0000897101-24-000163.txt : 20240507 0000897101-24-000163.hdr.sgml : 20240507 20240507163059 ACCESSION NUMBER: 0000897101-24-000163 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 49 CONFORMED PERIOD OF REPORT: 20240331 FILED AS OF DATE: 20240507 DATE AS OF CHANGE: 20240507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Electromed, Inc. CENTRAL INDEX KEY: 0001488917 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] ORGANIZATION NAME: 08 Industrial Applications and Services IRS NUMBER: 411732920 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34839 FILM NUMBER: 24922515 BUSINESS ADDRESS: STREET 1: 500 SIXTH AVENUE NW CITY: NEW PRAGUE STATE: MN ZIP: 56071 BUSINESS PHONE: 952-758-9299 MAIL ADDRESS: STREET 1: 500 SIXTH AVENUE NW CITY: NEW PRAGUE STATE: MN ZIP: 56071 10-Q 1 elmd240512_10q.htm 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q
(Mark One)  

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

     
  For the quarterly period ended March 31, 2024  
     

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

     
  For the transition period from           to          .  

 

Commission File No.: 001-34839

 

Electromed, Inc.
(Exact Name of Registrant as Specified in its Charter)

 

Minnesota   41-1732920
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     

500 Sixth Avenue NW

New Prague, Minnesota

  56071
(Address of principal executive offices)   (Zip Code)

 

(952) 758-9299
(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Common Stock, $0.01 par value   ELMD   NYSE American LLC
(Title of each class)   (Trading Symbol(s))   (Name of each exchange on which registered)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑  No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
   
Non-accelerated filer Smaller reporting company
   
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No

 

There were 8,655,727 shares of Electromed, Inc. common stock, par value $0.01 per share, outstanding as of the close of business on May 2, 2024.

 

 

 

 

 

Electromed, Inc.

Index to Quarterly Report on Form 10-Q

 

  Page
   
PART I – FINANCIAL INFORMATION  
  Item 1. Financial Statements 1
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
  Item 3. Quantitative and Qualitative Disclosures About Market Risk. 17
  Item 4. Controls and Procedures 17
     
PART II – OTHER INFORMATION  
  Item 1. Legal Proceedings 17
  Item 1A. Risk Factors 17
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
  Item 3. Defaults Upon Senior Securities 17
  Item 4. Mine Safety Disclosures 18
  Item 5. Other Information 18
  Item 6. Exhibits 18

 

 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1.Financial Statements.

 

Electromed, Inc.

Condensed Balance Sheets

 

   March 31, 2024   June 30, 2023 
   (Unaudited)     
Assets          
Current Assets          
Cash and cash equivalents  $11,712,000   $7,372,000 
Accounts receivable (net of allowances for credit losses of $45,000)   23,907,000    24,130,000 
Contract assets   642,000    487,000 
Inventories   4,178,000    4,221,000 
Prepaid expenses and other current assets   592,000    1,577,000 
Income tax receivable   291,000    - 
Total current assets   41,322,000    37,787,000 
Property and equipment, net   5,283,000    5,672,000 
Finite-life intangible assets, net   648,000    605,000 
Other assets   106,000    161,000 
Deferred income taxes   1,542,000    1,581,000 
Total assets  $48,901,000   $45,806,000 
           
Liabilities and Shareholders' Equity          
Current Liabilities          
Accounts payable  $792,000   $1,372,000 
Accrued compensation   2,987,000    3,018,000 
Income tax payable   -    336,000 
Warranty reserve   1,525,000    1,378,000 
Other accrued liabilities   1,022,000    1,949,000 
Total current liabilities   6,326,000    8,053,000 
Other long-term liabilities   31,000    86,000 
Total liabilities   6,357,000    8,139,000 
           
Commitments and Contingencies          
           
Shareholders’ Equity          
Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,655,727 and 8,555,238 shares issued and outstanding, as of March 31, 2024, and June 30, 2023, respectively   87,000    86,000 
Additional paid-in capital   20,342,000    18,788,000 
Retained earnings   22,115,000    18,793,000 
Total shareholders' equity   42,544,000    37,667,000 
Total liabilities and shareholders' equity  $48,901,000   $45,806,000 

 

See Notes to Condensed Financial Statements (Unaudited).

 

1

 

 

Electromed, Inc.

Condensed Statements of Operations (Unaudited)

 

                         
  

Three Months Ended

March 31,

  

Nine Months Ended

March 31,

 
   2024   2023   2024   2023 
Net revenues  $13,871,000   $12,068,000   $39,884,000   $34,455,000 
Cost of revenues   3,489,000    3,012,000    9,459,000    8,386,000 
Gross profit   10,382,000    9,056,000    30,425,000    26,069,000 
                     
Operating expenses                    
Selling, general and administrative   8,374,000    7,694,000    25,699,000    22,937,000 
Research and development   167,000    166,000    480,000    618,000 
Total operating expenses   8,541,000    7,860,000    26,179,000    23,555,000 
Operating income   1,841,000    1,196,000    4,246,000    2,514,000 
Interest income, net   120,000    26,000    293,000    37,000 
Net income before income taxes   1,961,000    1,222,000    4,539,000    2,551,000 
                     
Income tax expense   468,000    147,000    1,217,000    418,000 
                     
Net income  $1,493,000   $1,075,000   $3,322,000   $2,133,000 
                     
Income per share:                     
                     
Basic  $0.17   $0.13   $0.39   $0.25 
                     
Diluted   $0.17   $0.12   $0.38   $0.25 
                     
Weighted-average common shares outstanding:                     
Basic   8,565,725    8,461,531    8,549,352    8,449,623 
Diluted   8,892,821    8,710,106    8,822,938    8,694,407 

 

See Notes to Condensed Financial Statements (Unaudited).

 

2

 

 

Electromed, Inc.

Condensed Statements of Cash Flows (Unaudited)

 

             
   Nine Months Ended March 31, 
   2024   2023 
Cash Flows From Operating Activities          
Net income  $3,322,000   $2,133,000 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation   594,000    370,000 
Amortization of finite-life intangible assets   37,000    52,000 
Share-based compensation expense    1,250,000    506,000 
Deferred income taxes   39,000    32,000 
Changes in operating assets and liabilities:          
Accounts receivable   223,000    (1,293,000)
Contract assets    (155,000)   (284,000)
Inventories   78,000    (264,000)
Prepaid expenses and other assets   1,234,000    105,000 
Income tax receivable, net   (627,000)   (270,000)
Accounts payable and accrued liabilities   (1,386,000)   (111,000)
Accrued compensation   (31,000)   (660,000)
Net cash provided by operating activities   4,578,000    316,000 
           
Cash Flows From Investing Activities          
Expenditures for property and equipment   (265,000)   (1,221,000)
Expenditures for finite-life intangible assets   (84,000)   (54,000)
Net cash used in investing activities   (349,000)   (1,275,000)
           
Cash Flows From Financing Activities          
Issuance of common stock upon exercise of options   111,000    40,000 
Taxes paid on net share settlement of stock option exercises   -    (305,000)
Repurchase of common stock   -    (153,000)
Net cash provided by (used in) financing activities   111,000    (418,000)
Net increase (decrease) in cash   4,340,000    (1,377,000)
Cash and cash equivalents          
Beginning of period    7,372,000    8,153,000 
End of period   $11,712,000   $6,776,000 
           
Supplemental Disclosures of Cash Flow Information          
Cash paid for income taxes  $1,806,000   $655,000 
           
Supplemental Disclosures of Noncash Investing and Financing Activities          
Property and equipment acquisitions in accounts payable  $35,000   $136,000 
Intangible asset acquisitions in accounts payable  $-   $6,000 
Option exercise proceeds in other assets  $194,000   $- 
Demonstration equipment returned to inventory  $35,000   $9,000 

 

See Notes to Condensed Financial Statements (Unaudited).

 

3

 

 

Electromed, Inc.

Condensed Statements of Shareholders’ Equity (Unaudited)

 

                         
   Common Stock   Additional Paid-    Retained    Total Shareholders’ 
   Shares   Amount   in Capital   Earnings   Equity 
Balance on June 30, 2022   8,475,438   $85,000   $18,308,000   $15,780,000   $34,173,000 
Net income               81,000    81,000 
Issuance of restricted stock   27,400                 
Forfeiture of restricted stock   (14,166)                
Issuance of common stock upon exercise of options   11,760                 
Taxes paid on stock options exercised on a net basis           (60,000)       (60,000)
Share-based compensation expense           95,000        95,000 
Repurchase of common stock   (14,568)           (145,000)   (145,000)
Balance on September 30, 2022   8,485,864    85,000    18,343,000    15,716,000    34,144,000 
                          
Net income               977,000    977,000 
Issuance of restricted  stock   26,000                 
Issuance of common stock upon exercise of options   3,100        16,000        16,000 
Share-based compensation expense           221,000        221,000 
Repurchase of common stock   (800)           (8,000)   (8,000)
Balance at December 31, 2022   8,514,164   $85,000   $18,580,000   $16,685,000   $35,350,000 
                          
Net income               1,075,000    1,075,000 
Issuance of common stock upon exercise of options   42,436    1,000    23,000        24,000 
Taxes paid on stock options exercised on a net basis           (245,000)       (245,000)
Share-based compensation expense           190,000        190,000 
Balance on March 31, 2023   8,556,600   $86,000   $18,548,000   $17,760,000   $36,394,000 

 

                           
   Common Stock   Additional Paid-    Retained    Total Shareholders’ 
   Shares   Amount   in Capital   Earnings   Equity 
Balance on June 30, 2023   8,555,238   $86,000   $18,788,000   $18,793,000   $37,667,000 
Net income               155,000    155,000 
Issuance of restricted stock   20,878                 
Issuance of common stock upon exercise of options   2,934        29,000        29,000 
Share-based compensation expense           371,000        371,000 
Balance on September 30, 2023   8,579,050    86,000    19,188,000    18,948,000    38,222,000 
                          
Net income               1,674,000    1,674,000 
Issuance of restricted stock   21,000                 
Issuance of common stock upon exercise of options   2,627        26,000        26,000 
Share-based compensation expense           420,000        420,000 
Balance on December 31, 2023   8,602,677   $86,000   $19,634,000   $20,622,000   $40,342,000 
                          
Net income               1,493,000    1,493,000 
Issuance of restricted stock   2,550                 
Issuance of common stock upon exercise of options   50,500    1,000    249,000        250,000 
Share-based compensation expense           459,000        459,000 
Balance on March 31, 2024   8,655,727   $87,000   $20,342,000   $22,115,000   $42,544,000 

 

See Notes to Condensed Financial Statements (Unaudited).

 

4

 

 

Electromed, Inc.

Notes to Condensed Financial Statements (Unaudited)

 

Note 1. Interim Financial Reporting

 

Nature of business: Electromed, Inc. (the “Company”) develops, manufactures, and markets innovative airway clearance products that apply High Frequency Chest Wall Oscillation (“HFCWO”) therapy for pulmonary care patients. The Company markets its products in the U.S. to the homecare and hospital markets. The Company also sells internationally through distributors.

 

Since its inception, the Company has operated in a single industry segment: developing, manufacturing, and marketing medical equipment.

 

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, 2023 (“fiscal 2023”).

 

A summary of the Company’s significant accounting policies follows:

 

Use of estimates. Management uses estimates and assumptions in preparing the unaudited Condensed Financial Statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. The Company believes the critical accounting policies that require the most significant assumptions and judgments in the preparation of its unaudited Condensed Financial Statements include revenue recognition and the related estimation of variable consideration, inventory valuation, share-based compensation and warranty reserve.

 

Net income per common share. Net income is presented on a per share basis for both basic and diluted common shares. Basic net income per common share is computed using the weighted average number of common shares outstanding during the period, excluding any restricted stock awards which have not vested. The diluted net income per common share calculation includes outstanding restricted stock grants and assumes that all stock options were exercised and converted into common stock at the beginning of the period unless their effect would be anti-dilutive. Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were 289,362 and 179,992 for the three months ended March 31, 2024, and 2023, respectively, and were 400,639 and 200,140 for the nine months ended March 31, 2024, and 2023, respectively.

 

Recently Issued Accounting Standards

 

In June 2016, the Financial Accounting Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments, which was subsequently amended by ASU 2018-19, ASU 2019-04, 2019-05, 2019-10, 2019-11, and 2020-02. The standard introduces new accounting guidance for credit losses on financial instruments within its scope, including trade receivables. This new guidance adds an impairment model that is based on expected losses rather than incurred losses. The company adopted the standard effective July 1, 2023. The Company’s adoption of the standard did not have a material impact on the financial statements.

 

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 consideration paid or payable from 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.

 

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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 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® Airway Clearance System (“SmartVest System”) after control has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenues in the Condensed Statements of Operations.

 

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 and Contract assets.

 

Disaggregation of revenues. In the following table, net revenues are disaggregated by market:

   Three Months Ended March 31,   Nine Months Ended March 31, 
   2024   2023   2024   2023 
Homecare  $12,287,000   $10,971,000   $36,108,000   $31,335,000 
Hospital   783,000    440,000    1,909,000    1,420,000 
Homecare distributor   524,000    501,000    1,377,000    1,391,000 
Other   277,000    156,000    490,000    309,000 
Total  $13,871,000   $12,068,000   $39,884,000   $34,455,000 

 

In the following table, net homecare revenue is disaggregated by payer type:

 

   Three Months Ended March 31,   Nine Months Ended March 31, 
   2024   2023   2024   2023 
Commercial  $5,974,000   $4,787,000   $17,684,000   $12,706,000 
Medicare   4,825,000    4,544,000    13,666,000    13,753,000 
Medicare Supplemental   1,177,000    1,278,000    3,447,000    3,681,000 
Medicaid   115,000    128,000    722,000    618,000 
Other homecare   196,000    234,000    589,000    577,000 
Total  $12,287,000   $10,971,000   $36,108,000   $31,335,000 

 

Revenues are recognized at a point in time when control passes to the customer upon product shipment or delivery.

 

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:

 

Homecare market. In the Company’s homecare market, its customers are patients who use the SmartVest System. The various models of the SmartVest System are comprised of three main components – a generator, a vest and a connecting hose – that are sold together as an integrated unit. Accordingly, in contracts within the homecare market, the Company regards the SmartVest System to be a single performance obligation.

 

The Company makes available to its homecare 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 homecare market consist of a single performance obligation: the SmartVest System.

 

Homecare patients generally will rely on third-party payers, including commercial payers and governmental payers such as Medicare, Medicaid and the U.S. Department of Veterans Affairs 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.

 

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Regardless of the type of transaction, provided criteria for an enforceable contract are met, it is the Company’s long- standing business practice to regard all homecare agreements as transferring control to the patient upon shipment or delivery, despite possible payment cancellation under government or commercial programs where the payer is controlling the payment over specified time periods. For homecare 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 because 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 and Contract assets below.

 

The Company’s contractually stated transaction prices in the homecare 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 many 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 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.

 

7

 

 

Homecare distributors. Sales to distributors, who sell direct to patients, are made at fixed contract prices and may include tiered pricing structures or volume-based rebates which offer more favorable pricing once certain volumes are achieved per the negotiated contract. The distributor’s purchases accumulate to give the distributor the right to a higher discount on purchases more than the specified level within the contract period. As a result, to the extent the Company expects the distributor to exceed the specified volume of purchases in the annual period, it recognizes revenue at a blended rate based on estimated total annual volume and sales revenue. This effectively defers a portion of the transaction price on initial purchases below the specified volumes for recognition when the higher discount is earned on purchases in excess of specified volumes. Transfer of control of the products occurs upon shipment or delivery to the distributor, as applicable.

 

Hospital market. The Company’s hospital sales are made to hospitals and other clinics. Sales to these hospitals are negotiated with the individual hospital or with group purchasing organizations, with payments received directly from the hospital. No insurance reimbursement is involved. Generators are either sold or leased to the hospitals and associated hoses and wraps (used in hospital settings rather than vests) are sold separately. Accordingly, each product is distinct and considered a separate performance obligation in sales to hospital customers. The agreements with hospitals fall into two main types, distinguished by differences in the timing of transfer of control and timing of payments:

 

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 thirty days.

