. The loan was secured by a combination mortgage, security agreement and fixture statement covering the Ramsey Property. On February 22, 2016, the loan was repaid in full in conjunction with the sale of the Ramsey Property described above. Summit Financial Resources LP Additionally, as discussed in Note 5, on September 9, 2015 we entered into the Summit Loan, whereby we can borrow up to $1.0 million against our eligible receivables, on a revolving basis, as defined in the loan 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 monthly 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. During the fiscal year ended June 30, 2016 we borrowed 1.7 million, on a revolving basis, under the Summit Loan, which amounts were paid in full by June 30, 2016. Fineline Molds As discussed in Note 3, in conjunction with our acquisition of the assets of Fineline we issued a promissory note to Fineline in the amount of $100,000 which bears interest at 4% per annum and requires sixteen equal quarterly payments of principal and accrued interest in the amount of $6,794. The note is secured by all of the assets acquired by us from Fineline and is subordinate to the security interest created by the Summit Loan. The balance owed on the note as of June 30, 2016 and June 30, 2015 was approximately $70,000 and $94,000, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. 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. Additionally, during the fiscal year ended June 30, 2015 we entered leases in conjunction with the acquisitions of Huber and Fineline, located in San Carlos, California and San Dimas, California respectively. The Huber lease expired on November 30, 2015 and all orders shipped since that date are manufactured at the Irvine facility. The Fineline lease expires on February 28, 2017. Finally, during fiscal 2015 we opened a sales office in Troy, Michigan to support our engineering services division. The lease expired 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 fiscal 2016 and 2015 was $561,000 and $550,000, respectively. Minimum lease payments for future fiscal years ending June 30 are as follows (in thousands): Operating Leases Fiscal Year: 2017 $ 549 2018 361 Total minimum lease payments $ 910 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 fiscal years ended June 30, 2016 and 2015, we recognized compensation expense amounting to $68,000 and $33,000, respectively, in connection with the 401(k) Plan. Annual Incentive Plan (“AIP”) 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. Previously accrued AIP awards of $15,000 were paid to the participants during fiscal 2016. No compensation expense was accrued under the terms of the AIP in either fiscal year 2016 or 2015. Legal Matters On August 1, 2016, we received correspondence from an attorney representing Scott Robertson, the former president of Riverside Manufacturing, Inc., claiming damages owed under claims of breach of contract, fraudulent inducement, wrongful self-help eviction among others. The letter requested a payment of $250,000 within 10 days of the date of the letter to fully settle the matter. We have made no such payment nor have we accrued any amounts owed related to this matter. On August 12, 2016, we responded to the letter indicating that we believe each and every claim has no legal merit. Additionally, on September 8, 2016, we sent a follow up correspondence asserting claims against Mr. Robertson including slander of title, fraudulent misrepresentation, conversion and theft. We have proposed a mutual release of all claims to settle this dispute and avoid potentially costly legal fees. As of the date of this filing, no litigation has commenced nor, to our knowledge, is pending. While we believe that we would prevail should this matter escalate, there can be no assurances that we will be successful should this matter be litigated. In addition to the matter described above 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, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | 11. 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”). 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. Aggregate share-based compensation expense under the Plans for the years ended June 30, 2016 and 2015 were $2,000 and $17,000, respectively. 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 were reallocated 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 shares were reallocated for issuance under the provisions of the Employee Stock Purchase Plan described below. Stock Options There were no stock options granted during the fiscal years ended June 30, 2016 and 2015. As of June 30, 2016, there was no unrecognized compensation cost under the Stock Option Plans as all outstanding stock options are fully vested. The following is a summary of stock option activity under the Option Plans for the years ended June 30, 2016 and 2015: Outstanding Options Number of Shares Weighted-Average Exercise Price 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, July 1, 2015 106,668 $ 2.41 Options granted — — Options canceled or expired (8,334 ) (7.65 ) Options exercised (7,500 ) (2.14 ) Balance, June 30, 2016 90,834 $ 1.95 Stock Options Exercisable at June 30, 2016 90,834 $ 1.95 The following table summarizes information regarding options outstanding and options exercisable under the Option Plans at June 30, 2016: Options Outstanding & Exercisable Range of Exercise Prices Number Outstanding Weighted-Avg. Remaining Contractual Life Weighted-Avg. Exercise Price Aggregate Intrinsic Value $0 to 2.50 87,500 5.28 $ 1.86 $ 323,750 2.5 to 5.00 3,334 0.88 4.38 3,934 Total 90,834 5.12 years $ 1.95 $ 327,684 Restricted Stock The following is a summary of restricted share activity for the years ended June 30, 2016 and 2015: Outstanding Restricted Stock Units Number of Shares Weighted-Average Stock Price On Grant Date 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 Granted — — Forfeited — — Vested (5,000 ) 1.73 Balance, June 30, 2016 — $ — 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 and the Directors’ Stock Option Plan in excess of shares issuable pursuant to outstanding options, aggregating 704,715 shares, be reserved for issuance pursuant to the ESPP. The ESPP was approved by our shareholders at the December 3, 2014 Annual Meeting. On February 2, 2015, the Company filed a Registration Statement on Form S-8 registering the 704,715 shares issuable under the ESPP under the Securities Act of 1933. During the first quarter ended September 30, 2015, 1,925 shares were purchased and allocated to employees based upon their contributions at a price of $2.34 per share, upon the completion of the first offering period. During the third quarter ended March 31, 2016, 3,671 shares were purchased and allocated to employees based upon their contributions at a price of $2.31 per share, upon the completion of the second offering period. During the fiscal year ended June 30, 2016, we recorded stock compensation expense in the amount of $2,000 relating to the ESPP. |
