Pro-Dex (PDEX) 10-Q 7 Nov 19 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2019	Nov. 04, 2019
Document And Entity Information
Entity Registrant Name	PRO DEX INC
Entity Central Index Key	0000788920
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity's Reporting Status Current	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		3,972,588
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020
Entity Incorporation State Country Code	CO
Entity File Number	0-14942

CONDENSED BALANCE SHEETS (Unaud

CONDENSED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019
Current Assets:
Cash and cash equivalents	$ 6,502	$ 7,742
Investments	3,127	2,649
Accounts receivable, net of allowance for doubtful accounts of $12 and $0 at September 30, 2019 and at June 30, 2019, respectively	3,157	4,100
Deferred costs	493	430
Inventory	6,844	6,239
Prepaid expenses and other current assets	232	623
Total current assets	20,355	21,783
Equipment and leasehold improvements, net	2,653	2,726
Right of use asset, net	3,187
Intangibles, net	129	129
Deferred income taxes, net	301	260
Investments	1,306	582
Other assets	40	40
Total assets	27,971	25,520
Current Liabilities:
Accounts payable	1,376	1,996
Accrued expenses	1,306	1,437
Deferred revenue	240	215
Note payable and capital lease obligations	624	622
Total current liabilities	3,546	4,270
Deferred rent		146
Lease liability, net of current portion	3,015
Income taxes payable	191	162
Notes and capital leases payable, net of current portion	3,775	3,934
Total non-current liabilities	6,981	4,242
Total liabilities	10,527	8,512
Shareholders' equity:
Common shares; no par value; 50,000,000 shares authorized; 3,990,995 and 4,039,491 shares issued and outstanding at September 30, 2019 and June 30, 2019, respectively	15,161	15,815
Accumulated other comprehensive loss	(606)	(549)
Retained earnings	2,889	1,742
Total shareholders' equity	17,444	17,008
Total liabilities and shareholders' equity	$ 27,971	$ 25,520

CONDENSED BALANCE SHEETS (Paren

CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 12	$ 0
Common shares, no par value (in dollars per share)
Common shares, authorized	50,000,000	50,000,000
Common shares, issued	3,990,995	4,039,491
Common shares, outstanding	3,990,995	4,039,491

CONDENSED STATEMENTS OF OPERATI

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Net sales	$ 7,240	$ 6,916
Cost of sales	4,460	4,189
Gross profit	2,780	2,727
Operating (income) expenses:
Selling expenses	142	33
General and administrative expenses	663	565
Gain on disposal of equipment		(7)
Research and development costs	484	408
Total operating expenses	1,289	999
Operating income	1,491	1,728
Other income (expense):
Interest and miscellaneous income	35	74
Interest expense	(59)	(20)
Total other income (expense)	(24)	54
Income before income taxes	1,467	1,782
Provision for income taxes	363	433
Net income	1,104	1,349
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) from marketable equity investments, net of taxes	(57)	298
Comprehensive income	$ 1,047	$ 1,647
Basic and diluted income per share:
Basic net income per share	$ 0.28	$ 0.31
Diluted net income per share	$ 0.27	$ 0.31
Weighted average common shares outstanding:
Basic	4,008,017	4,330,636
Diluted	4,110,414	4,372,893
Common shares outstanding	3,990,995	4,249,548

CONDENSED STATEMENTS OF SHAREHO

CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	COMMON SHARES [Member]	Accumulated other comprehensive income (loss): [Member]	Retained earnings/(accumulated deficit): [Member]	Total
Balance at beginning at Jun. 30, 2018	$ 19,835	$ (153)	$ (2,406)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense	10
Share repurchases	(1,115)
Shares withheld from common stock issued to employees to pay employee payroll taxes	(101)
ESPP shares issued	10
Cumulative effect of change in accounting principle
Net income			1,349	$ 1,349
Net change in unrealized gain (loss) from marketable securities, net of taxes		298
Balance at end at Sep. 30, 2018	18,639	145	(1,057)	17,727
Balance at beginning at Jun. 30, 2019	15,815	(549)	1,742	17,008
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense	12
Share repurchases	(681)
Shares withheld from common stock issued to employees to pay employee payroll taxes
ESPP shares issued	15
Cumulative effect of change in accounting principle			43
Net income			1,104	1,104
Net change in unrealized gain (loss) from marketable securities, net of taxes		(57)
Balance at end at Sep. 30, 2019	$ 15,161	$ (606)	$ 2,889	$ 17,444