 

Wrap usage agreements – Under these transactions, the Company provides a generator device at no cost to the hospital in return for a fixed annual commitment to purchase consumable wraps. These agreements are cancellable upon at least sixty days prior written notice by either party. If cancelled, the generator is returned to the Company, where it can be refurbished and used again later. Revenue for the consumable wraps is recognized when control transfers to the customer.

 

Other. Other revenue consists of international sales which are made directly to several independent distributors at fixed contract prices that are not subject to further adjustments for variable consideration or sales to other customers that do not fall into the markets described above. Transfer of control of the products occurs upon shipment or delivery to the distributor or customer, as applicable.

 

Product warranty. The Company offers warranties on its products. These warranties are assurance-type warranties not sold on a standalone basis or are otherwise considered immaterial in the context of the contract, and therefore are not considered distinct performance obligations under ASC 606. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time the product is sold.

 

Accounts receivable. The Company’s accounts receivable balance is comprised of amounts due from individuals, -hospitals, and distributors. Balances due from individuals are typically remitted to the Company by third-party reimbursement agencies such as Medicare, Medicaid, and private insurance companies. Accounts receivables are carried at amounts estimated to be received from patients under reimbursement arrangements with third-party payers. Accounts receivable is also net of an allowance for credit losses. Management determines the allowance for credit losses by regularly evaluating individual customer accounts and determining expected losses.

 

Contract assets. Contract assets include amounts recognized as revenue that are estimates of variable consideration for Medicare appeals where the final determination of the insurance coverage amount is dependent on future approval of an appeal, or when the consideration due to the Company is dependent on a future event such as the patient meeting a deductible prior to the Company’s claim being processed by the payer. Contract assets are classified as current as amounts will turn into accounts receivable and be collected during the Company’s normal business operating cycle. Contract assets are reclassified to accounts receivable when the right to receive payment is unconditional.

 

Contract balances. The following table provides information about contract assets from contracts with customers:

 

8

 

   Nine Months Ended March 31, 2024   Fiscal Year Ended June 30, 2023 
   Increase (decrease)   Increase (decrease) 
Contract assets, beginning  $487,000   $286,000 
Reclassification of contract assets to accounts receivable   (1,453,000)   (1,220,000)
Contract assets recognized   1,829,000    1,351,000 
Increase (decrease) as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period   (221,000)   70,000 
Contract assets, ending  $642,000   $487,000 

 

Incremental costs to obtain a contract. Sales incentives paid to sales representatives are eligible for capitalization as they are incremental costs that would not have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction. However, the recovery period is less than one year as the performance obligation is satisfied upon shipment or delivery. Consequently, the Company applies the practical expedient provided by ASC 340 and expenses sales incentives as incurred. These costs are included in selling, general and administrative expenses in the Condensed Statements of Operations.

 

Note 3. Inventories

 

The components of inventory were as follows:

 

   March 31, 2024   June 30, 2023 
Parts inventory  $3,016,000   $3,420,000 
Work in process   449,000    470,000 
Finished goods   856,000    323,000 
Estimated inventory to be returned   260,000    265,000 
Less: Reserve for obsolescence   (403,000)   (257,000)
Total  $4,178,000   $4,221,000 

 

 

Note 4. Warranty Reserve

 

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 hospital 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 reserve 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 reserve and adjusts the amounts as necessary.

 

Changes in the Company’s warranty reserve were as follows:

 

   Nine Months Ended March 31, 2024   Fiscal Year Ended June 30, 2023 
Warranty reserve, beginning  $1,378,000   $1,256,000 
Accrual for products sold   426,000    416,000 
Expenditures and costs incurred for warranty claims   (279,000)   (294,000)
Warranty reserve, ending  $1,525,000   $1,378,000 

 

9

 

 

Note 5. Income Taxes

 

Income tax expense was estimated at $468,000 and $1,217,000, and the effective tax rate was 23.9% and 26.8% for the three and nine months ended March 31, 2024, respectively. Estimated income tax expense for the three and nine months ended March 31, 2024, includes a discrete current tax benefit of $99,000 and $95,000, respectively, primarily related to the exercise of stock options.

 

Income tax expense was estimated at $147,000 and $418,000, and the effective tax rate was 12.0% and 16.4% for the three and nine months ended March 31, 2023, respectively. Estimated income tax expense for the three and nine months ended March 31, 2023, includes a discrete current tax benefit of $176,000 and $219,000, respectively, related to the exercise of stock options.

 

The Company is subject to U.S. federal and state income tax in multiple jurisdictions. With limited exceptions, years prior to the Company’s fiscal year ended June 30, 2020, are no longer open to U.S. federal, state or local examinations by taxing authorities. The Company is not under any current income tax examinations by any federal, state or local taxing authority. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

 

Note 6. Financing Arrangements

 

The Company has a credit facility that provides for a $2,500,000 revolving line of credit through December 18, 2025, if not renewed before such date. There was no outstanding principal balance on the line of credit as of March 31, 2024, or June 30, 2023. Interest on borrowings under the line of credit, if any, accrues at the prime rate (8.50% on March 31, 2024) 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. On March 31, 2024, the maximum $2,500,000 was eligible for borrowing. Payment obligations under the line of credit, if any, are 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 non-financial 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.

 

Note 7. Common Stock

 

Authorized shares: The Company’s Articles of Incorporation, as amended, have established 15,000,000 authorized shares of capital stock consisting of 13,000,000 shares of common stock, par value $0.01 per share, and 2,000,000 shares of undesignated stock.

 

On May 26, 2021, the Company’s Board of Directors (the “Board”) approved a stock repurchase authorization. Under the authorization, the Company was originally able to repurchase up to $3.0 million of shares of common stock through May 26, 2022. On May 26, 2022, the Board removed the date limitation. As of March 31, 2024, a total of 239,995 shares have been repurchased and retired under this authorization for a total cost of $2,725,000, or $11.36 per share. Repurchased shares have been retired and constitute authorized but unissued shares. There were no share repurchases for the three and nine months ended March 31, 2024.

 

Note 8. Share-Based Compensation

 

The Company’s share-based compensation plans are described in Note 8 to the financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2023. Share-based compensation expense was $1,250,000 and $506,000 for the nine months ended March 31, 2024, and 2023, respectively. This expense is included in selling, general and administrative expense in the Condensed Statements of Operations.

 

Stock Options

 

Stock option transactions during the nine months ended March 31, 2024, are summarized as follows:

 

  

Number of Shares

  

Weighted-Average Exercise Price per

Share

 
Outstanding on June 30, 2023   451,570   $6.93 
Granted   263,162   $10.70 
Exercised   (56,063)  $5.45 
Cancelled or Forfeited   (21,079)  $10.46 
Outstanding on March 31, 2024   637,590   $8.50 

 

10

 

 

The following assumptions were used to estimate the fair value of stock options granted:

 

   Nine Months Ended
March 31, 2024
  Fiscal Year Ended
June 30, 2023
 
Risk-free interest rate  3.854.64%  2.88 - 4.23%  
Expected term (years)  6  6  
Expected volatility  51 - 53%  53% - 54%  

 

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. On March 31, 2024, the weighted average remaining contractual term for all outstanding stock options was 6.7 years and the aggregate intrinsic value of the options was $4,878,000. Outstanding on March 31, 2024, were 637,590 stock options issued to employees, of which 319,088 were vested and exercisable and had an aggregate intrinsic value of $3,118,000. As of March 31, 2024, $925,000 of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of approximately 2.8 years.

 

Restricted Stock

 

During the nine months ended March 31, 2024, the Company issued restricted stock awards to employees totaling 23,428 shares of common stock, with a weighted average vesting term of 3.0 years and a weighted average fair value of $10.74 per share, and to directors totaling 21,000 shares of common stock, with a vesting term of six months and a weighted average fair value of $10.44 per share. There were 57,661 shares of unvested restricted stock with a weighted average fair value of $10.53 per share outstanding as of March 31, 2024. As of March 31, 2024, $253,000 of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.6 years.

 

Performance-Based Restricted Stock Units

 

The Company granted 175,000 performance-based restricted stock units (“PSUs”) to our CEO in connection with his appointment as CEO on July 1, 2023. The PSUs are to be earned based on the extent to which performance goals tied to Total Shareholder Return (“TSR”) are achieved. The performance-based restricted stock units will be eligible to vest and settle into shares of common stock on a 1-for-1 basis with respect to one-half of the shares upon achieving a total shareholder return of 50% and the remaining shares upon a total shareholder return of 100%, in each case within four years of the date of grant. The grant date fair value of the awards was determined using a Monte Carlo valuation model with an expected term of four years.

 

Stock based compensation expense recognized for PSUs was $217,000 and $0 for the nine months ended March 31, 2024, and 2023, respectively. The weighted average grant date fair value per unit was $6.58 and as of March 31, 2024, there are 175,000 PSUs outstanding. On March 31, 2024, there was approximately $935,000 of total unrecognized compensation expense related to outstanding PSUs that is expected to be recognized over a period of 3.25 years.

 

Note 9. Commitments and Contingencies

 

The Company is occasionally involved in claims and disputes arising in the ordinary course of business. The Company insures certain 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.

 

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Financial Statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and our audited financial statements and related notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (“fiscal 2023”).

 

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Overview

 

Electromed, Inc. (“we,” “our,” “us,” “Electromed” or the “Company”) develops and provides innovative airway clearance products applying High Frequency Chest Wall Oscillation (“HFCWO”) technologies in pulmonary care for patients.

 

We manufacture, market, and sell products that provide HFCWO, including the SmartVest® Airway Clearance System (“SmartVest System”) that includes our newest generation SmartVest Clearway® Airway Clearance System (“Clearway”), previous generation SmartVest SQL®, and related garments and accessories to patients with compromised pulmonary function. The SmartVest Clearway, which received 510(k) clearance from the U.S. Food and Drug Administration in December 2022, provides patients with proven quality of life outcomes while offering a state-of-the-art patient experience with a simple touch screen user interface, small footprint and lightest HFCWO generator on the market.

 

Our products are sold in both the homecare market and the hospital market for inpatient use, which we refer to as “hospital sales.” Since 2000, we have marketed the SmartVest System and its predecessor products to patients suffering from bronchiectasis, cystic fibrosis, and other chronic pulmonary conditions which require external chest manipulation to enhance mucus transport. Additionally, we offer our products to a patient population that includes neuromuscular disorders such as cerebral palsy, muscular dystrophies, amyotrophic lateral sclerosis (“ALS”), patients with post-surgical complications or who are ventilator dependent and patients who have other conditions involving excess secretion and impaired mucus transport.

 

The SmartVest System is often eligible for reimbursement from major private insurance providers, health maintenance organizations (“HMOs”), state Medicaid systems, and the federal Medicare system, which we believe is an important consideration for patients considering an HFCWO course of therapy. For domestic sales, the SmartVest System may be reimbursed under the Medicare-assigned billing code (E0483) for HFCWO devices if the patient has cystic fibrosis, bronchiectasis (including chronic bronchitis or COPD that has resulted in a diagnosis of bronchiectasis), or any one of certain enumerated neuromuscular diseases and myopathies and can demonstrate that another less expensive physical or mechanical treatment did not adequately mobilize retained secretions. Private payers consider a variety of sources, including Medicare, as guidelines in setting their coverage policies and payment amounts.

 

Critical Accounting Estimates

 

For a description of our critical accounting estimates and assumptions used in the preparation of our financial statements, including the unaudited Condensed Financial Statements in this Quarterly Report on Form 10-Q, see Note 1 and Note 2 to our unaudited Condensed Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Part II, Item 7, and Note 1 to our audited financial statements included in Part II, Item 8, of our Annual Report on Form 10-K for fiscal 2023.

 

There were no material changes in our critical accounting estimates and assumptions since the filing of our Annual Report on Form 10-K for fiscal 2023.

 

Change Healthcare Update

 

In late February 2024, UnitedHealth Group’s Change Healthcare was impacted by a cybersecurity incident, negatively impacting financial operations for hospitals, insurers, pharmacies, and medical groups nationwide. Change Healthcare is a financial clearinghouse that works across the health system to make clinical, administrative and financial processes simpler and more efficient for payers, providers and consumers.

 

Electromed had historically filed all non-Medicare claims through Change Healthcare’s clearinghouse. However, we resolved nearly 75% of our delayed claims by the end of the quarter with successful submissions through an alternate clearinghouse. Although we experienced an approximately three-week delay in non-Medicare claims submissions, our impact to cashflow was less than $1,000,000 for the quarter ended March 31, 2024, and is expected to fully resolve by the end of the current fiscal year, June 30, 2024.  In spite of this headwind, we finished the quarter ended March 31, 2024 with $11,712,000 of cash, a $1,278,000 improvement from our prior quarter ($10,434,000 for the quarter ended December 31, 2023).

 

Although we were able to adapt quickly to mitigate the direct impacts of the Change Healthcare cyberattack on our business and operations future disruptions through Change Healthcare or any other financial clearinghouse could have a material adverse impact on our cash flow and ultimate ability to receive payment on our claims.

 

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Results of Operations

 

Net Revenues

 

Net revenues for the three and nine months ended March 31, 2024, and 2023 are summarized in the table below.

 

   Three Months Ended March 31,           Nine Months Ended March 31,         
   2024   2023   Increase   2024   2023   Increase (Decrease) 
Homecare  $12,287,000   $10,971,000   $1,316,000    12.0%  $36,108,000   $31,335,000   $4,773,000    15.2%
Hospital   783,000    440,000    343,000    78.0%   1,909,000    1,420,000    489,000    34.4%
Homecare distributor   524,000    501,000    23,000    4.6%   1,377,000    1,391,000    (14,000)   (1.0%)
Other   277,000    156,000    121,000    77.6%   490,000    309,000    181,000    58.6%
Total  $13,871,000   $12,068,000   $1,803,000    14.9%  $39,884,000   $34,455,000   $5,429,000    15.8%

 

Homecare revenue. Homecare revenue increased by $1,316,000, or 12.0%, for the three months ended March 31, 2024, compared to the same period in the prior year. For the nine months ended March 31, 2024, homecare revenue was $36,108,000, representing an increase of $4,773,000, or 15.2%, compared to the same period in the prior year. The increase in revenue was due to an increase in direct sales representatives, and efficiencies recognized within our reimbursement department as a result of recent investments made to streamline the claims process in the nine months ended March 31, 2024.

 

Hospital revenue. Hospital revenue was $783,000, an increase of $343,000, or 78.0%, for the three months ended March 31, 2024, compared to the same period in the prior year. For the nine months ended March 31, 2024, hospital revenue was $1,909,000, an increase of $489,000, or 34.4%, compared to the same period in the prior year. The increases were primarily due to an increase in sales representatives focused on the hospital market as well as increased capital and disposable demand.

 

Homecare distributor revenue. Homecare distributor revenue increased by $23,000, or 4.6%, for the three months ended March 31, 2024, compared to the same period in the prior year. For the nine months ended March 31, 2024, homecare distributor revenue was $1,377,000, a decrease of $14,000, or 1.0%, compared to the same period in the prior year. The change in Homecare distributor sales were primarily a result of the timing of distributor purchases that can cause significant fluctuations in reported revenue on a quarterly basis.

 

Other revenue. Other revenue was $277,000, an increase of $121,000, or 77.6%, for the three months ended March 31, 2024, compared to the same period in the prior year. For the nine months ended March 31, 2024, other revenue was $490,000, an increase of $181,000, or 58.6%, compared to the same period in the prior year. The increase in other revenue was primarily due to the timing of international distributor purchases and purchases by customers that do not fall within the other markets described above, which caused significant fluctuations in reported revenue on a quarterly basis.

 

Gross profit

 

Gross profit increased to $10,382,000, or 74.8% of net revenues, for the three months ended March 31, 2024, from $9,056,000, or 75.0% of net revenues, in the same period in the prior year. Gross profit increased to $30,425,000, or 76.3% of net revenues, for the nine months ended March 31, 2024, from $26,069,000, or 75.7% of net revenues, in the same period in the prior year. The decrease in gross profit as a percentage of net revenues compared to the same three-month period in the prior year was primarily due to costs associated with the wind down of our previous generator models. The increase in gross profit as a percentage of net revenues compared to the same nine-month period in the prior year was primarily due to decreased shipping expenses and increased material costs in the prior year to expedite inventory purchases which did not recur in the current year.

