Psychemedics (PMDI) 10-Q 31 Jul 15 2015 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 25, 2015
Document Information [Line Items]
Entity Registrant Name	PSYCHEMEDICS CORP
Entity Central Index Key	806,517
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	PMD
Entity Common Stock, Shares Outstanding		5,422,541
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,015

CONDENSED BALANCE SHEETS

CONDENSED BALANCE SHEETS - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 2,104,060	$ 3,612,153
Accounts receivable, net of allowance for doubtful accounts of $44,398 in 2015 and $95,525 in 2014	4,516,155	4,078,133
Prepaid expenses and other current assets	1,364,014	689,995
Income tax receivable	268,866	1,819,743
Deferred tax assets	543,380	376,529
Total Current Assets	8,796,475	10,576,553
Fixed Assets, net of accumulated amortization and depreciation of $6,249,983 in 2015 and $5,788,551 in 2014	13,236,421	12,740,131
Other assets	743,768	761,025
Total Assets	22,776,664	24,077,709
Current Liabilities:
Accounts payable	589,552	845,071
Accrued expenses	1,796,806	1,351,333
Current portion of long-term debt	1,399,925	1,399,925
Total Current Liabilities	3,786,283	3,596,329
Long-term debt	4,148,195	4,848,158
Deferred tax liabilities, long-term	2,796,666	2,796,666
Total Liabilities	$ 10,731,144	$ 11,241,153
Commitments and Contingencies (Note 7)
Shareholders' Equity:
Preferred-stock, $0.005 par value, 872,521 shares authorized, no shares issued or outstanding	$ 0	$ 0
Common stock, $0.005 par value; 50,000,000 shares authorized 6,090,671 shares issued in 2015 and 6,043,191 shares issued in 2014	30,453	30,216
Additional paid-in capital	29,748,157	29,454,023
Accumulated deficit	(7,651,301)	(6,565,894)
Less - Treasury stock, at cost, 668,130 shares	(10,081,789)	(10,081,789)
Total Shareholders' Equity	12,045,520	12,836,556
Total Liabilities and Shareholders' Equity	$ 22,776,664	$ 24,077,709

CONDENSED BALANCE SHEETS _Paren

CONDENSED BALANCE SHEETS [Parenthetical] - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Allowance for doubtful accounts	$ 44,398	$ 95,525
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 6,249,983	$ 5,788,551
Preferred stock, par value (in dollars per share)	$ 0.005	$ 0.005
Preferred stock, shares authorized	872,521	872,521
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.005	$ 0.005
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	6,090,671	6,043,191
Treasury stock, shares	668,130	668,130

CONDENSED STATEMENTS OF COMPREH

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues	$ 7,001,409	$ 7,694,137	$ 13,757,150	$ 14,738,958
Cost of revenues	3,731,667	3,802,874	7,148,540	7,051,913
Gross profit	3,269,742	3,891,263	6,608,610	7,687,045
Operating Expenses:
General & administrative	1,154,489	1,128,616	2,298,579	2,312,763
Marketing & selling	1,322,117	1,165,510	2,610,598	2,264,110
Research & development	437,090	277,429	892,872	622,412
Total Operating Expenses	2,913,696	2,571,555	5,802,049	5,199,285
Operating income	356,046	1,319,708	806,561	2,487,760
Other income (expense), net	(30,877)	3,235	(64,204)	4,784
Net income before provision for income taxes	325,169	1,322,943	742,357	2,492,544
Provision for income taxes	72,840	466,024	212,506	879,466
Net income and comprehensive income	$ 252,329	$ 856,919	$ 529,851	$ 1,613,078
Basic net income per share (in dollars per share)	$ 0.05	$ 0.16	$ 0.10	$ 0.30
Diluted net income per share (in dollars per share)	0.05	0.16	0.10	0.30
Dividends declared per share (in dollars per share)	$ 0.15	$ 0.15	$ 0.30	$ 0.30
Weighted average common shares outstanding, basic (in shares)	5,399,270	5,352,664	5,387,232	5,335,347
Weighted average common shares outstanding, diluted (in shares)	5,408,372	5,375,076	5,396,740	5,367,307