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,104	$ 1,349
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	138	88
Share-based compensation	12	10
Non-cash lease expense	13
Amortization of loan fees	2
Gain on disposal of equipment		(7)
Deferred income tax	(41)	404
Bad debt expense (recovery)	12	(13)
Changes in operating assets and liabilities:
Accounts receivable and other receivables	931	(655)
Deferred costs	(63)	(50)
Inventory	(605)	(172)
Prepaid expenses and other assets	391	(152)
Accounts payable and accrued expenses	(1,040)	(82)
Deferred revenue	25	39
Income taxes payable	29	(123)
Net cash provided by operating activities	908	636
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment	(61)	(477)
Purchases of investments	(1,258)	(824)
Decrease (increase) in intangibles	(4)	1
Proceeds from disposal of equipment		7
Net cash used in investing activities	(1,323)	(1,293)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease and notes payable	(159)	(10)
Borrowings from Minnesota Bank & Trust		5,000
Payment of employee payroll taxes on net issuance of common stock		(101)
Proceeds from ESPP Contributions	15	10
Repurchases of common stock	(681)	(1,115)
Net cash provided by (used in) financing activities	(825)	3,784
Net increase (decrease) in cash and cash equivalents	(1,240)	3,127
Cash and cash equivalents, beginning of period	7,742	5,188
Cash and cash equivalents, end of period	6,502	8,315
Cash paid during the period for:
Interest	63	20
Income taxes, net of refunds		$ 299

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Sep. 30, 2019
Accounting Policies [Abstract]
BASIS OF PRESENTATION	NOTE 1. BASIS OF PRESENTATION The accompanying unaudited condensed financial statements of Pro-Dex, Inc. (“we,” “us,” “our,” “Pro-Dex,” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These financial statements should be read in conjunction with the financial statements presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results of operations for such interim periods are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2019. RECENTLY ADOPTED ACCOUNTING STANDARDS On July 1, 2019, we adopted ASU 2016-02, (Topic 842) “Leases,” using a modified retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of fiscal 2020. 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. The impact of adoption was an increase to long-term assets and total liabilities of approximately $3.3 million as of July 1, 2019.

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	3 Months Ended
	Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS	NOTE 2. DESCRIPTION OF BUSINESS We specialize in the design, development and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic and maxocranial facial markets. We have patented adaptive torque-limiting software and proprietary sealing solutions which appeal to our customers, primarily medical device distributors. We also manufacture and sell rotary air motors to a wide range of industries.

COMPOSITION OF CERTAIN FINANCIA

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS	3 Months Ended
	Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS	NOTE 3. COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS Investments Investments are stated at market value and consist of the following (in thousands): September 30, June 30, Marketable equity securities- short-term $ 3,127 $ 2,649 Marketable equity securities- long-term 1,306 582 Total marketable equity securities $ 4,433 $ 3,231 Investments at September 30, 2019 and June 30, 2019 had an aggregate cost basis of $5,038,000 and $3,780,000, respectively. The long-term investments include equity investments of thinly traded securities and therefore we classified these assets as long term in nature because if we decide to sell these securities we may not be able to sell our position within one year. During the quarter ended September 30, 2019, the investments incurred unrealized losses of $57,000 (gross unrealized losses of $206,000 offset by gross unrealized gains of $149,000). At June 30, 2019, the investments included net unrealized losses of $549,000 and no unrealized gains. Of the total marketable equity securities at September 30, 2019 and June 30, 2019, $1,341,000 and $938,000, respectively, represent an investment in the common and preferred stock of Air T, Inc. Two of our Board members are also board members of Air T, Inc. and both either individually or through affiliates own an equity interest in Air T, Inc. Our Chairman, one of the two Board members aforementioned, also serves as the Chief Executive Officer and Chairman of Air T, Inc. The common stock was purchased through 10b5-1 Plans, and the purchased preferred stock was purchased through the exercise of issued warrants and in both cases, in accordance with our internal policies regarding the approval of related party transactions, purchases were approved by our three Board members that are not affiliated with Air T, Inc. We invest surplus cash from time to time through our Investment Committee, which is comprised of one management director, Mr. Van Kirk, and two non-management directors, Mr. Cabillot and Mr. Swenson, who chairs the committee. Both Mr. Cabillot and Mr. Swenson are active investors with extensive portfolio management expertise. We leverage the experience of these committee members to make investment decisions for the investment of our surplus operating capital or borrowed funds. Additionally, many of our securities holdings include stocks of public companies that either Messrs. Swenson or Cabillot or both may own from time to time either individually or through the investment funds that they manage, or other companies whose boards they sit on, such as Air T, Inc. Inventory Inventory is stated at the lower of cost (first-in, first-out) or net realizable value and consists of the following (in thousands): September 30, June 30, Raw materials/purchased components $ 2,768 $ 3,132 Work in process 2,557 1,511 Sub-assemblies/finished components 1,390 1,524 Finished goods 129 72 Total inventory $ 6,844 $ 6,239 Intangibles Intangibles consist of the following (in thousands): September 30, June 30, Patent-related costs $ 179 $ 175 Less accumulated amortization (50 ) (46 ) $ 129 $ 129 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. Since we do not know when, or if, our patent applications will be issued, the future amortization expense is not predictable.