 

Operating expenses

 

Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses were $8,374,000 and $25,699,000 for the three and nine months ended March 31, 2024, respectively, representing increases of $680,000 and $2,762,000, or 8.8% and 12.0%, respectively, compared to the same periods in the prior year.

 

Payroll and compensation-related expenses were $5,721,000 and $17,111,000 for the three and nine months ended March 31, 2024, respectively, representing increases of $684,000 and $2,191,000, or 13.6% and 14.7%, respectively, compared to the same periods in the prior year. The increase in the current year periods were primarily due to increases in share-based compensation, salaries, and incentive compensation related to the higher average number of sales, sales support, marketing, and reimbursement personnel to process higher patient referrals. We have also continued to provide regular merit-based increases for our employees and are regularly benchmarking our compensation ranges including share-based compensation for new and existing employees to ensure we can hire and retain the talent needed to drive growth in our business. Field sales employees totaled 59 as of March 31, 2024, 51 of which were direct sales representatives, compared to 57 field sales employees and 48 direct sales representatives as of March 31, 2023.

 

13

 

 

Travel, meals and entertainment expenses were $760,000 and $2,453,000 for the three and nine months ended March 31, 2024, respectively, representing increases of $102,000 and $163,000, or 15.5% and 7.1%, respectively, compared to the same periods in the prior year. The increase in the current year periods were due to a higher average number of direct sales representatives, higher travel costs, an increased number of sales territories, and a mid-year sales meeting held in Q3 FY 2024.

 

Total discretionary marketing expenses were $304,000 and $1,095,000 for the three and nine months ended March 31, 2024, respectively, representing increases of $92,000 and $514,000, or 43.4% and 88.5%, respectively, compared to the same periods in the prior year. The increases were primarily due to an investment in market research, direct-to-consumer and direct-to-physician marketing.

 

Professional fees were $978,000 and $3,222,000 for the three and nine months ended March 31, 2024, respectively, representing decreases of $410,000 and $628,000, or 29.5% and 16.3%, respectively, compared to the same periods in the prior year. Professional fees are primarily for services related to legal costs, shareowner services and reporting requirements, information technology technical support and consulting fees. The decrease in the three months ended March 31, 2024, were primarily related to legal and consulting costs associated with the termination of the Public Health Emergency for COVID-19 and recruiting costs for multiple senior leadership positions that has not recurred in the fiscal year ending June 30, 2024 (“fiscal 2024”). In addition to those fees that did not recur in the third quarter, the decreases in the nine months ended March 31, 2024, were due to legal fees in fiscal 2023 related to a reimbursement project that has not recurred in fiscal 2024.

 

Research and development expenses. Research and development (“R&D”) expenses were $167,000 and $480,000 for the three and nine months ended March 31, 2024, respectively, representing an increase of $1,000, or 0.6%, and a decrease of $138,000, or 22.3%, respectively, compared to the same periods in the prior year. The decrease in the nine months ended March 31, 2024, were primarily due to reduced costs associated with our SmartVest Clearway platform development in the prior year which has now been launched into the Homecare and Hospital markets.

 

Interest income, net

 

Net interest income for the three and nine months ended March 31, 2024, was $120,000 and $293,000, respectively, compared to $26,000 and $37,000, respectively, for the same periods in the prior year. These increases were due to increased savings rates on higher cash balances.

 

Income tax expense

 

Income tax expense was estimated at $468,000 and $1,217,000, and the effective tax rate was 23.9% and 26.8%, for the three and nine months ended March 31, 2024, respectively. Estimated income tax expense for the three and nine months ended March 31, 2024, includes a discrete tax benefit of $99,000 and $95,000, respectively, primarily related to the exercise of stock options.

 

Income tax expense was estimated at $147,000 and $418,000, and the effective tax rate was 12.0% and 16.4%, for the three and nine months ended March 31, 2023, respectively. Estimated income tax expense for the three and nine months ended March 31, 2023, includes a discrete tax benefit of $176,000 and $219,000, respectively, related to the exercise of stock options.

 

Net income

 

Net income for the three and nine months ended March 31, 2024, was $1,493,000 and $3,322,000, respectively, compared to $1,075,000 and $2,133,000 for the same periods in the prior year. The increases in net income were driven primarily by net revenues growth and an increase in interest income.

 

14

 

 

Liquidity and Capital Resources

 

Cash Flows and Sources of Liquidity

 

Cash Flows provided by Operating Activities

 

For the nine months ended March 31, 2024, net cash provided by operating activities was $4,578,000. Cash flows provided by operating activities consisted of net income of $3,322,000, non-cash expenses of $1,920,000, a decrease in prepaid expenses and other assets of $1,234,000, an increase in income tax receivable, net, of $627,000, a decrease in accounts receivable of $223,000, and a decrease in inventory of $78,000. These cash flows from operating activities were offset by a decrease in accounts payable and accrued liabilities of $1,386,000, an increase in contract assets of $155,000, and a decrease in accrued compensation of $31,000.

 

The decrease in prepaid expenses and other assets, as well as the decrease in accounts payable and other accrued liabilities are primarily due to a litigation settlement payment related to our previously disclosed cyber security breach. The payment to the settlement fund during the first quarter of fiscal 2024 for the settlement amount of $825,000 was covered by insurance resulting in a reduction in other current assets and other accrued liabilities.

 

Cash Flows used in Investing Activities

 

For the nine months ended March 31, 2024, cash used in investing activities was $349,000. Cash used in investing activities consisted of $265,000 in expenditures for property and equipment and $84,000 in expenditures for intangible asset costs.

 

Cash Flows provided by Financing Activities

 

For the nine months ended March 31, 2024, cash provided by financing activities was $111,000, consisting of cash received for stock option exercises.

 

Adequacy of Capital Resources

 

Our primary working capital requirements relate to adding employees to our sales force and support functions, continuing infrastructure investments, and supporting general corporate needs, including financing equipment purchases and other capital expenditures incurred in the ordinary course of business. Based on our current operational performance, we believe our working capital of $34,996,000 and available borrowings under our existing credit facility will provide sufficient liquidity to meet our anticipated working capital and other liquidity needs for the next twelve months from the date of this report.

 

Our credit facility provides us with a revolving line of credit. Interest on borrowings on the line of credit accrues at the prime rate (8.50% on March 31, 2024) less 1.00% and is payable monthly. There was no outstanding principal balance on the line of credit as of March 31, 2024, or June 30, 2023. 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 17, 2025, if not renewed. As of March 31, 2024, the maximum $2,500,000 was available under the line of credit. Payment obligations under the line of credit are secured by a security interest in substantially all of our tangible and intangible assets.

 

The documents governing our line of credit contain certain financial and nonfinancial covenants that include a minimum tangible net worth of not less than $10,125,000 and restrictions on our ability to incur certain additional indebtedness or pay dividends.

 

Any failure to comply with these covenants in the future may result in an event of default, which if not cured or waived, could result in the lender accelerating the maturity of our indebtedness, preventing access to additional funds under the line of credit, requiring prepayment of outstanding indebtedness, or refusing to renew the line of credit. If the maturity of the indebtedness is accelerated or the line of credit is not renewed, sufficient cash resources to satisfy the debt obligations may not be available and we may not be able to continue operations as planned. If we are unable to repay such indebtedness, the lender could foreclose on these assets.

 

15

 

 

For the nine months ended March 31, 2024, and 2023, we spent $265,000 and $1,221,000, respectively, on property and equipment. We currently expect to finance planned equipment purchases with cash flows from operations or borrowings under our credit facility. We may need to incur additional debt if we have an unforeseen need for additional capital equipment or if our operating performance does not generate adequate cash flows.

 

While the impact of macroeconomic factors such as inflation are difficult to predict, we believe our cash, cash equivalents and cash flows from operations will be sufficient to meet our working capital, capital expenditure, operational cash requirements for fiscal 2024 and the foreseeable future. We will continue to evaluate our projected expenditures relative to our available cash and evaluate financing alternatives to satisfy our working capital and other cash requirements.

 

Information Regarding Forward-Looking Statements

 

Statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact should be considered forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward- looking statements include, but are not limited to, statements regarding: our business strategy, including our intended level of investment in R&D and marketing activities; our expectations with respect to earnings, gross margins and sales growth, industry relationships, marketing strategies and international sales; estimated sizes of markets into which our products are or may be sold; our business strengths and competitive advantages; our ability to grow additional sales distribution channels; our intent to retain any earnings for use in operations rather than paying dividends; our expectation that our products will continue to qualify for reimbursement and payment under government and private insurance programs; our intellectual property plans and practices; the expected impact of applicable regulations on our business; our beliefs about our manufacturing processes; our expectations and beliefs with respect to our employees and our relationships with them; our belief that our current facilities are adequate to support our growth plans; our expectations with respect to ongoing compliance with the terms of our credit facility; our expectations regarding the ongoing availability of credit and our ability to renew our line of credit; enhancements to our products and services; expected excise tax exemption for the SmartVest System; and our anticipated revenues, expenses, capital requirements and liquidity. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “project,” “goal,” “target,” “should,” “will,” “would,” and similar expressions, including the negative of these terms, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Although we believe these forward-looking statements are reasonable, they involve risks and uncertainties that may cause actual results to differ materially from those projected by such statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements.

 

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, the following:

ability to obtain reimbursement from Medicare, Medicaid, or private insurance payers for our products including potential adverse impact with an expiration of the Centers for Medicare and Medicaid Services waiver for certain respiratory diseases;

component or raw material shortages, changes to lead times or significant price increases;

adverse changes to state and federal health care regulations;

our ability to maintain regulatory compliance and to gain future regulatory approvals and clearances;

entry of new competitors including new drug or pharmaceutical discoveries;

adverse economic and business conditions or intense competition;

the risks associated with our planned salesforce expansion;

wage and component price inflation;

technical problems with our research and products;

the risks associated with cyberattacks, data breaches, computer viruses and other similar security threats;

changes affecting the medical device industry;

our ability to develop new sales channels for our products such as the homecare distributor channel;

adverse international health care regulation impacting current international business;

our ability to renew our line of credit or obtain additional credit as necessary; and
our ability to protect and expand our intellectual property portfolio.

 

16

 

 

This list of factors is not exhaustive, however, and these or other factors, many of which are outside of our control, could have a material adverse effect on us and our results of operations. Therefore, you should consider these risk factors with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance. Forward-looking statements speak only as of the date on which the statements are made, and we undertake no obligation, and expressly disclaim any such obligation, to update any forward-looking statement for any reason other than as required by law, even if new information becomes available or other events occur in the future. You should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for fiscal 2023. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth herein.

 

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

 

As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.

 

Item 4.Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period subject to this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal 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.

 

Changes to Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1.Legal Proceedings.

 

Occasionally, we may be party to legal actions, proceedings, or claims in the ordinary course of business, including claims based on assertions of patent and trademark infringement. We are not party to any material pending legal proceedings.

 

Item 1A. Risk Factors.

 

As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

 

On May 26, 2021, our Board of Directors (the “Board”) approved the repurchase of up to $3.0 million of outstanding shares of our common stock. The shares of our common stock may be repurchased under the authorization on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. The current repurchase authorization does not expire and the approximate dollar value of shares that may yet be purchased under the plan as of March 31, 2024, was approximately $275,000. There were no share repurchases for the period covered by this Quarterly Report on Form 10-Q.

 

Item 3.Defaults Upon Senior Securities.

 

None.

 

17

 

 

Item 4.Mine Safety Disclosures.

 

None.

 

Item 5.Other Information.

 

During the three months ended March 31, 2024, no director or officer of the Company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

 

Item 6.Exhibits.

 

Exhibit

Number

 

Description

 

Method of Filing

3.1   Composite Articles of Incorporation, as amended through November 8, 2010 (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K for the fiscal year ended June 30, 2015)   Incorporated by Reference
         
3.2   Amended and Restated Bylaws, effective September 29, 2020 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed September 29, 2020)   Incorporated by Reference
         
31.1   Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   Filed Electronically
         
31.2   Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   Filed Electronically
         
32.1   Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   Furnished Electronically
         
32.2   Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   Furnished Electronically
         
101   Financial statements from the Quarterly Report on Form 10-Q for the period ended March 31, 2024, formatted in inline XBRL: (i) Condensed Balance Sheets, (ii) Condensed Statements of Operations, (iii) Condensed Statements of Cash Flows, (iv) Condensed Statements of Shareholders’ Equity, and (v) Notes to Condensed Financial Statements   Filed Electronically
         
104   Cover Page Interactive Data File (embedded within the inline XBRL Document)   Filed Electronically

 

* Management compensatory contract or arrangement

 

18

 

 

SIGNATURES

 

Pursuant to the requirements 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.

 

  ELECTROMED, INC.
   
Date: May 7, 2024 /s/ James L. Cunniff
    James L. Cunniff, President and Chief Executive Officer (duly authorized officer)
     
Date: May 7, 2024

/s/ Bradley M. Nagel

    Bradley M. Nagel, Chief Financial Officer
    (principal financial officer and principal accounting officer)

 

 

EX-31.1 2 elmd240512_ex31-1.htm CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 31.1

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, James L. Cunniff, certify that:

 

1.I have reviewed this report on Form 10-Q of Electromed, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 7, 2024  /s/ James L. Cunniff
  James L. Cunniff
  President and Chief Executive Officer

 

 

EX-31.2 3 elmd240512_ex31-2.htm CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 31.2

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Bradley M. Nagel, certify that:

 

1.I have reviewed this report on Form 10-Q of Electromed, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 7, 2024  /s/ Bradley M. Nagel
  Bradley M. Nagel
  Chief Financial Officer

 

 

EX-32.1 4 elmd240512_ex32-1.htm CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Electromed, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, James L. Cunniff, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: May 7, 2024  /s/ James L. Cunniff
  James L. Cunniff
  President and Chief Executive Officer

 

 

EX-32.2 5 elmd240512_ex32-2.htm CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.2

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Electromed, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Bradley M. Nagel, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: May 7, 2024 /s/ Bradley M. Nagel
  Bradley M. Nagel
  Chief Financial Officer

 

