Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Dec. 31, 2019 | Feb. 07, 2020 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Electromed, Inc. | |
Entity Central Index Key | 0001488917 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2019 | |
Amendment Flag | false | |
Entity File Number | 001-34839 | |
Entity Incorporation, State Code | MN | |
Entity Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 8,478,448 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Emerging Growth Company | false | |
Entity Smaller Reporting Company | true | |
Entity Shell Company | false |
Condensed Balance Sheets (Unaud
Condensed Balance Sheets (Unaudited) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Current Assets | ||
Cash | $ 9,206,722 | $ 7,807,928 |
Accounts receivable (net of allowances for doubtful accounts of $45,000) | 12,718,220 | 12,760,042 |
Contract assets | 1,190,810 | 995,847 |
Inventories | 2,651,420 | 2,622,000 |
Prepaid expenses and other current assets | 313,436 | 353,214 |
Income tax receivable | 206,489 | |
Total current assets | 26,287,097 | 24,539,031 |
Property and equipment, net | 3,914,934 | 3,604,744 |
Finite-life intangible assets, net | 552,093 | 581,413 |
Other assets | 122,057 | 45,044 |
Deferred income taxes | 611,000 | 629,000 |
Total assets | 31,487,181 | 29,399,232 |
Current Liabilities | ||
Current maturities of long-term debt | 82,938 | 30,320 |
Accounts payable | 610,610 | 586,575 |
Accrued compensation | 1,202,694 | 1,404,662 |
Income tax payable | 288,511 | |
Warranty reserve | 770,000 | 810,000 |
Other accrued liabilities | 327,531 | 530,453 |
Total current liabilities | 2,993,773 | 3,650,521 |
Other long-term liabilities | 39,628 | 14,737 |
Total liabilities | 3,033,401 | 3,665,258 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Common stock, $0.01 par value; authorized: 13,000,000 shares; 8,478,448 and 8,408,351 issued and outstanding at December 31, 2019 and June 30, 2019, respectively | 84,784 | 84,084 |
Additional paid-in capital | 16,647,320 | 16,127,826 |
Retained earnings | 11,721,676 | 9,522,064 |
Total shareholders' equity | 28,453,780 | 25,733,974 |
Total liabilities and shareholders' equity | $ 31,487,181 | $ 29,399,232 |
Condensed Balance Sheets (Una_2
Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 45,000 | $ 45,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 13,000,000 | 13,000,000 |
Common stock, issued | 8,478,448 | 8,408,351 |
Common stock, outstanding | 8,478,448 | 8,408,351 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||||
Net revenues | $ 8,546,942 | $ 8,012,487 | $ 16,849,440 | $ 15,288,370 |
Cost of revenues | 1,871,434 | 1,950,040 | 3,831,584 | 3,683,039 |
Gross profit | 6,675,508 | 6,062,447 | 13,017,856 | 11,605,331 |
Operating expenses | ||||
Selling, general and administrative | 4,965,053 | 5,149,613 | 9,859,858 | 10,422,598 |
Research and development | 143,477 | 237,838 | 242,414 | 306,028 |
Total operating expenses | 5,108,530 | 5,387,451 | 10,102,272 | 10,728,626 |
Operating income | 1,566,978 | 674,996 | 2,915,584 | 876,705 |
Interest income, net | 37,078 | 16,521 | 77,028 | 29,974 |
Net income before income taxes | 1,604,056 | 691,517 | 2,992,612 | 906,679 |
Income tax expense | 419,000 | 311,000 | 793,000 | 369,000 |
Net income | $ 1,185,056 | $ 380,517 | $ 2,199,612 | $ 537,679 |
Income per share: | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.05 | $ 0.26 | $ 0.06 |
Diluted (in dollars per share) | $ 0.14 | $ 0.04 | $ 0.25 | $ 0.06 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 8,390,125 | 8,298,961 | 8,384,807 | 8,279,493 |
Diluted (in shares) | 8,759,143 | 8,669,739 | 8,698,168 | 8,658,346 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows From Operating Activities | ||
Net income | $ 2,199,612 | $ 537,679 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 318,982 | 329,947 |
Amortization of finite-life intangible assets | 60,219 | 59,863 |
Amortization of debt issuance costs | 1,958 | |
Share-based compensation expense | 444,258 | 500,745 |
Deferred income taxes | 18,000 | 3,000 |
Loss on disposal of property and equipment | 1,294 | 1,198 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 41,822 | (126,158) |
Contract asset | (194,963) | (5,468) |
Inventories | (19,448) | (242,459) |
Prepaid expenses and other assets | 76,213 | 513,702 |
Income tax receivable | (206,489) | (24,860) |
Income tax payable | (288,511) | (397,390) |
Accounts payable and accrued liabilities | (427,390) | (331,168) |
Net cash provided by operating activities | 2,023,599 | 820,589 |
Cash Flows From Investing Activities | ||
Expenditures for property and equipment | (669,842) | (122,337) |
Expenditures for finite-life intangible assets | (30,899) | (28,794) |
Net cash used in investing activities | (700,741) | (151,131) |
Cash Flows From Financing Activities | ||
Principal payments on long-term debt including capital lease obligations | (1,103,001) | |
Issuance of common stock upon exercise of options | 75,936 | 188,821 |
Net cash provided by (used in) financing activities | 75,936 | (914,180) |
Net increase (decrease) in cash | 1,398,794 | (244,722) |
Cash | ||
Beginning of period | 7,807,928 | 7,455,844 |
End of period | $ 9,206,722 | $ 7,211,122 |
Condensed Statements of Shareho
Condensed Statements of Shareholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings | Total |
Balance beginning at Jun. 30, 2018 | $ 82,887 | $ 14,953,103 | $ 7,541,734 | $ 22,577,724 |
Balance beginning (in shares) at Jun. 30, 2018 | 8,288,659 | |||
Net income | 157,161 | 157,161 | ||
Issuance of restricted stock | $ 300 | (300) | ||
Issuance of restricted stock (in shares) | 30,000 | |||
Issuance of common stock upon exercise of options | $ 112 | 33,198 | 33,310 | |
Issuance of common stock upon exercise of options (in shares) | 11,167 | |||
Share-based compensation expense | 257,493 | 257,493 | ||
Balance ending at Sep. 30, 2018 | $ 83,299 | 15,243,494 | 7,698,895 | 23,025,688 |
Balance ending (in shares) at Sep. 30, 2018 | 8,329,826 | |||
Balance beginning at Jun. 30, 2018 | $ 82,887 | 14,953,103 | 7,541,734 | 22,577,724 |
Balance beginning (in shares) at Jun. 30, 2018 | 8,288,659 | |||
Net income | 537,679 | |||
Balance ending at Dec. 31, 2018 | $ 83,842 | 15,641,714 | 8,079,412 | 23,804,968 |
Balance ending (in shares) at Dec. 31, 2018 | 8,384,184 | |||
Balance beginning at Sep. 30, 2018 | $ 83,299 | 15,243,494 | 7,698,895 | 23,025,688 |
Balance beginning (in shares) at Sep. 30, 2018 | 8,329,826 | |||
Net income | 380,517 | 380,517 | ||
Issuance of restricted stock | $ 100 | (100) | ||
Issuance of restricted stock (in shares) | 10,000 | |||
Issuance of common stock upon exercise of options | $ 443 | 155,068 | 155,511 | |
Issuance of common stock upon exercise of options (in shares) | 44,358 | |||
Share-based compensation expense | 243,252 | 243,252 | ||
Balance ending at Dec. 31, 2018 | $ 83,842 | 15,641,714 | 8,079,412 | 23,804,968 |
Balance ending (in shares) at Dec. 31, 2018 | 8,384,184 | |||
Balance beginning at Jun. 30, 2019 | $ 84,084 | 16,127,826 | 9,522,064 | $ 25,733,974 |
Balance beginning (in shares) at Jun. 30, 2019 | 8,408,351 | 8,408,351 | ||