WARRANTY

WARRANTY	3 Months Ended
	Sep. 30, 2019
Product Warranties Disclosures [Abstract]
WARRANTY	NOTE 4. WARRANTY 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 balance sheets. As of September 30, 2019 and June 30, 2019, the warranty reserve amounted to $126,000 and $136,000, respectively. Warranty expenses are included in cost of sales in the accompanying 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. Information regarding the accrual for warranty costs for the three months ended September 30, 2019 and 2018 are as follows (in thousands): As of and for the 2019 2018 Beginning balance $ 136 $ 107 Accruals during the period 24 29 Changes in estimates of prior period warranty accruals (13 ) (15 ) Warranty amortization (21 ) (26 ) Ending balance $ 126 $ 95

NET INCOME PER SHARE

NET INCOME PER SHARE	3 Months Ended
	Sep. 30, 2019
Earnings Per Share [Abstract]
NET INCOME PER SHARE	NOTE 5. NET INCOME PER SHARE The Company calculates basic net income per share by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted income per share reflects the effects of potentially dilutive securities, which consist entirely of outstanding stock options and performance awards. The following table presents reconciliations of the numerators and denominators of the basic and diluted income per share computations. In the tables below, income amounts represent the numerator, and share amounts represent the denominator (in thousands, except per share amounts): Three Months Ended 2019 2018 Basic: Net income $ 1,104 $ 1,349 Weighted average shares outstanding 4,008 4,331 Basic earnings per share $ 0.28 $ 0.31 Diluted: Net income $ 1,104 $ 1,349 Weighted average shares outstanding 4,008 4,331 Effect of dilutive securities 102 42 Weighted average shares used in calculation of diluted earnings per share 4,110 4,373 Diluted earnings per share $ 0.27 $ 0.31

INCOME TAXES

INCOME TAXES	3 Months Ended
	Sep. 30, 2019
Income Tax Disclosure [Abstract]
INCOME TAXES	NOTE 6. INCOME TAXES Deferred income taxes are provided on a liability method whereby deferred tax assets and liabilities are recognized for temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Significant management judgment is required in determining our provision for income taxes and the recoverability of our deferred tax assets. Such determination is based primarily on our historical taxable income or loss, with some consideration given to our estimates of future taxable income or loss by jurisdictions in which we operate and the period over which our deferred tax assets would be recoverable. As of September 30, 2019, we have accrued $512,000 of unrecognized tax benefits related to federal and state income tax matters. None of this balance is expected to reduce the Company’s income tax expense if recognized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): As of and for the 2019 2018 Beginning balance $ 490 $ 462 Additions based on tax positions related to the current year 22 5 Ending balance $ 512 $ 467 We recognize accrued interest and penalties related to unrecognized tax benefits when applicable. As of September 30, 2019 and June 30, 2019, 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, 2016 and later. Our state income tax returns are open to audit under the statute of limitations for the years ended June 30, 2015 and later. However, because of research credit carryovers, substantially all of our tax years are subject to audit. We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next 12 months. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The new legislation represented a fundamental and dramatic shift in US taxation. The new legislation contained several key tax provisions that impacted us including the reduction of the corporate income tax rate to 21% effective January 1, 2018. The new legislation also included a variety of other changes including but not limited to a limitation on the deductibility of interest expense, acceleration of business asset expensing and reduction in the amount of executive pay that can qualify as a tax deduction.

