The following table sets forth, for the fiscal periods indicated, the percentage of net sales represented by the various income and expense categories reflected in the Company’s Statement of Operations.

The Company’s revenues are derived primarily from the sales of respiratory products, medical gas equipment and emergency medical products. The products are generally sold directly to distributors, customers affiliated with buying groups, individual customers and construction contractors, throughout the world.

The Company recognizes revenue from product sales upon satisfaction of its performance obligation which occurs on the transfer of control of the product, which is generally upon shipment or delivery, depending on the delivery terms set forth in the customer contract. Payment terms between Allied and its customers vary by the type of customer, country of sale, and the products offered. The term between invoicing and the payment due date is not significant.

Management exercises judgment in estimating variable consideration. Provisions for early payment discounts, rebates and returns and other adjustments are provided for in the period the related sales are recorded. Historical data is readily available and reliable, and is used for estimating the amount of the reduction in gross sales.

The Company provides rebates to wholesalers. Rebate amounts are based upon purchases using contractual amount for each product sold. Factors used in the rebate calculations include the identification of which products have been sold subject to a rebate and the customer or price terms that apply. Using known contractual allowances, the Company estimates the amount of the rebate that will be paid, and records the liability as a reduction of gross sales when it records the sale of the product. Settlement of the rebate generally occurs in the month following the sale.

The Company regularly analyzes the historical rebate trends and adjusts reserves for changes in trends and terms of rebate programs. Historically, adjustments to prior years’ rebate accruals have not been material to net income.

Other allowances charged against gross sales include cash discounts and returns, which are not significant. Cash discounts are known within 15 to 30 days of sale, and therefore can be reliably estimated. Returns can be reliably estimated because the Company’s historical returns are low, and because sales return terms and other sales terms have remained relatively unchanged for several periods. Product warranties are also not significant.

The Company does not allocate transaction price as the Company has only one performance obligation and its contracts do not span multiple periods. All taxes imposed on and concurrent with revenue producing transactions and collected by the Company are excluded from the measurement of transaction price.

Inventory is recorded net of a reserve for obsolete and excess inventory which is determined primarily based on an analysis of inventory items with no usage in the preceding year and for inventory items for which there is greater than two years’ usage on hand. This analysis considers those identified inventory items to determine, in management’s best estimate, if parts can be used beyond one year, if there are alternate uses or at what values such parts may be disposed for. At June 30, ~~2020~~2021 and ~~2019,~~2020, inventory is recorded net of a reserve for obsolete and excess inventory of $2.2 million and $1.8 ~~million.~~million, respectively.

The Company accounts for income taxes under the FASB Accounting Standards Codification (“ASC”) Topic 740: “Income Taxes.” Under ASC 740, the deferred tax provision is determined using the liability method, whereby deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and income tax bases of assets and liabilities using enacted tax rates that are expected to apply to taxable income when such assets and liabilities are anticipated to be settled or realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as tax expense or benefit in the period that includes the enactment date of the change. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Management uses a more likely than not criterion in its assessment and considers all available evidence, both positive and negative, in determining whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. In assessing the need for a valuation allowance the Company first considers the reversals of existing temporary deferred tax liabilities and available tax planning strategies. To the extent these items are not sufficient to cause the realization of deferred tax assets, the Company would then consider the availability of future taxable income only to the extent such income is considered likely to occur based on the Company’s earnings history, current income trends and projections.

In light of its history of operating losses the Company does not rely on the existence of future taxable income as it currently cannot conclude future taxable income is likely to occur. The Company does rely on reversals of existing temporary deferred tax liabilities and tax planning strategies to the extent available to support the value of its existing deferred tax assets. The tax planning strategies available to the Company that it would use rather than allow the tax benefits of net operating loss carryovers to expire include the revocation of the LIFO method inventory and the recognition of a gain on the sale of the Company’s excess land in Stuyvesant Falls, New York. As of June 30, ~~2020,~~2021, the Company’s deferred tax assets exceeded the amount supportable through reversals of existing deferred tax liabilities and tax planning strategies and a valuation allowance has been recorded for this amount.

Accounts receivable are recorded net of an allowance for doubtful accounts, which is determined based on an analysis of past due accounts including accounts placed with collection agencies, and an allowance for returns and credits, which is based on historical analysis of credit memo data and returns. The Company maintains an allowance for doubtful accounts to reflect the uncollectibility of accounts receivable based on past collection history and specific risks ~~indentified~~identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. At June 30, ~~2020~~2021 and ~~2019,~~2020, accounts receivable is recorded net of allowances of $170,000.

The impairment of long-lived assets is assessed when changes in circumstances (such as, but not limited to, a decrease in market value of an asset, current and historical operating losses or a change in business strategy) indicate that their carrying value may not be recoverable. This assessment is based on management’s expectations and judgments regarding future business and economic conditions, future market values and disposal costs. Actual results and events could differ significantly from management’s estimates. Based upon our most recent analysis, we believe that no impairment exists at June 30, ~~2020.~~2021. There can be no assurance that future impairment tests will not result in a charge to net earnings (loss).

The Company maintains a self-insurance program for a portion of its health care costs. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and the estimated liability for claims incurred but not reported. As of June 30, ~~2020~~2021 and ~~2019,~~2020, the Company had approximately ~~$150,000~~$120,000 and ~~$210,000,~~$150,000, respectively, of accrued liabilities related to health care claims. In order to establish the self-insurance reserves, the Company utilized actuarial estimates of expected claims based on analyses of historical data.

~~Allied~~The Company calculates share based compensation using the Black-Sholes-Merton (“Black-Scholes”) option-pricing model, which requires the input of highly subjective assumptions including the expected stock price volatility. For the twelve-month periods ended June 30, 2021, 2020, ~~2019,~~ and ~~2018,~~2019, Allied recorded approximately $14,000, $2,000 ~~$3,000~~ and $3,000, respectively, in share-based employee compensation. This compensation cost is included in the general and administrative expenses in the accompanying Statements of Operations.

The Company had income of $1.8 million before taxes for fiscal 2021, compared to a loss of $3.1 million before taxes for fiscal 2020. It recorded an income tax provision of $72,484 in fiscal 2021, compared to an income tax benefit of $130,359 in fiscal 2020.

Net sales for fiscal 2021 of $36.3 million were $4.4 million or 13.8% higher than net sales of $31.9 million in fiscal 2020. Domestically, sales increased by $1.0 million dollars while international sales, which represented 33.4% of fiscal 2021 sales, were $3.4 million higher. The increase in domestic sales was largely attributable to increases in sales of construction products and emergency medical products. International business is dependent upon hospital construction projects, and the development of medical facilities and emergency services in those regions in which the Company operates, as well as the economic and political climates in those international markets.

Orders for the Company’s products for the year ended June 30, 2021 of $29.6 million were $11.2 million or 27.5% lower than orders for the year ended June 30, 2020 of $40.8 million. As a result of the COVID-19 pandemic in fiscal year 2020, the Company experienced significantly increased orders for the emergency medical products sold by the Company, including the Company’s AHP300 ventilator and the EPV200 ventilator. In fiscal year 2021 the pace of orders materially decreased.

Respiratory care product sales, which include homecare products, were $8.1 million in fiscal 2021 compared to $8.6 million in 2020. Respiratory care products include carbon dioxide absorbents. For the year ended June 30, 2021 and 2020 the Company had carbon dioxide absorbent sales of Carbolime® and Litholyme® of $3.7 million.

Medical gas equipment sales, which include construction products, of $15.9 million in fiscal 2021 were approximately $0.6 million, or 3.9% higher than prior year levels of $15.3 million. The increase in sales was largely attributable to an increase sales of non-construction products of $1.5 million. This increase was partially offset by a decrease in international construction sales of $0.7 million. The Company continues to evaluate and strengthen its sales strategy in this market.

Emergency medical product sales in fiscal 2021 of $12.3 million were $4.2 million or 51.9% higher than fiscal 2020 sales of $8.1 million. International sales of emergency medical products increased by $3.3 million from the prior year while domestic sales increased by $0.9 million. The onset of the COVID-19 pandemic increased demand for the Company’s emergency products including the AHP300 ventilator.

International sales, which are included in the product lines discussed above, increased $3.4 million, or 39.1%, to $12.1 million in fiscal 2021 compared to sales of $8.7 million in fiscal 2020.

Gross profit in fiscal 2021 was $7.1 million, or 19.6% of sales, compared to a gross profit of $5.6 million, or 17.6% of sales in fiscal 2020. The $1.5 million increase in gross profit is mainly attributable to a $4.4 million increase in sales.

The Company invested approximately $0.2 million in fiscal 2021 and $0.8 million in fiscal 2020 for capital expenditures primarily for the expansion of the production line of our AHP300 ventilator.

Selling, General, and Administrative (“SG&A”) expenses for fiscal 2021 were $7.6 million compared to SG&A expenses of $8.6 million in fiscal 2020. The decrease is primarily due to the $1.1 million provision in fiscal 2020 for environmental cleanup costs at the Company’s facility in Stuyvesant Falls, New York and a decrease of $0.2 million for business travel expenses in fiscal 2021. These decreases were partially offset by a $0.2 million increase for legal and insurance expenses in fiscal 2021.

Interest income in fiscal 2021 was $233 compared to interest income of $654 in fiscal 2020. Interest expense in fiscal 2021 was $115,975 compared to interest expense of $64,682 in fiscal 2020.

Other income and expenses in fiscal 2021 include $2.4 million of income realized by the Company as a result of forgiveness of the PPP Loan.

The Company’s effective tax rate in 2021 was a provision of 4.1% compared to a benefit of 4.1% in 2020. The change in the effective tax rate in 2021 was attributable to non-deductible expenses attributable to the Company’s expected PPP Loan forgiveness and a decrease in the value of tax planning strategies.

The realization of the Company’s deferred tax assets has been based on the reversal of existing temporary deferred tax liabilities and tax planning strategies and to the extent those items are not sufficient to support the value of recorded deferred tax assets a valuation allowance is recorded. For the year ended June 30, 2019 the Company recorded an additional allowance of $536,240. For the year ended 2020 the Company recorded an additional allowance of $178,111 offset by an increase in the value of tax planning strategies of $138,873 resulting in a net increase in the allowance of $39,238. For the year ended 2021, the company recorded an additional allowance of $723,248. The allowance was further increased by a reduction in the value of the tax planning strategy of $63,676 resulting in a total increase to the allowance of $786,921. To the extent that the Company’s losses continue, the tax benefit of those losses would be fully offset by a valuation allowance.

Net income in fiscal 2021 was $1.7 million or $0.42 per basic and diluted earnings per share compared to a net loss of $3.0 million, or $0.75 per basic and diluted earnings per share in fiscal 2020. In 2021 and 2020 the weighted number of shares used in the calculation of basic earnings per share was 4,013,537. In 2021 and 2020 the weighted number of shares used in the calculation of diluted earnings per share was 4,026,446 and 4,013,537, respectively.

The Company had a loss of $3.1 million before taxes for fiscal 2020, compared to a loss of $2.1 million before taxes for fiscal 2019. It recorded an income tax benefit of $130,359 in fiscal 2020, compared to an income tax provision of $29,448 in fiscal 2019.

Net sales for fiscal 2020 of $31.9 million were $0.5 million or 1.6% higher than net sales of $31.4 million in fiscal 2019. Domestically, sales decreased by $0.4 million dollars while international sales, which represented 27.5% of fiscal 2020 sales, were 11.7% higher. The decrease in domestic sales was largely attributable to declines in sales of construction products and respiratory therapy products. International business is dependent upon hospital construction projects, and the development of medical facilities and emergency services in those regions in which the Company operates, as well as the economic and political climates in those international markets.

Orders for the Company’s products for the year ended June 30, 2020 of $40.8 million were $9.3 million or ~~29.54%~~29.5% higher than orders for the year ended June 30, 2019 of $31.5 million. As a result of the COVID-19 pandemic, the Company experienced significantly increased orders for the emergency medical products sold by the Company, including the Company’s AHP300 ventilator and the EPV200 ventilator.

Respiratory care product sales, which include homecare products, were $8.6 million in fiscal 2020 compared to $9.0 million in 2019. Respiratory care products include carbon dioxide absorbents. For the year ended June 30, 2020 and 2019 the Company had carbon dioxide absorbent sales of Carbolime® and Litholyme® of $3.7 million and $4.2 million, respectively.

Medical gas equipment sales, which include construction products, of $15.3 million in fiscal 2020 were approximately $0.7 million, or 4.4% lower than prior year levels of ~~$16.0.~~$16.0 million. The decrease in domestic sales was largely attributable to declines in sales of construction products. The Company continues to evaluate and strengthen its sales strategy in this market.