Major Customers & Suppliers
Major Customers & Suppliers | 12 Months Ended |
Jun. 30, 2016 | |
Risks and Uncertainties [Abstract] | |
Major Customers & Suppliers | 12. Major Customers & Suppliers Customers that accounted for sales in excess of 10% of our total sales in either of fiscal year 2016 or 2015, is as follows (in thousands, except percentages): Years Ended June 30, 2016 2015 Amount Percent of Total Amount Percent of Total Total revenue $ 20,157 100 % $ 13,383 100 % Customer concentration: Customer 1 $ 4,999 25 % $ 445 3 % Customer 2 3,630 18 % 6,569 49 % Customer 3 2,855 14 % 21 — Total $ 11,484 57 % $ 7,035 52 % Information with respect to accounts receivable from those customers whom comprised more than 10% of our gross accounts receivable at either June 30, 2016 or June 30, 2015, is as follows (in thousands, except percentages): June 30, 2016 June 30, 2015 Total gross accounts receivable, including amounts due from factor $ 2,908 100 % $ 2,362 100 % Customer concentration: Customer 1. $ 850 29 % $ 78 3 % Customer 2. 135 5 % 711 30 % Customer 3. 573 20 % — — Customer 4. 230 8 % 303 13 % Customer 5. 337 11 % 531 22 % Total. $ 2,125 73 % $ 1,623 68 % During fiscal 2016 and 2015, we had one supplier that accounted for 11 percent and 16 percent of total purchases, respectively. Accounts payable due to this same significant supplier represented 3 percent and 36 percent of total accounts payable as of June 30, 2016 and 2015, respectively. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | 13. Net Income (Loss) Per Share We calculate basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share reflects the effects of potentially dilutive securities. Because we incurred a net loss for the fiscal year ended June 30, 2015, basic and diluted loss per share were the same as the inclusion of common shares of 22,607 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, 2016 and 2015 is as follows (in thousands, except per share data): Years Ended June 30, 2016 2015 Basic: Income (loss) from continuing operations $ 822 $ (402 ) Weighted average shares outstanding 4,141 4,169 Basic earnings (loss) per share from continuing operations $ 0.20 $ (0.10 ) Income from discontinued operations $ — $ 37 Weighted average shares outstanding 4,141 4,169 Basic earnings per share from discontinued operations $ — $ 0.01 Net income (loss) $ 822 $ (365 ) Weighted average shares outstanding 4,141 4,169 Basic earnings (loss) per share $ 0.20 $ (0.09 ) Diluted: Income (loss) from continuing operations $ 822 $ (402 ) Weighted average shares outstanding 4,141 4,169 Effect of dilutive securities – stock options 32 — Weighted average shares used in calculation of diluted earnings per share 4,173 4,169 Diluted earnings (loss) per share from continuing operations $ 0.20 $ (0.10 ) Income from discontinued operations $ — $ 37 Weighted average shares used in calculation of diluted earnings per share 4,173 4,169 Diluted earnings per share from discontinued operations $ — $ 0.01 Net income (loss) $ 822 $ (365 ) Weighted average shares used in calculation of diluted earnings per share 4,173 4,169 Diluted earnings (loss) per share $ 0.20 $ (0.09 ) |
Common Stock
Common Stock | 12 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | 14. Common Stock 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 March 22, 2016, 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” or “Plan”). The 10b5-1 Plan became effective on March 23, 2016 and through June 30, 2016 we repurchased 99,688 shares at an aggregate cost of approximately $454,000. The 10b5-1 Plan terminated on July 6, 2016 in accordance with its provisions. Our prior 10b5-1 Plan commenced 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 prior 10b5-1 Plan. Repurchases under both 10b5-1 Plans were administered through an independent broker. |
Segment Information
Segment Information | 12 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | 15. Segment Information In fiscal 2016, 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 Company’s total revenues and assets. Additionally, effective November 30, 2015 the former San Carlos office of Huber Precision was closed and all orders shipped since that date are manufactured at the Irvine facility. • 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 Company’s 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 2016 and 2015 (in thousands): Pro-Dex OMS Fineli (1) ESD Corporate Unallocated Total Fiscal 2016 Net Sales $ 17,158 $ 969 $ 1,301 $ 730 $ — $ 20,158 Gross Profit 4,632 484 32 255 — 5,403 Operating Income (loss) 1,985 (282 ) (415 ) (70 ) (692 ) 526 Depreciation and amortization expense 536 11 67 — — 614 Total assets 7,414 371 660 186 2,516 11,147 (1) The Fineline operating loss includes $245,000 related to impairment of goodwill and long-lived assets. 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 Revenue by geographic region, based upon the ship to address, consisted of the following (in thousands): Years ended June 30, 2016 2015 Revenue by geographic region: North America $ 16,093 $ 6,367 Europe 3,840 6,972 Other 225 44 Total Revenue $ 20,158 $ 13,383 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events On July 21, 2016, we entered a master equipment lease agreement with Jules and Associates, Inc. to lease a specific machine used in our inspection process. The cost of the equipment was approximately $106,000 and the lease provides for 36 monthly payments in the amount of $3,121, as well as interim rent in the amount of $7,388. Additionally, as reported in our Current Report on Form 8-K filed with the SEC on September 12, 2016, the Company approved the adoption of a share repurchase plan intended to qualify for the safe harbor under Rule 10b5-1 under the Securities and Exchange Act of 1934 effective September 8, 2016. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2016 | |