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION	3 Months Ended
	Sep. 30, 2019
Share-based Payment Arrangement [Abstract]
SHARE-BASED COMPENSATION	NOTE 7. SHARE-BASED COMPENSATION Through 2014, we had two equity compensation plans, the Second Amended and Restated 2004 Stock Option Plan (the “Employee Stock Option Plan”) and the Amended and Restated 2004 Directors’ Stock Option Plan (the “Directors’ Stock Option Plan”) (collectively, the “Former Stock Option Plans”). The Employee Stock Option Plan and Director’s Stock Option Plan were terminated in June 2014 and December 2014, respectively. In September 2016, our Board approved the establishment of the 2016 Equity Incentive Plan, which was approved by our shareholders at the November 29, 2016 Annual Meeting. The 2016 Equity Incentive Plan provides for the award of up to 1,500,000 shares of our common stock in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted shares, restricted stock units, performance awards and other stock-based awards. As of September 30, 2019, 200,000 performance awards have been granted under the 2016 Equity Incentive Plan. Stock Options There were no stock options granted during the three months ended September 30, 2019 and 2018. As of September 30, 2019, there was no unrecognized compensation cost under our stock option plans as all outstanding stock options are fully vested. As of September 30, 2019, the options outstanding had a weighted average remaining contractual life of 2.0 years and an intrinsic value of $726,000. As of September 30, 2019 and June 30, 2019 there were 54,000 options outstanding at weighted-average exercise prices of $1.86 per share. Performance Awards In December 2017, the Compensation Committee of our Board of Directors granted 200,000 performance awards to our employees, which will generally be paid in shares of our common stock. Whether any performance awards vest, and the amount that does vest, is tied to the completion of service periods that range from 7 months to 9.5 years at inception and the achievement of our common stock trading at certain pre-determined prices. The weighted average fair value of the performance awards granted was $4.46, calculated using the weighted average fair market value for each award, using a Monte Carlo simulation. We recorded share-based compensation expense of $8,000 for the three months ended September 30, 2019 and 2018 related to these performance awards. On September 30, 2019, there was approximately $59,000 of unrecognized compensation cost related to these non-vested performance awards expected to be expensed over the weighted-average period of 3.63 years. On July 1, 2018, it was determined by the Compensation Committee of our Board of Directors that the first of five tranches of 40,000 performance awards had been achieved and participants were awarded 40,000 shares of common stock. Each participant elected a net issuance to cover their individual withholding taxes and therefore the Company issued 24,727 shares and paid $101,000 of participant related payroll tax liabilities. Employee Stock Purchase Plan 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 Former Stock Option Plans 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. During the first quarters ended September 30, 2019 and 2018, 1,292 and 1,820 shares were purchased, respectively, under the ESPP and allocated to employees based upon their contributions at discount prices of $11.76 and $5.51, respectively, per share. On a cumulative basis, since the inception of the ESPP plan, employees have purchased a total of 20,158 shares. During the three months ended September 30, 2019 and 2018, we recorded stock compensation expense in the amount of $4,000 and $2,000, respectively, relating to the ESPP.

MAJOR CUSTOMERS & SUPPLIERS

MAJOR CUSTOMERS & SUPPLIERS	3 Months Ended
	Sep. 30, 2019
Risks and Uncertainties [Abstract]
MAJOR CUSTOMERS & SUPPLIERS	NOTE 8. MAJOR CUSTOMERS & SUPPLIERS Information with respect to customers that accounted for sales in excess of 10% of our total sales in either of the three-month periods ended September 30, 2019 and 2018 is as follows (in thousands, except percentages): Three Months Ended September 30, 2019 2018 Amount Percent of Amount Percent of Total revenue $ 7,240 100 % $ 6,916 100 % Customer concentration: Customer 1 $ 5,412 75 % $ 4,314 62 % Customer 2 425 6 % 977 14 % Total $ 5,837 81 % $ 5,291 76 % Information with respect to accounts receivable from those customers that comprised more than 10 % of our gross accounts receivable at either September 30, 2019 and June 30, 2019, is as follows (in thousands, except percentages): September 30, 2019 June 30, 2019 Total gross accounts receivable $ 3,169 100 % $ 4,100 100 % Customer concentration: Customer 1 $ 2,230 70 % $ 2,587 63 % Customer 2 347 11 % 780 19 % Total $ 2,577 81 % $ 3,367 82 % During the three months ended September 30, 2019 and 2018, we had two suppliers that each accounted for more than 10% of total inventory purchases. Amounts owed to the fiscal 2020 significant suppliers at September 30, 2019 totaled $168,000 and $130,000 respectively, and at June 30, 2019 totaled, $299,000 and $363,000, respectively.

NOTES PAYABLE AND FINANCING TRA

NOTES PAYABLE AND FINANCING TRANSACTIONS	3 Months Ended
	Sep. 30, 2019
Notes Payable [Abstract]
NOTES PAYABLE AND FINANCING TRANSACTIONS	NOTE 9. NOTES PAYABLE AND FINANCING TRANSACTIONS Minnesota Bank & Trust On September 6, 2018, we entered into a Credit Agreement with Minnesota Bank & Trust, a Minnesota state banking corporation (“MBT”), providing for a $5,000,000 term loan (the “Term Loan”) as well as a $2,000,000 revolving loan (the “Revolving Loan” and together with the Term Loan, collectively the “Loans”), evidenced by a Term Note A and a Revolving Credit Note made by us in favor of MBT. The Loans are secured by substantially all of our assets pursuant to a Security Agreement entered into on September 6, 2018 between us and MBT. We paid loan origination fees to MBT in the amount of $60,000. The Term Loan matures on October 1, 2025 and bears interest at a fixed rate of 5.53% per annum. An initial payment of interest only in the amount of $18,433 was paid on October 1, 2018. Commencing November 1, 2018 and continuing on the first day of each subsequent month thereafter until the maturity date, we are required to make payments of principal and interest on the Term Loan of approximately $72,000, plus any additional accrued and unpaid interest through the date of payment. The Revolving Loan had an original maturity date of September 6, 2019 and has since been extended to November 6, 2020 and bears interest at the greater of (a) 4.5% or (b) the difference of the prime rate as published in the Money Rates section of the Wall Street Journal minus 0.50%. Commencing on the first day of each month after we initially borrow against the Revolving Loan, which we have yet to do, and each month thereafter until maturity, we are required to pay all accrued and unpaid interest on the Revolving Loan through the date of payment. Any principal on the Revolving Loan that is not previously prepaid shall be due and payable on the maturity date (or earlier termination of the Revolving Loan). Any payment on the Loans not made within seven days after the due date is subject to a late payment fee equal to 5% of the overdue amount. Upon the occurrence and during the continuance of an event of default, the interest rate of both Loans will be increased by 3% and MBT may, at its option, declare the Loans immediately due and payable in full. The Credit Agreement and Security Agreement contain representations and warranties, affirmative, negative, and financial covenants, and events of default that are customary for loans of this type. Jules & Associates/ Hitachi Capital America Corporation 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 provided for 36 monthly payments in the amount of $3,121, as well as interim rent in the amount of $7,388. The lease was subsequently assigned to Hitachi Capital America Corporation. The lease was paid off in full during the first quarter of fiscal 2020.

