Psychemedics (PMDI) 10-Q 2 May 17 2017 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 25, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
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		5,460,220

CONDENSED BALANCE SHEETS

CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current Assets:
Cash and cash equivalents	$ 6,869	$ 3,938
Accounts receivable, net of allowance for doubtful accounts of $58 in 2017 and $50 in 2016	3,787	5,837
Prepaid expenses and other current assets	1,171	1,079
Total Current Assets	11,827	10,854
Property and equipment:
Fixed Assets, net of accumulated amortization and depreciation of $9,577 in 2017 and $8,900 in 2016	13,055	13,358
Other assets	813	820
Total Assets	25,695	25,032
Current Liabilities:
Accounts payable	622	1,363
Accrued expenses	2,889	1,988
Current portion of long-term debt	1,144	1,144
Total Current Liabilities	4,655	4,495
Long-term debt	1,951	2,237
Deferred tax liabilities, long-term	2,638	2,693
Total Liabilities	9,244	9,425
Commitments and Contingencies (Note 7)
Shareholders' Equity:
Preferred stock, $0.005 par value, 873 shares authorized, no shares issued or outstanding	0	0
Common stock, $0.005 par value; 50,000 shares authorized 6,128 shares issued in 2017 and 2016	31	31
Additional paid-in capital	30,766	30,603
Accumulated deficit	(4,264)	(4,945)
Less - Treasury stock, at cost, 668 shares in 2017 and 2016	(10,082)	(10,082)
Total Shareholders' Equity	16,451	15,607
Total Liabilities and Shareholders' Equity	$ 25,695	$ 25,032

CONDENSED BALANCE SHEETS _Paren

CONDENSED BALANCE SHEETS [Parenthetical] - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Allowance for doubtful accounts	$ 58	$ 50
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 9,577	$ 8,900
Preferred stock, par value (in dollars per share)	$ 0.005	$ 0.005
Preferred stock, shares authorized	873	873
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	50,000
Common stock, shares issued	6,128	6,128
Treasury stock, shares	668	668

CONDENSED STATEMENTS OF OPERATI

CONDENSED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues	$ 10,209	$ 6,667
Cost of revenues	4,893	3,929
Gross profit	5,316	2,738
Operating Expenses:
General & administrative	1,475	1,252
Marketing & selling	1,243	1,127
Research & development	330	360
Total Operating Expenses	3,048	2,739
Operating income (loss)	2,268	(1)
Interest expense, net	(22)	(35)
Net income/(loss) before provision for/(benefit) from income taxes	2,246	(36)
Provision for / (Benefit) from income taxes	746	(13)
Net income / (loss)	$ 1,500	$ (23)
Basic net income / (loss) per share (in dollars per share)	$ 0.27	$ 0
Diluted net income / (loss) per share (in dollars per share)	0.27	0
Dividends declared per share (in dollars per share)	$ 0.15	$ 0.15

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income / (loss)	$ 1,500	$ (23)
Adjustments to reconcile net income / (loss) to net cash provided by operating activities:
Depreciation and amortization	687	530
Deferred income taxes	(55)	(61)
Stock-based compensation	163	175
Changes in assets and liabilities:
Accounts receivable	2,050	(1,280)
Prepaid expenses, other current assets, and income tax receivable	(92)	750
Accounts payable	(752)	177
Accrued expenses	901	(88)
Net cash provided by operating activities	4,402	180
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and leasehold improvements	(153)	(201)
Cost of internally developed software	(210)	(30)
Other assets	(3)	(26)
Net cash used in investing activities	(366)	(257)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equipment financing	0	610
Payments of equipment financing	(286)	(405)
Cash dividends paid	(819)	(813)
Net cash used in financing activities	(1,105)	(608)
Net increase / (decrease) in cash and cash equivalents	2,931	(685)
Cash and cash equivalents, beginning of period	3,938	2,689
Cash and cash equivalents, end of period	6,869	2,004
Supplemental disclosures of cash flow information:
Cash paid for income taxes	29	2
Cash paid for interest	22	34
Purchases of equipment through accounts payable	$ 11	$ 371

Interim Financial Statements

Interim Financial Statements	3 Months Ended
	Mar. 31, 2017
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 (“10-K”) for the year ended December 31, 2016, filed on March 7, 2017. 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 months ended March 31, 2017 may not be indicative of the results that may be expected for the year ending December 31, 2017, or any other period.