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 Sunfish Lake, LLC and Pro-Dex Riverside, LLC, both Delaware limited liability companies formed by the Company 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 Revenue from billable product development service portions of development and supply contracts is generally recognized either upon milestone completion or completion of the product development services, in conformity with ASC Section 605. We recognize revenue that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is considered substantive when the consideration payable to us for such milestone (i) is consistent with our performance necessary to achieve the milestone, (ii) relates solely to our past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. In making this assessment, we consider all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the milestone, the level of effort and investment required to achieve the milestone and whether any portion of the milestone consideration is related to future performance or deliverables. Accordingly, in certain cases, based upon the evaluation of the criteria above, we record revenue upon milestone completion and in other cases revenue from product development milestone billings to our customers is deferred until completion of all development phases or milestones. 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. 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 | 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. |
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, 2016 cash equivalents consisted of investments in money market funds. At June 30, 2015 there were no cash equivalents included in the cash and cash equivalents balance. |
Accounts Receivable and Deferred Costs | Accounts Receivable and Deferred Costs 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. Deferred costs reflect costs incurred related to non-recurring engineering services under the terms of the related development and supply contracts. These costs get recorded to cost of sales in the period that the revenue is recognized pursuant to the terms of the underlying contract with our customer. |
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 both historical usage and estimated demand over the ensuing 12 months from the measurement date. |
Long-lived Assets | 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 assetÂ’s estimated useful life |
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 during the fiscal year ended June 30, 2015. 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. Certain of the patent costs are being amortized over a period of seven years, the estimated life of the product that is currently utilizing the patented technology. The remaining patent costs will be amortized over the estimated life of the product(s) that will be utilizing the technology, or expensed immediately in the event the patent office denies the issuance of the patent. The capitalized software development costs have been fully amortized as of June 30, 2016. 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. |
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. ManagementÂ’s 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, 2016 and 2015 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, 2016 and 2015, 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 customersÂ’ payment histories. |
Compensation Plans | Compensation 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. |
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 13, 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: 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 Advertising costs are charged to selling expense as incurred and amounted to $21,000 and $51,000 for the fiscal years ended June 30, 2016 and 2015, 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 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. The adoption of this accounting standard did not have a material impact on our balance sheet. In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ” In February 2016, the FASB issued ASU 2016-02, (Topic 842) “Leases”. The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718) “Improvements to Employee Share-Based Payment Accounting”. This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. |
Reclassifications | Reclassifications Certain prior period balances have been reclassified as it relates to our income tax disclosures in Note 7 to conform to the current period presentation. |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
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 |
Goodwill and Indefinite-Lived26
Goodwill and Indefinite-Lived Assets (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of carrying amount of the fineline goodwill and trade name | The following table presents the changes in the carrying amount of the Fineline goodwill and trade name (in thousands): Goodwill Trade name Balance at July 1, 2014 $ — $ — Purchased 353 54 Balance at July 1, 2015 353 54 Impairment charge (241 ) (4 ) Balance at June 30, 2016 $ 112 $ 50 |
Composition of Certain Financ27
Composition of Certain Financial Statement Items (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
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, 2016 2015 Raw materials /purchased components $ 1,596 $ 2,025 Work in process 818 1,030 Sub-assemblies /finished components 1,044 1,095 Finished goods 115 160 Total inventory $ 3,573 $ 4,310 |
Schedule of equipment and leasehold improvements | Equipment and leasehold improvements consist of the following (in thousands): June 30, 2016 2015 Office furnishings and fixtures $ 2,007 $ 2,008 Machinery and equipment 4,953 4,803 Leasehold improvements 2,094 2,086 Total 9,054 8,897 Less: Accumulated depreciation and amortization (7,768 ) (7,427 ) $ 1,286 $ 1,470 |
Schedule of intangibles | Intangibles consist of the following (in thousands): June 30, June 30, Capitalized software development costs $ 73 $ 73 Covenant not to compete 52 52 Trade name 50 54 Customer list and backlog 316 316 Patent-related costs 121 96 Total intangibles $ 612 $ 591 Less accumulated amortization (161 ) (44 ) $ 451 $ 547 |