COMMON STOCK

COMMON STOCK	3 Months Ended
	Sep. 30, 2019
Stockholders' Equity Note [Abstract]
COMMON STOCK	NOTE 10. 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 has approved the adoption of several prearranged share repurchase plans intended to qualify for the safe harbor Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (“10b5-1 Plan” or “Plan”). During the quarter ended September 30, 2019, we repurchased 49,788 shares at an aggregate cost, inclusive of fees under the plan, of $681,000. During the quarter ended September 30, 2018, we repurchased 108,088 shares at an aggregate cost, inclusive of fees under the plan, of $1.1 million. On a cumulative basis, since the 2013 Board approval, we have repurchased a total of 637,839 shares under the share repurchase program at an aggregate cost of $5.8 million. All repurchases under the 10b5-1 Plans were administered through an independent broker. At The Market Offering Agreement In February 2017, our Board approved an ATM Agreement with Ascendiant Capital Markets, LLC (“Ascendiant”). The ATM Agreement allows us to sell shares of our common stock pursuant to specific parameters defined by us as well as those defined by the SEC and the ATM Agreement. During the three months ended September 30, 2019 and 2018 we did not issue any shares under the ATM. From the inception of the ATM in February 2017 through December 31, 2017, during periods when we did not have a 10b5-1 Plan in place for our share repurchase program, we sold 340,465 shares of common stock for gross proceeds of $2,311,000 net of commissions and fees paid to Ascendiant totaling $72,000. In December 2017, our Board suspended the ATM indefinitely. Our Board has the discretion to reactivate the ATM prior to February 16, 2020, the expiration of the ATM Agreement, unless earlier terminated by Ascendiant or us.

LEASES

LEASES	3 Months Ended
	Sep. 30, 2019
Leases [Abstract]
LEASES	NOTE 11. LEASES Effective July 1, 2019, we adopted the new lease accounting standard using the modified retrospective method of applying the new standard at the adoption date. In addition, we elected the practical expedient which allowed us to carry forward the historical lease classification of our sole operating lease for our corporate office, which includes our manufacturing and research and development facilities. Adoption of this standard resulted in the recording of net operating lease right-of-use (“ROU”) asset and corresponding operating lease liability of $3.3 million. Our financial position for reporting periods beginning on or after July 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance. Our operating lease ROU asset and long-term liability are presented separately on our Condensed Balance Sheet. The current portion of our operating lease liability as of September 30, 2019, in the amount of $289,000, is presented within accrued expenses on the Condensed Balance Sheet. As of September 30, 2019, the maturity of our lease liability is as follows: Operating Fiscal Year: 2020 $ 348 2021 475 2022 489 2023 504 2024 519 Thereafter 1,796 Total lease payments 4,131 Less imputed interest: (827 ) Total $ 3,304 As of September 30, 2019, our operating lease has a remaining lease term of eight years and an imputed interest rate of 5.3%. Cash paid for amounts included in the lease liability was $113,000 for the three months ended September 30, 2019. As previously disclosed in our 2019 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for our only operating lease having an initial or remaining noncancellable lease terms in excess of one year would have been as follows: Operating Fiscal Year: 2020 $ 461 2021 475 2022 489 2023 504 2024 519 Thereafter 1,796 Total minimum lease payments $ 4,244

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 12. COMMITMENTS AND CONTINGENCIES Legal Matters We are from time to time a party to various legal proceedings incidental to our business. There can be no certainty, however, that we may not ultimately incur liability or that such liability will not be material and adverse.