Cash and Cash Equivalents

Cash and Cash Equivalents	3 Months Ended
	Mar. 31, 2017
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, 2016 and March 31, 2017.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	3. Stock-Based Compensation The Company’s 2006 Incentive Plan (“the Plan”) provides for cash based awards or the grant or issuance of stock-based awards including; options, restricted stock or stock unit awards (SUA’s). As of March 31, 2017, 307 Weighted Weighted Average Average Aggregate Number of Exercise Price Remaining Intrinsic Shares per Share Contractual Life Value (1) Outstanding, December 31, 2016 160 $ 12.76 9.2 years $ 1,907 Granted - - Exercised - - Forfeited - - Outstanding, March 31, 2016 160 $ 12.76 8.9 years $ 1,166 Exercisable, March 31, 2016 9 $ 10.21 8.5 years $ 92 (1) The aggregate intrinsic value on this table was calculated based on the amount, if any, by which the closing market value of the Company’s stock on March 31, 2017 ($ 20.05 Weighted Weighted Number of Average Price Average Fair Shares per Share (2) Value (2) Outstanding & Unvested, December 31, 2016 74 $ 14.62 $ 1,077 Granted - Converted to common stock - Cancelled - Forfeited - Outstanding & Unvested, March 31, 2017 74 $ 14.62 $ 1,077 (2) Weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants related to each grant of stock unit awards. The weighted average fair value is the weighted average share price times the number of shares. As of March 31, 2017, a total of 541 819 2.4

Basic and Diluted Net Income _

Basic and Diluted Net Income / (Loss) Per Share	3 Months Ended
	Mar. 31, 2017
Earnings Per Share, Basic and Diluted [Abstract]
Earnings Per Share [Text Block]	4. Basic and Diluted Net Income / (Loss) Per Share Basic net income/(loss) per share is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed by dividing net income or loss 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 was determined in accordance with the treasury-stock method. Common equivalent shares consisted of common stock issuable upon the exercise of outstanding options and common stock issuable upon the vesting of outstanding, unvested SUAs. Three Months Ended March 31, March 31, 2017 2016 Weighted average common shares outstanding, basic 5,460 5,423 Dilutive common equivalent shares 73 - Weighted average common shares outstanding, diluted 5,533 5,423 Options outstanding to purchase common stock were excluded from the computation of diluted net loss per share for the three months ended March 31, 2016 because the effect of including such shares would have been anti-dilutive for the period. There were no anti-dilutive shares for the three months ended March 31, 2017.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2017
Fair Value Disclosures [Abstract]
Fair Value Disclosures [Text Block]	5. Fair Value Measurements The Company has financial instruments, such as accounts receivable, accounts payable, and accrued expenses, which are stated at carrying amounts that approximate fair value because of the short maturity of those instruments. The carrying amount of the Company’s long-term debt approximates fair value as the interest rate on the debt approximates the estimated borrowing rate currently available to the Company.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2017
Subsequent Events [Abstract]
Subsequent Events [Text Block]	Subsequent Events On April 25, 2017, the Company declared a quarterly dividend of $ 0.15 819

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
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 including, without limitations, the legal matters discussed in the 10K. We continue to believe these lawsuits are without merit and we intend to vigorously defend them. While the ultimate outcome of individual legal claims is inherently unpredictable, we believe that the final resolution of these actions will not have a material adverse effect on our results of operations, financial position, liquidity or capital resources.