Schedule of expected amortization expense | Expected amortization expense for the next five fiscal years ending June 30, are as follows (in thousands): Amortization Expense Fiscal Year: 2017 $ 62 2018 65 2019 65 2020 60 2021 55 Thereafter 94 Total expected amortization $ 401 |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): June 30, 2016 2015 Warranty $ 365 $ 261 Payroll and related items 443 302 Accrued legal and professional fees 60 46 Accrued sales, use and excise taxes 7 36 Accrued losses on development contracts 28 385 Accrued inventory in transit 11 83 Other 83 89 $ 997 $ 1,202 |
Warranty Accrual (Tables)
Warranty Accrual (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Product Warranties Disclosures [Abstract] | |
Schedule of accrual warranty costs | Information relating to the accrual for warranty costs for the years ended June 30, 2016 and 2015 is as follows (in thousands): June 30, 2016 2015 Balance at beginning of year $ 261 $ 237 Accruals during the year 350 372 Change in estimates of prior period accruals (154 ) (208 ) Warranty amortization (92 ) (140 ) Balance at end of year $ 365 $ 261 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision (benefit) for income taxes | The provision for income tax expense (benefit) from continuing operations consists of the following amounts (in thousands): Years Ended June 30, 2016 2015 Current: Federal $ 11 $ — State 14 (44 ) Deferred: Federal — — State — — Income tax expense (benefit) $ 25 $ (44 ) |
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, 2016 2015 Amount Percent Pretax Income Amount Percent Pretax Income Income (loss) from continuing operations before income taxes $ 847 100 % $ (446 ) 100% Computed “expected” income tax expense (benefit) on income (loss) from continuing operations before income taxes $ 288 34 % $ (152 ) (34 %) State tax, net of federal benefit 9 1 % (30 ) (7 %) Tax incentives (133 ) (16 %) (88 ) (20 %) Change in valuation allowance (141 ) (17 %) 227 51 % Permanent differences — — — — State income tax rate adjustment — — — — Other 2 — (1 ) — Income tax expense (benefit) $ 25 2 % $ (44 ) (10 %) |
Schedule of deferred income tax assets and liabilities | Significant components of our deferred tax assets and liabilities for federal and state income taxes are as follows (in thousands): June 30, 2016 2015 Deferred tax assets: Federal & State NOL carryforward $ 1,144 $ 1,592 Research & other credits 1,790 1,562 Reserves and accruals 337 407 Inventory 432 457 Other intangibles 237 252 Goodwill 89 — Other 5 34 Total gross deferred tax assets $ 4,034 $ 4,304 Less: valuation allowance (3,773 ) (3,961 ) Total deferred tax assets 261 343 June 30, 2016 2015 Deferred tax liabilities: Property and equipment, principally due to differing depreciation methods $ (261 ) $ (316 ) Goodwill — (4 ) Other intangibles — (1 ) Other — (22 ) Total gross deferred tax liabilities (261 ) (343 ) Net deferred tax assets $ — $ — |
Schedule of accrual unrecognized tax benefits | Information with respect to our accrual for unrecognized tax benefits is as follows (in thousands): June 30, 2016 2015 Unrecognized tax benefits: Beginning balance $ 399 $ 363 Additions based on federal tax positions related to the current year 15 8 Additions based upon state tax positions related to the current year 13 15 Additions for tax positions of prior years 19 13 Reductions for tax positions of prior years — — Ending balance $ 446 $ 399 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
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: 2017 $ 549 2018 361 Total minimum lease payments $ 910 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
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, 2016 and 2015: Outstanding Options Number of Shares Weighted-Average Exercise Price 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, July 1, 2015 106,668 $ 2.41 Options granted — — Options canceled or expired (8,334 ) (7.65 ) Options exercised (7,500 ) (2.14 ) Balance, June 30, 2016 90,834 $ 1.95 Stock Options Exercisable at June 30, 2016 90,834 $ 1.95 |
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, 2016: Options Outstanding & Exercisable Range of Number Outstanding Weighted-Avg. Remaining Contractual Life Weighted-Avg. Exercise Price Aggregate Intrinsic Value $0 to 2.50 87,500 5.28 $ 1.86 $ 323,750 2.5 to 5.00 3,334 0.88 4.38 3,934 Total 90,834 5.12 years $ 1.95 $ 327,684 |
Schedule of restricted share activity | The following is a summary of restricted share activity for the years ended June 30, 2016 and 2015: Outstanding Restricted Stock Units Number of Shares Weighted-Average Stock Price On Grant Date 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 Granted — — Forfeited — — Vested (5,000 ) 1.73 Balance, June 30, 2016 — $ — |
Major Customers & Suppliers (Ta
Major Customers & Suppliers (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Risks and Uncertainties [Abstract] | |
Schedule of sales by major customers | Customers that accounted for sales in excess of 10% of our total sales in either of fiscal year 2016 or 2015, is as follows (in thousands, except percentages): Years Ended June 30, 2016 2015 Amount Percent of Total Amount Percent of Total Total revenue $ 20,157 100 % $ 13,383 100 % Customer concentration: Customer 1 $ 4,999 25 % $ 445 3 % Customer 2 3,630 18 % 6,569 49 % Customer 3 2,855 14 % 21 — Total $ 11,484 57 % $ 7,035 52 % |
Schedule of accounts receivable of major customers | Information with respect to accounts receivable from those customers whom comprised more than 10% of our gross accounts receivable at either June 30, 2016 or June 30, 2015, is as follows (in thousands, except percentages): June 30, 2016 June 30, 2015 Total gross accounts receivable, including amounts due from factor $ 2,908 100 % $ 2,362 100 % Customer concentration: Customer 1. $ 850 29 % $ 78 3 % Customer 2. 135 5 % 711 30 % Customer 3. 573 20 % — — Customer 4. 230 8 % 303 13 % Customer 5. 337 11 % 531 22 % Total. $ 2,125 73 % $ 1,623 68 % |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