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	3 Months Ended
	Sep. 30, 2019
Accounting Policies [Abstract]
Recently Adopted Accounting Standards	RECENTLY ADOPTED ACCOUNTING STANDARDS On July 1, 2019, we adopted ASU 2016-02, (Topic 842) “Leases,” using a modified retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of fiscal 2020. 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. The impact of adoption was an increase to long-term assets and total liabilities of approximately $3.3 million as of July 1, 2019.

COMPOSITION OF CERTAIN FINANC_2

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (Tables)	3 Months Ended
	Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of inventory	Inventory is stated at the lower of cost (first-in, first-out) or net realizable value and consists of the following (in thousands): September 30, June 30, Raw materials/purchased components $ 2,768 $ 3,132 Work in process 2,557 1,511 Sub-assemblies/finished components 1,390 1,524 Finished goods 129 72 Total inventory $ 6,844 $ 6,239
Schedule of investments	Investments are stated at market value and consist of the following (in thousands): September 30, June 30, Marketable equity securities- short-term $ 3,127 $ 2,649 Marketable equity securities- long-term 1,306 582 Total marketable equity securities $ 4,433 $ 3,231
Schedule of intangibles	Intangibles consist of the following (in thousands): September 30, June 30, Patent-related costs $ 179 $ 175 Less accumulated amortization (50 ) (46 ) $ 129 $ 129

WARRANTY (Tables)

WARRANTY (Tables)	3 Months Ended
	Sep. 30, 2019
Product Warranties Disclosures [Abstract]
Schedule of accrual warranty costs	Information regarding the accrual for warranty costs for the three months ended September 30, 2019 and 2018 are as follows (in thousands): As of and for the 2019 2018 Beginning balance $ 136 $ 107 Accruals during the period 24 29 Changes in estimates of prior period warranty accruals (13 ) (15 ) Warranty amortization (21 ) (26 ) Ending balance $ 126 $ 95

NET INCOME PER SHARE (Tables)

NET INCOME PER SHARE (Tables)	3 Months Ended
	Sep. 30, 2019
Earnings Per Share [Abstract]
Schedule of reconciliations of the numerators and denominators of the basic and diluted earnings (loss) per share computations for net income (loss)	The following table presents reconciliations of the numerators and denominators of the basic and diluted income per share computations. In the tables below, income amounts represent the numerator, and share amounts represent the denominator (in thousands, except per share amounts): Three Months Ended 2019 2018 Basic: Net income $ 1,104 $ 1,349 Weighted average shares outstanding 4,008 4,331 Basic earnings per share $ 0.28 $ 0.31 Diluted: Net income $ 1,104 $ 1,349 Weighted average shares outstanding 4,008 4,331 Effect of dilutive securities 102 42 Weighted average shares used in calculation of diluted earnings per share 4,110 4,373 Diluted earnings per share $ 0.27 $ 0.31

INCOME TAXES (Tables)

INCOME TAXES (Tables)	3 Months Ended
	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Schedule of unrecognized tax benefits	A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): As of and for the 2019 2018 Beginning balance $ 490 $ 462 Additions based on tax positions related to the current year 22 5 Ending balance $ 512 $ 467

MAJOR CUSTOMERS & SUPPLIERS (Ta

MAJOR CUSTOMERS & SUPPLIERS (Tables)	3 Months Ended
	Sep. 30, 2019
Risks and Uncertainties [Abstract]
Schedule of sales by major customers	Information with respect to customers that accounted for sales in excess of 10% of our total sales in either of the three-month periods ended September 30, 2019 and 2018 is as follows (in thousands, except percentages): Three Months Ended September 30, 2019 2018 Amount Percent of Amount Percent of Total revenue $ 7,240 100 % $ 6,916 100 % Customer concentration: Customer 1 $ 5,412 75 % $ 4,314 62 % Customer 2 425 6 % 977 14 % Total $ 5,837 81 % $ 5,291 76 %
Schedule of accounts receivable of major customers	Information with respect to accounts receivable from those customers that comprised more than 10 % of our gross accounts receivable at either September 30, 2019 and June 30, 2019, is as follows (in thousands, except percentages): September 30, 2019 June 30, 2019 Total gross accounts receivable $ 3,169 100 % $ 4,100 100 % Customer concentration: Customer 1 $ 2,230 70 % $ 2,587 63 % Customer 2 347 11 % 780 19 % Total $ 2,577 81 % $ 3,367 82 %

LEASES (Tables)

LEASES (Tables)	3 Months Ended
	Sep. 30, 2019
Leases [Abstract]
Schedule of Maturities of Lease Liabilities	As of September 30, 2019, the maturity of our lease liability is as follows: Operating Fiscal Year: 2020 $ 348 2021 475 2022 489 2023 504 2024 519 Thereafter 1,796 Total lease payments 4,131 Less imputed interest: (827 ) Total $ 3,304 Operating Fiscal Year: 2020 $ 461 2021 475 2022 489 2023 504 2024 519 Thereafter 1,796 Total minimum lease payments $ 4,244