Net income | 1,014,556 | $ 1,014,556 | ||
Issuance of restricted stock | $ 325 | (325) | ||
Issuance of restricted stock (in shares) | 32,500 | |||
Issuance of common stock upon exercise of options | $ 50 | 12,990 | 13,040 | |
Issuance of common stock upon exercise of options (in shares) | 5,000 | |||
Share-based compensation expense | 209,954 | 209,954 | ||
Balance ending at Sep. 30, 2019 | $ 84,459 | 16,350,445 | 10,536,620 | 26,971,524 |
Balance ending (in shares) at Sep. 30, 2019 | 8,445,851 | |||
Balance beginning at Jun. 30, 2019 | $ 84,084 | 16,127,826 | 9,522,064 | $ 25,733,974 |
Balance beginning (in shares) at Jun. 30, 2019 | 8,408,351 | 8,408,351 | ||
Net income | $ 2,199,612 | |||
Balance ending at Dec. 31, 2019 | $ 84,784 | 16,647,320 | 11,721,676 | $ 28,453,780 |
Balance ending (in shares) at Dec. 31, 2019 | 8,478,448 | 8,478,448 | ||
Balance beginning at Sep. 30, 2019 | $ 84,459 | 16,350,445 | 10,536,620 | $ 26,971,524 |
Balance beginning (in shares) at Sep. 30, 2019 | 8,445,851 | |||
Net income | 1,185,056 | 1,185,056 | ||
Issuance of restricted stock | $ 150 | (150) | ||
Issuance of restricted stock (in shares) | 15,000 | |||
Issuance of common stock upon exercise of options | $ 175 | 62,721 | 62,896 | |
Issuance of common stock upon exercise of options (in shares) | 17,597 | |||
Share-based compensation expense | 234,304 | 234,304 | ||
Balance ending at Dec. 31, 2019 | $ 84,784 | $ 16,647,320 | $ 11,721,676 | $ 28,453,780 |
Balance ending (in shares) at Dec. 31, 2019 | 8,478,448 | 8,478,448 |
Interim Financial Reporting
Interim Financial Reporting | 6 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Interim Financial Reporting | Note 1. Interim Financial Reporting Basis of presentation: The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations as required by Regulation S-X. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by U.S. GAAP for annual reports. This interim report should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019 (“fiscal 2019”). A summary of the Company’s significant accounting policies follows: Use of estimates: Net income per common share: New accounting pronouncements: Impact on Previously Reported Results: The following table presents a recast of selected unaudited statement of operations line items after giving effect to the adoption of ASC 842: For the three months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Net Revenues $ 8,012,487 $ - $ 8,012,487 Cost of Revenues 1,950,040 - 1,950,040 Gross Profit 6,062,447 - 6,062,447 Operating Expenses Selling, general and administrative 5,152,394 (2,781 ) 5,149,613 Research and development 237,838 - 237,838 Total operating expenses 5,390,232 (2,781 ) 5,387,451 Operating Income 672,215 2,781 674,996 Interest income (expense), net 16,521 - 16,521 Net income before income taxes 688,736 2,781 691,517 Income tax expense 311,000 - 311,000 Net Income $ 377,736 $ 2,781 $ 380,517 Income per share: Basic $ 0.05 $ 0.00 $ 0.05 Diluted $ 0.04 $ 0.00 $ 0.04 For the six months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Net Revenues $ 15,288,370 $ - $ 15,288,370 Cost of Revenues 3,683,039 - 3,683,039 Gross Profit 11,605,331 - 11,605,331 Operating Expenses Selling, general and administrative 10,428,148 (5,550 ) 10,422,598 Research and development 306,028 - 306,028 Total operating expenses 10,734,176 (5,550 ) 10,728,626 Operating Income 871,155 5,550 876,705 Interest income (expense), net 29,974 - 29,974 Net income before income taxes 901,129 5,550 906,679 Income tax expense 369,000 - 369,000 Net Income $ 532,129 $ 5,550 $ 537,679 Income per share: Basic $ 0.06 $ 0.00 $ 0.06 Diluted $ 0.06 $ 0.00 $ 0.06 The following table presents a recast of selected unaudited balance sheet line items after giving effect to the adoption of ASC 842: June 30, 2019 As Previously Reported Effect of Adoption As Adjusted Assets Other Assets - 45,044 45,044 Liabilities and Shareholder’s Equity Current maturities of other long-term liabilities 30,320 30,320 Other long-term liabilities - 14,737 14,737 Retained Earnings 9,522,076 (12 ) 9,522,064 The following table presents a recast of selected unaudited statement of cash flow line items after giving effect to the adoption of ASC 842: For the six months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Cash Flow from Operating Activities Net income $ 532,129 $ 5,550 $ 537,679 Changes in operating assets and liabilities: Prepaid expenses and other assets 421,864 91,838 513,702 Accounts payable and accrued liabilities (233,780 ) (97,388 ) (331,168 ) |
Revenues
Revenues | 6 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Note 2. Revenues Revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, including non-cash consideration, consideration paid or payable to customers and significant financing components. Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer, as further described below under Performance obligations and transaction price Individual promised goods and services in a contract are considered a performance obligation and accounted for separately if the individual good or service is distinct (i.e., the customer can benefit from the good or service on its own or with other resources that are readily available to the customer and the good or service is separately identifiable from other promises in the arrangement). If an arrangement includes multiple performance obligations, the consideration is allocated between the performance obligations in proportion to their estimated standalone selling price, unless discounts or variable consideration is attributable to one or more but not all the performance obligations. Costs related to products delivered are recognized in the period incurred, unless criteria for capitalization of costs under FASB Accounting Standards Codification (“ASC”) 340-40, “Other Assets and Deferred Costs” (“ASC 340”), or other applicable guidance are met. The Company includes shipping and handling fees in net revenues. Shipping and handling costs associated with the shipment of the Company’s SmartVest ® The timing of revenue recognition, billings and cash collections results in accounts receivable on the condensed balance sheets as further described below under Accounts receivable Contract assets Disaggregation of revenues. For the three months ended December 31, For the six months ended December 31, 2019 2018 2019 2018 Home care $ 7,669,107 $ 7,330,927 $ 15,160,762 $ 14,053,321 Institutional 493,525 401,901 1,118,349 820,806 Home Care Distributor 131,035 - 251,369 - International 253,275 279,659 318,960 414,243 Total $ 8,546,942 $ 8,012,487 $ 16,849,440 $ 15,288,370 In the following table, home care revenue is disaggregated by payer type: For the three months ended December 31, For the six months ended December 31, 2019 2018 2019 2018 Commercial $ 3,103,518 $ 3,477,768 $ 5,988,130 $ 6,834,435 Medicare 3,788,173 3,239,434 7,463,673 6,150,643 Medicaid 449,492 465,331 1,131,410 717,116 Other 327,924 148,394 577,549 351,127 Total $ 7,669,107 $ 7,330,927 $ 15,160,762 $ 14,053,321 Revenues in the Company’s home care, home care distributor and international markets are recognized at a point in time when control passes to the customer upon product shipment or delivery. Revenues in the Company’s institutional market include sales recognized at a point in time upon shipment or delivery as well as revenues recognized over time under operating leases. Performance obligations and transaction price. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under ASC 606, “Revenue From Contracts With Customers” (“ASC 606”). A contract’s transaction price is allocated to each distinct performance obligation in proportion to the standalone selling price for each and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations and the timing or method of revenue recognition in each of the Company’s markets are discussed below: Home care market The Company makes available to its home care patients limited post-sale services that are not material in the context of the contracts, either individually or taken together, and therefore does not consider them to be performance obligations. The costs associated with the services are accrued and expensed when the related revenues are recognized. As such, transactions in the home care market consist of a single performance obligation, the SmartVest System. Home care patients generally will rely on third-party payers, including commercial payers and governmental payers such as Medicare, Medicaid, and the Veteran’s Administration to cover and reimburse all or part of the cost of the SmartVest System. The third-party payers’ reimbursement programs fall into three types, distinguished by the differences in the timing of payments from the payer, consisting of either (i) outright sale, in which payment is received from the payer based on standard terms, (ii) capped installment sale, under which the SmartVest System is sold for a series of payments that are capped not to exceed a prescribed or negotiated amount over a period of time or (iii) installment sale under which the SmartVest System is paid for over a period of several months as long as the patient continues to use the SmartVest System. Regardless of type of transaction, provided criteria for an enforceable contract are met, it is the Company’s long-standing business practice to regard all home care agreements as transferring control to the patient upon shipment or delivery, in spite of possible payment cancelation under government or commercial programs where the payer is controlling the payment over specified time periods. For home care sales that feature installment payments, the ultimate amount of consideration received from Medicare, Medicaid or commercial payers can be significantly less than expected if the contract is terminated due to changes in the patient’s status, including insurance coverage, hospitalization, death, or otherwise becoming unable to use the SmartVest System. However, once delivered to a patient who needs the SmartVest System, the patient is under no obligation to return the SmartVest System should payments be terminated as a result of the described contingencies. As a result, the Company’s product sales qualify for point in time revenue recognition. Control transfers to the patient, and revenue is recognized, upon shipment of the SmartVest System. At this point, physical possession and the significant risks and rewards of ownership are transferred to the patient and either a current or future right to payment is triggered, as further discussed under Accounts receivable Contract assets The Company’s contractually stated transaction prices in the home care market are generally set by the terms of the contracts negotiated with insurance companies or by government programs. The transaction price for the Company’s products may be further impacted by variable consideration. ASC 606 requires the Company to adjust the transaction price at contract inception and throughout the contract duration for the estimated value of payments to be received from insurance payers based on historical experience and other available information, subject to the constraint on estimates of variable consideration. Transactions requiring estimates of variable consideration primarily include (i) capped installment payments which are subject to the third-party payer’s termination due to changes in insurance coverage, death or the patient’s discontinued use of the SmartVest System, (ii) contracts under appeal and (iii) patient responsibility amounts for deductibles, coinsurance, copays and other similar payments. Although estimates may be made on a contract-by-contract basis, whenever possible, the Company uses all available information including historical collection patterns to estimate variable consideration for portfolios of contracts. The Company’s estimates of variable consideration consist of amounts it may receive from insurance providers in excess of its initial revenue estimate due to patients meeting deductibles or coinsurance during the payment duration, changes to a patient’s insurance status, changes in an insurance allowable, claims in appeals with Medicare and amounts received directly from patients for their allowable or coinsurance. The Company believes it has representative historical information to estimate the amount of variable consideration in relevant portfolios considering the significant experience it has with each portfolio and the similarity of patient accounts within a portfolio. The analysis includes steps to ensure that revenue recognized on a portfolio basis does not result in a material difference when compared with an individual contract approach. The Company also leverages its historical experience and all available relevant information for each portfolio of contracts to minimize the risk its estimates used to arrive at the transaction price will result in a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. For example, for contracts in which the Company believes the criteria for reimbursement under government or commercial payer contracts have been met but for which coverage is unconfirmed or payments are under appeal, the Company has significant observable evidence of relatively consistent claims recovery experience over the prior three to five years. The Company believes the low volatility in historical claims approval rates for populations of patients whose demographics are similar to those of current patients provides reliable predictive value in arriving at estimates of variable consideration in such contracts. Similarly, historical payment trends for recovery of claims subject to payer installments and payments from patients have remained relatively consistent over the past five years. No significant changes in patient demographics or other relevant factors have occurred that would limit the predictive value of such payment trends in estimating variable consideration for current contracts. As a result, the Company believes its estimates of variable consideration are generally not subject to the risk of significant revenue reversal. For each type of variable consideration discussed above, there are a large number of contracts with similar characteristics with a wide range of possible transaction prices. For that reason, the Company uses the probability-weighted expected value method provided under ASC 606 