Debt and Other Financing Arrang

Debt and Other Financing Arrangements	3 Months Ended
	Mar. 31, 2017
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 (“Loan Agreement”) with Banc of America Leasing & Capital, LLC, which it amended on September 15, 2015. The terms of this arrangement are detailed in the 10-K. The weighted average interest rate for all notes related to the Loan Agreement for the quarter ended March 31, 2017 was 2.76 22 2.41 35 2.93 3.1 2017 $ 858 2018 1,144 2019 776 2020 287 2021 30 Total long-term debt 3,095 Less current portion of long-term debt (1,144) Total long-term debt, net of current portion $ 1,951

Significant Customers

Significant Customers	3 Months Ended
	Mar. 31, 2017
Risks and Uncertainties [Abstract]
Concentration Risk Disclosure [Text Block]	9. Significant Customers The Company had one customer that exceeded 10 10 34 10

Recent Accounting Pronouncement

Recent Accounting Pronouncements	3 Months Ended
	Mar. 31, 2017
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Description of New Accounting Pronouncements Not yet Adopted [Text Block]	Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The new standard will become effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impacts the adoption of this accounting guidance will have on its financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard’s implementation date, as amended by ASU 2015-14, is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We have done a preliminary review of the impact of our pending adoption of ASU 2014-09 on our financial statements and have determined the implementation of this standard should not have a material impact on the financial statements. The Company intends to adopt the standard at the date required for public companies.

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Schedule of Nonvested Performance-based Units Activity [Table Text Block]	A summary of the Company’s stock option activity for the three months ended March 31, 2017 is as follows: Weighted Weighted Average Average Aggregate Number of Exercise Price Remaining Intrinsic Shares per Share Contractual Life Value (1) Outstanding, December 31, 2016 160 $ 12.76 9.2 years $ 1,907 Granted - - Exercised - - Forfeited - - Outstanding, March 31, 2016 160 $ 12.76 8.9 years $ 1,166 Exercisable, March 31, 2016 9 $ 10.21 8.5 years $ 92 (1) The aggregate intrinsic value on this table was calculated based on the amount, if any, by which the closing market value of the Company’s stock on March 31, 2017 ($ 20.05
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]	A summary of the Company’s stock unit award activity for the three months ended March 31, 2017 is as follows: Weighted Weighted Number of Average Price Average Fair Shares per Share (2) Value (2) Outstanding & Unvested, December 31, 2016 74 $ 14.62 $ 1,077 Granted - Converted to common stock - Cancelled - Forfeited - Outstanding & Unvested, March 31, 2017 74 $ 14.62 $ 1,077 (2) Weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants related to each grant of stock unit awards. The weighted average fair value is the weighted average share price times the number of shares.

Basic and Diluted Net Income 17

Basic and Diluted Net Income / (Loss) Per Share (Tables)	3 Months Ended
	Mar. 31, 2017
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 for the three months ended March 31, 2017 are as follows: Three Months Ended March 31, March 31, 2017 2016 Weighted average common shares outstanding, basic 5,460 5,423 Dilutive common equivalent shares 73 - Weighted average common shares outstanding, diluted 5,533 5,423

Debt and Other Financing Arra18

Debt and Other Financing Arrangements (Tables)	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Schedule of Long-term Debt Instruments [Table Text Block]	The annual principal repayment requirements for debt obligations as of March 31, 2017 were as follows: 2017 $ 858 2018 1,144 2019 776 2020 287 2021 30 Total long-term debt 3,095 Less current portion of long-term debt (1,144) Total long-term debt, net of current portion $ 1,951