EX-101.CAL 6 elmd-20240331_cal.xml XBRL CALCULATION FILE EX-101.DEF 7 elmd-20240331_def.xml XBRL DEFINITION FILE EX-101.LAB 8 elmd-20240331_lab.xml XBRL LABEL FILE Equity Components [Axis] Common Stock [Member] Additional Paid-in Capital [Member] Retained Earnings [Member] Product and Service [Axis] Home Care [Member] Hospital [Member] Home Care Distributor [Member] Other [Member] Payer Type [Axis] Commercial [Member] Medicare [Member] Medicare Supplemental [Member] Medicaid [Member] Other Homecare [Member] Lender Name [Axis] Revolving Credit Facility [Member] Variable Rate [Axis] Prime Rate [Member] Class of Stock [Axis] Capital Stock [Member] Authorized Shares Undesignated Stock [Member] Title of Individual [Axis] Board of Directors Chairman [Member] Award Type [Axis] Share-Based Payment Arrangement, Option [Member] Restricted Stock [Member] Plan Name [Axis] Employee [Member] Director [Member] Restricted Stock Units (RSUs) [Member] Cover [Abstract] Document Type Amendment Flag 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Cover - shares
9 Months Ended
Mar. 31, 2024
May 02, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Mar. 31, 2024  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --06-30  
Entity File Number 001-34839  
Entity Registrant Name Electromed, Inc.  
Entity Central Index Key 0001488917  
Entity Tax Identification Number 41-1732920  
Entity Incorporation, State or Country Code MN  
Entity Address, Address Line One 500 Sixth Avenue NW  
Entity Address, City or Town New Prague  
Entity Address, State or Province MN  
Entity Address, Postal Zip Code 56071  
City Area Code (952)  
Local Phone Number 758-9299  
Title of 12(b) Security Common Stock, $0.01 par value  
Trading Symbol ELMD  
Security Exchange Name NYSEAMER  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   8,655,727
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Condensed Balance Sheets (Unaudited) - USD ($)
Mar. 31, 2024
Jun. 30, 2023
Current Assets    
Cash and cash equivalents $ 11,712,000 $ 7,372,000
Accounts receivable (net of allowances for credit losses of $45,000) 23,907,000 24,130,000
Contract assets 642,000 487,000
Inventories 4,178,000 4,221,000
Prepaid expenses and other current assets 592,000 1,577,000
Income tax receivable 291,000
Total current assets 41,322,000 37,787,000
Property and equipment, net 5,283,000 5,672,000
Finite-life intangible assets, net 648,000 605,000
Other assets 106,000 161,000
Deferred income taxes 1,542,000 1,581,000
Total assets 48,901,000 45,806,000
Current Liabilities    
Accounts payable 792,000 1,372,000
Accrued compensation 2,987,000 3,018,000
Income tax payable 336,000
Warranty reserve 1,525,000 1,378,000
Other accrued liabilities 1,022,000 1,949,000
Total current liabilities 6,326,000 8,053,000
Other long-term liabilities 31,000 86,000
Total liabilities 6,357,000 8,139,000
Shareholders’ Equity    
Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,655,727 and 8,555,238 shares issued and outstanding, as of March 31, 2024, and June 30, 2023, respectively 87,000 86,000
Additional paid-in capital 20,342,000 18,788,000
Retained earnings 22,115,000 18,793,000
Total shareholders' equity 42,544,000 37,667,000
Total liabilities and shareholders' equity $ 48,901,000 $ 45,806,000
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Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($)
Mar. 31, 2024
Jun. 30, 2023
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, outstanding 8,655,727 8,555,238
Common stock, issued 8,655,727 8,555,238
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Condensed Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Income Statement [Abstract]        
Net revenues $ 13,871,000 $ 12,068,000 $ 39,884,000 $ 34,455,000
Cost of revenues 3,489,000 3,012,000 9,459,000 8,386,000
Gross profit 10,382,000 9,056,000 30,425,000 26,069,000
Operating expenses        
Selling, general and administrative 8,374,000 7,694,000 25,699,000 22,937,000
Research and development 167,000 166,000 480,000 618,000
Total operating expenses 8,541,000 7,860,000 26,179,000 23,555,000
Operating income 1,841,000 1,196,000 4,246,000 2,514,000
Interest income, net 120,000 26,000 293,000 37,000
Net income before income taxes 1,961,000 1,222,000 4,539,000 2,551,000
Income tax expense 468,000 147,000 1,217,000 418,000
Net income $ 1,493,000 $ 1,075,000 $ 3,322,000 $ 2,133,000
Income per share:        
Basic $ 0.17 $ 0.13 $ 0.39 $ 0.25
Diluted $ 0.17 $ 0.12 $ 0.38 $ 0.25
Weighted-average common shares outstanding:        
Basic 8,565,725 8,461,531 8,549,352 8,449,623
Diluted 8,892,821 8,710,106 8,822,938 8,694,407
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Condensed Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash Flows From Operating Activities    
Net income $ 3,322,000 $ 2,133,000
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 594,000 370,000
Amortization of finite-life intangible assets 37,000 52,000
Share-based compensation expense 1,250,000 506,000
Deferred income taxes 39,000 32,000
Changes in operating assets and liabilities:    
Accounts receivable 223,000 (1,293,000)
Contract assets (155,000) (284,000)
Inventories 78,000 (264,000)
Prepaid expenses and other assets 1,234,000 105,000
Income tax receivable, net (627,000) (270,000)
Accounts payable and accrued liabilities (1,386,000) (111,000)
Accrued compensation (31,000) (660,000)
Net cash provided by operating activities 4,578,000 316,000
Cash Flows From Investing Activities    
Expenditures for property and equipment (265,000) (1,221,000)
Expenditures for finite-life intangible assets (84,000) (54,000)
Net cash used in investing activities (349,000) (1,275,000)
Cash Flows From Financing Activities    
Issuance of common stock upon exercise of options 111,000 40,000
Taxes paid on net share settlement of stock option exercises (305,000)
Repurchase of common stock (153,000)
Net cash provided by (used in) financing activities 111,000 (418,000)
Net increase (decrease) in cash 4,340,000 (1,377,000)
Cash and cash equivalents    
Beginning of period 7,372,000 8,153,000
End of period 11,712,000 6,776,000
Supplemental Disclosures of Cash Flow Information    
Cash paid for income taxes 1,806,000 655,000
Supplemental Disclosures of Noncash Investing and Financing Activities    
Property and equipment acquisitions in accounts payable 35,000 136,000
Intangible asset acquisitions in accounts payable 6,000
Option exercise proceeds in other assets 194,000
Demonstration equipment returned to inventory $ 35,000 $ 9,000
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Condensed Statements of Shareholders' Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance on December 31, 2023 at Jun. 30, 2022 $ 85,000 $ 18,308,000 $ 15,780,000 $ 34,173,000
Balance at beginning (in shares) at Jun. 30, 2022 8,475,438      
Net income 81,000 81,000
Issuance of restricted stock
Issuance of restricted stock (in shares) 27,400      
Forfeiture of restricted stock
Forfeiture of restricted stock (in shares) (14,166)      
Issuance of common stock upon exercise of options
Issuance of common stock upon exercise of options (in shares) 11,760      
Taxes paid on stock options exercised on a net basis (60,000) (60,000)
Share-based compensation expense 95,000 95,000
Repurchase of common stock (145,000) (145,000)
Repurchase of common stock (in shares) (14,568)      
Balance on March 31, 2024 at Sep. 30, 2022 $ 85,000 18,343,000 15,716,000 34,144,000
Balance at ending (in shares) at Sep. 30, 2022 8,485,864      
Balance on December 31, 2023 at Jun. 30, 2022 $ 85,000 18,308,000 15,780,000 34,173,000
Balance at beginning (in shares) at Jun. 30, 2022 8,475,438      
Net income       2,133,000
Repurchase of common stock       (153,000)
Balance on March 31, 2024 at Mar. 31, 2023 $ 86,000 18,548,000 17,760,000 36,394,000
Balance at ending (in shares) at Mar. 31, 2023 8,556,600      
Balance on December 31, 2023 at Sep. 30, 2022 $ 85,000 18,343,000 15,716,000 34,144,000
Balance at beginning (in shares) at Sep. 30, 2022 8,485,864      
Net income 977,000 977,000
Issuance of restricted stock
Issuance of restricted stock (in shares) 26,000      
Issuance of common stock upon exercise of options 16,000 16,000
Issuance of common stock upon exercise of options (in shares) 3,100      
Share-based compensation expense 221,000 221,000
Repurchase of common stock (8,000) (8,000)
Repurchase of common stock (in shares) (800)      
Balance on March 31, 2024 at Dec. 31, 2022 $ 85,000 18,580,000 16,685,000 35,350,000
Balance at ending (in shares) at Dec. 31, 2022 8,514,164      
Net income 1,075,000 1,075,000
Issuance of common stock upon exercise of options 1,000 23,000 $ 24,000
Issuance of common stock upon exercise of options (in shares)       42,436
Taxes paid on stock options exercised on a net basis (245,000) $ (245,000)
Share-based compensation expense 190,000 190,000
Balance on March 31, 2024 at Mar. 31, 2023 $ 86,000 18,548,000 17,760,000 36,394,000
Balance at ending (in shares) at Mar. 31, 2023 8,556,600      
Balance on December 31, 2023 at Jun. 30, 2023 $ 86,000 18,788,000 18,793,000 $ 37,667,000
Balance at beginning (in shares) at Jun. 30, 2023 8,555,238     8,555,238
Net income 155,000 $ 155,000
Issuance of restricted stock
Issuance of restricted stock (in shares) 20,878      
Issuance of common stock upon exercise of options 29,000 29,000
Issuance of common stock upon exercise of options (in shares) 2,934      
Share-based compensation expense 371,000 371,000
Balance on March 31, 2024 at Sep. 30, 2023 $ 86,000 19,188,000 18,948,000 38,222,000
Balance at ending (in shares) at Sep. 30, 2023 8,579,050      
Balance on December 31, 2023 at Jun. 30, 2023 $ 86,000 18,788,000 18,793,000 $ 37,667,000
Balance at beginning (in shares) at Jun. 30, 2023 8,555,238     8,555,238
Net income       $ 3,322,000
Repurchase of common stock      
Repurchase of common stock (in shares)       (239,995)
Balance on March 31, 2024 at Mar. 31, 2024 $ 87,000 20,342,000 22,115,000 $ 42,544,000
Balance at ending (in shares) at Mar. 31, 2024 8,655,727     8,655,727
Balance on December 31, 2023 at Sep. 30, 2023 $ 86,000 19,188,000 18,948,000 $ 38,222,000
Balance at beginning (in shares) at Sep. 30, 2023 8,579,050      
Net income 1,674,000 1,674,000
Issuance of restricted stock
Issuance of restricted stock (in shares) 21,000      
Issuance of common stock upon exercise of options 26,000 26,000
Issuance of common stock upon exercise of options (in shares) 2,627      
Share-based compensation expense 420,000 420,000
Balance on March 31, 2024 at Dec. 31, 2023 $ 86,000 19,634,000 20,622,000 40,342,000
Balance at ending (in shares) at Dec. 31, 2023 8,602,677      
Net income 1,493,000 1,493,000
Issuance of restricted stock
Issuance of restricted stock (in shares) 2,550      
Issuance of common stock upon exercise of options $ 1,000 249,000 250,000
Issuance of common stock upon exercise of options (in shares) 50,500      
Share-based compensation expense 459,000 459,000
Balance on March 31, 2024 at Mar. 31, 2024 $ 87,000 $ 20,342,000 $ 22,115,000 $ 42,544,000
Balance at ending (in shares) at Mar. 31, 2024 8,655,727     8,655,727
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Interim Financial Reporting
9 Months Ended
Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Interim Financial Reporting

Note 1. Interim Financial Reporting

 

Nature of business: Electromed, Inc. (the “Company”) develops, manufactures, and markets innovative airway clearance products that apply High Frequency Chest Wall Oscillation (“HFCWO”) therapy for pulmonary care patients. The Company markets its products in the U.S. to the homecare and hospital markets. The Company also sells internationally through distributors.

 

Since its inception, the Company has operated in a single industry segment: developing, manufacturing, and marketing medical equipment.

 

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, 2023 (“fiscal 2023”).

 

A summary of the Company’s significant accounting policies follows:

 

Use of estimates. Management uses estimates and assumptions in preparing the unaudited Condensed Financial Statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. The Company believes the critical accounting policies that require the most significant assumptions and judgments in the preparation of its unaudited Condensed Financial Statements include revenue recognition and the related estimation of variable consideration, inventory valuation, share-based compensation and warranty reserve.

 

Net income per common share. Net income is presented on a per share basis for both basic and diluted common shares. Basic net income per common share is computed using the weighted average number of common shares outstanding during the period, excluding any restricted stock awards which have not vested. The diluted net income per common share calculation includes outstanding restricted stock grants and assumes that all stock options were exercised and converted into common stock at the beginning of the period unless their effect would be anti-dilutive. Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were 289,362 and 179,992 for the three months ended March 31, 2024, and 2023, respectively, and were 400,639 and 200,140 for the nine months ended March 31, 2024, and 2023, respectively.

 

Recently Issued Accounting Standards

 

In June 2016, the Financial Accounting Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments, which was subsequently amended by ASU 2018-19, ASU 2019-04, 2019-05, 2019-10, 2019-11, and 2020-02. The standard introduces new accounting guidance for credit losses on financial instruments within its scope, including trade receivables. This new guidance adds an impairment model that is based on expected losses rather than incurred losses. The company adopted the standard effective July 1, 2023. The Company’s adoption of the standard did not have a material impact on the financial statements.

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Revenues
9 Months Ended
Mar. 31, 2024
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 consideration paid or payable from 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 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® Airway Clearance System (“SmartVest System”) after control has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenues in the Condensed Statements of Operations.

 

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 and Contract assets.

 

Disaggregation of revenues. In the following table, net revenues are disaggregated by market:

   Three Months Ended March 31,   Nine Months Ended March 31, 
   2024   2023   2024   2023 
Homecare  $12,287,000   $10,971,000   $36,108,000   $31,335,000 
Hospital   783,000    440,000    1,909,000    1,420,000 
Homecare distributor   524,000    501,000    1,377,000    1,391,000 
Other   277,000    156,000    490,000    309,000 
Total  $13,871,000   $12,068,000   $39,884,000   $34,455,000 

 

In the following table, net homecare revenue is disaggregated by payer type:

 

   Three Months Ended March 31,   Nine Months Ended March 31, 
   2024   2023   2024   2023 
Commercial  $5,974,000   $4,787,000   $17,684,000   $12,706,000 
Medicare   4,825,000    4,544,000    13,666,000    13,753,000 
Medicare Supplemental   1,177,000    1,278,000    3,447,000    3,681,000 
Medicaid   115,000    128,000    722,000    618,000 
Other homecare   196,000    234,000    589,000    577,000 
Total  $12,287,000   $10,971,000   $36,108,000   $31,335,000 

 

Revenues are recognized at a point in time when control passes to the customer upon product shipment or delivery.

 

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:

 

Homecare market. In the Company’s homecare market, its customers are patients who use the SmartVest System. The various models of the SmartVest System are comprised of three main components – a generator, a vest and a connecting hose – that are sold together as an integrated unit. Accordingly, in contracts within the homecare market, the Company regards the SmartVest System to be a single performance obligation.

 

The Company makes available to its homecare 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 homecare market consist of a single performance obligation: the SmartVest System.

 

Homecare patients generally will rely on third-party payers, including commercial payers and governmental payers such as Medicare, Medicaid and the U.S. Department of Veterans Affairs 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 the type of transaction, provided criteria for an enforceable contract are met, it is the Company’s long- standing business practice to regard all homecare agreements as transferring control to the patient upon shipment or delivery, despite possible payment cancellation under government or commercial programs where the payer is controlling the payment over specified time periods. For homecare 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 because 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 and Contract assets below.

 

The Company’s contractually stated transaction prices in the homecare 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 many 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 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.

 

 

Homecare distributors. Sales to distributors, who sell direct to patients, are made at fixed contract prices and may include tiered pricing structures or volume-based rebates which offer more favorable pricing once certain volumes are achieved per the negotiated contract. The distributor’s purchases accumulate to give the distributor the right to a higher discount on purchases more than the specified level within the contract period. As a result, to the extent the Company expects the distributor to exceed the specified volume of purchases in the annual period, it recognizes revenue at a blended rate based on estimated total annual volume and sales revenue. This effectively defers a portion of the transaction price on initial purchases below the specified volumes for recognition when the higher discount is earned on purchases in excess of specified volumes. Transfer of control of the products occurs upon shipment or delivery to the distributor, as applicable.

 

Hospital market. The Company’s hospital sales are made to hospitals and other clinics. Sales to these hospitals are negotiated with the individual hospital or with group purchasing organizations, with payments received directly from the hospital. No insurance reimbursement is involved. Generators are either sold or leased to the hospitals and associated hoses and wraps (used in hospital settings rather than vests) are sold separately. Accordingly, each product is distinct and considered a separate performance obligation in sales to hospital customers. The agreements with hospitals fall into two main types, distinguished by differences in the timing of transfer of control and timing of payments:

 

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 thirty days.

 

Wrap usage agreements – Under these transactions, the Company provides a generator device at no cost to the hospital in return for a fixed annual commitment to purchase consumable wraps. These agreements are cancellable upon at least sixty days prior written notice by either party. If cancelled, the generator is returned to the Company, where it can be refurbished and used again later. Revenue for the consumable wraps is recognized when control transfers to the customer.

 

Other. Other revenue consists of international sales which are made directly to several independent distributors at fixed contract prices that are not subject to further adjustments for variable consideration or sales to other customers that do not fall into the markets described above. Transfer of control of the products occurs upon shipment or delivery to the distributor or customer, as applicable.

 

Product warranty. The Company offers warranties on its products. These warranties are assurance-type warranties not sold on a standalone basis or are otherwise considered immaterial in the context of the contract, and therefore are not considered distinct performance obligations under ASC 606. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time the product is sold.

 

Accounts receivable. The Company’s accounts receivable balance is comprised of amounts due from individuals, -hospitals, and distributors. Balances due from individuals are typically remitted to the Company by third-party reimbursement agencies such as Medicare, Medicaid, and private insurance companies. Accounts receivables are carried at amounts estimated to be received from patients under reimbursement arrangements with third-party payers. Accounts receivable is also net of an allowance for credit losses. Management determines the allowance for credit losses by regularly evaluating individual customer accounts and determining expected losses.