to estimate variable consideration. The Company often receives payment from third-party payers for the SmartVest System sales over a period of time that may exceed one year. Despite these extended payment terms, no significant financing component is deemed to exist because the purpose of such terms is not to provide financing to the patient, the payer or the Company. Rather, the extended payment terms are mandated by the government or commercial insurance programs; the fundamental purpose of which is to avoid paying the full purchase price of equipment that may potentially be used by the patient for only a short period of time. Home Care Distributors. Institutional market. ● Outright sale – Under these transactions, the Company sells its products for a prescribed or negotiated price. Transfer of control of the product, and associated revenue recognition, occurs at the time of shipment and payment is made within normal credit terms, usually within 30 days. ● Rentals – Under these transactions, the customer obtains a right to use the product for a period of time in exchange for consideration as usage occurs. These transactions are treated as operating leases and revenue is recognized ratably over the applicable rental period. Lease revenue recognized during the six months ended December 31, 2019 and 2018 was approximately $4,000 and $25,000, respectively. International market. Product Warranty. Accounts receivable. Contract assets. Incremental costs to obtain a contract. . Contract balances. December 31, 2019 June 30, 2019 Receivables, included in “Accounts receivable, net of allowance for doubtful accounts” $ 12,718,220 $ 12,760,042 Contract assets, included in other current assets $ 1,190,810 $ 995,847 Significant changes in contract assets during the period are as follows: For the six months ended December 31, 2019 For the tweleve months ended June 30, 2019 Increase (decrease) Increase (decrease) Contract assets, beginning $ 995,847 $ 776,338 Reclassification of contract assets to accounts receivable (797,515 ) (2,012,619 ) Contract assets recognized 991,611 2,169,835 Increaase as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period 867 62,293 Contract assets, ending $ 1,190,810 $ 995,847 |
Inventories
Inventories | 6 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 3. Inventories The components of inventory were approximately as follows: December 31, 2019 June 30, 2019 Parts inventory $ 2,132,000 $ 1,783,000 Work in process 178,000 444,000 Finished goods 447,000 521,000 Estimated inventory to be returned 204,000 184,000 Less: Reserve for obsolescence (310,000 ) (310,000 ) Total $ 2,651,000 $ 2,622,000 |
Finite-life Intangible Assets
Finite-life Intangible Assets | 6 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Finite-life Intangible Assets | Note 4. Finite-life Intangible Assets The carrying value of patents and trademarks includes the original cost of obtaining the patents, periodic renewal fees, and other costs associated with maintaining and defending patent and trademark rights. Patents and trademarks are amortized over their estimated useful lives, generally 15 and 12 years, respectively. Accumulated amortization was $1,070,000 and $1,010,000 at December 31, 2019 and June 30, 2019, respectively. The activity and balances of finite-life intangible assets were approximately as follows: Six Months Ended December 31, 2019 Fiscal Year Ended June 30, 2019 Balance, beginning $ 581,000 $ 649,000 Additions 31,000 58,000 Abandonments - (5,000 ) Amortization expense (60,000 ) (121,000 ) Balance, ending $ 552,000 $ 581,000 |
Warranty Liability
Warranty Liability | 6 Months Ended |
Dec. 31, 2019 | |
Product Warranties Disclosures [Abstract] | |
Warranty Liability | Note 5. Warranty Liability The Company provides a lifetime warranty on its products to the prescribed patient for sales within the U.S. and a three-year warranty for all institutional sales and sales to individuals outside the U.S. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time the product is shipped. Factors that affect the Company’s warranty liability include the number of units shipped, historical and anticipated rates of warranty claims, the product’s useful life and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. Changes in the Company’s warranty liability were approximately as follows: Six Months Ended December 31, 2019 Fiscal Year Ended June 30, 2019 Beginning warranty reserve $ 810,000 $ 760,000 Accrual for products sold 28,000 201,000 Expenditures and costs incurred for warranty claims (68,000 ) (151,000 ) Ending warranty reserve $ 770,000 $ 810,000 |
Income Taxes
Income Taxes | 6 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 6. Income Taxes On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate. As the year progresses, the Company refines its estimate based on the facts and circumstances by each tax jurisdiction. Income tax expense was estimated at approximately $419,000 and $793,000, and the effective tax rate was 26.1% and 26.5% for the three and six months ended December 31, 2019, respectively. Estimated income tax expense for the three and six months ended December 31, 2019 included a discrete deferred tax benefit of approximately $12,000 and $15,000, respectively, related to stock options that were exercised during the period. The net impact of these discrete events decreased the estimated effective tax rates by 0.7% and 0.5% during the three and six months ended December 31, 2019, respectively. Income tax expense was estimated at approximately $311,000 and $369,000 and the effective tax rate was 45.0% and 40.7%, for the three and six months ended December 31, 2018, respectively. Estimated income tax expense for the three and six months ended December 31, 2018 included a discrete deferred tax expense of approximately $126,000 related to unexercised fully-vested stock options that expired on November 24, 2018 and a discrete current tax benefit of approximately $9,000 related to the excess tax benefit of non-qualified stock options that were exercised during the period. The net impact of these discrete events increased the estimated effective tax rates by 16.9% and 12.9% during the three and six months ended December 31, 2018, respectively. |
Financing Arrangements