Emergency medical product sales in fiscal 2020 of $8.1 million were $1.7 million or 26.6% higher than fiscal 2019 sales of $6.4 million. International sales of emergency medical products increased by 61.6% from the prior year while domestic sales increased by 13.2%. The onset of the COVID-19 pandemic increased demand for the Company’s emergency products including the AHP300 ventilator. Most of this increase occurred in the fourth quarter of the fiscal year. While demand for emergency and mass-casualty ventilators increased in the last part of fiscal year 2020, it was necessary for the company to ramp up its manufacturing capacity and to address any supply chain issues. The ramp up has included investment in capital equipment and training to increase capacity. For these reasons some orders were not shipped immediately in the fourth quarter.

International sales, which are included in the product lines discussed above, increased $0.9 million, or 11.5%, to $8.7 million in fiscal 2020 compared to sales of $7.8 million in fiscal 2019.

Gross profit in fiscal 2020 was $5.6 million, or 17.6% of sales, compared to a gross profit of $5.0 million, or 15.9% of sales in fiscal 2019. The $0.6 million increase in gross profit is mainly attributable to a $0.7 million decrease in fringe benefits including medical benefits. The Company is self-insured for medical benefits and there is variation in the amount of claims over time.

The Company invested approximately $0.8 million in capital expenditures in fiscal 2020 primarily for the expansion of the production line of our AHP300 ventilator. The Company did not invest in capital expenditures in fiscal 2019.

Selling, General, and Administrative (“SG&A”) expenses for fiscal 2020 were $8.6 million compared to SG&A expenses of $7.8 million in fiscal 2019. The increase is primarily due to the $1.1 million provision for environmental cleanup costs at the Company’s facility in Stuyvesant Falls, New York. This increase was offset by a $0.3 million decrease in personnel cost consisting of salary and fringe benefits.

Interest income in fiscal 2020 was $654 compared to interest income of $138 in fiscal 2019. Interest expense in fiscal 2020 was $64,682 compared to interest expense of $56,223 in fiscal 2019.

Other income and expenses in fiscal 2019 include $750,000 of income realized by the Company as a result of the settlement of litigation with Niagara Mohawk Power Corporation d/b/a National Grid (“Niagara”), which provides electrical power to the Company’s facility in Stuyvesant Falls, New York, and one other party. See Part ~~II,~~I, Item 13 – Legal Proceedings, below, for more information concerning litigation.

The Company’s effective tax rate in 2020 was a benefit of 4.1% compared to a provision of 1.4% in 2019. The change in the effective tax rate in 2020 was attributable to non-deductible expenses attributable to the Company’s expected PPP Loan forgiveness and an increase in the value of tax planning strategies.

The realization of the Company’s deferred tax assets ~~have~~has been based on the reversal of existing temporary deferred tax liabilities and tax planning strategies and to the extent those items are not sufficient to support the value of recorded deferred tax assets a valuation allowance is recorded. For the year ended June 30, 2018 the Company recorded a $352,727 reduction to the allowance. The reduction was caused by a decrease in the allowance of $1,080,362 due to a reduction in federal rates expected to be in effect at reversal. The reduced rates are as a result of the Tax Cuts and Jobs Act of 2017. This reduction was offset by a $727,635 increase in the valuation allowance reflecting the impact of 2018 additions to deferred tax assets not supported by deferred tax liabilities or tax planning strategies. For the year ended June 30, 2019 the Company recorded an additional allowance of $536,240. For the year ended 2020 the Company recorded an additional allowance of $178,111 offset by an increase in the value of tax planning strategies of $138,873 resulting in a net increase in the allowance of $39,238. To the extent that the Company’s losses continue, the tax benefit of those losses would be fully offset by a valuation allowance.

Net loss in fiscal 2020 was $3.0 million or $0.75 per basic and diluted earnings per share, an increase from a net loss of $2.1 million, or $0.53 per basic and diluted earnings per share in fiscal 2019. In 2020 and 2019 the weighted number of shares used in the calculation of basic and diluted earnings per share was 4,013,537.

The Company had a loss of $2.1 million before taxes for fiscal 2019, compared to a loss of $2.0 million before taxes for fiscal 2018. It recorded an income tax provision of $29,448 in fiscal 2019, compared to an income tax provision of $173,038 in fiscal 2018.

Net sales for fiscal 2019 of $31.4 million were $2.4 million or 7.1% less than net sales of $33.8 million in fiscal 2018. Domestically, sales decreased by $2.2 million dollars. The decrease in domestic sales was largely attributable to declines in sales of construction products. The Company continues to evaluate and strengthen its sales strategy in this market. Internationally, sales decreased by $0.2 million. International business is dependent upon hospital construction projects, and the development of medical facilities and emergency services in those regions in which the Company operates, as well as the economic and political climates in those international markets.

Orders for the Company’s products for the year ended June 30, 2019 of $31.5 million were $1.3 million or 4.0% lower than orders for the year ended June 30, 2018 of $32.8 million. Customer purchase order releases for the year ended June 30, 2019 were $30.9 million or 5.2% lower than customer purchase order releases of $32.6 million for the year ended June 30, 2018. Customer purchase order releases depend on the scheduling practices of individual customers and the status of construction projects.

Respiratory care product sales, which include homecare products, were $9.0 million in fiscal 2019 and 2018. Respiratory care products also include carbon dioxide absorbents. For the year ended June 30, 2019 and 2018 the Company had carbon dioxide absorbent sales of Carbolime® and Litholyme® of $4.2 million and $3.9 million, respectively.

Medical gas equipment sales, which include construction products, of $16.0 million in fiscal 2019 were approximately $1.6 million, or 9.1% lower than prior year levels of $17.6. The decrease in domestic sales was largely attributable to declines in sales of construction products. The Company continues to evaluate and strengthen its sales strategy in this market.

Emergency medical product sales in fiscal 2019 of $6.4 million were $0.7 million or 9.9% lower than fiscal 2018 sales of $7.1 million. International sales of emergency medical products decreased by 28.0% from the prior year while domestic sales decreased by 0.7%.

~~International sales, which are included in the product lines discussed above, decreased $0.2 million, or 2.5%, to $7.8 million in fiscal 2019 compared to sales of $8.0 million in fiscal 2018.~~

Gross profit in fiscal 2019 was $5.0 million, or 15.9% of sales, compared to a gross profit of $6.5 million, or 19.2% of sales in fiscal 2018. Gross profit was primarily unfavorably impacted by the decrease in sales during the period. ~~The decrease in sales and production resulted in less effective utilization of fixed overhead cost. Manufacturing overhead spending increased by $52,000 for the year.~~

The Company did not invest in capital expenditures in fiscal 2019 and fiscal 2018. The Company continues to control cost and actively pursue methods to reduce its costs through process changes, and purchasing initiatives.

Selling, General, and Administrative (“SG&A”) expenses for fiscal 2019 were $7.8 million compared to SG&A expenses of $8.4 million in fiscal 2018. Personnel cost, primarily salaries and fringe benefits, decreased by approximately $0.1 million, business travel decreased by approximately $0.1 million, and legal fees decreased by $0.2 million.

~~Interest income in fiscal 2019 was $138 compared to interest income of $288 in fiscal 2018. Interest expense in fiscal 2019 was $56,223 compared to interest expense of $23,569 in fiscal 2018.~~

Other income and expenses in fiscal 2019 include $750,000 of income realized by the Company as a result of the settlement of litigation with Niagara Mohawk Power Corporation d/b/a National Grid (“Niagara”), which provides electrical power to the Company’s facility in Stuyvesant Falls, New York, and one other party. See Part II, Item 1 – Legal Proceedings, below, for more information concerning litigation.

The Company’s effective tax rate in 2019 was a provision of 1.4% compared to a provision of 8.6% in 2018. The decrease in the effective tax rate in 2019 was attributable to changes in the valuation allowance for indefinite lived deferred tax assets and a reduction value in the value attributable to the tax planning strategies recorded in fiscal 2018 as a result of the Tax Cuts and Jobs Act of 2017.

The realization of the Company’s deferred tax assets have been based on the reversal of existing temporary deferred tax liabilities and tax planning strategies and to the extent those items are not sufficient to support the value of recorded deferred tax assets a valuation allowance is recorded. For the year ended June 30, 2017 the Company recorded an additional allowance of $739,578. For the year ended June 30, 2018 the Company recorded a $352,727 reduction to the allowance. The reduction was caused by a decrease in the allowance of $1,080,362 due to a reduction in federal rates expected to be in effect at reversal. The reduced rates are as a result of the Tax Cuts and Jobs Act of 2017. This reduction was offset by a $727,635 increase in the valuation allowance reflecting the impact of 2018 additions to deferred tax assets not supported by deferred tax liabilities or tax planning strategies. For the year ended June 30, 2019 the Company recorded an additional allowance of $536,240. To the extent that the Company’s losses continue, the tax benefit of those losses would be fully offset by a valuation allowance.

Net loss in fiscal 2019 was $2.1 million or $0.53 per basic and diluted earnings per share, a decrease from a net loss of $2.2 million, or $0.55 per basic and diluted earnings per share in fiscal 2018. In 2019 and 2018 the weighted number of shares used in the calculation of basic and diluted earnings per share was 4,013,537.

The following table sets forth selected information concerning Allied's financial condition at June 30:

The Company’s working capital was $6.3 million at June 30, 2021 compared to $5.9 million at June 30, ~~2020 compared to $7.4~~2020. The $0.4 million ~~at June 30, 2019. Accounts~~increase in working capital is from an inventory increase of $0.5 million, a decrease in accounts payable ~~increased by $1.5~~of $1.1 million ~~The current portion of long term debt increased by $1.0 million,~~and a decrease in customer deposits ~~increased by $2.3 million and Other Accrued Liabilities increased by $0.6~~of $2.2 million. ~~The increase in Other Accrued Liabilities reflects a $0.6 million provision for environmental costs.~~ During fiscal ~~2020,~~2021, these ~~decreases~~increases in working capital were partially offset by a ~~$1.6~~$1.9 million decrease in cash and $1.0 million increase in ~~Inventory.~~the current portion of long term debt. Accounts receivable as measured in days sales outstanding (“DSO”) is 40 DSO at June 30, 2021, up from 35 DSO at June 30, ~~2020, down from 39 DSO at June 30, 2019.~~2020. The Company does adjust product forecast, order quantities, and safety stock based on changes in demand patterns in order to manage inventory levels.

The net decrease in cash for the fiscal year ended June 30, 2021 was $1.9 million. The net increase in cash for the fiscal year ended June 30, 2020 was $2.4 million. ~~The net increase~~Cash flows used in ~~cash~~operating activities for the fiscal year ended June 30, ~~2019 was $0.1~~2021 consisted of a decrease in Customer deposits of $2.2 million, a decrease of Accounts payable of $1.1 million and increase of Inventory of $0.5 million. These cash out flows were offset by a decrease of Accounts receivable of $0.2 million and net income of $1.7 million, supplemented by $0.6 million in non-cash charges for amortization and depreciation.

Cash flows provided by operating activities for the fiscal year ended June 30, 2020 consisted of an increase in Customer deposits of $2.3 million, an increase of Accounts payable of $1.3 million and increase of Other accrued liabilities of $1.1 million. These cash flows were offset by an increase of Inventories of $1.6 million and a net loss of $3.1 million, supplemented by $0.6 million in non-cash charges for amortization and depreciation.

Cash flows provided by operating activities for the fiscal year ended June 30, 2019 consisted of a decrease in accounts receivable of $0.6 million and decrease in Inventory of $0.5 million. These cash flows were offset by a net loss of $2.1 million, supplemented by $0.8 million in non-cash charges for amortization and depreciation.

As of June 30, ~~2020,~~2021, the Company was party to a Loan and Security Agreement with North Mill Capital, LLC (“North Mill”), as successor in interest to Summit Financial Resources, L.P., dated effective February 27, 2017, as amended April 16, 2018, ~~and~~ April 24, 2019 and December 18, 2020 (as amended, the “Credit Agreement”). Pursuant to the Credit Agreement, the Company obtained a secured revolving credit facility (the “Credit Facility”). The Company’s obligations under the Credit Facility are secured by all of the Company’s personal property, both tangible and intangible, pursuant to the terms and subject to the conditions set forth in the Credit Agreement. Availability of funds under the Credit Agreement is based on the Company’s accounts receivable and inventory but will not exceed ~~$2,000,000.~~$4,000,000. At June 30, ~~2020~~2021 availability under the agreement was ~~$1,994,657.~~approximately $630,000.