 

Contract assets. Contract assets include amounts recognized as revenue that are estimates of variable consideration for Medicare appeals where the final determination of the insurance coverage amount is dependent on future approval of an appeal, or when the consideration due to the Company is dependent on a future event such as the patient meeting a deductible prior to the Company’s claim being processed by the payer. Contract assets are classified as current as amounts will turn into accounts receivable and be collected during the Company’s normal business operating cycle. Contract assets are reclassified to accounts receivable when the right to receive payment is unconditional.

 

Contract balances. The following table provides information about contract assets from contracts with customers:

 

   Nine Months Ended March 31, 2024   Fiscal Year Ended June 30, 2023 
   Increase (decrease)   Increase (decrease) 
Contract assets, beginning  $487,000   $286,000 
Reclassification of contract assets to accounts receivable   (1,453,000)   (1,220,000)
Contract assets recognized   1,829,000    1,351,000 
Increase (decrease) as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period   (221,000)   70,000 
Contract assets, ending  $642,000   $487,000 

 

Incremental costs to obtain a contract. Sales incentives paid to sales representatives are eligible for capitalization as they are incremental costs that would not have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction. However, the recovery period is less than one year as the performance obligation is satisfied upon shipment or delivery. Consequently, the Company applies the practical expedient provided by ASC 340 and expenses sales incentives as incurred. These costs are included in selling, general and administrative expenses in the Condensed Statements of Operations.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Inventories
9 Months Ended
Mar. 31, 2024
Inventory Disclosure [Abstract]  
Inventories

Note 3. Inventories

 

The components of inventory were as follows:

 

   March 31, 2024   June 30, 2023 
Parts inventory  $3,016,000   $3,420,000 
Work in process   449,000    470,000 
Finished goods   856,000    323,000 
Estimated inventory to be returned   260,000    265,000 
Less: Reserve for obsolescence   (403,000)   (257,000)
Total  $4,178,000   $4,221,000 

 

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Warranty Reserve
9 Months Ended
Mar. 31, 2024
Guarantees and Product Warranties [Abstract]  
Warranty Reserve

Note 4. Warranty Reserve

 

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 hospital 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 reserve 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 reserve and adjusts the amounts as necessary.

 

Changes in the Company’s warranty reserve were as follows:

 

   Nine Months Ended March 31, 2024   Fiscal Year Ended June 30, 2023 
Warranty reserve, beginning  $1,378,000   $1,256,000 
Accrual for products sold   426,000    416,000 
Expenditures and costs incurred for warranty claims   (279,000)   (294,000)
Warranty reserve, ending  $1,525,000   $1,378,000 

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Income Taxes
9 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

Note 5. Income Taxes

 

Income tax expense was estimated at $468,000 and $1,217,000, and the effective tax rate was 23.9% and 26.8% for the three and nine months ended March 31, 2024, respectively. Estimated income tax expense for the three and nine months ended March 31, 2024, includes a discrete current tax benefit of $99,000 and $95,000, respectively, primarily related to the exercise of stock options.

 

Income tax expense was estimated at $147,000 and $418,000, and the effective tax rate was 12.0% and 16.4% for the three and nine months ended March 31, 2023, respectively. Estimated income tax expense for the three and nine months ended March 31, 2023, includes a discrete current tax benefit of $176,000 and $219,000, respectively, related to the exercise of stock options.

 

The Company is subject to U.S. federal and state income tax in multiple jurisdictions. With limited exceptions, years prior to the Company’s fiscal year ended June 30, 2020, are no longer open to U.S. federal, state or local examinations by taxing authorities. The Company is not under any current income tax examinations by any federal, state or local taxing authority. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Financing Arrangements
9 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Financing Arrangements

Note 6. Financing Arrangements

 

The Company has a credit facility that provides for a $2,500,000 revolving line of credit through December 18, 2025, if not renewed before such date. There was no outstanding principal balance on the line of credit as of March 31, 2024, or June 30, 2023. Interest on borrowings under the line of credit, if any, accrues at the prime rate (8.50% on March 31, 2024) 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. On March 31, 2024, the maximum $2,500,000 was eligible for borrowing. Payment obligations under the line of credit, if any, are 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 non-financial 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.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Common Stock
9 Months Ended
Mar. 31, 2024
Common Stock  
Common Stock

Note 7. Common Stock

 

Authorized shares: The Company’s Articles of Incorporation, as amended, have established 15,000,000 authorized shares of capital stock consisting of 13,000,000 shares of common stock, par value $0.01 per share, and 2,000,000 shares of undesignated stock.

 

On May 26, 2021, the Company’s Board of Directors (the “Board”) approved a stock repurchase authorization. Under the authorization, the Company was originally able to repurchase up to $3.0 million of shares of common stock through May 26, 2022. On May 26, 2022, the Board removed the date limitation. As of March 31, 2024, a total of 239,995 shares have been repurchased and retired under this authorization for a total cost of $2,725,000, or $11.36 per share. Repurchased shares have been retired and constitute authorized but unissued shares. There were no share repurchases for the three and nine months ended March 31, 2024.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Share-Based Compensation
9 Months Ended
Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation

Note 8. Share-Based Compensation

 

The Company’s share-based compensation plans are described in Note 8 to the financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2023. Share-based compensation expense was $1,250,000 and $506,000 for the nine months ended March 31, 2024, and 2023, respectively. This expense is included in selling, general and administrative expense in the Condensed Statements of Operations.

 

Stock Options

 

Stock option transactions during the nine months ended March 31, 2024, are summarized as follows:

 

  

Number of Shares

  

Weighted-Average Exercise Price per

Share

 
Outstanding on June 30, 2023   451,570   $6.93 
Granted   263,162   $10.70 
Exercised   (56,063)  $5.45 
Cancelled or Forfeited   (21,079)  $10.46 
Outstanding on March 31, 2024   637,590   $8.50 

 

 

The following assumptions were used to estimate the fair value of stock options granted:

 

   Nine Months Ended
March 31, 2024
  Fiscal Year Ended
June 30, 2023
 
Risk-free interest rate  3.854.64%  2.88 - 4.23%  
Expected term (years)  6  6  
Expected volatility  51 - 53%  53% - 54%  

 

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. On March 31, 2024, the weighted average remaining contractual term for all outstanding stock options was 6.7 years and the aggregate intrinsic value of the options was $4,878,000. Outstanding on March 31, 2024, were 637,590 stock options issued to employees, of which 319,088 were vested and exercisable and had an aggregate intrinsic value of $3,118,000. As of March 31, 2024, $925,000 of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of approximately 2.8 years.

 

Restricted Stock

 

During the nine months ended March 31, 2024, the Company issued restricted stock awards to employees totaling 23,428 shares of common stock, with a weighted average vesting term of 3.0 years and a weighted average fair value of $10.74 per share, and to directors totaling 21,000 shares of common stock, with a vesting term of six months and a weighted average fair value of $10.44 per share. There were 57,661 shares of unvested restricted stock with a weighted average fair value of $10.53 per share outstanding as of March 31, 2024. As of March 31, 2024, $253,000 of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.6 years.

 

Performance-Based Restricted Stock Units

 

The Company granted 175,000 performance-based restricted stock units (“PSUs”) to our CEO in connection with his appointment as CEO on July 1, 2023. The PSUs are to be earned based on the extent to which performance goals tied to Total Shareholder Return (“TSR”) are achieved. The performance-based restricted stock units will be eligible to vest and settle into shares of common stock on a 1-for-1 basis with respect to one-half of the shares upon achieving a total shareholder return of 50% and the remaining shares upon a total shareholder return of 100%, in each case within four years of the date of grant. The grant date fair value of the awards was determined using a Monte Carlo valuation model with an expected term of four years.

 

Stock based compensation expense recognized for PSUs was $217,000 and $0 for the nine months ended March 31, 2024, and 2023, respectively. The weighted average grant date fair value per unit was $6.58 and as of March 31, 2024, there are 175,000 PSUs outstanding. On March 31, 2024, there was approximately $935,000 of total unrecognized compensation expense related to outstanding PSUs that is expected to be recognized over a period of 3.25 years.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Commitments and Contingencies
9 Months Ended
Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 9. Commitments and Contingencies

 

The Company is occasionally involved in claims and disputes arising in the ordinary course of business. The Company insures certain 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.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Interim Financial Reporting (Policies)
9 Months Ended
Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Use of estimates

Use of estimates. Management uses estimates and assumptions in preparing the unaudited Condensed Financial Statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. The Company believes the critical accounting policies that require the most significant assumptions and judgments in the preparation of its unaudited Condensed Financial Statements include revenue recognition and the related estimation of variable consideration, inventory valuation, share-based compensation and warranty reserve.

Net income per common share

Net income per common share. Net income is presented on a per share basis for both basic and diluted common shares. Basic net income per common share is computed using the weighted average number of common shares outstanding during the period, excluding any restricted stock awards which have not vested. The diluted net income per common share calculation includes outstanding restricted stock grants and assumes that all stock options were exercised and converted into common stock at the beginning of the period unless their effect would be anti-dilutive. Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were 289,362 and 179,992 for the three months ended March 31, 2024, and 2023, respectively, and were 400,639 and 200,140 for the nine months ended March 31, 2024, and 2023, respectively.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

 

In June 2016, the Financial Accounting Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments, which was subsequently amended by ASU 2018-19, ASU 2019-04, 2019-05, 2019-10, 2019-11, and 2020-02. The standard introduces new accounting guidance for credit losses on financial instruments within its scope, including trade receivables. This new guidance adds an impairment model that is based on expected losses rather than incurred losses. The company adopted the standard effective July 1, 2023. The Company’s adoption of the standard did not have a material impact on the financial statements.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Revenues (Tables)
9 Months Ended
Mar. 31, 2024
Revenue from Contract with Customer [Abstract]  
Schedule of disaggregated revenue

Disaggregation of revenues. In the following table, net revenues are disaggregated by market:

   Three Months Ended March 31,   Nine Months Ended March 31, 
   2024   2023   2024   2023 
Homecare  $12,287,000   $10,971,000   $36,108,000   $31,335,000 
Hospital   783,000    440,000    1,909,000    1,420,000 
Homecare distributor   524,000    501,000    1,377,000    1,391,000 
Other   277,000    156,000    490,000    309,000 
Total  $13,871,000   $12,068,000   $39,884,000   $34,455,000 

 

In the following table, net homecare revenue is disaggregated by payer type:

 

   Three Months Ended March 31,   Nine Months Ended March 31, 
   2024   2023   2024   2023 
Commercial  $5,974,000   $4,787,000   $17,684,000   $12,706,000 
Medicare   4,825,000    4,544,000    13,666,000    13,753,000 
Medicare Supplemental   1,177,000    1,278,000    3,447,000    3,681,000 
Medicaid   115,000    128,000    722,000    618,000 
Other homecare   196,000    234,000    589,000    577,000 
Total  $12,287,000   $10,971,000   $36,108,000   $31,335,000 
Schedule of contract asset

Contract balances. The following table provides information about contract assets from contracts with customers:

 

   Nine Months Ended March 31, 2024   Fiscal Year Ended June 30, 2023 
   Increase (decrease)   Increase (decrease) 
Contract assets, beginning  $487,000   $286,000 
Reclassification of contract assets to accounts receivable   (1,453,000)   (1,220,000)
Contract assets recognized   1,829,000    1,351,000 
Increase (decrease) as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period   (221,000)   70,000 
Contract assets, ending  $642,000   $487,000 
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Inventories (Tables)
9 Months Ended
Mar. 31, 2024
Inventory Disclosure [Abstract]  
The components of inventory were as follows:

The components of inventory were as follows:

 

   March 31, 2024   June 30, 2023 
Parts inventory  $3,016,000   $3,420,000 
Work in process   449,000    470,000 
Finished goods   856,000    323,000 
Estimated inventory to be returned   260,000    265,000 
Less: Reserve for obsolescence   (403,000)   (257,000)
Total  $4,178,000   $4,221,000 
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Warranty Reserve (Tables)
9 Months Ended
Mar. 31, 2024
Guarantees and Product Warranties [Abstract]  
Changes in the Company’s warranty reserve were as follows:

Changes in the Company’s warranty reserve were as follows:

 

   Nine Months Ended March 31, 2024   Fiscal Year Ended June 30, 2023 
Warranty reserve, beginning  $1,378,000   $1,256,000 
Accrual for products sold   426,000    416,000 
Expenditures and costs incurred for warranty claims   (279,000)   (294,000)
Warranty reserve, ending  $1,525,000   $1,378,000 
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Share-Based Compensation (Tables)
9 Months Ended
Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Stock option transactions during the nine months ended March 31, 2024, are summarized as follows:

Stock option transactions during the nine months ended March 31, 2024, are summarized as follows:

 

  

Number of Shares

  

Weighted-Average Exercise Price per

Share

 
Outstanding on June 30, 2023   451,570   $6.93 
Granted   263,162   $10.70 
Exercised   (56,063)  $5.45 
Cancelled or Forfeited   (21,079)  $10.46 
Outstanding on March 31, 2024   637,590   $8.50 
The following assumptions were used to estimate the fair value of stock options granted:

The following assumptions were used to estimate the fair value of stock options granted:

 