Financing Arrangements | 6 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Note 7. Financing Arrangements The Company has a credit facility that provides for a revolving line of credit and a term loan. Effective December 18, 2019, the Company renewed its $2,500,000 revolving line of credit. There was no outstanding principal balance on the line of credit as of December 31, 2019 or June 30, 2019. Interest on borrowings under the line of credit, if any, accrues at the prime rate (4.75% at December 31, 2019) less 1.00% and is payable monthly. The amount eligible for borrowing on the line of credit is limited to the lesser of $2,500,000 or 57.00% of eligible accounts receivable and the line of credit expires on December 18, 2020, if not renewed. At December 31, 2019, the maximum $2,500,000 was eligible for borrowing. The line of credit is secured by a security interest in substantially all the tangible and intangible assets of the Company. The documents governing the line of credit contain certain financial and nonfinancial covenants that include a minimum tangible net worth covenant of not less than $10,125,000 and restrictions on the Company’s ability to incur certain additional indebtedness or pay dividends. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Note 8. Stock-Based Compensation In November 2017, the Company’s shareholders approved the 2017 Omnibus Incentive Plan 2014 Equity Incentive Plan (the “2014 Plan”) The Company recorded approximately $444,000 and $501,000 of compensation expense related to current and past grants of stock options and restricted stock for the six months ended December 31, 2019 and 2018, respectively. This expense is included in selling, general and administrative expense. As of December 31, 2019, approximately $1,125,000 of total unrecognized compensation expense related to non-vested equity awards was expected to be recognized over a weighted average period of approximately 0.8 years. The Company recognizes compensation expense related to share-based payment transactions in the financial statements based on the estimated fair value of the award issued. The fair value of each option is estimated using the Black-Scholes pricing model at the time of award grant. The Company estimates the expected life of options based on the expected holding period by the option holder. The risk-free interest rate is based upon observed U.S. Treasury interest rates for the expected term of the options. The Company makes assumptions with respect to expected stock price volatility based upon the historical volatility of its stock price. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates. Forfeitures are estimated based on the percentage of awards expected to vest, taking into consideration the seniority level of the award recipient. The following assumptions were used to estimate the fair value of stock options granted: Six Months Ended December 31, 2019 Fiscal Year Ended June 30, 2019 Risk-free interest rate 1.85 % 2.36% - 2.77 % Expected term (years) 6 6 Expected volatility 190.1 % 182.4% - 192.0 % Stock Options The Company issued 149,300 stock options pursuant to the 2017 Plan during the six months ended December 31, 2019. Stock option transactions during the six months ended December 31, 2019 are summarized as follows: Number of Shares Weighted Average Outstanding at June 30, 2019 683,000 $ 3.84 Granted 149,300 $ 5.29 Exercised (24,000 ) $ 3.52 Cancelled or Forfeited (31,050 ) $ 5.30 Outstanding at December 31, 2019 777,250 $ 4.07 The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. At December 31, 2019, the weighted average remaining contractual term for all outstanding stock options was 6.94 years and their aggregate intrinsic value was approximately $3,558,000. Outstanding at December 31, 2019 were 777,250 stock options issued to employees, of which 486,674 were exercisable and had an aggregate intrinsic value of approximately $2,616,000. Restricted Stock The 2017 Plan also permits the grant of other stock-based awards, including shares of restricted stock. Historically, the Company makes restricted stock grants to key employees and non-employee directors that vest over six months to three years. During the six months ended December 31, 2019, the Company issued restricted stock awards to employees totaling 32,500 shares of common stock, with a vesting term of one to three years and a fair value of $5.29 per share, and to directors totaling 18,000 shares of common stock, with a vesting term of six months and a fair value of $9.74 per share. The restricted stock’s fair value per share represents the closing price of its common stock on the NYSE American on the date of the grant. Restricted stock transactions during the six months ended December 31, 2019 are summarized as follows: Number of Shares Weighted Average Outstanding Shares of Restricted Stock Unvested at June 30, 2019 29,998 $ 5.46 Granted 50,500 $ 6.88 Vested – – Forfeited (3,000 ) 9.74 Outstanding Shares of Restricted Stock Unvested at December 31, 2019 77,498 $ 6.22 |
Leases
Leases | 6 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Note 9. Leases The Company has four leases for office and warehouse space that require monthly payments. These leases have escalating payments ranging from approximately $450 to $4,400 per month which expire through July 2022 and are recognized on a straight-line basis over the life of the lease. The Company has a lease for office equipment that requires payments of approximately $1,500 per month through December 2022. All leases are classified as operating leases which do not include renewal options. The Company currently does not have any short-term or variable lease costs. The Company applied the practical expedient to calculate the present value of the fixed payments without having to perform an allocation to lease and non-lease components. The Company has recognized right of use assets associated with its operating leases of approximately $122,000 and $45,000 as of December 31, 2019 and June 30, 2019, respectively, which is included in other assets on the Company’s condensed balance sheet. Operating lease liabilities were $123,000 and $45,000 as of December 31, 2019 and June 30, 2019, respectively, which are included in current maturities of long-term liabilities and other long-term liabilities on the Company’s condensed balance sheet. As of December 31, 2019, the Company has a weighted-average lease term of 0.8 years for its operating leases, which have a weighted-average discount rate of 4.0%. Operating lease payments of $45,000 are included in operating cash flows for the six months ended December 31, 2019. Maturities of lease liabilities, which are included in current maturities of long-term liabilities and other long-term liabilities on the Company’s condensed balance sheet, are as follows: Fiscal years ending June 30: 2020 * $ 44,000 2021 73,000 2022 9,000 2023 1,000 Total lease payments 127,000 Less: Interest (4,000) Present value of lease liabilities $ 123,000 * |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies The Company is occasionally involved in claims and disputes arising in the ordinary course of business. The Company insures its business risks where possible to mitigate the financial impact of individual claims and establishes reserves for an estimate of any probable cost of settlement or other disposition. |
Interim Financial Reporting (Po
Interim Financial Reporting (Policies) | 6 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of estimates: |
Net income per common share | Net income per common share: |