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, 2016 and 2015 is as follows (in thousands, except per share data): Years Ended June 30, 2016 2015 Basic: Income (loss) from continuing operations $ 822 $ (402 ) Weighted average shares outstanding 4,141 4,169 Basic earnings (loss) per share from continuing operations $ 0.20 $ (0.10 ) Income from discontinued operations $ — $ 37 Weighted average shares outstanding 4,141 4,169 Basic earnings per share from discontinued operations $ — $ 0.01 Net income (loss) $ 822 $ (365 ) Weighted average shares outstanding 4,141 4,169 Basic earnings (loss) per share $ 0.20 $ (0.09 ) Diluted: Income (loss) from continuing operations $ 822 $ (402 ) Weighted average shares outstanding 4,141 4,169 Effect of dilutive securities – stock options 32 — Weighted average shares used in calculation of diluted earnings per share 4,173 4,169 Diluted earnings (loss) per share from continuing operations $ 0.20 $ (0.10 ) Income from discontinued operations $ — $ 37 Weighted average shares used in calculation of diluted earnings per share 4,173 4,169 Diluted earnings per share from discontinued operations $ — $ 0.01 Net income (loss) $ 822 $ (365 ) Weighted average shares used in calculation of diluted earnings per share 4,173 4,169 Diluted earnings (loss) per share $ 0.20 $ (0.09 ) |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of segment performance | The following tables summarize segment performance for fiscal 2016 and 2015 (in thousands): Pro-Dex OMS Fineline (1) ESD Corporate Unallocated Total Fiscal 2016 Net Sales $ 17,158 $ 969 $ 1,301 $ 730 $ — $ 20,158 Gross Profit 4,632 484 32 255 — 5,403 Operating Income (loss) 1,985 (282 ) (415 ) (70 ) (692 ) 526 Depreciation and amortization expense 536 11 67 — — 614 Total assets 7,414 371 660 186 2,516 11,147 (1) The Fineline operating loss includes $245,000 related to impairment of goodwill and long-lived assets. 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 |
Schedule of revenue by geographic region | Revenue by geographic region, based upon the ship to address, consisted of the following (in thousands): Years ended June 30, 2016 2015 Revenue by geographic region: North America $ 16,093 $ 6,367 Europe 3,840 6,972 Other 225 44 Total Revenue $ 20,158 $ 13,383 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Advertising expense | $ 21 | $ 51 |
Goodwill | $ 112 | 353 |
Trade name | $ 54 | |
Patent-related costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Amortization period of assets | 7 years | |
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 assetÂ’s estimated useful life |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 | Feb. 01, 2015 | Dec. 01, 2014 |
Fair value of assets acquired: | ||||
Goodwill | $ 112 | $ 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 Name [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | ||||
Huber Precision [Member] | Customer list and backlog [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 Name [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | 54 | |||
Fineline Molds [Member] | Customer list and backlog [Member] | ||||
Fair value of assets acquired: | ||||
Intangible assets, other than goodwill | $ 179 |
Business Acquisitions (Details
Business Acquisitions (Details Narrative) $ in Thousands | Feb. 01, 2015USD ($) | Dec. 01, 2014USD ($) | Jun. 30, 2015USD ($)Number |
Business Acquisition [Line Items] | |||
Number of businesses acquired | Number | 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 (Detail38
Business Acquisitions (Details Narrative 1) - Fineline Molds [Member] $ in Thousands | Feb. 01, 2015USD ($) |
Business Acquisition [Line Items] | |
Cash paid on aquisition | $ 657 |
Debt instrument, face amount | $ 100 |
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 |
Goodwill and Indefinite-Lived39
Goodwill and Indefinite-Lived Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Goodwill [Roll Forward] | ||
Balance at beginning | $ 353 | |
Balance at end | 112 | $ 353 |
Fineline Molds [Member] | ||
Goodwill [Roll Forward] | ||
Balance at beginning | 353 | |
Balance at end | 353 | |
Fineline Molds [Member] | Trade Name [Member] | ||
Goodwill [Roll Forward] | ||
Balance at beginning | 54 | |
Purchased | 54 | |
Impairment charge | (4) | |
Balance at end | 50 | 54 |
Fineline Molds [Member] | Goodwill [Member] | ||
Goodwill [Roll Forward] | ||
Balance at beginning | 353 | |
Purchased | 353 | |
Impairment charge | (241) | |
Balance at end | $ 112 | $ 353 |
Composition of Certain Financ40
Composition of Certain Financial Statement Items (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials /purchased components | $ 1,596 | $ 2,025 |
Work in process | 818 | 1,030 |
Sub-assemblies /finished components | 1,044 | 1,095 |
Finished goods | 115 | 160 |
Total inventory | $ 3,573 | $ 4,310 |
Composition of Certain Financ41
Composition of Certain Financial Statement Items (Details 1) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Property, Plant and Equipment [Line Items] | ||
Total gross | $ 9,054 | $ 8,897 |
Accumulated depreciation | (7,768) | (7,427) |
Property, plant and equipment, net | 1,286 | 1,470 |
Office Furnishings and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total gross | 2,007 | 2,008 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total gross | 4,953 | 4,803 |
Leasehold & Improvement [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total gross | $ 2,094 | $ 2,086 |
Composition of Certain Financ42
Composition of Certain Financial Statement Items (Details 2) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | $ 612 | $ 591 |
Less accumulated amortization | (161) | (44) |
Intangible assets,net | 451 | 547 |
Capitalized Software Development Costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | 73 | 73 |
Covenant Not To Compete [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | 52 | 52 |
Trade Name [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | 50 | 54 |
Customer list and backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | 316 | 316 |
Patent-related costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangibles | $ 121 | $ 96 |
Composition of Certain Financ43
Composition of Certain Financial Statement Items (Details 3) $ in Thousands | Jun. 30, 2016USD ($) |
Fiscal Year: | |
2,017 | $ 62 |
2,018 | 65 |
2,019 | 65 |
2,020 | 60 |
2,021 | 55 |
Thereafter | 94 |
Total expected amortization | $ 401 |
Composition of Certain Financ44
Composition of Certain Financial Statement Items (Details 4) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Warranty | $ 365 | $ 261 |
Payroll and related items | 443 | 302 |
Accrued legal and professional fees | 60 | 46 |
Accrued sales, use and excise taxes | 7 | 36 |
Accrued losses on development contracts | 28 | 385 |
Accrued inventory in transit | 11 | 83 |
Other | 83 | 89 |
Total accrued expenses | $ 997 | $ 1,202 |
Composition of Certain Financ45