The Credit Facility will be available, subject to its terms, on a revolving basis until it expires on February 27, ~~2021,~~2023, at which time all amounts outstanding under the Credit Facility will be due and payable. Advances will bear interest at a rate equal to 2.00% in excess of the prime rate as reported in the Wall Street Journal. Interest is computed based on the actual number of days elapsed over a year of 360 days. In addition to interest, the Credit facility requires that the Company pay the lender a monthly administration fee in an amount equal to forty-seven hundredths percent (0.47%) of the average outstanding daily principal amount of loan advances for ~~the~~ each calendar month, or portion thereof.

Regardless of the amount borrowed under the Credit Facility, the Company will pay a minimum amount of .25% (25 basis points) per month on the maximum availability ($~~5,000~~10,000 per month). In the event the Company prepays or terminates the Credit Facility prior to February 27, ~~2021,~~2022, the Company will be obligated to pay an amount equal to the minimum monthly payment multiplied by the number of months remaining between February 27, ~~2021~~2022 and the date of such prepayment or termination.

Under the Credit Agreement, advances are generally subject to customary borrowing conditions and to North Mill’s sole discretion to fund the advances. The Credit Agreement also contains covenants with which the Company must comply during the term of the Credit Facility. Among other things, such covenants require the Company to maintain insurance on the collateral, operate in the ordinary course and not engage in a change of control, dissolve or wind up the Company.

The Credit Agreement also contains certain events of default including, without limitation: the failure to make payments when due; the material breach of representations or warranties contained in the Credit Agreement or other loan documents; cross-default with other indebtedness of the Company; the entry of judgments or fines that may have a material adverse effect on the Company; failure to comply with the observance or performance of covenants contained in the Credit Agreement or other loan documents; insolvency of the Company, appointment of a receiver, commencement of bankruptcy or other insolvency proceedings; dissolution of the Company; the attachment of any state or federal tax lien; attachment or levy upon or seizure of the Company’s property; or any change in the Company’s condition that may have a material adverse effect. After an event of default, and upon the continuation thereof, the principal amount of all loans made under the Credit Facility would bear interest at a rate per annum equal to 20.00% above the otherwise applicable interest rate (provided, that the interest rate may not exceed the highest rate permissible under law), and North Mill would have the option to accelerate maturity and payment of the Company’s obligations under the Credit Facility.

The Company was in compliance with all of the covenants associated with the Credit Facility at June 30, ~~2020.~~2021.

On April 13, 2020, the Company entered into a Payroll Protection Program (PPP) loan agreement (the “SBA Loan”) with Jefferson Bank and Trust Company under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). The Company received total proceeds of $2.375 million from the SBA Loan. In accordance with the requirements of the CARES Act, the Company ~~will use~~used proceeds from the SBA Loan for payroll costs and other permitted uses. The SBA Loan iswas scheduled to mature on April 13, 2022 and ~~has~~had a 1.00% interest rate and iswas subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act.

~~All or a portion of the SBA Loan may be forgiven by the SBA upon application by the Company upon documentation of expenditures in accordance with the SBA requirements. Under the CARES Act,~~The loan, forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during the eight week or at the Company’s election 24 week period beginning on the loan origination date, subject to regulations and guidance provided by the United States Treasury. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 40 % of the forgiven amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. In the event the SBA Loan, or any portion thereof, is forgiven pursuant to the CARES Act, the amount forgiven is applied to outstanding principal. The Company intends to seek forgiveness of the SBA Loan to the maximum extent permitted but cannot guarantee whether or to what extent such forgiveness will be granted.

~~Payments of unforgiven~~including all principal and accrued interest, are deferred until November 2020, at which point the Company is required to repay such amounts in 18 equal monthly payments. The SBA Loan is evidenced by a promissory note, which contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. The SBA Loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties.was forgiven on June 11, 2021.

At June 30, ~~2020~~2021 the Company had ~~$2.4~~$2.1 million indebtedness, including capital lease obligations, short-term debt, and long term debt, of which $2.4 million is owed under the SBA Loan and which the Company believes it is entitled to forgiveness under the terms of such loan. This debt accrues interest at 1.00% per annum under the terms of the PPP.debt.

The following table summarizes the Company’s contractual obligations at June 30, ~~2020:~~2021:

Capital expenditures were approximately $167,000, $758,000, ~~$0,~~ and $0 in fiscal 2021, 2020, ~~2019,~~ and ~~2018,~~2019, respectively. The Company believes that cash flows from operations and available borrowings under its credit facilities will be sufficient to finance fixed payments and planned capital expenditures of ~~$1.0~~$0.1 million in ~~2021.~~2022.

At June 30, ~~2020,~~2021, the Company had ~~$2.4~~$2.1 million outstanding ~~debt, of which $2.4 million is owed under the SBA Loan and which the Company believes it is entitled to forgiveness under the terms of such loan.~~debt. During fiscal ~~2020~~2021 the Company had $36.7 million in borrowings and $34.6 million in repayments under the Credit ~~Agreement of $32.9 million. Our cash~~Agreement. Cash used in operations was $3,784,000 in fiscal 2021. Cash flows from operations ~~were $647,581~~ in fiscal 2020 and ~~$59,342 in fiscal 2019. Cash flow from operations was negative in fiscal 2018.~~2019 were $648,000 and $59,000, respectively. Our cash flows may be further negatively impacted by decreases in sales, market conditions, and adverse changes in working capital. While we believe that our borrowing capacity under the Credit Agreement provides sufficient financial flexibility, continued negative cash flows could negatively affect our ability to access the Credit Agreement or to repay amounts borrowed and we might need to secure additional sources of funds, which may or may not be available to us.

In fiscal ~~2019~~2021 the Company had borrowings of $36.7 million and ~~2018~~repayments of $34.6 million under the Credit Agreement. In fiscal 2020 the Company had borrowings and repayments of $32.9 million under the Credit ~~Agreement of $32.9 and $14.8 million, respectively.~~Agreement.

In ~~2020,~~2021, inflation in the price of raw materials and purchased components negatively impacted earnings by approximately ~~$0.3~~$0.5 million dollars. The Company experienced a material direct impact of $35,000 in 2021, and $44,000 onin 2020, ~~and $0 in 2019,~~ from changes in trade policy or tariffs. The Company also believes a portion of its increased raw materials costs were due to tariffs imposed on steel and aluminum import. The Company makes its foreign sales in U.S. dollars and, accordingly, sales proceeds are not affected by exchange rate fluctuations. However, fluctuations in exchange rates can affect the price of our products in local currency, which does impact the pace of incoming orders.

The following table sets forth selected operating results for the eight quarters ended June 30, ~~2020.~~2021. The information for each of these quarters is unaudited, but includes all normal recurring adjustments which the Company considers necessary for a fair presentation thereof. These operating results, however, are not necessarily indicative of results for any future period. Further, operating results may fluctuate as a result of the timing of orders, the Company’s product and customer mix, the introduction of new products by the Company and its competitors, and overall trends in the health care industry and the economy. While these patterns have an impact on the Company’s quarterly operations, the Company is unable to predict the extent of this impact in any particular period.

Earnings per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly amounts will not necessarily equal the total for the year.

The Company becomes, from time to time, a party to personal injury litigation arising out of incidents involving the use of its products. The Company believes that any potential judgments resulting from such claims over its self-insured retention will be covered by the Company’s product liability insurance.

See Item 8, Note 2 “Summary of Significant Accounting Policies” for a discussion of recent accounting pronouncements and their impact on the Company’s financial statements, if any.

At June 30, ~~2020,~~2021, the Company had no$2.1 million debt outstanding under ~~its~~the revolving credit facility. The revolving credit facility bears an interest rate using the prime rate as reported in the Wall Street Journal as the basis, as defined in the loan agreement, and therefore is subject to additional expense should there be an increase in market interest rates.

The Company had no holdings of derivative financial or commodity instruments at June 30, ~~2020.~~2021. Allied has international sales; however these sales are denominated in U.S. dollars, mitigating foreign exchange rate fluctuation risk.

The following described financial statements of Allied Healthcare Products, Inc. are included in response to this item:

Statement of Operations for the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018.~~2019.

Balance Sheet for the fiscal years ended June 30, ~~2020~~2021 and ~~2019.~~2020.

Statement of Changes in Stockholders’ Equity for the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018.~~2019.

Statement of Cash Flows for the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018.~~2019.

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

We have audited the accompanying balance sheet of Allied Healthcare Products, Inc. (the Company) as of June 30, ~~2020~~2021 and ~~2019 and~~2020, the related statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended June 30, ~~2020,~~2021, and the related notes (collectively referred to as the ~~financial statements)~~“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of ~~Allied Healthcare Products, Inc.~~the Company as of June 30, ~~2020~~2021 and ~~2019,~~2020, and the results of its operations and its cash flows for each of the three years in the period ended June 30, ~~2020,~~2021, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ~~(PCAOB)~~(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Inventory Reserve for Obsolete and Excess Inventory - Refer To Notes 2 And 8 To The Financial Statements

Inventory is recorded at the lower of cost, determined using the last-in, first-out (“LIFO”) method, or market. Inventory is recorded net of a reserve for obsolete and excess inventory which is determined primarily based on an analysis of inventory items with no usage in the preceding year and for inventory items for which there is greater than two years’ usage on hand. When quantities on hand exceed usage benchmarks, a write-down is recorded for such excess inventory. Changes in assumptions of product demand could have a significant impact on the amount of write-down recorded.

Given the inherent uncertainty in forecasting future inventory usage, including the impact of forecasting future sales activity, auditing the reasonableness of the reserve for obsolete and excess inventory required a high degree of auditor judgment and an increased extent of effort.

Our audit procedures related to the reserve for obsolete and excess inventory included the following, among others:

Year ended June 30, 2020 2019 2018
Cash flows from operating activities:
Net loss $ (3,014,100 ) $ (2,109,685 ) $ (2,192,170 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 619,801 822,068 931,408
Stock based compensation 2,415 3,097 2,830
Provision for doubtful accounts and sales returns and allowances 21,750 19,649 (12,118 )
Deferred tax provision (138,876 ) 18,772 163,100
Changes in operating assets and liabilities:
Accounts receivable 39,720 563,055 (373,437 )
Inventories (1,595,593 ) 497,446 681,413
Income tax receivable - - 377
Customer deposits 2,269,465 192,020 (242,023 )
Other current assets 15,103 5,697 65,073
Accounts payable 1,330,172 (4,386 ) 33,215
Other accrued liabilities 1,097,724 51,609 82,740
Net cash provided by (used in) operating activities 647,581 59,342 (859,592 )
Cash flows from investing activities:
Capital expenditures (617,811 ) - -
Net cash used in investing activities (617,811 ) - -
Cash flows from financing activities:
Borrowings under revolving credit agreement 32,856,428 32,176,067 14,774,091
Payments under revolving credit agreement (32,856,428 ) (32,176,067 ) (14,774,091 )
Proceeds from Payroll Protection Program loan 2,374,859 - -
Net cash provided by financing activities 2,374,859 - -
Net increase (decrease) in cash and cash equivalents 2,404,629 59,342 (859,592 )
Cash and cash equivalents at beginning of year 195,454 136,112 995,704
Cash and cash equivalents at end of year $ 2,600,083 $ 195,454 $ 136,112
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $ 8,517 $ 10,675 $ 9,561
Interest $ 64,862 $ 56,223 $ 23,569

Non-cash investing and financing activities lease liability and right of use asset arising from operating leases $ 17,326 - -
Capital expenditures included in accounts payable at year end $ 140,602 - -

~~See accompanying Notes to Financial Statements.~~

ALLIED HEALTHCARE PRODUCTS, INC.

NOTES TO FINANCIAL STATEMENTS

1.	Organization

Allied Healthcare Products, Inc. (the “Company” or “Allied”) is a manufacturer of respiratory products used in the health care industry in a wide range of hospital and alternate site settings, including post-acute care facilities, home health care and trauma care. The Company's product lines include respiratory care products, medical gas equipment and emergency medical products.

2.	Summary of Significant Accounting Policies

The significant accounting policies followed by ~~Allied~~the Company are described below.

Use of estimates

The policies utilized by the Company in the preparation of the financial statements conform to accounting principles generally accepted in the United States of America, and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.

~~Adoption of new revenue recognition standard~~

In May 2014, the Financial Accounting Standards Board (FASB) issued a new accounting standard that amends the guidance for the recognition of revenue from contracts with customers to transfer goods and services. The FASB subsequently issued additional, clarifying standards to address issues arising from implementation of the new revenue recognition standard. The new revenue recognition standard and clarifying standards require an entity to recognize revenue when control of promised goods or services is transferred to the customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted this new standard as of July 1, 2018, by applying the modified-retrospective method to those contracts that were not completed as of that date.

The results for reporting periods beginning after July 1, 2018, are presented in accordance with the new standard, although comparative information has not been restated and continues to be reported under the accounting standards and policies in effect for those periods. The adoption of this standard did not have a material impact on the amount of revenue recognized by the Company as it sells finished products and recognizes revenue at the point of sale or delivery and the timing of revenue recognition has not changed with the adoption of the new standard.