   Nine Months Ended
March 31, 2024
  Fiscal Year Ended
June 30, 2023
 
Risk-free interest rate  3.854.64%  2.88 - 4.23%  
Expected term (years)  6  6  
Expected volatility  51 - 53%  53% - 54%  
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Interim Financial Reporting (Details Narrative) - shares
3 Months Ended 9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]        
Common stock equivalents included from calculation of diluted earnings per share 289,362 179,992 400,639 200,140
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Schedule of disaggregated revenue (Details) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Disaggregation of Revenue [Line Items]        
Revenue $ 13,871,000 $ 12,068,000 $ 39,884,000 $ 34,455,000
Home Care [Member]        
Disaggregation of Revenue [Line Items]        
Revenue 12,287,000 10,971,000 36,108,000 31,335,000
Home Care [Member] | Commercial [Member]        
Disaggregation of Revenue [Line Items]        
Revenue 5,974,000 4,787,000 17,684,000 12,706,000
Home Care [Member] | Medicare [Member]        
Disaggregation of Revenue [Line Items]        
Revenue 4,825,000 4,544,000 13,666,000 13,753,000
Home Care [Member] | Medicare Supplemental [Member]        
Disaggregation of Revenue [Line Items]        
Revenue 1,177,000 1,278,000 3,447,000 3,681,000
Home Care [Member] | Medicaid [Member]        
Disaggregation of Revenue [Line Items]        
Revenue 115,000 128,000 722,000 618,000
Home Care [Member] | Other Homecare [Member]        
Disaggregation of Revenue [Line Items]        
Revenue 196,000 234,000 589,000 577,000
Hospital [Member]        
Disaggregation of Revenue [Line Items]        
Revenue 783,000 440,000 1,909,000 1,420,000
Home Care Distributor [Member]        
Disaggregation of Revenue [Line Items]        
Revenue 524,000 501,000 1,377,000 1,391,000
Other [Member]        
Disaggregation of Revenue [Line Items]        
Revenue $ 277,000 $ 156,000 $ 490,000 $ 309,000
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Schedule of contract asset (Details) - USD ($)
9 Months Ended 12 Months Ended
Mar. 31, 2024
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]    
Contract assets beginning $ 487,000 $ 487,000
Reclassification of contract assets to accounts receivable (1,453,000) (1,220,000)
Contract assets recognized 1,829,000 1,351,000
Increase (decrease) as a result of changes in the estimate of amounts to be realized frompayers, excluding amounts transferred to receivables during the period (221,000) 70,000
Contract assets, ending $ 642,000 $ 487,000
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.24.1.u1
The components of inventory were as follows: (Details) - USD ($)
Mar. 31, 2024
Jun. 30, 2023
Inventory Disclosure [Abstract]    
Parts inventory $ 3,016,000 $ 3,420,000
Work in process 449,000 470,000
Finished goods 856,000 323,000
Estimated inventory to be returned 260,000 265,000
Less: Reserve for obsolescence (403,000) (257,000)
Total $ 4,178,000 $ 4,221,000
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Changes in the Company’s warranty reserve were as follows: (Details) - USD ($)
9 Months Ended 12 Months Ended
Mar. 31, 2024
Jun. 30, 2023
Guarantees and Product Warranties [Abstract]    
Warranty reserve, beginning $ 1,378,000 $ 1,256,000
Accrual for products sold 426,000 416,000
Expenditures and costs incurred for warranty claims (279,000) (294,000)
Warranty reserve, ending $ 1,525,000 $ 1,378,000
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Income Taxes (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Income Tax Disclosure [Abstract]        
Income tax expense $ 468,000 $ 147,000 $ 1,217,000 $ 418,000
Effective tax rate 23.90% 12.00% 26.80% 16.40%
Current income tax expense $ 99,000 $ 176,000 $ 95,000 $ 219,000
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Financing Arrangements (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2024
Jun. 30, 2023
Line of Credit Facility [Line Items]    
Minimum tangible net worth to be maintained $ 10,125,000  
Revolving Credit Facility [Member]    
Line of Credit Facility [Line Items]    
Maximum borrowing capacity 2,500,000  
Line of credit balance $ 0 $ 0
Basis spread on rate 1.00%  
Available borrowing capacity $ 2,500,000  
Borrowing capacity of eligible accounts receivable percent 57.00%  
Available borrowing capacity $ 2,500,000  
Revolving Credit Facility [Member] | Prime Rate [Member]    
Line of Credit Facility [Line Items]    
Interest rate 8.50%  
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Common Stock (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Dec. 31, 2022
Sep. 30, 2022
Mar. 31, 2024
Jun. 30, 2023
May 26, 2022
Common stock, authorized     13,000,000 13,000,000  
Common stock, par value (in dollars per share)     $ 0.01 $ 0.01  
Number of share repurchased     239,995    
Repurchase of common stock     $ 2,725,000    
Share price     $ 11.36    
Board of Directors Chairman [Member]          
Common stock, authorized         3,000,000
Common Stock [Member]          
Common stock, authorized     13,000,000    
Common stock, par value (in dollars per share)     $ 0.01    
Number of share repurchased 800 14,568      
Capital Stock [Member]          
Common stock, authorized     15,000,000    
Authorized Shares Undesignated Stock [Member]          
Common stock, authorized     2,000,000    
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Stock option transactions during the nine months ended March 31, 2024, are summarized as follows: (Details) - $ / shares
3 Months Ended 9 Months Ended
Mar. 31, 2023
Mar. 31, 2024
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Exercised (42,436)  
Option outstanding, ending   637,590
Share-Based Payment Arrangement, Option [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Option outstanding , beginning   451,570
Weighted average grant date fair value, beginning   $ 6.93
Granted   263,162
Granted   $ 10.70
Exercised   (56,063)
Exercised   $ 5.45
Cancelled or Forfeited   (21,079)
Cancelled or Forfeited   $ 10.46
Option outstanding, ending   637,590
Weighted average grant date fair value, ending   $ 8.50
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.24.1.u1
The following assumptions were used to estimate the fair value of stock options granted: (Details)
9 Months Ended 12 Months Ended
Mar. 31, 2024
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]    
Risk free interest rate - minimum 3.85% 2.88%
Risk free interest rate - maximum 4.64% 4.23%
Expected term (years) 6 years 6 years
Expected volatility - maximum 51.00% 53.00%
Expected volatility - maximum 53.00% 54.00%
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Share-Based Compensation (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Jun. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Share-based compensation expense $ 1,250,000 $ 506,000  
Shares outstanding 637,590    
Share-Based Payment Arrangement, Option [Member]      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Unrecognized compensation expense, period for recognition 6 years 8 months 12 days    
Options exercisable, intrinsic value $ 4,878,000    
Shares outstanding 637,590   451,570
Vested and exercisable 319,088    
Options exercisable, intrinsic value $ 3,118,000    
Unrecognized compensation expense $ 925,000    
Unrecognized compensation expense, period for recognition 2 years 9 months 18 days    
Shares granted 263,162    
Restricted Stock [Member]      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Unrecognized compensation expense, period for recognition 1 year 4 months 24 days    
Unrecognized compensation expense $ 253,000    
Restricted stock - unvested 57,661    
Weight average fair value - unvested restricted stock (per share) $ 10.53    
Restricted Stock [Member] | Director [Member]      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Stock issued 21,000    
Fair value of per share $ 10.44    
Restricted Stock [Member] | Employee [Member]      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Stock issued 23,428    
Vesting term 3 years    
Fair value of per share $ 10.74    
Restricted Stock Units (RSUs) [Member]      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Share-based compensation expense $ 217,000 $ 0  
Unrecognized compensation expense, period for recognition 3 years 2 months 30 days    
Shares outstanding 175,000    
Unrecognized compensation expense $ 935,000    
Fair value of per share $ 6.58    
Shares granted 175,000    
Other description The performance-based restricted stock units will be eligible to vest and settle into shares of common stock on a 1-for-1 basis with respect to one-half of the shares upon achieving a total shareholder return of 50% and the remaining shares upon a total shareholder return of 100%, in each case within four years of the date of grant. The grant date fair value of the awards was determined using a Monte Carlo valuation model with an expected term of four years.    
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(the “Company”) develops, manufactures, and markets innovative airway clearance products that apply High Frequency Chest Wall Oscillation (“HFCWO”) therapy for pulmonary care patients. The Company markets its products in the U.S. to the homecare and hospital markets. The Company also sells internationally through distributors.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Since its inception, the Company has operated in a single industry segment: developing, manufacturing, and marketing medical equipment.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>Basis of presentation: </b>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 <a href="http://www.sec.gov/Archives/edgar/data/1488917/000089710123000380/elmd230887_10k.htm">Annual Report on Form 10-K for the fiscal year ended June 30, 2023</a> (“fiscal 2023”).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">A summary of the Company’s significant accounting policies follows:</p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p id="xdx_84C_eus-gaap--UseOfEstimates_zEWGS0jjmgcc" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b><span id="xdx_869_z952NQyNJbyk">Use of estimates</span>. </b>Management uses estimates and assumptions in preparing the unaudited Condensed Financial Statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. The Company believes the critical accounting policies that require the most significant assumptions and judgments in the preparation of its unaudited Condensed Financial Statements include revenue recognition and the related estimation of variable consideration, inventory valuation, share-based compensation and warranty reserve.</p> <p id="xdx_854_zG1Lm66Y3wk7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p id="xdx_845_eus-gaap--EarningsPerSharePolicyTextBlock_zOsTV59gA3Of" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b><span id="xdx_86F_zn7JugnIYB3b">Net income per common share</span>. </b>Net income is presented on a per share basis for both basic and diluted common shares. Basic net income per common share is computed using the weighted average number of common shares outstanding during the period, excluding any restricted stock awards which have not vested. The diluted net income per common share calculation includes outstanding restricted stock grants and assumes that all stock options were exercised and converted into common stock at the beginning of the period unless their effect would be anti-dilutive. Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were <span id="xdx_90C_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_pid_uShares_c20240101__20240331_zxa28kHzqBv2" title="Common stock equivalents included from calculation of diluted earnings per share">289,362</span> and <span id="xdx_90C_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_pid_uShares_c20230101__20230331_zmfoWFlgOKTi" title="Common stock equivalents included from calculation of diluted earnings per share">179,992</span> for the three months ended March 31, 2024, and 2023, respectively, and were <span id="xdx_90E_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_pid_uShares_c20230701__20240331_zzIr2lSTSbgj" title="Common stock equivalents included from calculation of diluted earnings per share">400,639</span> and <span id="xdx_907_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_pid_uShares_c20220701__20230331_zyBlI8D51f16" title="Common stock equivalents included from calculation of diluted earnings per share">200,140</span> for the nine months ended March 31, 2024, and 2023, respectively.</p> <p id="xdx_854_zcocRV0gY4U6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p id="xdx_847_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_zUkdExO0SKS4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b><span id="xdx_865_zvOMrrS5P3n9">Recently Issued Accounting Standards</span></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">In June 2016, the Financial Accounting Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments, which was subsequently amended by ASU 2018-19, ASU 2019-04, 2019-05, 2019-10, 2019-11, and 2020-02. The standard introduces new accounting guidance for credit losses on financial instruments within its scope, including trade receivables. This new guidance adds an impairment model that is based on expected losses rather than incurred losses. The company adopted the standard effective July 1, 2023. The Company’s adoption of the standard did not have a material impact on the financial statements.</p> <p id="xdx_853_zMTGC8l2NjY5" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p> <p id="xdx_84C_eus-gaap--UseOfEstimates_zEWGS0jjmgcc" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b><span id="xdx_869_z952NQyNJbyk">Use of estimates</span>. </b>Management uses estimates and assumptions in preparing the unaudited Condensed Financial Statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. The Company believes the critical accounting policies that require the most significant assumptions and judgments in the preparation of its unaudited Condensed Financial Statements include revenue recognition and the related estimation of variable consideration, inventory valuation, share-based compensation and warranty reserve.</p> <p id="xdx_845_eus-gaap--EarningsPerSharePolicyTextBlock_zOsTV59gA3Of" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b><span id="xdx_86F_zn7JugnIYB3b">Net income per common share</span>. </b>Net income is presented on a per share basis for both basic and diluted common shares. Basic net income per common share is computed using the weighted average number of common shares outstanding during the period, excluding any restricted stock awards which have not vested. The diluted net income per common share calculation includes outstanding restricted stock grants and assumes that all stock options were exercised and converted into common stock at the beginning of the period unless their effect would be anti-dilutive. Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were <span id="xdx_90C_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_pid_uShares_c20240101__20240331_zxa28kHzqBv2" title="Common stock equivalents included from calculation of diluted earnings per share">289,362</span> and <span id="xdx_90C_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_pid_uShares_c20230101__20230331_zmfoWFlgOKTi" title="Common stock equivalents included from calculation of diluted earnings per share">179,992</span> for the three months ended March 31, 2024, and 2023, respectively, and were <span id="xdx_90E_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_pid_uShares_c20230701__20240331_zzIr2lSTSbgj" title="Common stock equivalents included from calculation of diluted earnings per share">400,639</span> and <span id="xdx_907_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_pid_uShares_c20220701__20230331_zyBlI8D51f16" title="Common stock equivalents included from calculation of diluted earnings per share">200,140</span> for the nine months ended March 31, 2024, and 2023, respectively.</p> 289362 179992 400639 200140 <p id="xdx_847_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_zUkdExO0SKS4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b><span id="xdx_865_zvOMrrS5P3n9">Recently Issued Accounting Standards</span></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">In June 2016, the Financial Accounting Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments -- Credit Losses: Measurement of Credit Losses on Financial Instruments, which was subsequently amended by ASU 2018-19, ASU 2019-04, 2019-05, 2019-10, 2019-11, and 2020-02. The standard introduces new accounting guidance for credit losses on financial instruments within its scope, including trade receivables. This new guidance adds an impairment model that is based on expected losses rather than incurred losses. The company adopted the standard effective July 1, 2023. The Company’s adoption of the standard did not have a material impact on the financial statements.</p> <p id="xdx_80D_eus-gaap--RevenueFromContractWithCustomerTextBlock_zDgIq2eOg5u5" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Note 2. <span id="xdx_82E_z98vFKT2Yynf">Revenues</span></p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">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 consideration paid or payable from 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 <i>Performance obligations and transaction price</i>.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">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 Accounting Standards Codification (“ASC”) 340-40, “Other Assets and Deferred Costs” (“ASC 340”), or other applicable guidance are met.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The Company includes shipping and handling fees in net revenues. Shipping and handling costs associated with the shipment of the Company’s SmartVest® Airway Clearance System (“SmartVest System”) after control has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenues in the Condensed Statements of Operations.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The timing of revenue recognition, billings and cash collections results in accounts receivable on the Condensed Balance Sheets as further described below under <i>Accounts receivable</i> and <i>Contract assets</i>.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p id="xdx_89A_eus-gaap--DisaggregationOfRevenueTableTextBlock_zAS6ya7tHCaj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>Disaggregation of revenues.</b> In the following table, net revenues are disaggregated by market:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8B9_zvGBuGVM3u0e" style="display: none; visibility: hidden">Schedule of disaggregated revenue</span></p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Three Months Ended March 31,</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Nine Months Ended March 31,</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 40%">Homecare</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember_zb2UP9ZVab3g" style="width: 12%; text-align: right" title="Revenue">12,287,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_988_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember_zjkmOf0nEMle" style="width: 12%; text-align: right" title="Revenue">10,971,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_986_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember_zVbwuDJi2MRa" style="width: 12%; text-align: right" title="Revenue">36,108,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember_zfrwEQ4Zrb3c" style="width: 12%; text-align: right" title="Revenue">31,335,000</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Hospital</td><td> </td> <td style="text-align: left"> </td><td id="xdx_988_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HospitalMember_zs8rQmfE2Uv3" style="text-align: right" title="Revenue">783,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_984_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HospitalMember_zSHzwlrkZtD7" style="text-align: right" title="Revenue">440,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98A_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HospitalMember_zDbBGUTMI8u7" style="text-align: right" title="Revenue">1,909,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_981_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HospitalMember_zMkyeMYnUXqe" style="text-align: right" title="Revenue">1,420,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Homecare distributor</td><td> </td> <td style="text-align: left"> </td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareDistributorMember_z2wSBiYErAc8" style="text-align: right" title="Revenue">524,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98B_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareDistributorMember_zI6WKVFbCvo9" style="text-align: right" title="Revenue">501,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_988_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareDistributorMember_zOp5lICpib6f" style="text-align: right" title="Revenue">1,377,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98B_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareDistributorMember_z2kg54hFSkVf" style="text-align: right" title="Revenue">1,391,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">Other</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98E_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--OtherMember_zhoJvfEKJhwg" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">277,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_981_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--OtherMember_zeTuaNLyXpT4" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">156,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_986_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--OtherMember_z2c5IYzhqtB3" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">490,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_985_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--OtherMember_ztygcsdQfLu1" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">309,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98E_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331_z35ClQhHsqB" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">13,871,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98B_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331_z0826JTQ8ZCf" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">12,068,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_984_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331_znGpZ9RH45wd" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">39,884,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_984_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331_zMVXCTUgn2L8" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">34,455,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">In the following table, net homecare revenue is disaggregated by payer type:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Three Months Ended March 31,</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Nine Months Ended March 31,</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 40%">Commercial</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_982_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--CommercialMember_z3FshHLLZox2" style="width: 12%; text-align: right" title="Revenue">5,974,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--CommercialMember_zNztYVFAd3Pl" style="width: 12%; text-align: right" title="Revenue">4,787,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_981_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--CommercialMember_zyNGIuB06hmg" style="width: 12%; text-align: right" title="Revenue">17,684,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 3%; text-align: left">$</td><td id="xdx_985_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--CommercialMember_z9OHZZ3bdRJ4" style="width: 10%; text-align: right" title="Revenue">12,706,000</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Medicare</td><td> </td> <td style="text-align: left"> </td><td id="xdx_989_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareMember_zlblrwdW41q6" style="text-align: right" title="Revenue">4,825,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_986_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareMember_zf8Q92XH3asg" style="text-align: right" title="Revenue">4,544,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_983_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareMember_znu5G9A0D17f" style="text-align: right" title="Revenue">13,666,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareMember_zEpFbPGThO28" style="text-align: right" title="Revenue">13,753,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Medicare Supplemental</td><td> </td> <td style="text-align: left"> </td><td id="xdx_980_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareSupplementalMember_zUOuGSlWrbc1" style="text-align: right" title="Revenue">1,177,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_989_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareSupplementalMember_zx5rK7eSEQa5" style="text-align: right" title="Revenue">1,278,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_985_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareSupplementalMember_zRBBvfjCBuCl" style="text-align: right" title="Revenue">3,447,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareSupplementalMember_ztr8sQ6lYtI7" style="text-align: right" title="Revenue">3,681,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Medicaid</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98D_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicaidMember_zDCA42myitga" style="text-align: right" title="Revenue">115,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_981_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicaidMember_zX1X0Z3IedM1" style="text-align: right" title="Revenue">128,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98E_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicaidMember_z2mzwLbUhqKd" style="text-align: right" title="Revenue">722,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_984_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicaidMember_zgLZqDy147rf" style="text-align: right" title="Revenue">618,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-bottom: 1pt">Other homecare</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--OtherHomecareMember_zZqv2Ugx4Zo7" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">196,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_988_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--OtherHomecareMember_zqUDOsiDoHib" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">234,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--OtherHomecareMember_zkok32gUOPBi" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">589,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_986_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--OtherHomecareMember_zVHqwBbfGow6" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">577,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember_zodYspyRdxWa" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">12,287,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_989_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember_zHypqSaYIDz1" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">10,971,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember_zmbXcUVQfHW2" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">36,108,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember_z7WOy74kQurf" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">31,335,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr> </table> <p id="xdx_8A7_z3ayjzqtuWwc" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Revenues are recognized at a point in time when control passes to the customer upon product shipment or delivery.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>Performance obligations and transaction price.</b> 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:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"><b><i>Homecare market</i>.</b> In the Company’s homecare market, its customers are patients who use the SmartVest System. The various models of the SmartVest System are comprised of three main components – a generator, a vest and a connecting hose – that are sold together as an integrated unit. Accordingly, in contracts within the homecare market, the Company regards the SmartVest System to be a single performance obligation.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in">The Company makes available to its homecare 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 homecare market consist of a single performance obligation: the SmartVest System.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in">Homecare patients generally will rely on third-party payers, including commercial payers and governmental payers such as Medicare, Medicaid and the U.S. Department of Veterans Affairs 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in">Regardless of the type of transaction, provided criteria for an enforceable contract are met, it is the Company’s long- standing business practice to regard all homecare agreements as transferring control to the patient upon shipment or delivery, despite possible payment cancellation under government or commercial programs where the payer is controlling the payment over specified time periods. For homecare 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 because 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 <i>Accounts receivable</i> and <i>Contract assets</i> below.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in">The Company’s contractually stated transaction prices in the homecare 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in">For each type of variable consideration discussed above, there are many 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in">The Company often receives payment from third-party payers for 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"><b><i>Homecare distributors.</i></b> Sales to distributors, who sell direct to patients, are made at fixed contract prices and may include tiered pricing structures or volume-based rebates which offer more favorable pricing once certain volumes are achieved per the negotiated contract. The distributor’s purchases accumulate to give the distributor the right to a higher discount on purchases more than the specified level within the contract period. As a result, to the extent the Company expects the distributor to exceed the specified volume of purchases in the annual period, it recognizes revenue at a blended rate based on estimated total annual volume and sales revenue. This effectively defers a portion of the transaction price on initial purchases below the specified volumes for recognition when the higher discount is earned on purchases in excess of specified volumes. Transfer of control of the products occurs upon shipment or delivery to the distributor, as applicable.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"><b><i>Hospital market.</i></b> The Company’s hospital sales are made to hospitals and other clinics. Sales to these hospitals are negotiated with the individual hospital or with group purchasing organizations, with payments received directly from the hospital. No insurance reimbursement is involved. Generators are either sold or leased to the hospitals and associated hoses and wraps (used in hospital settings rather than vests) are sold separately. Accordingly, each product is distinct and considered a separate performance obligation in sales to hospital customers. The agreements with hospitals fall into two main types, distinguished by differences in the timing of transfer of control and timing of payments:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify"> <td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">●</td><td style="text-align: left">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 thirty days.</td> </tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify"> <td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left">●</td><td style="text-align: left">Wrap usage agreements – Under these transactions, the Company provides a generator device at no cost to the hospital in return for a fixed annual commitment to purchase consumable wraps. These agreements are cancellable upon at least sixty days prior written notice by either party. If cancelled, the generator is returned to the Company, where it can be refurbished and used again later. Revenue for the consumable wraps is recognized when control transfers to the customer.</td> </tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; margin-left: 0.25in"><b><i>Other.</i></b> Other revenue consists of international sales which are made directly to several independent distributors at fixed contract prices that are not subject to further adjustments for variable consideration or sales to other customers that do not fall into the markets described above. Transfer of control of the products occurs upon shipment or delivery to the distributor or customer, as applicable.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>Product warranty.</b> The Company offers warranties on its products. These warranties are assurance-type warranties not sold on a standalone basis or are otherwise considered immaterial in the context of the contract, and therefore are not considered distinct performance obligations under ASC 606. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time the product is sold.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b>Accounts receivable. </b>The Company’s accounts receivable balance is comprised of amounts due from individuals, -hospitals, and distributors. Balances due from individuals are typically remitted to the Company by third-party reimbursement agencies such as Medicare, Medicaid, and private insurance companies. Accounts receivables are carried at amounts estimated to be received from patients under reimbursement arrangements with third-party payers. Accounts receivable is also net of an allowance for credit losses. Management determines the allowance for credit losses by regularly evaluating individual customer accounts and determining expected losses.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b>Contract assets. </b>Contract assets include amounts recognized as revenue that are estimates of variable consideration for Medicare appeals where the final determination of the insurance coverage amount is dependent on future approval of an appeal, or when the consideration due to the Company is dependent on a future event such as the patient meeting a deductible prior to the Company’s claim being processed by the payer. Contract assets are classified as current as amounts will turn into accounts receivable and be collected during the Company’s normal business operating cycle. Contract assets are reclassified to accounts receivable when the right to receive payment is unconditional.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <p id="xdx_89A_eus-gaap--ContractWithCustomerAssetAndLiabilityTableTextBlock_zc8fNJXZqCYi" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>Contract balances.</b> The following table provides information about contract assets from contracts with customers:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8B6_zmQVDSeI7Ita" style="display: none; visibility: hidden">Schedule of contract asset</span></p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Nine Months Ended March 31, 2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Fiscal Year Ended June 30, 2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Increase (decrease)</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Increase (decrease)</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 70%; text-align: left">Contract assets, beginning</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_98A_eus-gaap--ContractWithCustomerAssetNetCurrent_iS_dxL_c20230701__20240331_zv1oZBnygtk9" style="width: 12%; text-align: right" title="Contract assets beginning::XDX::487000"><span style="-sec-ix-hidden: xdx2ixbrl0674">487,000</span></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_988_eus-gaap--ContractWithCustomerAssetNetCurrent_iS_dxL_c20220701__20230630_zuBZqz1paEH5" style="width: 12%; text-align: right" title="Contract assets beginning::XDX::487000"><span style="-sec-ix-hidden: xdx2ixbrl0676">286,000</span></td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Reclassification of contract assets to accounts receivable</td><td> </td> <td style="text-align: left"> </td><td id="xdx_980_eus-gaap--ContractWithCustomerAssetReclassifiedToReceivable_c20230701__20240331_z64D1L1GMXt8" style="text-align: right" title="Reclassification of contract assets to accounts receivable">(1,453,000</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98B_eus-gaap--ContractWithCustomerAssetReclassifiedToReceivable_c20220701__20230630_z4ZnjKHBxxjj" style="text-align: right" title="Reclassification of contract assets to accounts receivable">(1,220,000</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Contract assets recognized</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98D_eus-gaap--ContractWithCustomerLiabilityRevenueRecognized_c20230701__20240331_z2DTtAMTRyJb" style="text-align: right" title="Contract assets recognized">1,829,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98A_eus-gaap--ContractWithCustomerLiabilityRevenueRecognized_c20220701__20230630_zMmjjLmb51mi" style="text-align: right" title="Contract assets recognized">1,351,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Increase (decrease) as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98E_eus-gaap--ContractWithCustomerAssetCumulativeCatchUpAdjustmentToRevenueChangeInEstimateOfTransactionPrice_c20230701__20240331_zYPKAt8T7Fji" style="border-bottom: Black 1pt solid; text-align: right" title="Increase (decrease) as a result of changes in the estimate of amounts to be realized frompayers, excluding amounts transferred to receivables during the period">(221,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_982_eus-gaap--ContractWithCustomerAssetCumulativeCatchUpAdjustmentToRevenueChangeInEstimateOfTransactionPrice_c20220701__20230630_ztHIeWI5cINi" style="border-bottom: Black 1pt solid; text-align: right" title="Increase (decrease) as a result of changes in the estimate of amounts to be realized frompayers, excluding amounts transferred to receivables during the period">70,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="padding-bottom: 2.5pt">Contract assets, ending</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98F_eus-gaap--ContractWithCustomerAssetNetCurrent_iE_c20230701__20240331_z6M1GXpOeKKd" style="border-bottom: Black 2.5pt double; text-align: right" title="Contract assets, ending">642,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_985_eus-gaap--ContractWithCustomerAssetNetCurrent_iE_c20220701__20230630_zYeC1LQ8Bud3" style="border-bottom: Black 2.5pt double; text-align: right" title="Contract assets, ending">487,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> <p id="xdx_8AD_zeiMJeHHKWD1" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b>Incremental costs to obtain a contract. </b>Sales incentives paid to sales representatives are eligible for capitalization as they are incremental costs that would not have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction. However, the recovery period is less than one year as the performance obligation is satisfied upon shipment or delivery. Consequently, the Company applies the practical expedient provided by ASC 340 and expenses sales incentives as incurred. These costs are included in selling, general and administrative expenses in the Condensed Statements of Operations.</p> <p id="xdx_89A_eus-gaap--DisaggregationOfRevenueTableTextBlock_zAS6ya7tHCaj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>Disaggregation of revenues.</b> In the following table, net revenues are disaggregated by market:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8B9_zvGBuGVM3u0e" style="display: none; visibility: hidden">Schedule of disaggregated revenue</span></p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Three Months Ended March 31,</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Nine Months Ended March 31,</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 40%">Homecare</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember_zb2UP9ZVab3g" style="width: 12%; text-align: right" title="Revenue">12,287,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_988_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember_zjkmOf0nEMle" style="width: 12%; text-align: right" title="Revenue">10,971,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_986_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember_zVbwuDJi2MRa" style="width: 12%; text-align: right" title="Revenue">36,108,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember_zfrwEQ4Zrb3c" style="width: 12%; text-align: right" title="Revenue">31,335,000</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Hospital</td><td> </td> <td style="text-align: left"> </td><td id="xdx_988_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HospitalMember_zs8rQmfE2Uv3" style="text-align: right" title="Revenue">783,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_984_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HospitalMember_zSHzwlrkZtD7" style="text-align: right" title="Revenue">440,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98A_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HospitalMember_zDbBGUTMI8u7" style="text-align: right" title="Revenue">1,909,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_981_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HospitalMember_zMkyeMYnUXqe" style="text-align: right" title="Revenue">1,420,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Homecare distributor</td><td> </td> <td style="text-align: left"> </td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareDistributorMember_z2wSBiYErAc8" style="text-align: right" title="Revenue">524,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98B_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareDistributorMember_zI6WKVFbCvo9" style="text-align: right" title="Revenue">501,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_988_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareDistributorMember_zOp5lICpib6f" style="text-align: right" title="Revenue">1,377,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98B_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareDistributorMember_z2kg54hFSkVf" style="text-align: right" title="Revenue">1,391,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">Other</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98E_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--OtherMember_zhoJvfEKJhwg" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">277,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_981_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--OtherMember_zeTuaNLyXpT4" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">156,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_986_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--OtherMember_z2c5IYzhqtB3" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">490,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_985_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--OtherMember_ztygcsdQfLu1" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">309,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98E_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331_z35ClQhHsqB" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">13,871,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98B_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331_z0826JTQ8ZCf" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">12,068,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_984_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331_znGpZ9RH45wd" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">39,884,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_984_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331_zMVXCTUgn2L8" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">34,455,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">In the following table, net homecare revenue is disaggregated by payer type:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Three Months Ended March 31,</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Nine Months Ended March 31,</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 40%">Commercial</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_982_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--CommercialMember_z3FshHLLZox2" style="width: 12%; text-align: right" title="Revenue">5,974,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--CommercialMember_zNztYVFAd3Pl" style="width: 12%; text-align: right" title="Revenue">4,787,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_981_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--CommercialMember_zyNGIuB06hmg" style="width: 12%; text-align: right" title="Revenue">17,684,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 3%; text-align: left">$</td><td id="xdx_985_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--CommercialMember_z9OHZZ3bdRJ4" style="width: 10%; text-align: right" title="Revenue">12,706,000</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Medicare</td><td> </td> <td style="text-align: left"> </td><td id="xdx_989_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareMember_zlblrwdW41q6" style="text-align: right" title="Revenue">4,825,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_986_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareMember_zf8Q92XH3asg" style="text-align: right" title="Revenue">4,544,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_983_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareMember_znu5G9A0D17f" style="text-align: right" title="Revenue">13,666,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareMember_zEpFbPGThO28" style="text-align: right" title="Revenue">13,753,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Medicare Supplemental</td><td> </td> <td style="text-align: left"> </td><td id="xdx_980_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareSupplementalMember_zUOuGSlWrbc1" style="text-align: right" title="Revenue">1,177,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_989_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareSupplementalMember_zx5rK7eSEQa5" style="text-align: right" title="Revenue">1,278,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_985_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareSupplementalMember_zRBBvfjCBuCl" style="text-align: right" title="Revenue">3,447,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicareSupplementalMember_ztr8sQ6lYtI7" style="text-align: right" title="Revenue">3,681,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Medicaid</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98D_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicaidMember_zDCA42myitga" style="text-align: right" title="Revenue">115,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_981_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicaidMember_zX1X0Z3IedM1" style="text-align: right" title="Revenue">128,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98E_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicaidMember_z2mzwLbUhqKd" style="text-align: right" title="Revenue">722,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_984_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--MedicaidMember_zgLZqDy147rf" style="text-align: right" title="Revenue">618,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-bottom: 1pt">Other homecare</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--OtherHomecareMember_zZqv2Ugx4Zo7" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">196,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_988_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--OtherHomecareMember_zqUDOsiDoHib" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">234,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--OtherHomecareMember_zkok32gUOPBi" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">589,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_986_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember__custom--PayerTypeAxis__custom--OtherHomecareMember_zVHqwBbfGow6" style="border-bottom: Black 1pt solid; text-align: right" title="Revenue">577,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20240101__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember_zodYspyRdxWa" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">12,287,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_989_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230101__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember_zHypqSaYIDz1" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">10,971,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20230701__20240331__srt--ProductOrServiceAxis__custom--HomeCareMember_zmbXcUVQfHW2" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">36,108,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_c20220701__20230331__srt--ProductOrServiceAxis__custom--HomeCareMember_z7WOy74kQurf" style="border-bottom: Black 2.5pt double; text-align: right" title="Revenue">31,335,000</td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr> </table> 12287000 10971000 36108000 31335000 783000 440000 1909000 1420000 524000 501000 1377000 1391000 277000 156000 490000 309000 13871000 12068000 39884000 34455000 5974000 4787000 17684000 12706000 4825000 4544000 13666000 13753000 1177000 1278000 3447000 3681000 115000 128000 722000 618000 196000 234000 589000 577000 12287000 10971000 36108000 31335000 <p id="xdx_89A_eus-gaap--ContractWithCustomerAssetAndLiabilityTableTextBlock_zc8fNJXZqCYi" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>Contract balances.