Composition of Certain Financial Statement Items (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Realized gains on sale of investments | $ 455 | |
Depreciation expenses | $ 497 | 534 |
Amortization expense | $ 117 | $ 44 |
Due from Factor (Details Narrat
Due from Factor (Details Narrative) - USD ($) $ in Thousands | Sep. 09, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Short-term Debt [Line Items] | |||
Due from factor | $ 1,419 | ||
Proceeds from short term debt | 1,689 | ||
Loan and Security Agreement ("Summit Loan") [Member] | Summit Financial Resources LP, (the "Factor") [Member] | |||
Short-term Debt [Line Items] | |||
Debt instrument, face amount | $ 1,000 | ||
Debt instrument, interest rate description | Bear interest at a rate of prime plus 2 percent. | ||
Percentage of monthly administrative fee | 0.70% | ||
Debt instrument, term | 18 months | ||
Debt instrument, annual facility fee | $ 10 | ||
Due from factor | 1,400 | ||
Proceeds from short term debt | $ 1,700 |
Warranty Accrual (Details)
Warranty Accrual (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of year | $ 261 | $ 237 |
Accruals during the period | 350 | 372 |
Change in estimates of prior period accruals | (154) | (208) |
Warranty amortization | (92) | (140) |
Balance at end of year | $ 365 | $ 261 |
Warranty Accrual (Details Narra
Warranty Accrual (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Product Warranties Disclosures [Abstract] | ||
Warranty expenses | $ 196 | $ 164 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Current: | ||
Federal | $ 11 | |
State | 14 | (44) |
Deferred: | ||
Federal | ||
State | ||
Income tax expense (benefit) | $ 25 | $ (44) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||
Income (loss) from continuing operations before income taxes | $ 847 | $ (446) |
Computed "expected" income tax expense (benefit) on income (loss) from continuing operations before income taxes | 288 | (152) |
State tax, net of federal benefit | 9 | (30) |
Tax incentives | (133) | (88) |
Change in valuation allowance | (141) | 227 |
Permanent differences | ||
State income tax rate adjustment | ||
Other | 2 | (1) |
Income tax expense (benefit) | $ 25 | $ (44) |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Income (loss) from continuing operations before income taxes | 100.00% | 100.00% |
Computed "expected" income tax expense (benefit) on income (loss) from continuing operations before income taxes | 34.00% | (34.00%) |
State tax, net of federal benefit | 1.00% | (7.00%) |
Tax incentives | (16.00%) | (20.00%) |
Change in valuation allowance | (17.00%) | 51.00% |
Permanent differences | ||
State income tax rate adjustment | ||
Other | ||
Income tax expense (benefit) | 2.00% | (10.00%) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Deferred tax assets: | ||
Federal & State NOL carryforward | $ 1,144 | $ 1,592 |
Research & other credits | 1,790 | 1,562 |
Reserves and accruals | 337 | 407 |
Inventory | 432 | 457 |
Other intangibles | 237 | 252 |
Goodwill | 89 | |
Other | 5 | 34 |
Total gross deferred tax assets | 4,034 | 4,304 |
Less: valuation allowance | (3,773) | (3,961) |
Total deferred tax assets | 261 | 343 |
Deferred tax liabilities: | ||
Property and equipment, principally due to differing depreciation methods | (261) | (316) |
Goodwill | (4) | |
Other intangibles | (1) | |
Other | (22) | |
Total gross deferred tax liabilities | (261) | (343) |
Net deferred tax assets |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning balance | $ 399 | $ 363 |
Additions based on federal tax positions related to the current year | 15 | 8 |
Additions based upon state tax positions related to the current year | 13 | 15 |
Additions for tax positions of prior years | 19 | 13 |
Reductions for tax positions of prior years | ||
Ending balance | $ 446 | $ 399 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carry forward | $ 1,899 | ||
Operating loss carryforward, expiration year | 2,033 | ||
Federal net operating losses excess from stock compensation deductions | $ 22 | ||
Increase (Decrease) in deferred tax asset valuation allowance | (188) | $ 451 | |
Unrecognized tax benefits | 446 | $ 399 | $ 363 |
Federal Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Tax credit carryforward | $ 1,356 | ||
Tax credit carryforward, expiration year | 2,027 | ||
States Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carry forward | $ 5,876 | ||
Operating loss carryforward, expiration year | 2,026 | ||
Tax credit carryforward | $ 870 |
Investment in Ramsey Property54
Investment in Ramsey Property and Related Notes Receivable (Details Narrative) - USD ($) $ in Thousands | Nov. 30, 2014 | Mar. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Mar. 31, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Notes receivable net | $ 1,652 | ||||
Proceeds from liquidation of Ramsey assets | 1,992 | ||||
Gain on the sale of investment in ramsey | 340 | ||||
Riverside Manufacturing Inc [Member] | Revolving Credit Facility [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Revolving loan agreement aggregate amount | $ 200 | ||||
Revolving loan modification agreement aggregate amount | $ 300 | ||||
Proceeds from liquidation of Ramsey assets | $ 1,653 | ||||
Collection of escrow account | $ 1,441 | ||||
Proceeds from sale of property | 529 | ||||
Gain on the sale of investment in ramsey | 340 | ||||
Escrow upon completion of voluntary foreclosure proceedings | $ 86 | ||||
Two Promissory Notes (Loan Purchase and Sale Agreement) [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Notes receivable net | $ 1,200 | ||||
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). |
Notes Payable and Financing T55
Notes Payable and Financing Transactions (Details Narrative) - USD ($) $ in Thousands | Sep. 09, 2015 | Sep. 08, 2015 | Feb. 01, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Short-term Debt [Line Items] | |||||
Proceeds from notes payable | $ 500 | ||||
Borrowed from Summit loan | 1,689 | ||||
Fineline Molds [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt instrument, face amount | $ 100 | ||||
Debt instrument, term | 4 years | ||||
Promissory note payment terms | Sixteen equal quarterly payments. | ||||
Interest rate | 4.00% | ||||
Promissory note payment of principal and accrued interest | $ 6,794 | ||||
Note payable balance | $ 70 | $ 94 | |||
Fortitude Income Funds, LLC [Member] | |||||
Short-term Debt [Line Items] | |||||
Proceeds from notes payable | $ 500 | ||||