The cumulative impact on accumulated deficit as a result of the adoption of this standard did not have a material impact on the Company’s historical net losses and, therefore, no adjustment was made to the opening balance of accumulated deficit. In addition, the impact on reported total revenues and operating income as compared to what reported amounts would have been under the prior standard was also immaterial. The Company expects the impact of adoption in future periods to also be immaterial. The accounting policies under the new standard were applied prospectively and are described below. See Note 2, Revenues.

Revenue recognition

Marketing and Advertising Costs

Promotional and advertising costs are expensed as incurred and are included in selling, general and administrative expenses in the Statement of Operations. Advertising expenses for the years ended June 30, 2021, 2020 and 2019 were $0, $3,550, and ~~2018 were $3,550,~~ $0, ~~and $2,000,~~ respectively.

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents.

The Company maintains funds in bank accounts that, at times, may exceed the limit insured by the Federal Deposit Insurance Corporation. The risk of loss attributable to these uninsured balances is mitigated by depositing funds only in high credit quality financial institutions. The Company has not experienced any losses in such accounts.

Foreign currency transactions

Allied has international sales which are denominated in U.S. dollars, the functional currency for these transactions.

Accounts receivable and concentrations of credit risk

Accounts receivable are recorded at the invoiced amount. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for potential credit losses based on past experience and an analysis of current amounts due, and historically such losses have been within management's expectations. The Company maintains an allowance for doubtful accounts to reflect the uncollectibility of accounts receivable based on past collection history and specific risks ~~indentified~~identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company’s customers can be grouped into three main categories: medical equipment distributors, construction contractors and health care institutions. At June 30, ~~2020,~~2021, the Company believes that it has no significant concentration of credit risk.

Inventories

Inventories are stated at the lower of cost, determined using the last-in, first-out (“LIFO”) method, or market. If the first-in, first-out method (which approximates replacement cost) had been used in determining cost, inventories would have been ~~$2,408,878~~$2,149,560 and ~~$2,308,377~~$2,408,878 higher at June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Changes in the LIFO reserve are included in cost of sales. Cost of sales was reduced by $0, ~~$120,965,~~$0, and ~~$242,885~~$120,965 in fiscal 2021, 2020, ~~2019,~~ and ~~2018~~2019 respectively, as a result of LIFO liquidations. Costs in inventory include raw materials, direct labor and manufacturing overhead.

Property, plant and equipment

Property, plant and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, which range from 3 to 35 years. Expenditures for repairs, maintenance and renewals are charged to income as incurred. Expenditures, which improve an asset or extend its estimated useful life, are capitalized. When properties are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income.

Impairment of long-lived assets

The Company evaluates impairment of long-lived assets under the provisions of ASC Topic 360: “Property, Plant and Equipment.” ASC 360 provides a single accounting model for long-lived assets to be disposed of and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Under ASC 360, if the sum of the expected future cash flows (undiscounted and without interest charges) of the long-lived assets is less than the carrying amount of such assets, an impairment loss will be recognized. No impairment losses of long-lived assets or identifiable intangibles were recorded by the Company for fiscal years ended June 30, 2021, 2020, ~~2019,~~ and ~~2018.~~2019.

Collective Bargaining Agreement

At June 30, ~~2020,~~2021, the Company had approximately ~~218~~189 full-time employees. Approximately ~~139~~114 employees in the Company’s principal manufacturing facility located in St. Louis, Missouri, are covered by a collective bargaining agreement that will expire on ~~May~~July 31, ~~2021.~~2024.

Self-insurance

The Company maintains a self-insurance program for a portion of its health care costs. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and the estimated liability for claims incurred but not reported. As of June 30, ~~2020~~2021 and ~~2019,~~2020, the Company had ~~$150,000~~$120,000 and ~~$210,000~~$150,000, respectively, of accrued liabilities related to health care claims. In order to establish the self-insurance reserves, the Company utilized actuarial estimates of expected claims based on analyses of historical data.

Fair value of financial instruments

The Company’s financial instruments include cash, accounts receivable, the revolving line of credit and accounts payable. The carrying amounts for cash, accounts receivable, the revolving line of credit and accounts payable approximate their fair value due to the short maturity of these instruments.

Income taxes

The Company accounts for income taxes under ASC Topic 740: “Income Taxes.” Under ASC 740, the deferred tax provision is determined using the liability method, whereby deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and income tax bases of assets and liabilities using enacted tax rates that are expected to apply to taxable income when such assets and liabilities are anticipated to be settled or realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as tax expense or benefit in the period that includes the enactment date of the change. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In assessing the need for a valuation allowance the Company first considers the reversals of existing temporary deferred tax liabilities and available tax planning strategies. To the extent these items are not sufficient to cause the realization of deferred tax assets, the Company considers the availability of future taxable income to the extent such income is considered likely to occur based on the Company’s earnings history, current income trends and projections.

The Company recognizes tax liabilities when, despite the Company’s belief that its tax return positions are supportable, the Company believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. To the extent the Company deems it necessary to record a liability for its tax positions, the current portion of the liability is included in income taxes payable and the noncurrent portion is included in other liabilities on the balance sheet. If upon the final tax outcome of these matters the ultimate liability is different than the amounts recorded, such differences are reflected in income tax expense in the period in which such determination is made. The Company files a federal and multiple state income tax returns. With few exceptions, the Company’s federal and state income tax returns are open for fiscal years ending after June 30, ~~2017.~~2018.

The Company classifies interest expenses on taxes payable as interest expense. Penalties are classified as a component of other expenses.

Research and development costs

Research and development costs are expensed as incurred and are included in selling, general and administrative expenses. Research and development expenses for the years ended June 30, 2021, 2020 and 2019 were $571,535, $595,236, and ~~2018 were $595,236,~~ $459,455, ~~and $472,077,~~ respectively.

Earnings per share

Basic earnings per share are based on the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share are based on the sum of the weighted average number of shares of common stock and common stock equivalents outstanding during the year. The weighted average number of basic shares outstanding for the years ended June 30, 2021, 2020 and 2019 was 4,013,537 shares. The weighted average number of diluted shares outstanding for the years ended June 30, 2021, 2020 and 2019 was 4,026,446, 4,013,537 and ~~2018 was~~ 4,013,537 ~~shares.~~shares, respectively. The dilutive effect of the Company's employee and director stock option plans are determined by use of the treasury stock method. There are 20,250 potential common shares excluded from the calculation of net income per share, as their effect would be anti-dilutive for the year ended June 30, 2021. There are no potential common shares excluded from the calculation of net loss per share, as their effect would be anti-dilutive for the years ended June 30, 2020 ~~2019~~ and ~~2018 respectively.~~2019.

The following information is necessary to calculate earnings per share for the periods presented:

Year ended June 30, 2020 2019 2018
Net loss, as reported $ (3,014,100 ) $ (2,109,685 ) $ (2,192,170 )

Weighted average common shares outstanding 4,013,537 4,013,537 4,013,537
Effect of dilutive stock options - - -
Weighted average diluted common shares outstanding 4,013,537 4,013,537 4,013,537

Net loss per common share
Basic $ (0.75 ) $ (0.53 ) $ (0.55 )
Diluted $ (0.75 ) $ (0.53 ) $ (0.55 )

Employee stock options excluded from computation of diluted income per share amounts because their effect would be anti-dilutive - - -

Year ended June 30,	2021		2020			2019
Net income (loss), as reported	$	1,687,188	$	(3,014,100	)	$	(2,109,685	)

Weighted average common shares outstanding		4,013,537		4,013,537			4,013,537
Effect of dilutive stock options		12,909		-			-
Weighted average diluted common shares outstanding		4,026,446		4,013,537			4,013,537

Net Income (loss) per common share
Basic	$	0.42	$	(0.75	)	$	(0.53	)
Diluted	$	0.42	$	(0.75	)	$	(0.53	)

Employee stock options excluded from computation of diluted income per share amounts because their effect would be anti-dilutive		20,250		-			-

Employee stock-based compensation

The company follows the provisions of ASC Topic 718: “Compensation – Stock Compensation”, which sets accounting requirements for “share-based” compensation to employees, including employee stock purchase plans, and requires companies to recognize in the statement of operations the grant-date fair value of the stock options and other equity-based compensation.

The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model. The following table summarizes the weighted average assumptions utilized in the Black-Scholes option pricing model for options granted during the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018.~~2019.

	2020			2019			2018			2021			2020			2019
Weighted-average fair value	$	0.61		$	1.06		$	0.99		$	6.44		$	0.61		$	1.06
Weighted-average volatility		53	%		48	%		44	%		109	%		53	%		48	%
Weighted-average expected life (in years)		6.0			6.0			6.0			6.0			6.0			6.0
Weighted-average risk-free interest rate		1.77	%		3.03	%		2.11	%		0.52	%		1.77	%		3.03	%
Dividend yield		0	%		0	%		0	%		0	%		0	%		0	%

Expected volatility is based on the historical volatility of the Company’s common stock to estimate future volatility. The risk-free rates are taken from rates as published by the Federal Reserve and represent the yields on actively traded treasury securities for terms equal or approximately equal to the expected terms of the options. The expected term is calculated using the SEC Staff Accounting Bulletin 107 (ASC 718-10-S99) simplified method. Forfeitures are recognized as they occur. The dividend yield is zero based on the fact that the Company has no intention of paying dividends in the near term.

Share-based compensation expense included in the Statement of Operations for the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018~~2019 was approximately $14,000, $2,000 ~~$3,000~~ and $3,000, respectively. Unrecognized shared-based compensation cost related to unvested stock options as of June 30, ~~2020~~2021 amounts to approximately ~~$3,000.~~$9,000. The cost is expected to be recognized through fiscal 2025.

The Company recognized an income tax benefit for share-based compensation arrangements of approximately $6,000, $1,000 and $1,000 respectively for the years ended June 30, 2021, 2020 ~~2019~~ and ~~2018,~~2019, all of which were fully offset by an increase in the deferred tax asset valuation allowance.

No stock options were exercised during fiscal years 2021, 2020 ~~2019~~ and ~~2018.~~

~~Recent Accounting Pronouncements~~2019.

~~Adoption of new lease standard~~Leases

In February 2016, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ~~ASU~~Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The ~~new~~ standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard was effective for Allied on July 1, 2019. The Company adopted the new standard on its effective date and used the effective date as our date of initial application. Consequently, financial information recorded and the disclosures required under the new standard are not provided for dates and periods before July 1, 2019. Additionally, the Company determined that as of the effective date of the standard, it had no material impact on the financial statements or disclosures of the Company.

The new standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients which does not require us to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. Leasing activities are not significant to Allied’s business and there is no significant change in the Company’s leasing activities upon adoption. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases with terms of less than 12 months.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other specified instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance must be applied using a cumulative-effect transition method. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years (the fiscal year ending June 30, 2022 for the Company), with early adoption permitted. The Company is currently evaluating the impact that adopting this guidance may have on its financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update eliminate the need for an organization to analyze whether certain exceptions apply for tax purposes. It also simplifies GAAP for certain taxes. The amendments in these updates are effective for us for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We do not expect the adoption of this standard to have a material impact on our financial statements.

Environmental Remediation

The Company is subject to federal and state requirements for protection of the environment, including the remediation of contaminated sites. The Company’s policy is to accrue and charge to current expense identified exposures related to environmental remediation sites when it is probable that a liability has been incurred and the amount can be reasonably estimated. The amount of the liability is based on the best estimate or the low end of a range of reasonably possible exposure for investigation, cleanup, and monitoring costs to be incurred. Estimated remediation costs are not discounted to present value.

On January 30, 2020, the Company filed a Citizen Participation Plan with the New York Department of Environmental Conservation under its Brownfield Cleanup Program. The plan was filed with respect to the Company’s property in Stuyvesant Falls, New York. The plan recognizes that the soil and groundwater at the Stuyvesant Falls facility is impacted by chemical compounds exceeding regulatory standards. ~~The~~On October 13, 2020, the Company executed a Brownfield Cleanup Program Agreement with the Department of Environmental Conservation with respect to the property. Under the agreement, the Company has ~~applied~~voluntarily agreed to ~~the Brownfield Cleanup Program. Pursuant to the plan, the Company will~~ conduct, at its expense, ~~investigation~~certain remedial investigations and ~~remediation~~remedial actions with respect to suspected soil and groundwater contamination at the site with oversight by the ~~Department of Environmental Conservation.~~department.