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 529,851	$ 1,613,078
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	707,303	469,307
Stock-based compensation	342,992	288,188
Changes in assets and liabilities:
Accounts receivable	(438,022)	(1,254,344)
Prepaid expenses, other current assets, and income tax receivable	876,858	(89,052)
Accounts payable	(255,519)	668,524
Accrued expenses	178,497	(1,383,094)
Deferred income taxes	(166,851)	(113,198)
Net cash provided by operating activities	1,775,109	199,409
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and leasehold improvements	(699,192)	(5,787,821)
Cost of internally developed software	(220,019)	(246,570)
Other assets	(149)	(145,204)
Net cash used in investing activities	(919,360)	(6,179,595)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of stock options	91,556	47,564
Proceeds from issuance of stock, net of tax withholding	(140,177)	(36,968)
Proceeds from equipment financing	0	6,000,000
Payments of equipment financing	(699,963)	(52,647)
Cash dividends paid	(1,615,258)	(1,599,749)
Net cash provided by (used in) financing activities	(2,363,842)	4,358,200
Net decrease in cash and cash equivalents	(1,508,093)	(1,621,986)
Cash and cash equivalents, beginning of period	3,612,153	3,970,512
Cash and cash equivalents, end of period	2,104,060	2,348,526
Supplemental Disclosures of Cash Flow Information:
Cash paid for income taxes	2,870	411,860
Cash paid for interest	64,679	5,572
Purchases of equipment through accrued liabilities	$ 266,976	$ 606,127

Interim Financial Statements

Interim Financial Statements	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]	1. Interim Financial Statements The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Accordingly, certain information and footnote disclosure required for complete financial statements are not included herein. It is recommended that these financial statements be read in conjunction with the financial statements and related notes of Psychemedics Corporation (“the Company,” “our Company,” “our” or “we”) as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 27, 2015. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations, and cash flows at the dates and for the periods presented have been included. The results of operations for the three and

Cash and Cash Equivalents

Cash and Cash Equivalents	6 Months Ended
	Jun. 30, 2015
Cash and Cash Equivalents [Abstract]
Cash and Cash Equivalents Disclosure [Text Block]	2. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Cash equivalents consisted exclusively of cash in the bank as of December 31, 2014 and June 30, 2015.

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	3. Stock-Based Compensation 2006 Equity Incentive Plan The Company’s 2006 Incentive Plan provides for the grant or issuance to officers, directors, employees and consultants of options with terms of up to ten years, restricted stock, stock unit awards (SUA’s), issuances of stock bonuses or other stock-based awards, covering up to 500,000 shares of common stock. As of June 30, 2015, 118,232 shares remained available for future grant under the 2006 Incentive Plan. On April 29, 2015 the Company granted SUAs covering 43,950 shares of common stock. The SUAs vest over a period of two years for non-employee board members and four years for employees and are convertible into an equivalent number of shares of the Company’s common stock provided that the director or employee receiving the award remains continuously employed throughout the vesting period. The Company records compensation expense related to the SUAs on a straight-line basis over the vesting term of the SUAs. Employees are issued shares upon vesting, net of tax withholdings, unless the employee chooses to receive all shares and pay for the associated employment taxes. No other types of equity-based awards have been granted or issued under the 2006 Incentive Plan. A summary of activity for SUAs under the Company’s 2006 Incentive Plan for the six months ended June 30, 2015 is as follows: Number Aggregate (000s) Unvested, December 31, 2014 121,625 Granted 43,950 Forfeited/expired (15,297 ) Converted to common stock (39,814 ) Unvested, June 30, 2015 110,464 $ 1,638 Available for grant, June 30, 2015 118,232 (1) The aggregate intrinsic value on this table was calculated based on the closing market value of the Company’s stock on June 30, 2015 ($14.83). Expired Plans As of June 30, 2015, all options to acquire common stock that had been outstanding on December 31, 2014, were either exercised or expired without having been exercised. A summary of stock option activity for the Company’s expired stock option plans for the six months ended June 30, 2015 is as follows: Number of Weighted Weighted Aggregate (000s) Outstanding, December 31, 2014 136,050 $ 14.40 Granted - - Exercised (134,350 ) $ 14.40 Terminated/Expired (1,700 ) $ 14.40 Outstanding, June 30, 2015 - - - $ - Exercisable, June 30, 2015 - - - $ - Available for grant, June 30, 2015 - All Stock-Based Compensation Plans As of June 30, 2015, a total of 228,696 shares of common stock were reserved for issuance under the 2006 Incentive Plan