New Accounting Pronouncements | New accounting pronouncements: Impact on Previously Reported Results: The following table presents a recast of selected unaudited statement of operations line items after giving effect to the adoption of ASC 842: For the three months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Net Revenues $ 8,012,487 $ - $ 8,012,487 Cost of Revenues 1,950,040 - 1,950,040 Gross Profit 6,062,447 - 6,062,447 Operating Expenses Selling, general and administrative 5,152,394 (2,781 ) 5,149,613 Research and development 237,838 - 237,838 Total operating expenses 5,390,232 (2,781 ) 5,387,451 Operating Income 672,215 2,781 674,996 Interest income (expense), net 16,521 - 16,521 Net income before income taxes 688,736 2,781 691,517 Income tax expense 311,000 - 311,000 Net Income $ 377,736 $ 2,781 $ 380,517 Income per share: Basic $ 0.05 $ 0.00 $ 0.05 Diluted $ 0.04 $ 0.00 $ 0.04 For the six months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Net Revenues $ 15,288,370 $ - $ 15,288,370 Cost of Revenues 3,683,039 - 3,683,039 Gross Profit 11,605,331 - 11,605,331 Operating Expenses Selling, general and administrative 10,428,148 (5,550 ) 10,422,598 Research and development 306,028 - 306,028 Total operating expenses 10,734,176 (5,550 ) 10,728,626 Operating Income 871,155 5,550 876,705 Interest income (expense), net 29,974 - 29,974 Net income before income taxes 901,129 5,550 906,679 Income tax expense 369,000 - 369,000 Net Income $ 532,129 $ 5,550 $ 537,679 Income per share: Basic $ 0.06 $ 0.00 $ 0.06 Diluted $ 0.06 $ 0.00 $ 0.06 The following table presents a recast of selected unaudited balance sheet line items after giving effect to the adoption of ASC 842: June 30, 2019 As Previously Reported Effect of Adoption As Adjusted Assets Other Assets - 45,044 45,044 Liabilities and Shareholder’s Equity Current maturities of other long-term liabilities 30,320 30,320 Other long-term liabilities - 14,737 14,737 Retained Earnings 9,522,076 (12 ) 9,522,064 The following table presents a recast of selected unaudited statement of cash flow line items after giving effect to the adoption of ASC 842: For the six months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Cash Flow from Operating Activities Net income $ 532,129 $ 5,550 $ 537,679 Changes in operating assets and liabilities: Prepaid expenses and other assets 421,864 91,838 513,702 Accounts payable and accrued liabilities (233,780 ) (97,388 ) (331,168 ) |
Interim Financial Reporting (Ta
Interim Financial Reporting (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of recast of selected financial information for adoption of ASC 842 | The following table presents a recast of selected unaudited statement of operations line items after giving effect to the adoption of ASC 842: For the three months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Net Revenues $ 8,012,487 $ - $ 8,012,487 Cost of Revenues 1,950,040 - 1,950,040 Gross Profit 6,062,447 - 6,062,447 Operating Expenses Selling, general and administrative 5,152,394 (2,781 ) 5,149,613 Research and development 237,838 - 237,838 Total operating expenses 5,390,232 (2,781 ) 5,387,451 Operating Income 672,215 2,781 674,996 Interest income (expense), net 16,521 - 16,521 Net income before income taxes 688,736 2,781 691,517 Income tax expense 311,000 - 311,000 Net Income $ 377,736 $ 2,781 $ 380,517 Income per share: Basic $ 0.05 $ 0.00 $ 0.05 Diluted $ 0.04 $ 0.00 $ 0.04 For the six months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Net Revenues $ 15,288,370 $ - $ 15,288,370 Cost of Revenues 3,683,039 - 3,683,039 Gross Profit 11,605,331 - 11,605,331 Operating Expenses Selling, general and administrative 10,428,148 (5,550 ) 10,422,598 Research and development 306,028 - 306,028 Total operating expenses 10,734,176 (5,550 ) 10,728,626 Operating Income 871,155 5,550 876,705 Interest income (expense), net 29,974 - 29,974 Net income before income taxes 901,129 5,550 906,679 Income tax expense 369,000 - 369,000 Net Income $ 532,129 $ 5,550 $ 537,679 Income per share: Basic $ 0.06 $ 0.00 $ 0.06 Diluted $ 0.06 $ 0.00 $ 0.06 The following table presents a recast of selected unaudited balance sheet line items after giving effect to the adoption of ASC 842: June 30, 2019 As Previously Reported Effect of Adoption As Adjusted Assets Other Assets - 45,044 45,044 Liabilities and Shareholder’s Equity Current maturities of other long-term liabilities 30,320 30,320 Other long-term liabilities - 14,737 14,737 Retained Earnings 9,522,076 (12 ) 9,522,064 The following table presents a recast of selected unaudited statement of cash flow line items after giving effect to the adoption of ASC 842: For the six months ended December 31, 2018 As Previously Reported Effect of Adoption As Adjusted Cash Flow from Operating Activities Net income $ 532,129 $ 5,550 $ 537,679 Changes in operating assets and liabilities: Prepaid expenses and other assets 421,864 91,838 513,702 Accounts payable and accrued liabilities (233,780 ) (97,388 ) (331,168 ) |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregated revenue | For the three months ended December 31, For the six months ended December 31, 2019 2018 2019 2018 Home care $ 7,669,107 $ 7,330,927 $ 15,160,762 $ 14,053,321 Institutional 493,525 401,901 1,118,349 820,806 Home Care Distributor 131,035 - 251,369 - International 253,275 279,659 318,960 414,243 Total $ 8,546,942 $ 8,012,487 $ 16,849,440 $ 15,288,370 In the following table, home care revenue is disaggregated by payer type: For the three months ended December 31, For the six months ended December 31, 2019 2018 2019 2018 Commercial $ 3,103,518 $ 3,477,768 $ 5,988,130 $ 6,834,435 Medicare 3,788,173 3,239,434 7,463,673 6,150,643 Medicaid 449,492 465,331 1,131,410 717,116 Other 327,924 148,394 577,549 351,127 Total $ 7,669,107 $ 7,330,927 $ 15,160,762 $ 14,053,321 |
Schedule of contract assets | The following table provides information about accounts receivable and contracts assets from contracts with customers: December 31, 2019 June 30, 2019 Receivables, included in “Accounts receivable, net of allowance for doubtful accounts” $ 12,718,220 $ 12,760,042 Contract assets, included in other current assets $ 1,190,810 $ 995,847 Significant changes in contract assets during the period are as follows: For the six months ended December 31, 2019 For the tweleve months ended June 30, 2019 Increase (decrease) Increase (decrease) Contract assets, beginning $ 995,847 $ 776,338 Reclassification of contract assets to accounts receivable (797,515 ) (2,012,619 ) Contract assets recognized 991,611 2,169,835 Increaase as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period 867 62,293 Contract assets, ending $ 1,190,810 $ 995,847 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventories | The components of inventory were approximately as follows: December 31, 2019 June 30, 2019 Parts inventory $ 2,132,000 $ 1,783,000 Work in process 178,000 444,000 Finished goods 447,000 521,000 Estimated inventory to be returned 204,000 184,000 Less: Reserve for obsolescence (310,000 ) (310,000 ) Total $ 2,651,000 $ 2,622,000 |
Finite-life Intangible Assets (
Finite-life Intangible Assets (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of activity and balances of finite-life intangible assets | The activity and balances of finite-life intangible assets were approximately as follows: Six Months Ended December 31, 2019 Fiscal Year Ended June 30, 2019 Balance, beginning $ 581,000 $ 649,000 Additions 31,000 58,000 Abandonments - (5,000 ) Amortization expense (60,000 ) (121,000 ) Balance, ending $ 552,000 $ 581,000 |
Warranty Liability (Tables)
Warranty Liability (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Product Warranties Disclosures [Abstract] | |