The Company’s best estimate of the expected cost to remediate the site is $1.1 million. This amount was recorded as an expense in the fiscal year ~~2020 and $0.2 million is an expense in the three months~~ ended June 30, ~~2020. These amounts are~~2020 and is reflected in other accrued liabilities and selling, general and administrative expenses in the Company’s financial statements. As of June 30, ~~2020,~~2021, the Company has paid approximately ~~$82,000~~$142,000 in remediation expenses which have been charged to the initial reserve.

Risk and Uncertainties, Going Concern, Liquidity and Management’s Plan

A novel strain of coronavirus (“COVID-19”) was first identified in Wuhan, China in December 2019. On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in business slowdowns or shutdowns in affected areas. Despite our efforts to manage and remedy the effects of this pandemic, the significance depends on factors beyond our control, including the duration and severity of the outbreak as well as third-party actions taken to contain the spread and mitigate public health efforts. For the Company this creates additional economic uncertainty. Risks for the Company include disruption in operations if a significant percentage of our workforce is unable to work due to illness, forced curtailment of business operations and business travel by governmental authorities, and failure of others in our supply chain and distribution channel to meet their obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties.

Financing

North Mill Loan

The Company is party to a Loan and Security Agreement with North Mill Capital, LLC (“North Mill”), as successor in interest to Summit Financial Resources, L.P., dated effective February 27, 2017, as amended April 16, 2018, ~~and~~ April 24, 2019 and December 18, 2020 (as amended, the “Credit Agreement”). Pursuant to the Credit Agreement, the Company obtained a secured revolving credit facility (the “Credit Facility”). The Company’s obligations under the Credit Facility are secured by all of the Company’s personal property, both tangible and intangible, pursuant to the terms and subject to the conditions set forth in the Credit Agreement. Availability of funds under the Credit Agreement is based on the Company’s accounts receivable and inventory but will not exceed ~~$2,000,000.~~$4,000,000. At June 30, ~~2020~~2021 availability under the agreement was ~~$1,994,657.~~approximately $630,000.

The Credit Agreement also contains certain events of default including, without limitation: the failure to make payments when due; the material breach of representations or warranties contained in the Credit Agreement or other loan documents; cross-default with other indebtedness of the Company; the entry of judgments or fines that may have a material adverse effect on the Company; failure to comply with the observance or performance of covenants contained in the Credit Agreement or other loan documents; insolvency of the Company, appointment of a receiver, commencement of bankruptcy or other insolvency proceedings; dissolution of the Company; the attachment of any state or federal tax lien; attachment or levy upon or seizure of the Company’s property; or any change in the Company’s condition that may have a material adverse effect. After an event of default, and upon the continuation thereof, the principal amount of all loans made under the Credit Facility would bear interest at a rate per annum equal to 20.00% above the otherwise applicable interest rate (provided, that the interest rate may not exceed the highest rate permissible under law), and would have the option to accelerate maturity and payment of the Company’s obligations under the Credit Facility.

The Company was in compliance with all of the covenants associated with the Credit Facility at June 30, ~~2020.~~2021.

PPP Loan

On April 13, 2020, the Company entered into a Payroll Protection Program (PPP) loan agreement (the “SBA Loan”) with Jefferson Bank and Trust Company under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). The Company received total proceeds of $2.375 million from the SBA Loan. In accordance with the requirements of the CARES Act, the Company ~~will use~~used proceeds from the SBA Loan for payroll costs and other permitted uses. The SBA Loan iswas scheduled to mature on April 13, 2022 and has a 1.00% interest rate and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act.

~~All or a portion~~The loan, including all principal and accrued interest, was forgiven on June 11, 2021.

The company elected to account for the PPP Loan using FASB ASC 470, Debt. The related forgiveness income is included in other income for the year ended June 30, 2021.

According to the rules of the SBA, Loan may be forgiven by the SBA upon application by the Company upon documentation of expenditures in accordance with the SBA requirements. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during the eight week or at the Company’s election 24 week period beginning on the loan origination date, subject to regulations and guidance provided by the United States Treasury. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 40% of the forgiven amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. In the event the SBA Loan, or any portion thereof, is forgiven pursuant to the CARES Act, the amount forgiven is applied to outstanding principal. The Company intends to seek forgiveness of the SBA Loan to the maximum extent permitted but cannot guarantee whether or to what extent such forgiveness will be granted.

~~Payments of unforgiven principal and interest are deferred until November 2020, at which point~~ the Company is required to ~~repay~~retain PPP Loan documentation for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of the SBA, including representatives of its Office of Inspector General, to access such ~~amounts in 18 equal monthly payments. The~~files upon request. Should the SBA conduct such a review and reject all or some of the Company’s judgments pertaining to satisfying PPP Loan ~~is evidenced by a promissory note, which contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. The SBA Loan~~eligibility or forgiveness conditions, the Company may be ~~prepaid by~~required to adjust previously reported amounts and disclosures in the ~~Company at any time prior to maturity with no prepayment penalties.~~financial statements.

At June 30, ~~2020~~2021, the Company had ~~$2.4~~$2.1 million indebtedness, including lease obligations ~~short-term debt,~~ and ~~long term~~short-term debt. The prime rate as reported in the Wall Street Journal was 3.25% on June 30, ~~2020.~~2021.

~~Future maturities of debt are as follows:~~

Fiscal years ending

2021 $ 1,042,655
2022 1,332,204
Total $ 2,374,859

4.	Lease Commitments

The Company leases vehicles and equipment, generally for terms of three to five years.

As described in Note 2, “Summary of Significant Accounting Policies” the Company adopted ASC Topic 842, Leases (“ASC 842” or “Topic 842”), utilizing the modified retrospective adoption method with an effective date of July 1, 2019. The Company made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, as permitted by Topic 842, the Company recognizes the lease payments under its short-term leases in profit or loss on a straight-line basis over the lease term. The Company elected this accounting policy for all classes of underlying assets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company generally uses the rate implicit in the lease to discount lease payments to present value.

As of June 30, ~~2020,~~2021, the Company had vehicles and equipment financed under operating leases with lease terms expiring through 2024. Rent expense consists of monthly rental payments under the terms of the Company’s lease agreements recognized on a straight-line basis.

The following table sets forth the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s balance sheet as of June 30, ~~2020.~~2021.

	Maturity of		Maturity of
	Operating Lease		Operating Lease
Fiscal years ending	Liabilities		Liabilities
2021	$	6,065
2022	$	6,065	$	6,065
2023	$	6,065		6,065
2024	$	3,032		3,032


Total lease payments	$	21,227		15,162
Less: amounts representing interest	$	3,901		2,084
Present value of lease liabilities	$	17,326		13,078
Less: current portion	$	4,249		4,777
Long-term portion	$	13,077	$	8,301

The Company’s operating lease cost amounted to $59,432 in 2021 and $74,009 in 2020. Expenses are classified within selling, general and administrative expenses in the Company’s statement of operations for the year ended June 30, 2021 and 2020.

The table below presents lease-related terms and discount rates as of June 30, ~~2020.~~2021.

	June 30, ~~2020~~2021
Weighted average remaining lease terms
Operating leases		~~3.5~~2.5 years
Weighted average discount rate
Operating leases		12	%

5.	Income Taxes

The provision for (benefit from) income taxes consists of the following:

	2020			2019			2018			2021			2020			2019
Current:
Federal	$	84,420		$	-		$	-		$	-		$	84,420		$	-
State		23,093			10,676			9,938			8,805			23,093			10,676
Less net operating loss carryforward applied		(98,996	)		-			-			-			(98,996	)		-
Total current		8,517			10,676			9,938			8,805			8,517			10,676

Deferred:
Federal		(182,517	)		(451,591	)		424,038			(644,606	)		(182,517	)		(451,591	)
State		4,405			(65,877	)		91,789			(78,641	)		4,405			(65,877	)
Valuation Allowance		39,236			536,240			(352,727	)
Valuation allowance											786,926			39,236			536,240
Total deferred		(138,876	)		18,772			163,100			63,679			(138,876	)		18,772
Provision (benefit)	$	(130,359	)	$	29,448		$	173,038		$	72,484		$	(130,359	)	$	29,448

A reconciliation of income taxes, with the amounts computed at the statutory federal rate is as follows:

	2020			2019			2018			2021			2020			2019
Computed tax at federal statutory rate	$	(662,125	)	$	(436,850	)	$	(555,261	)	$	367,682		$	(662,125	)	$	(436,850	)
State income taxes, net of federal tax (benefit) provision		(17,475	)		(61,974	)		(54,471	)		(13,771	)		(17,475	)		(61,974	)
Non deductible expenses		506,798			7,699			9,775			1,570			506,798			7,699
Federal research credit		(31,076	)		(22,906	)		(16,880	)		(28,428	)		(31,076	)		(22,906	)
Net operating loss carryforward adjustment		-			-			131,244
Non taxable income from PPP Loan forgiveness											(504,470	)		-			-
State NOLs		30,397			6,772			(39,979	)		11,602			30,397			6,772
Stock Options - Expired		3,763			2,536			4,424			5,243			3,763			2,536
Changes resulting from the TCJA		-			-			1,080,362
Change in tax law allowing deductibilty of PPP Loan related expenses											(553,653	)		-			-
Other, net		123			(2,069	)		(33,449	)		(217	)		123			(2,069	)
Valuation Allowance		39,236			536,240			(352,727	)		786,926			39,236			536,240
Total	$	(130,359	)	$	29,448		$	173,038		$	72,484		$	(130,359	)	$	29,448

On December 22, 2017, President Trump signed into law tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”), which became effective on that date. The TCJA significantly revised U.S. tax law by lowering the U.S. federal statutory income tax rate from 35% to 21% effective January 1, 2018.

ASC Topic 740, requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted. Accordingly, in the second quarter of fiscal 2018, the Company recorded a one-time charge of $136,386 within its income tax provision in connection with the TCJA. The net expense of $136,386 relates to revaluation of the Company’s valuation allowance.

The deferred tax assets and deferred tax liabilities recorded on the balance sheet as of June 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

	2020			2019			2021			2020
Deferred tax assets
Bad debts	$	25,500		$	25,500		$	25,500		$	25,500
Intangible assets		1,340			1,935			745			1,340
Accrued liabilities		491,605			262,970			458,337			491,605
Stock options		25,276			28,568			23,403			25,276
Net operating loss and credit carryforwards		3,807,811			3,914,655			4,505,628			3,807,813
Total Assets		4,351,532			4,233,628			5,013,613			4,351,534

Deferred tax liabilities
Prepaid expenses		10,587			10,937			10,341			10,587
Inventory		614,184			652,251			529,045			614,184
Depreciation		194,920			233,142			209,997			194,920
Other		116,007			99,575			125,147			116,007
Total Liabilities		935,698			995,905			874,530			935,698
Valuation Allowance		(2,775,069	)		(2,735,832	)		(3,561,995	)		(2,775,069	)
Total deferred taxes	$	640,765		$	501,891		$	577,088		$	640,767

At June 30, ~~2020,~~2021, there were $13.2 million dollars of federal net operating loss carryforwards which will expire in 2031 through 2038 and ~~$1.5~~$3.8 million subject to indefinite carryforward. In addition, the Company has state tax net operating losses of approximately ~~$8.1~~$8.3 million that expire in varying years from ~~2020~~2021 through ~~2039.~~2041 and $0.7 million subject to indefinite carryforward.

The Company files a federal and multiple state income tax returns. With few exceptions the Company’s federal and state income tax returns are open for fiscal years ending after June 30, ~~2017.~~2018.

The Company has not taken any uncertain tax positions on its federal or state income tax filings for open tax years.

6.	Employee Retirement Benefits

The Company offers a retirement savings plan under Section 401(k) of the Internal Revenue Code to certain eligible salaried employees. Each employee may elect to enter a written salary deferral agreement under which a portion of such employee's pre-tax earnings may be contributed to the plan.

During the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018,~~2019, the Company made contributions of $186,366, $185,000, ~~$190,965,~~ and ~~$197,999,~~$190,965, respectively, to the retirement savings plan. The Company contributes 2% of eligible salaried employee’s annual income to the plan. In addition, the Company provides a 25% match on the first 8% of employee deferrals for eligible employees.

The risk of participating in multi-employer pension plan is different from single-employer plans. Assets contributed to a multi-employer plan by one employer may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

The Company’s participation in a multi-employer pension plan for the year ended June 30, ~~2020,~~2021, is outlined in the table below. The “EIN/PN” column provides the Employee Identification Number (EIN) and the three-digit plan number (PN). The most recent Pension Protection Act (PPA) zone status for ~~2019~~2020 and ~~2018~~2019 is for the plan year-ends as indicated below. The zone status is based on information that the Company obtained from the annual funding notice for District No. 9 International Association of Machinists and Aerospace Workers Pension Trust. Among other factors, plans in the red zone are less than 65 percent funded, plans in the yellow zone are between 65 and 80 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. In addition to regular plan contributions, the Company may be subject to a surcharge if the plan is in the red zone. The “Surcharge Imposed” column indicates whether a surcharge has been imposed on contributions to the plan. The last column lists the expiration date(s) of the collective-bargaining agreement (CBA) to which the plan is subject.