Basic and Diluted Net Income Pe

Basic and Diluted Net Income Per Share	6 Months Ended
	Jun. 30, 2015
Earnings Per Share, Basic and Diluted [Abstract]
Earnings Per Share [Text Block]	4. Basic and Diluted Net Income Per Share Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding during the period. The number of dilutive common equivalent shares outstanding during the period is determined in accordance with the treasury-stock method. Common equivalent shares consist of common stock issuable upon the exercise of outstanding options and common stock issuable upon the vesting of outstanding, unvested SUAs. Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2015 2014 2015 2014 (in thousands) Weighted average common shares outstanding, basic 5,399 5,353 5,387 5,335 Dilutive common equivalent shares 9 22 10 32 Weighted average common shares outstanding, diluted 5,408 5,375 5,397 5,367

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Fair Value Disclosures [Text Block]	5. Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures It establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy prioritizes the inputs in three broad levels as follows: · Level 1 · Level 2 · Level 3 A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level of any input that is significant to the fair value measurement. The financial assets of the Company measured at fair value on a recurring basis are cash and cash equivalents. The Company’s cash and cash equivalents are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices that are accessible at the measurement date for identical assets and liabilities.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2015
Subsequent Events [Abstract]
Subsequent Events [Text Block]	6. Subsequent Events On July 28, 2015, the Company declared a quarterly dividend of $ 0.15 813

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies Disclosure [Text Block]	7. Commitments and Contingencies The Company is subject to legal proceedings and claims, which arise in the ordinary course of its business. The Company believes that based upon information available to the Company at this time, the expected outcome of these matters would not have a material impact on the Company’s results of operations or financial condition.

Debt and Other Financing Arrang

Debt and Other Financing Arrangements	6 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
Debt Disclosure [Text Block]	8. Debt and Other Financing Arrangements On March 20, 2014, the Company entered into an equipment financing arrangement with Banc of America Leasing & Capital, LLC (the “Lender”), which it amended on August 8, 2014, including a Master Loan and Security Agreement and related documentation (collectively the “Equipment Loan Arrangement”) which provided the Company with the ability to finance, at its option, up to $ 7.5 Under the Equipment Loan Arrangement, the Company executed notes on March 24, 2014, May 22, 2014, June 13, 2014 and August 8, 2014 in the amounts of $ 1.1 1.9 3.0 1.0 7.0 2.18 31,478 2.18 5.5 The annual repayment requirements for debt obligations as of June 30, 2015 were as follows (in 000’s): 2015 $ 700 2016 1,400 2017 1,400 2018 1,400 2019 648 Total long-term debt 5,548 Less current portion of long-term debt (1,400) Total long-term debt, net of current portion $ 4,148

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Nonvested Performance-based Units Activity [Table Text Block]	A summary of activity for SUAs under the Company’s 2006 Incentive Plan for the six months ended June 30, 2015 is as follows: Number Aggregate (000s) Unvested, December 31, 2014 121,625 Granted 43,950 Forfeited/expired (15,297) Converted to common stock (39,814) Unvested, June 30, 2015 110,464 $ 1,638 Available for grant, June 30, 2015 118,232 (1) The aggregate intrinsic value on this table was calculated based on the closing market value of the Company’s stock on June 30, 2015 ($ 14.83
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]	A summary of stock option activity for the Company’s expired stock option plans for the six months ended June 30, 2015 is as follows: Number of Weighted Weighted Aggregate (000s) Outstanding, December 31, 2014 136,050 $ 14.40 Granted - - Exercised (134,350) $ 14.40 Terminated/Expired (1,700) $ 14.40 Outstanding, June 30, 2015 - - - $ - Exercisable, June 30, 2015 - - - $ - Available for grant, June 30, 2015 -

Basic and Diluted Net Income 15

Basic and Diluted Net Income Per Share (Tables)	6 Months Ended
	Jun. 30, 2015
Earnings Per Share, Basic and Diluted [Abstract]
Schedule of Weighted Average Number of Shares [Table Text Block]	Basic and diluted weighted average common shares outstanding are as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2015 2014 2015 2014 (in thousands) Weighted average common shares outstanding, basic 5,399 5,353 5,387 5,335 Dilutive common equivalent shares 9 22 10 32 Weighted average common shares outstanding, diluted 5,408 5,375 5,397 5,367

Debt and Other Financing Arra16

Debt and Other Financing Arrangements (Tables)	6 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
Schedule of Long-term Debt Instruments [Table Text Block]	The annual repayment requirements for debt obligations as of June 30, 2015 were as follows (in 000’s): 2015 $ 700 2016 1,400 2017 1,400 2018 1,400 2019 648 Total long-term debt 5,548 Less current portion of long-term debt (1,400) Total long-term debt, net of current portion $ 4,148