Description of interest rate | The loan bore interest at 12 percent per annum. | ||||
Debt instrument, origination fee | $ 15 | ||||
Debt instrument, maturity date | Mar. 15, 2016 | ||||
Description of collateral | The loan was secured by a combination mortgage. | ||||
Loan and Security Agreement ("Summit Loan") [Member] | Summit Financial Resources LP, (the "Factor") [Member] | |||||
Short-term Debt [Line Items] | |||||
Description of interest rate | Bear interest at a rate of prime plus 2 percent. | ||||
Debt instrument, face amount | $ 1,000 | ||||
Percentage of monthly administrative fee | 0.70% | ||||
Debt instrument, term | 18 months | ||||
Debt instrument, annual facility fee | $ 10 | ||||
Borrowed from Summit loan | $ 1,700 |
Commitments and Contingencies56
Commitments and Contingencies (Details) $ in Thousands | Jun. 30, 2016USD ($) |
Fiscal Year: | |
2,017 | $ 549 |
2,018 | 361 |
Total minimum lease payments | $ 910 |
Commitments and Contingencies57
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Loss Contingencies [Line Items] | ||
Rent expense | $ 561 | $ 550 |
Riverside Manufacturing Inc [Member] | Scott Robertson [Member] | ||
Loss Contingencies [Line Items] | ||
Amount of loss contingency | $ 250 | |
401(k) Plan [Member] | ||
Loss Contingencies [Line Items] | ||
Percentage of matching contributions | 25.00% | |
Percentage of maximum employee contributions | 5.00% | |
Compensation expense | $ 68 | $ 33 |
AIP [Member] | ||
Loss Contingencies [Line Items] | ||
Compensation expense paid | $ 15 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - $ / shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at beginning of period | 106,668 | 165,002 |
Options granted | ||
Options canceled or expired | (8,334) | (10,001) |
Options exercised | (7,500) | (48,333) |
Outstanding at end of period | 90,834 | 106,668 |
Stock Options Exercisable at end of period | 90,834 | |
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) | $ 2.41 | $ 2.40 |
Options granted (in dollars per share) | ||
Options canceled or expired (in dollars per share) | (7.65) | 4.94 |
Options exercised (in dollars per share) | (2.14) | 1.87 |
Outstanding at end of period (in dollars per share) | 1.95 | $ 2.41 |
Stock Options Exercisable at end of period (in dollars per share) | $ 1.95 |
Share-Based Compensation (Det59
Share-Based Compensation (Details 1) $ / shares in Units, $ in Thousands | 12 Months Ended |
Jun. 30, 2016USD ($)$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | shares | 90,834 |
Weighted-Average Remaining Contractual Life | 5 years 1 month 13 days |
Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 1.95 |
Aggregate Intrinsic Value | $ | $ 327,684 |
Number Outstanding (in shares) | shares | 90,834 |
Weighted-Average Remaining Contractual Life | 5 years 1 month 13 days |
Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 1.95 |
Aggregate Intrinsic Value | $ | $ 327,684 |
$0 to $2.50 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | shares | 87,500 |
Weighted-Average Remaining Contractual Life | 5 years 3 months 11 days |
Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 1.86 |
Aggregate Intrinsic Value | $ | $ 323,750 |
Number Outstanding (in shares) | shares | 87,500 |
Weighted-Average Remaining Contractual Life | 5 years 3 months 11 days |
Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 1.86 |
Aggregate Intrinsic Value | $ | $ 323,750 |
$2.5 to $5.00 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | shares | 3,334 |
Weighted-Average Remaining Contractual Life | 10 months 17 days |
Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 4.38 |
Aggregate Intrinsic Value | $ | $ 3,934 |
Number Outstanding (in shares) | shares | 3,334 |
Weighted-Average Remaining Contractual Life | 10 months 17 days |
Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 4.38 |
Aggregate Intrinsic Value | $ | $ 3,934 |
Share-Based Compensation (Det60
Share-Based Compensation (Details 2) - Restricted Shares [Member] - $ / shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding at beginning of period | 5,000 | 13,333 |
Granted | ||
Forfeited | (1,667) | |
Vested | (5,000) | (6,666) |
Outstanding at end of period | 5,000 | |
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 period (in dollars per share) | $ 1.73 | $ 1.73 |
Granted (in dollars per share) | ||
Forfeited (in dollars per share) | 1.73 | |
Vested (in dollars per share) | 1.73 | 1.73 |
Outstanding at end of period (in dollars per share) | $ 1.73 |
Share-Based Compensation (Det61
Share-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Aggregate share-based compensation expense | $ 2 | $ 17 | ||||
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] | ||||||
Aggregate share-based compensation expense | $ 2 | |||||
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. | |||||
Number of shares reserved for future issuance | 704,715 | |||||
Number of shares purchased and allocated to employee (in shares) | 3,671 | 1,925 | ||||
Exercise price (in dollars per share) | $ 2.31 | $ 2.34 | ||||
Restricted Shares [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Description of vesting period | 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. | |||||
Restricted Shares [Member] | Employees Stock Option Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
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] | ||||||
Forfeiture period of stock option in case of cessation of employment | 90 days |
Major Customers & Suppliers (De
Major Customers & Suppliers (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Concentration Risk [Line Items] | ||
Total revenue | $ 20,158 | $ 13,383 |
Sales [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | $ 20,157 | $ 13,383 |
Percentage of concentrations risk | 100.00% | 100.00% |
Sales [Member] | Customer [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | $ 11,484 | $ 7,035 |
Percentage of concentrations risk | 57.00% | 52.00% |
Sales [Member] | Customer 1 [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | $ 4,999 | $ 445 |
Percentage of concentrations risk | 25.00% | 3.00% |
Sales [Member] | Customer 2 [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | $ 3,630 | $ 6,569 |
Percentage of concentrations risk | 18.00% | 49.00% |
Sales [Member] | Customer 3 [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | $ 2,855 | $ 21 |