PPA Zone Status Contributions by the Company
FIP/RP
Status
Pending/ Surcharge Expiration
Pension Trust Fund EIN/PN 2019 2018 Implemented 2020 2019 2018 Imposed Date of CBA
District No. 9 51-0138317/001 Green Green
International 12/31/2019 12/31/2018 N/A $ 245,824 $ 236,256 $ 269,928 No 5/31/2021
Association of
Machinist and
Aerospace Workers
Pension Plan

PPA Zone Status

Contributions by the Company

FIP/RP

Status

Pending/

Surcharge

Expiration

Pension Trust Fund

EIN/PN

2020

2019

Implemented

2021

2020

2019

Imposed

Date of CBA

District No. 9

51-0138317/001

Yellow

Implemented

International

12/31/2020

12/31/2019

N/A

315,342

245,824

236,256

7/31/2024

Association of

Machinists and

Aerospace Workers

Pension Plan

The Company was not listed in the Form 5500 for the above plan as of the plan year ends as providing more than 5 percent of total contributions.

Under federal pension law, a plan generally is in “endangered” status if its funded percentage is less than 80% (other factors may apply).

If a pension plan enters endangered status, the trustees of the plan are required to adopt a funding improvement plan. Funding improvement plans establish benchmarks for pension plans to improve their funding status over a specified period of time.

The plan was first certified as being in endangered status in the 2019 Plan Year because the Plan was projected to have a funding deficiency in the 2023 Plan Year. The Plan continues to be in endangered status in the 2020 Plan Year because funding improvement plan contribution rate increases are required to eliminate the Plan’s projected deficiency.

In an effort to improve the Plan’s funding situation, the Board of Trustees adopted a funding improvement plan that includes increases in the contribution by employers and/or decreases in the benefit accrual rate for members.

As a result, Allied Healthcare Products, Inc. and District 9 of the International Association of Machinist were required to collectively bargain the required Contribution Rate Increase and the impact on the Future Benefit Accrual. On June 30, 2021 the two parties reached agreement on the Funding Improvement Plan. Under the plan, future benefit accruals are eliminated for members and the monthly employer contribution rate will increase by 80%. Additional contributions under the plan will begin on December 1, 2021.

Stock Based Compensation

The Company has established a 2009 Incentive Stock Plan. The Employee Plan provides for the granting of options to the Company's executive officers and key employees to purchase shares of common stock at prices equal to the fair market value of the stock on the date of grant. Options to purchase up to 300,000 shares of common stock may be granted under the Employee Plan. Options generally become exercisable ratably over a ~~four year~~four-year period or one-fourth of the shares covered thereby on each anniversary of the date of grant, commencing on the first or second anniversary of the date granted. The right to exercise the options generally expires in ten years from the date of grant, or earlier if an option holder ceases to be employed by the Company.

In addition, the Company has established a 2005 Directors Non-Qualified Stock Option Plan and a 2013 Incentive Plan for Non-Employee Directors (collectively the “Directors Plans”). The Directors Plans provide for the granting of options to the Company's directors who are not employees of the Company to purchase shares of common stock at prices equal to the fair market value of the stock on the date of grant. Options to purchase up to 75,000 shares of common stock may be granted under the Directors Plans. Options shall become exercisable with respect to one-fourth of the shares covered thereby on each anniversary of the date of grant, commencing on the second anniversary of the date granted, except for certain options which become exercisable with respect to all of the shares covered thereby one year after the grant date. The right to exercise the options expires in ten years from the date of grant, or earlier if an option holder ceases to be a director of the Company.

Upon stock-settled compensation exercises and awards, the Company issues new shares of common stock.

A summary of stock option transactions in fiscal ~~2018,~~ 2019, 2020 and ~~2020,~~2021, respectively, pursuant to the Employee Plans and the Directors Plans is as follows:

Weighted
Average
Weighted Remaining Aggregate
Average Contractual Intrinsic
Shares Exercise Price Term (years) Value
June 30, 2017 45,000 $ 6.67
Options Granted 3,000 $ 2.22
Options Exercised 0 $ 0.00
Options Forfeited or Expired (3,000 ) $ 13.46
June 30, 2018 45,000 $ 5.92 4.3 $ -

Options Granted 3,000 $ 2.13
Options Exercised 0 $ 0.00
Options Forfeited or Expired (3,000 ) $ 8.10
June 30, 2019 45,000 $ 5.52 4.0 $ -

Options Granted 7,500 $ 1.20
Options Exercised 0 $ 0.00
Options Forfeited or Expired (9,750 ) $ 6.00
June 30, 2020 42,750 $ 4.65 4.1 $ 304,768
Exercisable at June 30, 2020 35,250 $ 5.38 3.0 $ 225,443

						Weighted
						Average
				Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Shares			Exercise Price		Term (years)		Value
June 30, 2018		45,000		$	5.92
Options Granted		3,000		$	2.13
Options Exercised		-		$	0.00
Options Forfeited or Expired		(3,000	)	$	8.10
June 30, 2019		45,000		$	5.52		4.0	$	-

Options Granted		7,500		$	1.20
Options Exercised		-		$	0.00
Options Forfeited or Expired		(9,750	)	$	6.00
June 30, 2020		42,750		$	4.65		4.1	$	304,768

Options Granted		3,000		$	7.86
Options Exercised		-		$	0.00
Options Forfeited or Expired		(2,250	)	$	8.68
June 30, 2021		43,500		$	4.66		3.8	$	41,915
Exercisable at June 30, 2021		35,500		$	4.88		2.6	$	27,165

The following table provides additional information for options outstanding and exercisable at June 30, ~~2020:~~2021:

~~Options Outstanding~~

Options Outstanding

Range of Exercise Prices Number Weighted Average
Remaining Life Weighted Average
Exercise Price
$1.17 - 6.99 23,250 6.7 years $ 2.51
$7.00 15,000 1.2 years $ 7.00
$7.01 -10.08 4,500 0.9 years $ 7.89

$1.17 - 10.08 42,750 4.1 years $ 4.65

Range of Exercise Prices		Number		Weighted Average Remaining Life	Weighted Average Exercise Price
	$1.17 - 6.99		23,250	5.7 years	$	2.51
	$7.00		15,000	0.2 years	$	7.00
	$7.01 -8.68		5,250	5.5 years	$	7.53

	$1.17 - 8.68		43,500	3.8 years	$	4.66

~~Options Exercisable~~

Options Exercisable

Range of Exercise Prices Number Weighted Average Exercise Price
$1.17 - 6.99 15,750 $ 3.13
$7.00 15,000 $ 7.00
$7.01 -10.08 4,500 $ 7.89

$1.17 - 10.08 35,250 $ 5.38

Range of Exercise Prices		Number		Weighted Average Exercise Price
	$1.17 - 6.99		18,250	$	2.86
	$7.00		15,000	$	7.00
	$7.01 -8.68		2,250	$	7.10

	$1.17 - 8.68		35,500	$	4.88

See Note 2 for discussion of accounting for stock awards and related fair value disclosures.

8. Supplemental Balance Sheet Information

June 30,
2020 2019
Inventories
Work in progress $ 817,692 $ 288,828
Component parts 8,299,972 7,151,228
Finished goods 1,660,158 1,693,974
Reserve for obsolete and excess inventory (1,849,134 ) (1,800,935 )
$ 8,928,688 $ 7,333,095

Estimated
Useful Life
(years)
Property, plant and equipment
Machinery and equipment 3-10 $ 18,831,765 $ 18,073,352
Buildings 28-35 13,055,628 13,055,628
Land and land improvements 5-7 919,566 919,566
Total property, plant and equipment at cost 32,806,959 32,048,546

Less accumulated depreciation and amortization (28,667,266 ) (28,047,465 )
$ 4,139,693 $ 4,001,081

~~Depreciation and amortization expense was approximately $0.6 million, $0.8 million, and $.09 million for~~

~~the fiscal years ended June 30, 2020, 2019 and 2018, respectively.~~

Other accrued liabilities
Accrued compensation expense $ 1,257,332 $ 1,149,210
Environmental remediation 514,000 -
Other 334,799 382,197
$ 2,106,131 $ 1,531,407

~~Depreciation and amortization expense was approximately $0.6 million, $0.8 million, and $.09 million for~~
~~the fiscal years ended June 30, 2020, 2019 and 2018, respectively.~~

		June 30,
		2021			2020
Inventories
Work in progress		$	829,962		$	817,692
Component parts			8,994,457			8,299,972
Finished goods			1,800,461			1,660,158
Reserve for obsolete and excess inventory			(2,174,149	)		(1,849,134	)
		$	9,450,731		$	8,928,688

	Estimated
	Useful Life
	(years)
Property, plant and equipment
Machinery and equipment	3-10	$	18,998,928		$	18,831,765
Buildings	28-35		13,055,628			13,055,628
Land and land improvements	5-7		919,566			919,566
Total property, plant and equipment at cost			32,974,122			32,806,959

Less accumulated depreciation and amortization			(29,246,738	)		(28,667,266	)
		$	3,727,384		$	4,139,693

Depreciation and amortization expense was approximately $0.6 million, $0.6 million, and $0.8 million for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

Other accrued liabilities
Accrued compensation expense		$	1,323,901		$	1,257,332
Environmental remediation			976,720			514,000
Other			256,514			334,799
		$	2,557,135		$	2,106,131

9. Commitments and Contingencies

Legal Claims

The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. The Company intends to continue to conduct business in such a manner as to avert any FDA action seeking to interrupt or suspend manufacturing or require any recall or modification of products.

The Company has recognized the costs and associated liabilities only for those investigations, claims and legal proceedings for which, in its view, it is probable that liabilities have been incurred and the related amounts are estimable. Based upon information currently available, management believes that existing accrued liabilities are sufficient.

The Company’s best estimate of the expected cost to remediate the site is $1.1 million. This amount was recorded as an expense ~~during~~in the fiscal year ended June 30, 2020 and is reflected in other accrued liabilities and selling, general and administrative expenses in the Company’s financial statements. As of June 30, ~~2020,~~2021, the Company has paid approximately ~~$82,000~~$142,000 in remediation expenses which have been charged to the initial reserve.

~~Liability for future environmental expenditures~~

2020 2019
Beginning Balance $ - $ -
Charges to income 1,119,155 -
Remedial and investigatory spending 82,155 -
Ending Balance $ 1,037,000 $ -

Reflected in the Balance sheet as:
Current, included in Other Liabilities $ 514,000 $ -
Long-term environmental 523,000 -
Total $ 1,037,000 $ -

Liability for future environmental expenditures	2021		2020
Beginning Balance	$	1,037,000	$	-

Charges to income		-		1,119,155

Remedial and investigatory spending		60,280		82,155

Ending Balance	$	976,720	$	1,037,000



Reflected in the Balance sheet as:

Current, included in Other Liabilities	$	976,720	$	514,000
		��
Long-term environmental		-		523,000

Total	$	976,720	$	1,037,000

Stuyvesant Falls Power Litigation. The Company has been involved in litigation with Niagara Mohawk Power Corporation d/b/a National Grid (“Niagara”), which provides electrical power to the Company’s facility in Stuyvesant Falls, New York, and one other party. The Company maintained in its defense of the lawsuit that it is entitled to a certain amount of free electricity based on covenants running with the land which have been honored for more than a century. After the commencement of the litigation, Niagara began sending invoices to the Company for electricity used at the Company’s Stuyvesant Falls plant. Niagara’s attempts to collect such invoices were stopped in December 2010 by a temporary restraining order. Among other things, Niagara sought as damages the value of electricity received by the Company without charge. The total value of electricity at issue in the litigation was not known with certainty and Niagara alleged different amounts of damages. Niagara alleged in its Second Amended Verified Complaint, dated February 6, 2012, damages of approximately $469,000 in free electricity from May 2003 through May 2010. Niagara also alleged in its Motion For Summary Judgment, filed on March 14, 2014, damages of approximately $492,000 in free electricity from May 2010 through the date of the filing. In April 2015, Allied received an invoice for electrical power at the Stuyvesant Falls plant with an “Amount Due” balance of $696,000 as of March 31, 2015 without any description as to the period of time covered by the invoice.