BASIS OF PRESENTATION (Details)

BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jul. 01, 2019	Jun. 30, 2019
Accounting Policies [Abstract]
Long-term assets		$ 3,300
Total liabilities	$ 10,527	$ 3,300	$ 8,512

COMPOSITION OF CERTAIN FINANC_3

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (Details) (Narrative) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019
Aggregate cost	$ 5,038	$ 3,780
Net unrealized losses	(57)	(549)
Gross unrealized losses	206
Gross unrealized gains	149
Marketable equity securities	3,127	2,649
Air T, Inc. [Member]
Marketable equity securities	$ 1,341	$ 938

COMPOSITION OF CERTAIN FINANC_4

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (Marketable Equity Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Marketable equity securities - short-term	$ 3,127	$ 2,649
Marketable equity securities - long-term	1,306	582
Total marketable equity securities	$ 4,433	$ 3,231

COMPOSITION OF CERTAIN FINANC_5

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (Inventory) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials/purchased components	$ 2,768	$ 3,132
Work in process	2,557	1,511
Sub-assemblies/finished components	1,390	1,524
Finished goods	129	72
Total inventory	$ 6,844	$ 6,239

COMPOSITION OF CERTAIN FINANC_6

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (Intangible Assets) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019
Finite-Lived Intangible Assets [Line Items]
Total intangibles	$ 179	$ 175
Less accumulated amortization	(50)	(46)
Intangible assets,net	129	129
Patent-related costs [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangibles	$ 179	$ 175

WARRANTY (Narrative) (Details)

WARRANTY (Narrative) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2018	Jun. 30, 2018
Product Warranties Disclosures [Abstract]
Warranty reserves	$ 126	$ 136	$ 95	$ 107

WARRANTY (Movement in Warranty)

WARRANTY (Movement in Warranty) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Beginning balance	$ 136	$ 107
Accruals during the period	24	29
Changes in estimates of prior period warranty accruals	(13)	(15)
Warranty amortization	(21)	(26)
Ending balance	$ 126	$ 95

NET INCOME PER SHARE (Details)

NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Basic:
Net income	$ 1,104	$ 1,349
Weighted average shares outstanding	4,008,017	4,330,636
Basic earnings per share	$ 0.28	$ 0.31
Diluted:
Net income	$ 1,104	$ 1,349
Weighted average shares outstanding	4,008,017	4,330,636
Effect of dilutive securities	102,000	42,000
Weighted average shares used in calculation of diluted earnings per share	4,110,414	4,372,893
Diluted earnings per share	$ 0.27	$ 0.31

INCOME TAXES (Narrative) (Detai

INCOME TAXES (Narrative) (Details)	3 Months Ended
	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Corporate tax rate	21.00%

INCOME TAXES (Reconciliation of

INCOME TAXES (Reconciliation of Beginning and Ending Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Unrecognized tax benefits:
Beginning balance	$ 490	$ 462
Additions based on tax positions related to the current year	22	5
Ending balance	$ 512	$ 467

SHARE-BASED COMPENSATION (Narra

SHARE-BASED COMPENSATION (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended
	Jul. 31, 2018	Dec. 31, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2014	Jun. 30, 2019	Nov. 29, 2016
Performance Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate share-based compensation expense			$ 8	$ 8
Number of awards granted during period	40,000	200,000
Period for award description			Whether any performance awards vest, and the amount that does vest, is tied to the completion of service periods that range from 7 months to 9.5 years and the achievement of our common stock trading at certain pre-determined prices.
Unrecognized compensation cost			$ 59
Weighted-average period			3 years 7 months 17 days
Weighted average fair value			$ 4.46
Shares issued	24,727
Payment of payroll tax liabilities	$ 101
COMMON SHARES [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted during period	40,000
2016 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available to be awarded			200,000				1,500,000
Employees Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining contractual life			2 years
Intrinsic value of stock options exercisable			$ 726
Options outstanding						54
Weighted-average exercise price						$ 1.86
ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate share-based compensation expense			$ 4	$ 2
Description of plan					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.
Number of shares reserved for future issuance					704,715
Number of shares purchased and allocated to employee (in shares)			1,292	1,820
Exercise price (in dollars per share)			$ 11.76	$ 5.51
Number of shares options purchased (in shares)			20,158

MAJOR CUSTOMERS & SUPPLIERS (Na

MAJOR CUSTOMERS & SUPPLIERS (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019
Concentration Risk [Line Items]
Percentage of concentrations risk		100.00%	100.00%
Accounts payable	$ 1,376		$ 1,996
Accounts Payable [Member] | Supplier One [Member]
Concentration Risk [Line Items]
Percentage of concentrations risk	10.00%	10.00%	10.00%
Purchase [Member] | Supplier One [Member]
Concentration Risk [Line Items]
Accounts payable	$ 168		$ 299
Purchase [Member] | Supplier Two [Member]
Concentration Risk [Line Items]
Accounts payable	$ 130		$ 363