Schedule of changes in warranty liability | Changes in the Company’s warranty liability were approximately as follows: Six Months Ended December 31, 2019 Fiscal Year Ended June 30, 2019 Beginning warranty reserve $ 810,000 $ 760,000 Accrual for products sold 28,000 201,000 Expenditures and costs incurred for warranty claims (68,000 ) (151,000 ) Ending warranty reserve $ 770,000 $ 810,000 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of assumptions used to estimate fair value of options granted | The following assumptions were used to estimate the fair value of stock options granted: Six Months Ended December 31, 2019 Fiscal Year Ended June 30, 2019 Risk-free interest rate 1.85 % 2.36% - 2.77 % Expected term (years) 6 6 Expected volatility 190.1 % 182.4% - 192.0 % |
Schedule of stock option transactions | Stock option transactions during the six months ended December 31, 2019 are summarized as follows: Number of Shares Weighted Average Outstanding at June 30, 2019 683,000 $ 3.84 Granted 149,300 $ 5.29 Exercised (24,000 ) $ 3.52 Cancelled or Forfeited (31,050 ) $ 5.30 Outstanding at December 31, 2019 777,250 $ 4.07 |
Schedule of restricted stock transactions | Restricted stock transactions during the six months ended December 31, 2019 are summarized as follows: Number of Shares Weighted Average Outstanding Shares of Restricted Stock Unvested at June 30, 2019 29,998 $ 5.46 Granted 50,500 $ 6.88 Vested – – Forfeited (3,000 ) 9.74 Outstanding Shares of Restricted Stock Unvested at December 31, 2019 77,498 $ 6.22 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of the maturity of lease liabilities | Maturities of lease liabilities, which are included in current maturities of long-term liabilities and other long-term liabilities on the Company’s condensed balance sheet, are as follows: Fiscal years ending June 30: 2020 * $ 44,000 2021 73,000 2022 9,000 2023 1,000 Total lease payments 127,000 Less: Interest (4,000) Present value of lease liabilities $ 123,000 * |
Interim Financial Reporting (De
Interim Financial Reporting (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net revenues | $ 8,546,942 | $ 8,012,487 | $ 16,849,440 | $ 15,288,370 | ||||
Cost of revenues | 1,871,434 | 1,950,040 | 3,831,584 | 3,683,039 | ||||
Gross profit | 6,675,508 | 6,062,447 | 13,017,856 | 11,605,331 | ||||
Operating expenses | ||||||||
Selling, general and administrative | 4,965,053 | 5,149,613 | 9,859,858 | 10,422,598 | ||||
Research and development | 143,477 | 237,838 | 242,414 | 306,028 | ||||
Total operating expenses | 5,108,530 | 5,387,451 | 10,102,272 | 10,728,626 | ||||
Operating income | 1,566,978 | 674,996 | 2,915,584 | 876,705 | ||||
Interest income (expense), net | 37,078 | 16,521 | 77,028 | 29,974 | ||||
Net income before income taxes | 1,604,056 | 691,517 | 2,992,612 | 906,679 | ||||
Income tax expense | 419,000 | 311,000 | 793,000 | 369,000 | ||||
Net income | $ 1,185,056 | $ 1,014,556 | $ 380,517 | $ 157,161 | $ 2,199,612 | $ 537,679 | ||
Income per share: | ||||||||
Basic | $ 0.14 | $ 0.05 | $ 0.26 | $ 0.06 | ||||
Diluted | $ 0.14 | $ 0.04 | $ 0.25 | $ 0.06 | ||||
Cash Flows From Operating Activities | ||||||||
Net income | $ 1,185,056 | $ 1,014,556 | $ 380,517 | $ 157,161 | $ 2,199,612 | $ 537,679 | ||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | 76,213 | 513,702 | ||||||
Accounts payable and accrued liabilities | (427,390) | (331,168) | ||||||
Assets | ||||||||
Other assets | 122,057 | 122,057 | $ 45,044 | $ 45,044 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current maturities of long-term debt | 82,938 | 82,938 | 30,320 | 30,320 | ||||
Other long-term liabilities | 39,628 | 39,628 | 14,737 | 14,737 | ||||
Retained earnings | $ 11,721,676 | $ 11,721,676 | $ 9,522,064 | 9,522,064 | ||||
Effect of Adoption [Member] | ||||||||
Operating expenses | ||||||||
Selling, general and administrative | (2,781) | (5,550) | ||||||
Research and development | ||||||||
Total operating expenses | (2,781) | (5,550) | ||||||
Operating income | 2,781 | 5,550 | ||||||
Interest income (expense), net | ||||||||
Net income before income taxes | 2,781 | 5,550 | ||||||
Income tax expense | ||||||||
Net income | $ 2,781 | $ 5,550 | ||||||
Income per share: | ||||||||
Basic | $ 0 | $ 0 | ||||||
Diluted | $ 0 | $ 0 | ||||||
Cash Flows From Operating Activities | ||||||||
Net income | $ 2,781 | $ 5,550 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | 91,838 | |||||||
Accounts payable and accrued liabilities | (97,388) | |||||||
Assets | ||||||||
Other assets | 45,044 | |||||||
Liabilities and Shareholders' Equity | ||||||||
Current maturities of long-term debt | 30,320 | |||||||
Other long-term liabilities | 14,737 | |||||||
Retained earnings | (12) | |||||||
As Previously Reported[Member] | ||||||||
Net revenues | 8,012,487 | 15,288,370 | ||||||
Cost of revenues | 1,950,040 | 3,683,039 | ||||||
Gross profit | 6,062,447 | 11,605,331 | ||||||
Operating expenses | ||||||||
Selling, general and administrative | 5,152,394 | 10,428,148 | ||||||
Research and development | 237,838 | 306,028 | ||||||
Total operating expenses | 5,390,232 | 10,734,176 | ||||||
Operating income | 672,215 | 871,155 | ||||||
Interest income (expense), net | 16,521 | 29,974 | ||||||
Net income before income taxes | 688,736 | 901,129 | ||||||
Income tax expense | 311,000 | 369,000 | ||||||
Net income | $ 377,736 | $ 532,129 | ||||||
Income per share: | ||||||||
Basic | $ 0.05 | $ 0.06 | ||||||
Diluted | $ 0.04 | $ 0.06 | ||||||
Cash Flows From Operating Activities | ||||||||
Net income | $ 377,736 | $ 532,129 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | 421,864 | |||||||
Accounts payable and accrued liabilities | $ (233,780) | |||||||
Assets | ||||||||
Other assets | ||||||||
Liabilities and Shareholders' Equity | ||||||||
Other long-term liabilities | ||||||||
Retained earnings | $ 9,522,076 |
Interim Financial Reporting (_2
Interim Financial Reporting (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock equivalents excluded from calculation of diluted earnings per share | 136,000 | 356,084 | 316,000 | 177,750 |
Sales | $ 8,546,942 | $ 8,012,487 | $ 16,849,440 | $ 15,288,370 |
International [Member] | ||||
Sales | $ 319,000 | $ 414,000 |
Revenues (Details)
Revenues (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | $ 8,546,942 | $ 8,012,487 | $ 16,849,440 | $ 15,288,370 |
Home Care [Member] | ||||
Revenue | 7,669,107 | 7,330,927 | 15,160,762 | 14,053,321 |
Home Care [Member] | Commercial [Member] | ||||
Revenue | 3,103,518 | 3,477,768 | 5,988,130 | 6,834,435 |
Home Care [Member] | Medicare [Member] | ||||
Revenue | 3,788,173 | 3,239,434 | 7,463,673 | 6,150,643 |
Home Care [Member] | Medicaid [Member] | ||||
Revenue | 449,492 | 465,331 | 1,131,410 | 717,116 |
Home Care [Member] | Other [Member] | ||||
Revenue | 327,924 | 148,394 | 577,549 | 351,127 |
Institutional [Member] | ||||
Revenue | 493,525 | 401,901 | 1,118,349 | 820,806 |
Home Care Distributor [Member] | ||||
Revenue | 131,035 | 251,369 | ||
International [Member] | ||||
Revenue | $ 253,275 | $ 279,659 | $ 318,960 | $ 414,243 |
Revenues (Details 1)