The Company filed a Motion for Summary Judgment on March 14, 2014, seeking dismissal of Niagara’s claims and oral arguments on the motions were held on June 13, 2014. On October 1, 2014, the Court granted the Company’s motion, denied Niagara’s motion and ruled that the Company is entitled to receive electrical power pursuant to the power covenants. On October 26 and October 30, 2014, Niagara and the other party filed separate notices of appeal of the Court’s decision. On March 31, 2016 the Supreme Court of New York, Appellate Division, Third Department reversed the trial court decision and held that the free power covenants are no longer enforceable. The Company’s application for leave to appeal this ruling was dismissed as premature by the New York Court of Appeals on September 20, 2016. On May 26, 2017 the Company again moved for leave to appeal the March 31, 2016 decision. That motion was granted on October 7, 2017 by the New York State Court of Appeals. The Company filed its brief and record on January 26, 2018. Niagara and the other party to the lawsuit, Albany Engineering Corporation, filed their responses on July 16, 2018 and the Company filed its reply on August 14, 2018.

On February 20, 2019, the Company, Niagara and Albany entered into a Final Settlement Agreement pursuant to which the Company agreed, among other things, to cancel and forgo its rights to free power from either Niagara or Albany under the power covenants. The New York State Court of Appeals granted a request of all parties to withdraw the appeal on March 5, 2019 and all parties entered a Stipulation of Discontinuance on March 7, 2019 which discontinued the litigation. By separate agreement, Niagara paid the Company $750,000 as consideration for the Company’s agreements pursuant to the settlement. On March 15, 2019 the Appellate Division of the Supreme Court of New York granted Niagara’s request to withdraw its pending appeal. The matter is now fully concluded.

Employment Contract

~~In March 2007,~~On April 20, 2021, the Company entered into ~~a three year~~an employment contract with its chief executive ~~officer. The contract is subject to automatic annual renewals after the~~officer, Joseph F. Ondrus, Jr., which provides for an initial term ~~unless notification is given. The contract was amended and restated in December 2009 without extending its term.~~of three years with annual renewals. The contract includes termination without cause and change of control provisions, under which the chief executive officer is entitled to ~~receive specified severance~~continued payments ~~generally equal to two times ending~~of annual salary and benefits if the Company terminates his employment without cause or he voluntarily terminates his employment with “good reason.” “Good Reason” generally includes changes in the scope of his duties or location of employment but also includes (i) the Company’s written election not to renew the Employment Agreement and (ii) certain voluntary resignations by the chief executive officer following a “Change of Control” as defined in the Agreement.

10. Segment Information

The Company operates in one segment consisting of the manufacturing, marketing and distribution of a variety of respiratory products used in the health care industry to hospitals, hospital equipment dealers, hospital construction contractors, home health care dealers and emergency medical product dealers. The Company’s product lines include respiratory care products, medical gas equipment and emergency medical products. The Company does not have any one single customer that represents more than 10 percent of total sales. Disaggregation information of sales by region, and by product, are as follows:

Sales by Region

	2020		2019		2018		2021		2020		2019
Domestic United States	$	23,138,276	$	23,541,614	$	25,711,912	$	24,162,321	$	23,138,276	$	23,541,614
Europe		1,422,660		877,308		1,428,245		4,069,672		1,422,660		877,308
Canada		829,901		758,145		795,357		1,310,440		829,901		758,145
Latin America		3,122,929		2,450,969		1,855,013		2,819,165		3,122,929		2,450,969
Middle East		693,716		464,470		857,066		1,189,139		693,716		464,470
Far East		2,686,206		3,259,905		3,107,339		2,727,508		2,686,206		3,259,905
Other International		574		29,110		5,021		1,231		574		29,110
	$	31,894,262	$	31,381,521	$	33,759,953	$	36,279,476	$	31,894,262	$	31,381,521

Sales by Product

	2020		2019		2018		2021		2020		2019
Respiratory care products	$	8,555,954	$	8,993,216	$	9,037,704	$	8,082,974	$	8,555,954	$	8,993,216
Medical gas equipment		15,282,732		16,031,109		17,645,413		15,943,246		15,282,732		16,031,109
Emergency medical products		8,055,576		6,357,196		7,076,836		12,253,256		8,055,576		6,357,196
	$	31,894,262	$	31,381,521	$	33,759,953	$	36,279,476	$	31,894,262	$	31,381,521

11. Quarterly Financial Data (unaudited)

Summarized quarterly financial data for fiscal 2021 and 2020 ~~and 2019~~

appears below (all amounts in thousands except per share amounts):

	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,
Three months ended,	2020			2020			2019			2019			2019			2019			2018			2018			2021			2021			2020		2020			2020			2020			2019			2019
Net sales	$	8,511		$	8,097		$	7,310		$	7,976		$	7,690		$	8,316		$	8,107		$	7,269		$	7,018		$	7,967		$	11,104	$	10,190		$	8,511		$	8,097		$	7,310		$	7,976

Gross profit		1,378			1,586			1,347			1,260			1,405			1,550			1,205			879			1,188			1,435			2,612		1,874			1,378			1,586			1,347			1,260

Loss from operations		(638	)		(305	)		(1,512	)		(607	)		(433	)		(353	)		(762	)		(1,226	)
Income (loss) from operations																										(745	)		(381	)		734		(135	)		(638	)		(305	)		(1,512	)		(607	)

Net income (loss)		(539	)		(330	)		(1,531	)		(614	)		(474	)		378			(779	)		(1,235	)		1,553			(413	)		700		(153	)		(539	)		(330	)		(1,531	)		(614	)

Basic earnings (loss) per share		(0.14	)		(0.08	)		(0.38	)		(0.15	)		(0.12	)		0.09			(0.19	)		(0.31	)		0.39			(0.10	)		0.17		(0.04	)		(0.14	)		(0.08	)		(0.38	)		(0.15	)

Diluted earnings (loss) per share		(0.14	)		(0.08	)		(0.38	)		(0.15	)		(0.12	)		0.09			(0.19	)		(0.31	)		0.39			(0.10	)		0.17		(0.04	)		(0.14	)		(0.08	)		(0.38	)		(0.15	)

Earnings per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly amounts will not necessarily equal the total for the year.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(a)

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time period specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In connection with our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020,~~2021, as required under Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the date of such evaluation to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

(b)

Internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, which is defined as a process designed by, or under supervision of, our principal executive and ~~principle~~principal financial officer and effected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However these inherent limitations are known features of the financial reporting process. It is possible to design into the process safeguards to reduce, though not eliminate, the risk that misstatements are not prevented or detected on a timely basis.

Management assessed the effectiveness of our internal control over financial reporting as of June 30, ~~2020.~~2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, our management concluded that, as of June 30, ~~2020,~~2021, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation and presentation of financial statements for external purposes in accordance with generally accepted accounting principles.

There were no changes to the Company’s internal controls over financial reporting during the fourth quarter that have materially affected, or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

A list of our executive officers and biographical information appears under the caption “Information About our Executive Officers,” in Part I of this report. A definitive proxy statement is expected to be filed with the Securities and Exchange Commission within 120 days after June 30, ~~2020.~~2021. The information required by this item is set forth under the caption “Election of Directors”, under the caption “Executive Officers”, and under the caption Section 16(a) Beneficial Ownership Reporting Compliance in the definitive proxy statement, which information is incorporated herein by reference thereto.

Item 11. Executive Compensation

The information required by this item is set forth under the caption "Executive Compensation" in the definitive proxy statement, which information is incorporated herein by reference thereto.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in the definitive proxy statement, which information is incorporated herein by reference thereto.

Item 13. Certain Relationships and Related Transactions, and Director Independence

None

Item 14. Principal Accounting Fees and Services

The information required by this item will appear in the section entitled “Audit Fees” included in the definitive proxy statement relating to the ~~2020~~2021 Annual Meeting of stockholders and such information is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

1. Financial Statements

The following financial statements of the Company are included in response to Item 8:

Statement of Operations for the years ended June 30, 2021, 2020, ~~2019,~~ and ~~2018~~2019

Balance Sheet at June 30, ~~2020~~2021 and ~~2019~~2020

Statement of Changes in Stockholders’ Equity for the years ended June 30, 2021, 2020 ~~2019~~ and ~~2018~~2019

Statement of Cash Flows for the years ended June 30, 2021, 2020 ~~2019~~ and ~~2018~~2019

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

2. Financial Statement Schedule

Financial statement schedules which are not required under applicable regulations or related instructions and notes thereto or which are inapplicable have been omitted.

3. Exhibits

The exhibits listed on the accompanying Index to Exhibits are filed as part of this Report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ALLIED HEALTHCARE PRODUCTS, INC.
	By:

	/s/ ~~Earl R. Refsland~~Joseph F. Ondrus
	~~Earl R. Refsland~~Joseph F. Ondrus
	President and Chief Executive Officer

	/s/ Daniel C. Dunn
	Daniel C. Dunn
	Vice President, Chief Financial Officer, and Secretary

Dated: September 28, ~~2020~~2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on September 28th, ~~2020.~~2021.

Signatures		Title

*		Chairman of the Board
John D. Weil

*		President, Chief Executive Officer and Director (Principal Executive Officer)
~~Earl R. Refsland~~
Joseph F. Ondrus

*
Joseph Root		Director

*
Judy Graves		Director

*
Susan Deuser		Director

* By:	/s/ ~~Earl R. Refsland~~Joseph F. Ondrus
	~~Earl R. Refsland~~Joseph F. Ondrus
	Attorney-in-Fact

* Such signature has been affixed pursuant to Power of Attorney.

INDEX TO EXHIBITS

Exhibit
No.		Description

3.1		Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3(1) to the Company’s Registration Statement on Form S-1, as amended, Registration No. 33-40128, filed with the Commission on May 8, 1991 (the “Registration Statement”) and incorporated herein by reference)

3.1.1		Certificate of Amendment to Amended and Restated Certificate of Incorporation (filed as Exhibit 99.1 to Current Report on Form 8-K filed December 6, 2016 with event date of December 5, 2016 and incorporated by reference)

3.2		By-Laws of the Registrant (filed as Exhibit 3(2) to the Registration Statement and incorporated herein by reference)

4		Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10.1		NCG Trademark License Agreement, dated April 16, 1982, between Liquid Air Corporation and Allied Healthcare Products, Inc. (filed as Exhibit 10(24) to the Registration Statement and incorporated herein by reference)

10.2		Employee Stock Purchase Plan (filed as Exhibit 10(3) to the Company’s Annual Report on Form 10-K for the year ended June 30, 1998 and incorporated by reference)

10.3		Form of Indemnification Agreement with officers and directors (filed as Exhibit 10.22 to the 2001 Form 10-K and incorporated herein by reference).

10.4		~~Amended and restated~~ Employment Agreement, ~~dated December 21, 2009~~ by and between ~~Allied Healthcare Products, Inc.~~the Company and ~~Earl Refsland~~Joseph F. Ondrus, Jr., dated April 20, 2021 (filed as Exhibit ~~10.1~~99.1 to ~~the Company’s Quarterly~~Current Report on Form ~~10-Q for the quarterly period ended March 31, 2010 and incorporated by reference)~~8-K filed April 21, 2021).

10.4.1		Change of Control Agreement dated March 16, 2007 by and between Allied Healthcare Products, Inc. and certain executive officers (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007 and incorporated by reference)

10.5		Allied Healthcare Products, Inc. 2009 Incentive Stock Plan (filed as Appendix A to the Company’s 2009 Proxy Statement on Schedule 14A)

10.6		Loan and Security Agreement dated February 27, 2017 by and between the Company and North Mill Capital, LLC, as successor in interest to Summit Financial Resources, L.P. (filed as Exhibit 99.1 to Current Report on Form 8-K filed March 1, 2017 with event date of February 27, 2017 and incorporated by reference)

10.6.1		First Amendment to Loan and Security Agreement, dated April 16, 2018 (filed as Exhibit 99.1 to Current Report on Form 8-K filed April 20, 2018 with event date of April 16, 2018)

10.6.2		Second Amendment to Loan and Security Agreement, dated April 24, 2019 (filed as Exhibit 99.1 to Current Report on Form 8-K filed on April 25, 2019 with event date of April 24, 2019)
10.6.3		Third Amendment to Loan and Security Agreement, dated December 18, 2020 (filed as Exhibit 99.1 to Current Report on Form 8-K filed on December 22, 2020 with event date of December 18, 2020)
10.7		Patent License Agreement, dated June 8, 2012, by and between Allied Healthcare Products, Inc. and Armstrong Medical Limited (filed as Exhibit 10.12 to the Company’s annual report on for the fiscal year ended June 30, 2012 on Form 10-K and incorporated by reference).

~~10.8~~		Promissory Note, dated April 22, 2020, issued by the Company to Jefferson Bank and Trust Company in the original principal amount of $2.375 million under the terms of the Paycheck Protection Program administered by the Small Business Administration and the United States Treasury.
	47

*Notwithstanding any incorporation of this Annual Report on Form 10-K in any other filing by the Registrant, Exhibits furnished herewith and designated with an asterisk (*) shall not be deemed incorporated by reference to any other filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 unless specifically otherwise set forth therein.