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($)		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price per Share, Outstanding, December 31, 2016			$ 9.2
Current Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Outstanding, December 31, 2016			160
Number of Shares, Granted		0
Number of Shares, Exercised		0
Number of Shares, Forfeited		0
Number of Shares, Outstanding, March 31, 2016		160	9
Weighted Average Exercise Price per Share, Outstanding, December 31, 2016			$ 12.76
Weighted Average Exercise Price per Share, Granted		$ 0
Weighted Average Exercise Price per Share, Exercised		0
Weighted Average Exercise Price per Share, Forfeited		0
Weighted Average Exercise Price per Share, Outstanding, March 31, 2016		12.76
Weighted Average Exercise Price per Share, Exercisable, March 31, 2016		$ 10.21	$ 8.5
Weighted Average Remaining Contractual Life, Exercisable			8 years 10 months 24 days
Aggregate Intrinsic Value, Outstanding, December 31, 2015	[1]		$ 1,907
Aggregate Intrinsic Value, Outstanding, March 31, 2016	[1]	$ 1,166
Aggregate Intrinsic Value, Exercisable, March 31, 2016	[1]		$ 92
[1]	The aggregate intrinsic value on these tables was calculated based on the closing market value of the Company’s stock on September 30, 2016 ($19.82).

Stock-Based Compensation (Det20

Stock-Based Compensation (Details 1) - Stock Unit Award [Member] $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Outstanding & Unvested, December 31, 2016	74
Number of Shares, Granted	0
Number of Shares, Converted to common stock	0
Number of Shares, Cancelled	0
Number of Shares, Forfeited	0
Number of Shares, Outstanding & Unvested, December 31, 2016	74
Weighted Average Price per Share, Outstanding & Unvested, December 31, 2016 | $ / shares	$ 14.62
Weighted Average Price per Share, Outstanding & Unvested, March 31, 2017 | $ / shares	$ 14.62
Weighted Average Fair Value, Outstanding & Unvested, March 31, 2017 | $	$ 1,077	[1]
Weighted Average Fair Value, Outstanding & Unvested, March 31, 2017 | $	$ 1,077	[1]
[1]	The aggregate intrinsic value on this table was calculated based on the amount, if any, by which the closing market value of the Company’s stock on the September 30, 2016 ($19.82) exceeded the exercise price of the underlying options, multiplied by the number of shares subject to each option.

Stock-Based Compensation (Det21

Stock-Based Compensation (Details Textual) shares in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | shares	307
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) | $	$ 819,000
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Unamortized Fair Value Period For Amortization	2 years 4 months 24 days
Stock Incentive Plan 2006 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance | shares	541
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, Options, Vested in Period, Fair Value | $	$ 20,050

Basic and Diluted Net Income 22

Basic and Diluted Net Income / (Loss) Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Weighted average common shares outstanding, basic	5,460	5,423
Dilutive common equivalent shares	73	0
Weighted average common shares outstanding, diluted	5,533	5,423

Subsequent Events (Details Text

Subsequent Events (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	Apr. 25, 2017	Mar. 31, 2017	Mar. 31, 2016
Common Stock, Dividends, Per Share, Declared		$ 0.15	$ 0.15
Subsequent Event [Member]
Common Stock, Dividends, Per Share, Declared	$ 0.15
Dividends Payable	$ 819

Debt and Other Financing Arra24

Debt and Other Financing Arrangements (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
2,017	$ 858
2,018	1,144
2,019	776
2,020	287
2,021	30
Total long-term debt	3,095
Less current portion of long-term debt	(1,144)	$ (1,144)
Total long-term debt, net of current portion	$ 1,951	$ 2,237

Debt and Other Financing Arra25

Debt and Other Financing Arrangements (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Debt Instrument, Interest Rate, Effective Percentage	2.93%	2.41%
Interest Expense	$ 22	$ 35
Long-term Debt	$ 3,095
Debt, Weighted Average Interest Rate	2.76%

Significant Customers (Details

Significant Customers (Details Textual)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Sales Revenue, Net [Member]
Concentration Risk, Benchmark	one customer that exceeded 10% of revenue	no customers that exceeded 10% of revenue
Accounts Receivable [Member]
Concentration Risk, Benchmark	no customers who exceeded 10% of the accounts receivable
Accounts Receivable [Member] | One Customer [Member]
Concentration Risk, Percentage		34.00%