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - Stock Unit Award [Member] - USD ($) $ in Thousands		1 Months Ended	6 Months Ended
		Apr. 29, 2015	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Granted		43,950
Stock Incentive Plan 2006 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Unvested			121,625
Number of Shares, Granted			43,950
Number of Shares Forfeited/expired			(15,297)
Number of Shares, Converted to common stock			(39,814)
Number of Shares, Unvested			110,464
Number of Shares, Available for grant			118,232
Aggregate Intrinsic Value, Unvested	[1]		$ 1,638
[1]	The aggregate intrinsic value on this table was calculated based on the closing market value of the Company’s stock on June 30, 2015 ($14.83).

Stock-Based Compensation (Det18

Stock-Based Compensation (Details 1) - Jun. 30, 2015 - Employee Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Outstanding - Beginning balance	136,050
Number of Shares, Granted	0
Number of Shares, Exercised	(134,350)
Number of Shares, Terminated/Expired	(1,700)
Number of Shares, Outstanding - Ending balance	0
Number of Shares, Exercisable	0
Number of Shares, Available for grant	0
Weighted Average Exercise Price per Share, Outstanding - Beginning balance	$ 14.4
Weighted Average Exercise Price per Share, Granted	0
Weighted Average Exercise Price per Share, Exercised	14.4
Weighted Average Exercise Price per Share, Terminated/Expired	14.4
Weighted Average Exercise Price per Share, Outstanding - Ending balance	0
Weighted Average Exercise Price Per Share, Exercisable	$ 0
Weighted Average Remaining Contractual Life, Outstanding
Weighted Average Remaining Contractual Life, Exercisable
Aggregate Intrinsic Value, Outstanding	$ 0
Aggregate Intrinsic Value, Exercisable	$ 0

Stock-Based Compensation (Det19

Stock-Based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	6 Months Ended
	Apr. 29, 2015	Jun. 30, 2015
Stock Unit Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Unamortized Fair Value (in dollars)		$ 1.5
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Unamortized Fair Value Period For Amortization		3 years
Share-Based Compensation Arrangement By Share-Based Payment Award, Equity Instruments Other Than Options, Grants In Period	43,950
Stock Incentive Plan 2006 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance		228,696
Stock Incentive Plan 2006 [Member] | Stock Unit Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		500,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		118,232
Share-Based Compensation Arrangement By Share-Based Payment Award, Equity Instruments Other Than Options, Grants In Period		43,950
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 14.83

Basic and Diluted Net Income 20

Basic and Diluted Net Income Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Weighted average common shares outstanding, basic	5,399,270	5,352,664	5,387,232	5,335,347
Dilutive common equivalent shares	9,000	22,000	10,000	32,000
Weighted average common shares outstanding, diluted	5,408,372	5,375,076	5,396,740	5,367,307

Subsequent Events (Details Text

Subsequent Events (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 28, 2015	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Common Stock, Dividends, Per Share, Declared		$ 0.15	$ 0.15	$ 0.30	$ 0.30
Subsequent Event [Member]
Common Stock, Dividends, Per Share, Declared	$ 0.15
Dividends Payable	$ 813

Debt and Other Financing Arra22

Debt and Other Financing Arrangements (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
2,015	$ 700,000
2,016	1,400,000
2,017	1,400,000
2,018	1,400,000
2,019	648,000
Total long-term debt	5,548,000
Less current portion of long-term debt	(1,399,925)	$ (1,399,925)
Total long-term debt, net of current portion	$ 4,148,195	$ 4,848,158

Debt and Other Financing Arra23

Debt and Other Financing Arrangements (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2015	Aug. 08, 2014	Jun. 13, 2014	May. 22, 2014	Mar. 24, 2014	Mar. 20, 2014
Debt Instrument, Interest Rate, Effective Percentage	2.18%
Interest Expense	$ 31,478
Long-term Debt and Capital Lease Obligations	5,500,000
Equipment Loan Arrangement [Member]
Debt Instrument, Unused Borrowing Capacity, Amount	$ 7,000,000	$ 1,000,000	$ 3,000,000	$ 1,900,000	$ 1,100,000	$ 7,500,000
Debt Instrument, Interest Rate, Effective Percentage	2.18%