DELAWARE	25-1370721
(State or other jurisdiction of	(I.R.S. employer identification no.)
Incorporation or organization)

1720 Sublette Avenue
St. Louis, Missouri	63110
(Address of principal executive offices)	(zip code)

		Name of each exchange
Title of each class	Trading Symbol	on which registered
Common Stock, $.01	AHPI	The NASDAQ Capital Market LLC

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer x	Smaller reporting company x
	Emerging growth company ¨

		Page

Part I
Item 1.	Business	1
Item 1A.	Risk Factors	87
Item 1B.	Unresolved Staff Comments	12
Item 2.	Properties	12
Item 3.	Legal Proceedings	1312
Item 4.	Mine Safety Disclosures	1312

Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13
Item 6.	Selected Financial Data	1413
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1514
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	2523
Item 8.	Financial Statements and Supplementary Data	2523
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	4743
Item 9A.	Controls and Procedures	4744
Item 9B.	Other Information	4744

Part III
Item 10.	Directors, Executive Officers and Corporate Governance	4744
Item 11.	Executive Compensation	4844
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4844
Item 13.	Certain Relationships and Related Transactions, and Director Independence	4845
Item 14.	Principal Accounting Fees and Services	4845

Part IV
Item 15.	Exhibits and Financial Statement Schedules	4845

~~Product~~	~~Description~~	~~Principal~~ ~~Brand Names~~	~~Primary Users~~
~~Respiratory Care Products~~
~~Respiratory Care/Anesthesia Products~~	~~Large volume compressors; ventilator calibrators; humidifiers and mist tents; and carbon dioxide absorbent~~	~~Timeter®; Carbolime®;~~ ~~Litholyme®~~	~~Hospitals and sub-acute facilities~~

~~Home Respiratory Care Products~~	~~O2 cylinders; pressure regulators; nebulizers; portable large volume compressors; portable suction equipment and disposable respiratory products~~	~~Timeter®;~~ ~~B&F®;~~ ~~Schuco®~~	~~Patients at home~~

~~Medical Gas Equipment~~
~~Construction Products~~	~~In-wall medical gas system components; central station pumps and compressors and headwalls~~	~~Chemetron®; Oxequip®~~	~~Hospitals and sub-acute facilities~~

~~Regulation Devices~~	~~Flowmeters; vacuum regulators; pressure regulators and related products~~	~~Chemetron®; Oxequip®; Timeter®~~	~~Hospitals and sub-acute facilities~~

~~Disposable Cylinders~~	~~Disposable oxygen and gas cylinders~~	~~Lif-O-Gen®~~	~~First aid providers and specialty gas distributors~~

~~Suction Equipment~~	~~Portable suction equipment and disposable suction canisters~~	~~Gomco®;~~ ~~Allied;~~ ~~Schuco~~	~~Hospitals, sub-acute facilities and homecare products~~

~~Emergency Medical Products~~
~~Respiratory/Resuscitation~~	Demand resuscitation valves; bag mask resuscitators; emergency transport ventilators, oxygen regulators, SurgeX - surge suppressing post valve, mass casualty ventilation line, and the AHP300 Ventilator	~~LSP; Omni-Tech®; Allied~~	~~Emergency service providers~~

~~Trauma and Patient Handling Products~~	~~Spine immobilization products; pneumatic anti-shock garments, trauma burn kits and Xtra backboards~~	~~LSP~~	~~Emergency service providers~~

Product	Description	Principal Brand Names	Primary Users
*Respiratory Care Products*
Respiratory Care/Anesthesia Products	Large volume compressors; ventilator calibrators; humidifiers and mist tents; and carbon dioxide absorbent	Timeter®; Carbolime®; Litholyme®	Hospitals and sub-acute facilities

Home Respiratory Care Products	O2 cylinders; pressure regulators; nebulizers; portable large volume compressors; portable suction equipment and disposable respiratory products	Timeter®; B&F®; Schuco®	Patients at home

*Medical Gas Equipment*
Construction Products	In-wall medical gas system components; central station pumps and compressors and headwalls	Chemetron®; Oxequip®	Hospitals and sub-acute facilities

Regulation Devices	Flowmeters; vacuum regulators; pressure regulators and related products	Chemetron®; Oxequip®; Timeter®	Hospitals and sub-acute facilities

Disposable Cylinders	Disposable oxygen and gas cylinders	Lif-O-Gen®	First aid providers and specialty gas distributors

Suction Equipment	Portable suction equipment and disposable suction canisters	Gomco®; Allied; Schuco	Hospitals, sub-acute facilities and homecare products

*Emergency Medical Products*
Respiratory/Resuscitation	Demand resuscitation valves; bag mask resuscitators; emergency transport ventilators, oxygen regulators, SurgeX - surge suppressing post valve, mass casualty ventilation line, and the AHP300 Ventilator	LSP; Omni-Tech®; Allied	Emergency service providers

Trauma and Patient Handling Products	Spine immobilization products; pneumatic anti-shock garments, trauma burn kits and Xtra backboards	LSP	Emergency service providers

Name	Age	Position
~~Earl R. Refsland~~Joseph F. Ondrus	7764	Director, President and Chief Executive Officer (1)
~~Andrew D. Riley~~Earl R. Refsland	4378	~~Vice~~Director, President ~~of Operations~~and Chief Executive Officer (2)
Daniel C. Dunn	6061	Vice President of Finance, Chief Financial Officer, Secretary & Treasurer (3)

Location	Square Footage (Approximate)		Owned/ Leased	Activities/Products
St. Louis,, Missouri		242,000	Owned	Headquarters; medical gas equipment; respiratory care products; emergency medical products

Stuyvesant Falls,, New York		30,000	Owned	Carbon dioxide absorbent

2020	High		Low		2019	High		Low
2021										High		Low		2020	High		Low
September quarter	$	1.88	$	1.25	September quarter	$	3.05	$	2.03	$	13.27	$	4.66	September quarter	$	1.88	$	1.25
December quarter	$	1.45	$	0.92	December quarter	$	2.80	$	1.62	$	8.13	$	4.20	December quarter	$	1.45	$	0.92
March quarter	$	45.00	$	1.19	March quarter	$	2.17	$	1.69	$	9.00	$	4.07	March quarter	$	45.00	$	1.19
June quarter	$	20.95	$	7.60	June quarter	$	2.08	$	1.43	$	5.30	$	3.45	June quarter	$	20.95	$	7.60

(In thousands, except per share data)
Year ended June 30,	2020			2019			2018			2017			2016			2021			2020			2019			2018			2017
Statement of Operations Data
Net sales	$	31,894		$	31,382		$	33,760		$	33,512		$	35,952		$	36,279		$	31,894		$	31,382		$	33,760		$	33,512
Cost of sales		26,323			26,343			27,309			26,956			28,593			29,170			26,323			26,343			27,309			26,956
Gross profit		5,571			5,039			6,451			6,556			7,359			7,109			5,571			5,039			6,451			6,556
Selling, general and administrative expenses		8,633			7,813			8,446			8,608			9,279			7,636			8,633			7,813			8,446			8,608
Loss from operations		(3,062	)		(2,774	)		(1,995	)		(2,052	)		(1,920	)		(527	)		(3,062	)		(2,774	)		(1,995	)		(2,052	)
Interest expense		65			56			24			-			-			116			65			56			24			-
Interest income		(1	)		-			-			(1	)		(3	)		-			(1	)		-			-			(1	)
Legal settlement		-			(750	)		-			-			-			-			-			(750	)		-			-
Other, net		18			-			-			1			87			(2,402	)		18			-			-			1
Loss before provision for
(benefit from) income taxes		(3,144	)		(2,080	)		(2,019	)		(2,052	)		(2,004	)
Income (loss) before provision for (benefit from) income taxes																	1,759			(3,144	)		(2,080	)		(2,019	)		(2,052	)
Provision for (benefit from) income taxes		(130	)		29			173			37			301			72			(130	)		29			173			37
Net loss	$	(3,014	)	$	(2,109	)	$	(2,192	)	$	(2,089	)	$	(2,305	)
Basic loss per share	$	(0.75	)	$	(0.53	)	$	(0.55	)	$	(0.52	)	$	(0.57	)
Diluted loss per share	$	(0.75	)	$	(0.53	)	$	(0.55	)	$	(0.52	)	$	(0.57	)
Net income (loss)																$	1,687		$	(3,014	)	$	(2,109	)	$	(2,192	)	$	(2,089	)
Basic income (loss) per share																$	0.42		$	(0.75	)	$	(0.53	)	$	(0.55	)	$	(0.52	)
Diluted income (loss) per share																$	0.42		$	(0.75	)	$	(0.53	)	$	(0.55	)	$	(0.52	)
Basic weighted average common shares outstanding		4,014			4,014			4,014			4,014			4,014			4,014			4,014			4,014			4,014			4,014
Diluted weighted average common shares outstanding		4,014			4,014			4,014			4,014			4,014			4,026			4,014			4,014			4,014			4,014

(In thousands)
June 30,		2020			2019			2018			2017			2016
Balance Sheet Data
Working capital	$	5,949		$	7,387		$	8,653		$	9,748		$	10,736
Total assets		19,672			15,454			17,321			19,637			22,478
Stockholders' equity		8,879			11,890			13,997			16,186			18,272

	Dollars in thousands
Year ended June 30,	2020
	Net		% of Total
	Sales		Net Sales
Respiratory care products	$	8,556		26.8	%
Medical gas equipment		15,283		47.9	%
Emergency medical products		8,055		25.3	%
Total	$	31,894		100.0	%

	Payments due by period										Payments due by period
			Less than		1-3		3-5		More than					Less than		1-3		3-5		More than
Contractual Obligations	Total		1 year		years		years		5 years			Total		1 year		years		years		5 years
Long-Term Debt	$	2,374,859	$	1,042,655	$	1,332,204		-		-	$	2,077,440	$	2,077,440	$	-		-		-
Capital Lease Obligations		-		-		-		-		-		-		-		-		-		-
Operating Leases	$	71,535	$	56,373	$	12,130	$	3,032		-	$	57,331	$	50,348	$	4,655	$	2,328		-
Unconditional Purchase Obligations		-		-		-		-		-		-		-		\		-		-
Other Long-Term Obligations		-		-		-		-		-		-		-		-		-		-
Total Contractual Cash Obligations	$	2,446,394	$	1,099,028	$	1,344,334	$	3,032	$	-	$	2,134,771	$	2,127,788	$	4,655	$	2,328	$	-

			Additional
	Common		Paid-in		Accumulated			Treasury
	Stock		Capital		Deficit			Stock			Total
Balance, June 30, 2018	$	52,139	$	48,488,220	$	(13,562,631	)	$	(20,980,788	)	$	13,996,940

Stock based compensation		-		3,097		-			-			3,097

Net loss for the year ended											��
June 30, 2019		-		-		(2,109,685	)		-			(2,109,685	)
Balance, June 30, 2019		52,139		48,491,317		(15,672,316	)		(20,980,788	)		11,890,352

Stock based compensation		-		2,415		-			-			2,415

Net loss for the year ended
June 30, 2020		-		-		(3,014,100	)		-			(3,014,100	)
Balance, June 30, 2020		52,139		48,493,732		(18,686,416	)		(20,980,788	)		8,878,667

Stock based compensation		-		14,006		-			-			14,006

Net income for the year ended
June 30, 2021		-		-		1,687,188			-			1,687,188
Balance, June 30, 2021	$	52,139	$	48,507,738	$	(16,999,228	)	$	(20,980,788	)	$	10,579,861

Range of Exercise Prices		Number		Weighted Average Exercise Price
	$1.17 - 6.99		15,750	$	3.13
	$7.00		15,000	$	7.00
	$7.01 -10.08		4,500	$	7.89

	$1.17 - 10.08		35,250	$	5.38

23.1		Consent of RubinBrown LLP (filed herewith)

24		Form of Power of Attorney – (filed herewith)

31.1		Certification of Chief Executive Officer (filed herewith)

31.2		Certification of Chief Financial Officer (filed herewith)

32.1		Sarbanes-Oxley Certification of Chief Executive Officer (provided herewith)*

32.2		Sarbanes-Oxley Certification of Chief Financial Officer (provided herewith)*

101		Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020,~~2021, is formatted in XBRL interactive data files: (i) Statement of Operations for the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018;~~2019; (ii) Balance Sheet at June 30, ~~2020~~2021 and June 30, ~~2019;~~2020; (iii) Statement of Changes in Stockholders’ Equity for the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018;~~2019; (iv) Statement of Cash Flows for the fiscal years ended June 30, 2021, 2020 ~~2019~~ and ~~2018;~~2019; and (v) Notes to Financial Statements.