Revenues (Details 1) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | ||||
Receivables, included in "Accounts receivable, net of allowance for doubtful accounts" | $ 12,718,220 | $ 12,760,042 | ||
Contract assets, included in other current assets | $ 1,190,810 | $ 776,338 | $ 1,190,810 | $ 995,847 |
Contract assets, beginning | 995,847 | 776,338 | ||
Reclassification contract assets to accounts receivable | (797,515) | (2,012,619) | ||
Contract assets recognized | 991,611 | 2,169,835 | ||
Increase as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period | 867 | 62,293 | ||
Contract assets, ending | $ 1,190,810 | $ 995,847 |
Revenues (Details Narrative)
Revenues (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Operating lease revenue | $ 4,000 | $ 25,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Inventory Disclosure [Abstract] | ||
Parts inventory | $ 2,132,000 | $ 1,783,000 |
Work in process | 178,000 | 444,000 |
Finished goods | 447,000 | 521,000 |
Estimated Inventory to be returned | 204,000 | 184,000 |
Less: Reserve for obsolescence | (310,000) | (310,000) |
Total | $ 2,651,420 | $ 2,622,000 |
Finite-life Intangible Assets_2
Finite-life Intangible Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2019 | Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance, beginning | $ 581,413 | $ 649,000 |
Additions | 31,000 | 58,000 |
Abandonments | (5,000) | |
Amortization expense | (60,000) | (121,000) |
Balance, ending | $ 552,093 | $ 581,413 |
Finite-life Intangible Assets_3
Finite-life Intangible Assets (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2019 | Jun. 30, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated amortization | $ 1,070,000 | $ 1,010,000 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 15 years | |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 12 years |
Warranty Liability (Details)
Warranty Liability (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2019 | Jun. 30, 2019 | |
Warranty reserve: | ||
Beginning warranty reserve | $ 810,000 | $ 760,000 |
Accrual for products sold | 28,000 | 201,000 |
Expenditures and costs incurred for warranty claims | (68,000) | (151,000) |
Ending warranty reserve | $ 770,000 | $ 810,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 26.10% | 45.00% | 26.50% | 40.70% |
Income tax expense | $ 419,000 | $ 311,000 | $ 793,000 | $ 369,000 |
Impact of discrete deferred tax benefit | $ 12,000 | $ 15,000 | ||
Impact of discrete deferred tax expense | $ 126,000 | $ 9,000 | ||
Impact of discrete deferred tax benefit (expense) on effective tax rates | 0.70% | (16.90%) | 0.50% | (12.90%) |
Financing Arrangements (Details
Financing Arrangements (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2019 | Jun. 30, 2019 | |
Minimum tangible net worth to be maintained | $ 10,125,000 | |
Credit Facility [Member] | ||
Maximum borrowing capacity | 2,500,000 | |
Line of credit balance | $ 0 | $ 0 |
Credit facility effective date | Dec. 18, 2019 | |
Credit facility expiration date | Dec. 18, 2020 | |
Basis spread on rate | (1.00%) | |
Borrowing capacity of eligible accounts receivable | $ 2,500,000 | |
Borrowing capacity of eligible accounts receivable (percent) | 57.00% | |
Available borrowing capacity | $ 2,500,000 | |
Credit Facility [Member] | Prime Rate [Member] | ||
Interest rate | 4.75% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Stock Options [Member] | 6 Months Ended | 12 Months Ended |
Dec. 31, 2019 | Jun. 30, 2019 | |
Risk free interest rate - minimum | 2.36% | |
Risk free interest rate - maximum | 2.77% | |
Risk free interest rate | 1.85% | |
Expected term (year) | 6 years | 6 years |
Expected volatility | 190.10% | |
Expected volatility - minimum | 182.40% | |
Expected volatility - maximum | 192.00% |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) - Stock Options [Member] | 6 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Number of Shares | |
Options outstanding, beginning | shares | 683,000 |
Granted | shares | 149,300 |
Exercised | shares | (24,000) |
Cancelled or Forfeited | shares | (31,050) |
Options outstanding, ending | shares | 777,250 |
Weighted Average Grant Date Fair Value | |
Options outstanding, beginning | $ / shares | $ 3.84 |
Granted | $ / shares | 5.29 |
Exercised | $ / shares | 3.52 |
Cancelled or Forfeited | $ / shares | 5.30 |
Options outstanding, ending | $ / shares | $ 4.07 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 2) - Restricted Stock [Member] | 6 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Number of Shares | |
Outstanding, beginning | shares | 29,998 |
Granted | shares | 50,500 |
Forfeited | shares | (3,000) |
Outstanding, ending | shares | 77,498 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning | $ / shares | $ 5.46 |
Granted | $ / shares | 6.88 |
Forfeited | $ / shares | 9.74 |
Outstanding, ending | $ / shares | $ 6.22 |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based compensation expense | $ 444,258 | $ 500,745 |
Unrecognized compensation expense | $ 1,125,000 | |
Unrecognized compensation expense, period for recognition | 9 months 18 days | |
2017 Plan [Member] | ||
Shares available for issuance | 900,000 | |
Available for grant, shares | 497,000 | |
Options outstanding (shares) | 304,000 | |
Restricted Stock outstanding (shares) | 77,498 | |
2014 Plan [Member] | ||
Options outstanding (shares) | 473,250 | |
Stock Options [Member] | ||
Options outstanding, intrinsic value | $ 3,558,000 | |
Options exercisable, intrinsic value | $ 2,616,000 | |
Outstanding exercisable | 486,674 | |
Weighted average contractual term outstanding stock options | 6 years 11 months 8 days | |
Restricted Stock [Member] | ||
Fair value on grant date | $ 6.88 | |
Restricted Stock [Member] | Directors [Member] | ||
Vesting term of awards | 6 months | |
Fair value on grant date | $ 9.74 | |
Restricted stock issued | 18,000 | |
Restricted Stock [Member] | Employees [Member] | ||
Fair value on grant date | $ 5.29 | |
Restricted stock issued | 32,500 | |
Restricted Stock [Member] | Employees [Member] | Minimum [Member] | ||
Vesting term of awards | 1 year | |
Restricted Stock [Member] | Employees [Member] | Maximum [Member] | ||
Vesting term of awards | 3 years |
Leases (Details)
Leases (Details) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 | |
Year ending June 30: | |||
2020 | [1] | $ 44,000 | |
2021 | 73,000 | ||
2022 | 9,000 | ||
2023 | 1,000 | ||
Total lease payments | 127,000 | ||
Less: interest | (4,000) | ||
Present value of lease liabilities | $ 123,000 | $ 45,000 | |
[1] | Six months ended June 30, 2020 |
Leases (Details Narrative)
Leases (Details Narrative) | 6 Months Ended | |
Dec. 31, 2019USD ($)Number | Jun. 30, 2019USD ($) | |
Number of operating leases | Number | 4 | |
Right of use asset - Operating leases | $ 122,000 | $ 45,000 |
Operating lease liabilities | $ 123,000 | $ 45,000 |
Weighted average lease term | 9 months 18 days | |
Weighted average discount rate | 4.00% | |
Operating lease payments included in cash flows | $ 45,000 | |
Office Equipment [Member] | ||
Monthly lease payment | 1,500 | |
Minimum [Member] | ||
Escalating payments per month | 450 | |
Maximum [Member] | ||
Escalating payments per month | $ 4,400 |