MAJOR CUSTOMERS & SUPPLIERS (Sa

MAJOR CUSTOMERS & SUPPLIERS (Sales) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019
Concentration Risk [Line Items]
Net sales	$ 7,240	$ 6,916
Total gross accounts receivable	3,169		$ 4,100
Percentage of concentrations risk		100.00%	100.00%
Sales [Member]
Concentration Risk [Line Items]
Net sales	$ 5,837	$ 5,291
Percentage of concentrations risk	81.00%	76.00%
Sales [Member] | Customer 1 [Member]
Concentration Risk [Line Items]
Net sales	$ 5,412	$ 4,314
Percentage of concentrations risk	75.00%	62.00%
Sales [Member] | Customer 2 [Member]
Concentration Risk [Line Items]
Net sales	$ 425	$ 977
Percentage of concentrations risk	6.00%	14.00%
Accounts Receivable [Member]
Concentration Risk [Line Items]
Total gross accounts receivable	$ 2,577		$ 3,367
Percentage of concentrations risk	81.00%		82.00%
Accounts Receivable [Member] | Customer 1 [Member]
Concentration Risk [Line Items]
Total gross accounts receivable	$ 2,230		$ 2,587
Percentage of concentrations risk	70.00%		63.00%
Accounts Receivable [Member] | Customer 2 [Member]
Concentration Risk [Line Items]
Total gross accounts receivable	$ 347		$ 780
Percentage of concentrations risk	11.00%		19.00%

NOTES PAYABLE AND FINANCING T_2

NOTES PAYABLE AND FINANCING TRANSACTIONS (Details) - USD ($)	Oct. 02, 2018	Sep. 06, 2018	Jul. 21, 2016	Sep. 30, 2019	Sep. 30, 2018
Debt Instrument [Line Items]
Interest expense				$ 59,000	$ 20,000
Minnesota Bank & Trust [Member]
Debt Instrument [Line Items]
Debt instrument, origination fee		$ 60,000
Percentage of late payment fee				5.00%
Increased percentage of default late payment				3.00%
Minnesota Bank & Trust [Member] | Business Loan Agreement ("Revolving Loan Agreement") [Member]
Debt Instrument [Line Items]
Debt instrument, maturity date		Sep. 6, 2019
Debt instrument, face amount		$ 2,000,000
Interest rate		4.50%
Minnesota Bank & Trust [Member] | Business Loan Agreement ("Term Loan Agreement") [Member]
Debt Instrument [Line Items]
Debt instrument, maturity date		Oct. 1, 2025
Debt instrument, face amount		$ 5,000,000
Interest rate		5.53%
Interest expense	$ 18,433
Debt instrument, periodic payment of principal and interest beginning November 1, 2018		$ 72,000
Jules & Associates/ Hitachi Capital America Corporation [Member] | Master Equipment Lease Agreement [Member]
Debt Instrument [Line Items]
Interim rent			$ 7,388
Cost of equipment			106,000
Amount of payment			$ 3,121
Duration of lease payment			36 months

COMMON STOCK (Details)

COMMON STOCK (Details) - USD ($) $ in Thousands	3 Months Ended		20 Months Ended	73 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2013
At The Market Offering Agreement [Member]
Class of Stock [Line Items]
Expiration date	Feb. 16, 2020
Number of shares sold			340,465
Proceeds from sale of shares			$ 2,311
Fees paid to Ascendiant			$ 72
Share Repurchase Program [Member] | Cumulative basis [Member]
Class of Stock [Line Items]
Shares repurchased during the year, number of shares				637,839
Shares repurchased during year, value				$ 5,800
Share Repurchase Program [Member] | 10b5-1 Plan [Member]
Class of Stock [Line Items]
Shares repurchased during the year, number of shares	49,788	108,088
Shares repurchased during year, value	$ 681	$ 1,100
Number of authorized shares to repurchase, shares					750,000

LEASES (Narrative) (Details)

LEASES (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Operating lease right-of-use	$ 3,187
Operating lease liability	$ 3,304
Interest rate	5.30%
Cash paid lease liability	$ 113
Remaining lease term	8 years
Operating lease liability current portion	$ 289

LEASES (Schedule of Future Mini

LEASES (Schedule of Future Minimum Base Rental Payment) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019
Leases [Abstract]
2020	$ 348
2021	475
2022	489
2023	504
2024	519
Thereafter	1,796
Total	4,131
Less imputed interest:	(827)
Lease liabilities	$ 3,304
2020		$ 461
2021		475
2022		489
2023		504
2024		519
Thereafter		1,796
Total minimum lease payments		$ 4,244