Percentage of concentrations risk | 14.00% | |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Total gross accounts receivable, including amounts due from factor | $ 2,908 | $ 2,362 |
Percentage of concentrations risk | 100.00% | 100.00% |
Accounts Receivable [Member] | Customer [Member] | ||
Concentration Risk [Line Items] | ||
Total gross accounts receivable, including amounts due from factor | $ 2,125 | $ 1,623 |
Percentage of concentrations risk | 73.00% | 68.00% |
Accounts Receivable [Member] | Customer 1 [Member] | ||
Concentration Risk [Line Items] | ||
Total gross accounts receivable, including amounts due from factor | $ 850 | $ 78 |
Percentage of concentrations risk | 29.00% | 3.00% |
Accounts Receivable [Member] | Customer 2 [Member] | ||
Concentration Risk [Line Items] | ||
Total gross accounts receivable, including amounts due from factor | $ 135 | $ 711 |
Percentage of concentrations risk | 5.00% | 30.00% |
Accounts Receivable [Member] | Customer 3 [Member] | ||
Concentration Risk [Line Items] | ||
Total gross accounts receivable, including amounts due from factor | $ 573 | |
Percentage of concentrations risk | 20.00% | |
Accounts Receivable [Member] | Customer 4 [Member] | ||
Concentration Risk [Line Items] | ||
Total gross accounts receivable, including amounts due from factor | $ 230 | $ 303 |
Percentage of concentrations risk | 8.00% | 13.00% |
Accounts Receivable [Member] | Customer 5 [Member] | ||
Concentration Risk [Line Items] | ||
Total gross accounts receivable, including amounts due from factor | $ 337 | $ 531 |
Percentage of concentrations risk | 11.00% | 22.00% |
Major Customers & Suppliers (63
Major Customers & Suppliers (Details Narrative) - Supplier [Member] | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Accounts Payable [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentrations risk | 3.00% | 36.00% |
Purchase [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentrations risk | 11.00% | 16.00% |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Basic: | ||
Income (loss) from continuing operations | $ 822 | $ (402) |
Basic (in shares) | 4,141,353 | 4,169,326 |
Basic earnings (loss) per share from continuing operations | $ 0.20 | $ (0.10) |
Income from discontinued operations | $ 37 | |
Weighted average shares outstanding basic (in shares) | 4,141,353 | 4,169,326 |
Basic earnings per share from discontinued operations (in dollars per share) | $ 0.01 | |
Net income (loss) | $ 822 | $ (365) |
Basic earnings (loss) per share (in dollars per share) | $ 0.20 | $ (0.09) |
Diluted: | ||
Income (loss) from continuing operations | $ 822 | $ (402) |
Weighted average shares outstanding - basic (in shares) | 4,141,353 | 4,169,326 |
Effect of dilutive securities - stock options | 32 | |
Diluted earnings (loss) per share from continuing operations | $ 0.20 | $ (0.10) |
Income from discontinued operations | $ 37 | |
Diluted (in shares) | 4,173,556 | 4,169,326 |
Diluted earnings per share from discontinued operations (in dollars per share) | $ 0.01 | |
Net income (loss) | $ 822 | $ (365) |
Weighted average shares used in calculation of diluted earnings per share (in shares) | 4,173,556 | 4,169,326 |
Diluted earnings (loss) per share | $ 0.20 | $ (0.09) |
Net Income (Loss) Per Share (65
Net Income (Loss) Per Share (Details Narrative) | 12 Months Ended |
Jun. 30, 2015shares | |
Earnings Per Share [Abstract] | |
Antidilutive securities excluded from computation | 22,607 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - Share Repurchase Program [Member] - 10b5-1 Plan [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2016 | Mar. 23, 2015 | Sep. 30, 2013 | |
Number of authorized shares to repurchase | 99,688 | 69,773 | 750,000 |
Number of shares amount | $ 454 | $ 154 | |
Expiration date | Jul. 6, 2016 |
Segment Information (Details Na
Segment Information (Details Narrative) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016USD ($)Number | Jun. 30, 2015USD ($) | |
Number of reportable segments | Number | 4 | |
Impairment of goodwill and long-lived assets | $ 245 | |
Fineline [Member] | ||
Impairment of goodwill and long-lived assets | $ 245 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | ||
Segment Reporting Information [Line Items] | |||
Net Sales | $ 20,158 | $ 13,383 | |
Gross Profit | 5,403 | 3,704 | |
Operating Income (loss) | 526 | (902) | |
Depreciation and amortization expense | 614 | 578 | |
Total assets | 11,147 | 12,516 | |
Pro-Dex [Member] | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 17,158 | 11,617 | |
Gross Profit | 4,632 | 2,653 | |
Operating Income (loss) | 1,985 | 75 | |
Depreciation and amortization expense | 536 | 536 | |
Total assets | 7,414 | 8,479 | |
OMS [Member] | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 969 | 1,394 | |
Gross Profit | 484 | 927 | |
Operating Income (loss) | (282) | 144 | |
Depreciation and amortization expense | 11 | 11 | |
Total assets | 371 | 548 | |
Fineline [Member] | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 1,301 | [1] | 257 |
Gross Profit | 32 | [1] | 44 |
Operating Income (loss) | (415) | [1] | (33) |
Depreciation and amortization expense | 67 | [1] | 31 |
Total assets | 660 | [1] | 962 |
ESD [Member] | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 730 | 115 | |
Gross Profit | 255 | 80 | |
Operating Income (loss) | (70) | (361) | |
Depreciation and amortization expense | |||
Total assets | 186 | 17 | |
Corporate Unallocated [Member] | |||
Segment Reporting Information [Line Items] | |||
Net Sales | |||
Gross Profit | |||
Operating Income (loss) | (692) | (727) | |
Depreciation and amortization expense | |||
Total assets | $ 2,516 | $ 2,510 | |
[1] | The Fineline operating loss includes $245,000 related to impairment of goodwill and long-lived assets. |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Total Revenue | $ 20,158 | $ 13,383 |
North America [Member] | ||
Total Revenue | 16,093 | 6,367 |
Europe [Member] | ||
Total Revenue | 3,840 | 6,972 |
Other [Member] | ||
Total Revenue | $ 225 | $ 44 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) $ in Thousands | Jul. 21, 2016 | Jun. 30, 2016 | Jun. 30, 2015 |
NBV of equipment | $ 1,286 | $ 1,470 | |
Annual rent expense | $ 561 | $ 550 | |
Subsequent Event [Member] | Master Equipment Lease Agreement [Member] | Jules And Associates, Inc [Member] | |||
NBV of equipment | $ 106 | ||
Lease term | 36 months | ||
Annual rent expense | $ 3,121 | ||
Interim rent | $ 7,388 |