</b> The following table provides information about contract assets from contracts with customers:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8B6_zmQVDSeI7Ita" style="display: none; visibility: hidden">Schedule of contract asset</span></p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Nine Months Ended March 31, 2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Fiscal Year Ended June 30, 2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Increase (decrease)</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Increase (decrease)</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 70%; text-align: left">Contract assets, beginning</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_98A_eus-gaap--ContractWithCustomerAssetNetCurrent_iS_dxL_c20230701__20240331_zv1oZBnygtk9" style="width: 12%; text-align: right" title="Contract assets beginning::XDX::487000"><span style="-sec-ix-hidden: xdx2ixbrl0674">487,000</span></td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_988_eus-gaap--ContractWithCustomerAssetNetCurrent_iS_dxL_c20220701__20230630_zuBZqz1paEH5" style="width: 12%; text-align: right" title="Contract assets beginning::XDX::487000"><span style="-sec-ix-hidden: xdx2ixbrl0676">286,000</span></td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Reclassification of contract assets to accounts receivable</td><td> </td> <td style="text-align: left"> </td><td id="xdx_980_eus-gaap--ContractWithCustomerAssetReclassifiedToReceivable_c20230701__20240331_z64D1L1GMXt8" style="text-align: right" title="Reclassification of contract assets to accounts receivable">(1,453,000</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98B_eus-gaap--ContractWithCustomerAssetReclassifiedToReceivable_c20220701__20230630_z4ZnjKHBxxjj" style="text-align: right" title="Reclassification of contract assets to accounts receivable">(1,220,000</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Contract assets recognized</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98D_eus-gaap--ContractWithCustomerLiabilityRevenueRecognized_c20230701__20240331_z2DTtAMTRyJb" style="text-align: right" title="Contract assets recognized">1,829,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_98A_eus-gaap--ContractWithCustomerLiabilityRevenueRecognized_c20220701__20230630_zMmjjLmb51mi" style="text-align: right" title="Contract assets recognized">1,351,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Increase (decrease) as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98E_eus-gaap--ContractWithCustomerAssetCumulativeCatchUpAdjustmentToRevenueChangeInEstimateOfTransactionPrice_c20230701__20240331_zYPKAt8T7Fji" style="border-bottom: Black 1pt solid; text-align: right" title="Increase (decrease) as a result of changes in the estimate of amounts to be realized frompayers, excluding amounts transferred to receivables during the period">(221,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_982_eus-gaap--ContractWithCustomerAssetCumulativeCatchUpAdjustmentToRevenueChangeInEstimateOfTransactionPrice_c20220701__20230630_ztHIeWI5cINi" style="border-bottom: Black 1pt solid; text-align: right" title="Increase (decrease) as a result of changes in the estimate of amounts to be realized frompayers, excluding amounts transferred to receivables during the period">70,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="padding-bottom: 2.5pt">Contract assets, ending</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98F_eus-gaap--ContractWithCustomerAssetNetCurrent_iE_c20230701__20240331_z6M1GXpOeKKd" style="border-bottom: Black 2.5pt double; text-align: right" title="Contract assets, ending">642,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_985_eus-gaap--ContractWithCustomerAssetNetCurrent_iE_c20220701__20230630_zYeC1LQ8Bud3" style="border-bottom: Black 2.5pt double; text-align: right" title="Contract assets, ending">487,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> -1453000 -1220000 1829000 1351000 -221000 70000 642000 487000 <p id="xdx_808_eus-gaap--InventoryDisclosureTextBlock_zC94Gh4RqUEf" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Note 3. <span id="xdx_827_zXTh4fpyE8a9">Inventories</span></p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p id="xdx_893_eus-gaap--ScheduleOfInventoryCurrentTableTextBlock_zlrJBVHusF7l" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8B4_zLxI23mgLT4e">The components of inventory were as follows:</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" id="xdx_49A_20240331_zXkeiDSpjvIe" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">March 31, 2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" id="xdx_496_20230630_z9YWvdCuflpl" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr id="xdx_40A_eus-gaap--OtherInventorySupplies_iI_zwx8Vm8RmnPd" style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 70%; text-align: left">Parts inventory</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">3,016,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">3,420,000</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_405_eus-gaap--InventoryWorkInProcess_iI_zr8DhtLe1Oj" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Work in process</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">449,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">470,000</td><td style="text-align: left"> </td></tr> <tr id="xdx_40C_eus-gaap--InventoryFinishedGoods_iI_zOsDKaeewaf3" style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Finished goods</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">856,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">323,000</td><td style="text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--OtherInventoryInTransit_iI_zDYVyFTYQJ0b" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Estimated inventory to be returned</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">260,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">265,000</td><td style="text-align: left"> </td></tr> <tr id="xdx_407_eus-gaap--InventoryValuationReserves_iNI_di_zXd6kntPVu2d" style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-bottom: 1pt">Less: Reserve for obsolescence</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(403,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(257,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr id="xdx_40D_eus-gaap--InventoryNet_iI_zaCTzm3knb9b" style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,178,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,221,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> <p id="xdx_8AC_zfSKitqfggo8" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p id="xdx_893_eus-gaap--ScheduleOfInventoryCurrentTableTextBlock_zlrJBVHusF7l" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8B4_zLxI23mgLT4e">The components of inventory were as follows:</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" id="xdx_49A_20240331_zXkeiDSpjvIe" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">March 31, 2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" id="xdx_496_20230630_z9YWvdCuflpl" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr id="xdx_40A_eus-gaap--OtherInventorySupplies_iI_zwx8Vm8RmnPd" style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 70%; text-align: left">Parts inventory</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">3,016,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">3,420,000</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_405_eus-gaap--InventoryWorkInProcess_iI_zr8DhtLe1Oj" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Work in process</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">449,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">470,000</td><td style="text-align: left"> </td></tr> <tr id="xdx_40C_eus-gaap--InventoryFinishedGoods_iI_zOsDKaeewaf3" style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Finished goods</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">856,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">323,000</td><td style="text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--OtherInventoryInTransit_iI_zDYVyFTYQJ0b" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Estimated inventory to be returned</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">260,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">265,000</td><td style="text-align: left"> </td></tr> <tr id="xdx_407_eus-gaap--InventoryValuationReserves_iNI_di_zXd6kntPVu2d" style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-bottom: 1pt">Less: Reserve for obsolescence</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(403,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(257,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr id="xdx_40D_eus-gaap--InventoryNet_iI_zaCTzm3knb9b" style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,178,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,221,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> 3016000 3420000 449000 470000 856000 323000 260000 265000 403000 257000 4178000 4221000 <p id="xdx_80B_eus-gaap--ProductWarrantyDisclosureTextBlock_zR4FxZ5KZI01" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Note 4. <span id="xdx_82B_zrlcLLo5Ubyc">Warranty Reserve</span></p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">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 hospital 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 reserve 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 reserve and adjusts the amounts as necessary.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p id="xdx_892_eus-gaap--ScheduleOfProductWarrantyLiabilityTableTextBlock_z4gF30zP77b" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8BA_znpY2SvXK8qi">Changes in the Company’s warranty reserve were as follows:</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Nine Months Ended March 31, 2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Fiscal Year Ended June 30, 2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 70%; text-align: left">Warranty reserve, beginning</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--ProductWarrantyAccrual_iS_c20230701__20240331_zIkvpH9BbiNk" style="width: 12%; text-align: right" title="Warranty reserve, beginning">1,378,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_981_eus-gaap--ProductWarrantyAccrual_iS_c20220701__20230630_zKJ7V7e81eDg" style="width: 12%; text-align: right" title="Warranty reserve, beginning">1,256,000</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 0.125in">Accrual for products sold</td><td> </td> <td style="text-align: left"> </td><td id="xdx_985_eus-gaap--ProductWarrantyAccrualWarrantiesIssued_c20230701__20240331_zRRXkwswj9z1" style="text-align: right" title="Accrual for products sold">426,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_982_eus-gaap--ProductWarrantyAccrualWarrantiesIssued_c20220701__20230630_zBYybujNw5D3" style="text-align: right" title="Accrual for products sold">416,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0.125in">Expenditures and costs incurred for warranty claims</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_980_eus-gaap--ProductWarrantyAccrualPayments_iN_di_c20230701__20240331_z9vgRvWoiUFd" style="border-bottom: Black 1pt solid; text-align: right" title="Expenditures and costs incurred for warranty claims">(279,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_982_eus-gaap--ProductWarrantyAccrualPayments_iN_di_c20220701__20230630_zcOyXz5WZjH8" style="border-bottom: Black 1pt solid; text-align: right">(294,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Warranty reserve, ending</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--ProductWarrantyAccrual_iE_c20230701__20240331_znH6eI0HoUXh" style="border-bottom: Black 2.5pt double; text-align: right" title="Warranty reserve, ending">1,525,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_981_eus-gaap--ProductWarrantyAccrual_iE_c20220701__20230630_zQGD3kXPDKI7" style="border-bottom: Black 2.5pt double; text-align: right" title="Warranty reserve, ending">1,378,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> <p id="xdx_8A3_zUrbhCohYji2" style="margin-top: 0; margin-bottom: 0"></p> <p id="xdx_892_eus-gaap--ScheduleOfProductWarrantyLiabilityTableTextBlock_z4gF30zP77b" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span id="xdx_8BA_znpY2SvXK8qi">Changes in the Company’s warranty reserve were as follows:</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Nine Months Ended March 31, 2024</td><td style="padding-bottom: 1pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Fiscal Year Ended June 30, 2023</td><td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 70%; text-align: left">Warranty reserve, beginning</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--ProductWarrantyAccrual_iS_c20230701__20240331_zIkvpH9BbiNk" style="width: 12%; text-align: right" title="Warranty reserve, beginning">1,378,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_981_eus-gaap--ProductWarrantyAccrual_iS_c20220701__20230630_zKJ7V7e81eDg" style="width: 12%; text-align: right" title="Warranty reserve, beginning">1,256,000</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 0.125in">Accrual for products sold</td><td> </td> <td style="text-align: left"> </td><td id="xdx_985_eus-gaap--ProductWarrantyAccrualWarrantiesIssued_c20230701__20240331_zRRXkwswj9z1" style="text-align: right" title="Accrual for products sold">426,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_982_eus-gaap--ProductWarrantyAccrualWarrantiesIssued_c20220701__20230630_zBYybujNw5D3" style="text-align: right" title="Accrual for products sold">416,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0.125in">Expenditures and costs incurred for warranty claims</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_980_eus-gaap--ProductWarrantyAccrualPayments_iN_di_c20230701__20240331_z9vgRvWoiUFd" style="border-bottom: Black 1pt solid; text-align: right" title="Expenditures and costs incurred for warranty claims">(279,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_982_eus-gaap--ProductWarrantyAccrualPayments_iN_di_c20220701__20230630_zcOyXz5WZjH8" style="border-bottom: Black 1pt solid; text-align: right">(294,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Warranty reserve, ending</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--ProductWarrantyAccrual_iE_c20230701__20240331_znH6eI0HoUXh" style="border-bottom: Black 2.5pt double; text-align: right" title="Warranty reserve, ending">1,525,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_981_eus-gaap--ProductWarrantyAccrual_iE_c20220701__20230630_zQGD3kXPDKI7" style="border-bottom: Black 2.5pt double; text-align: right" title="Warranty reserve, ending">1,378,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> 1378000 1256000 426000 416000 279000 294000 1525000 1378000 <p id="xdx_80C_eus-gaap--IncomeTaxDisclosureTextBlock_zkedp6buyAi5" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Note 5. <span id="xdx_825_zGrWuT6XFg2f">Income Taxes</span></p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Income tax expense was estimated at $<span id="xdx_908_eus-gaap--IncomeTaxExpenseBenefit_c20240101__20240331_zVdgez72nfyf" title="Income tax expense">468,000</span> and $<span id="xdx_903_eus-gaap--IncomeTaxExpenseBenefit_c20230701__20240331_zJXnPy84Y7yi" title="Income tax expense">1,217,000</span>, and the effective tax rate was <span id="xdx_907_eus-gaap--EffectiveIncomeTaxRateContinuingOperations_dp_c20240101__20240331_zVB1CgzCPuH3" title="Effective tax rate">23.9</span>% and <span id="xdx_906_eus-gaap--EffectiveIncomeTaxRateContinuingOperations_dp_c20230701__20240331_zO9YliRPOqU8" title="Effective tax rate">26.8</span>% for the three and nine months ended March 31, 2024, respectively. Estimated income tax expense for the three and nine months ended March 31, 2024, includes a discrete current tax benefit of $<span id="xdx_900_eus-gaap--CurrentIncomeTaxExpenseBenefit_c20240101__20240331_zUyT77bY0hcd" title="Current income tax expense">99,000</span> and $<span id="xdx_902_eus-gaap--CurrentIncomeTaxExpenseBenefit_c20230701__20240331_zBZXHNQSDq82">95,000</span>, respectively, primarily related to the exercise of stock options.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Income tax expense was estimated at $<span id="xdx_901_eus-gaap--IncomeTaxExpenseBenefit_dxL_c20240101__20240331_zZ9pZPoSFFx9" title="Income tax expense::XDX::468000"><span style="-sec-ix-hidden: xdx2ixbrl0748">147,000</span></span> and $<span id="xdx_909_eus-gaap--IncomeTaxExpenseBenefit_dxL_c20230701__20240331_zpHv8xVFlFTc" title="Income tax expense::XDX::1217000"><span style="-sec-ix-hidden: xdx2ixbrl0750">418,000</span></span>, and the effective tax rate was <span id="xdx_90E_eus-gaap--EffectiveIncomeTaxRateContinuingOperations_dp_c20230101__20230331_z57AHUnt3rL" title="Effective tax rate">12.0</span>% and <span id="xdx_908_eus-gaap--EffectiveIncomeTaxRateContinuingOperations_dp_c20220701__20230331_zWSi9FgL8gs7" title="Effective tax rate">16.4</span>% for the three and nine months ended March 31, 2023, respectively. Estimated income tax expense for the three and nine months ended March 31, 2023, includes a discrete current tax benefit of $<span id="xdx_901_eus-gaap--CurrentIncomeTaxExpenseBenefit_c20230101__20230331_zAARzdvbBUE1" title="Current income tax expense">176,000</span> and $<span id="xdx_901_eus-gaap--CurrentIncomeTaxExpenseBenefit_c20220701__20230331_zDbRwnC8Ee4k">219,000</span>, respectively, related to the exercise of stock options.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The Company is subject to U.S. federal and state income tax in multiple jurisdictions. With limited exceptions, years prior to the Company’s fiscal year ended June 30, 2020, are no longer open to U.S. federal, state or local examinations by taxing authorities. The Company is not under any current income tax examinations by any federal, state or local taxing authority. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.</p> 468000 1217000 0.239 0.268 99000 95000 0.120 0.164 176000 219000 <p id="xdx_801_eus-gaap--DebtDisclosureTextBlock_z7zm4M5KrqBg" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Note 6. <span id="xdx_828_z23StjqlyOAj">Financing Arrangements</span></p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The Company has a credit facility that provides for a $<span id="xdx_905_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_c20240331__us-gaap--LineOfCreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zeXBGYtaoCMh" title="Maximum borrowing capacity">2,500,000</span> revolving line of credit through December 18, 2025, if not renewed before such date. There was <span id="xdx_90C_eus-gaap--LinesOfCreditCurrent_iI_dxL_c20240331__us-gaap--LineOfCreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zerb86S6ntl8" title="Line of credit balance::XDX::0"><span id="xdx_90D_eus-gaap--LinesOfCreditCurrent_iI_dxL_c20230630__us-gaap--LineOfCreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zbzrncO3wbVc" title="Line of credit balance::XDX::0"><span style="-sec-ix-hidden: xdx2ixbrl0763"><span style="-sec-ix-hidden: xdx2ixbrl0765">no</span></span></span></span> outstanding principal balance on the line of credit as of March 31, 2024, or June 30, 2023. Interest on borrowings under the line of credit, if any, accrues at the prime rate (<span id="xdx_906_ecustom--PrimeRate_iI_pid_dp_uPure_c20240331__us-gaap--LineOfCreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember__us-gaap--VariableRateAxis__us-gaap--PrimeRateMember_zIddY5qVVM78" title="Interest rate">8.50</span>% on March 31, 2024) less <span id="xdx_90A_eus-gaap--DebtInstrumentBasisSpreadOnVariableRate1_pid_dp_uPure_c20230701__20240331__us-gaap--LineOfCreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_znVOOfO8NMFj" title="Basis spread on rate">1.00</span>% and is payable monthly. The amount eligible for borrowing on the line of credit is limited to the lesser of $<span id="xdx_909_eus-gaap--LineOfCreditFacilityCapacityAvailableForSpecificPurposeOtherThanForTradePurchases_iI_c20240331__us-gaap--LineOfCreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zVUIWpiVSxUl" title="Available borrowing capacity">2,500,000</span> or <span id="xdx_90A_ecustom--BorrowingCapacityOfEligibleAccountsReceivablePercent_iI_dp_uPure_c20240331__us-gaap--LineOfCreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zncvg3l5ztSe" title="Borrowing capacity of eligible accounts receivable percent">57.00</span>% of eligible accounts receivable. On March 31, 2024, the maximum $<span id="xdx_902_eus-gaap--LineOfCreditFacilityRemainingBorrowingCapacity_iI_c20240331__us-gaap--LineOfCreditFacilityAxis__us-gaap--RevolvingCreditFacilityMember_zt9cELfP0PJj" title="Available borrowing capacity">2,500,000</span> was eligible for borrowing. Payment obligations under the line of credit, if any, are secured by a security interest in substantially all the tangible and intangible assets of the Company.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The documents governing the line of credit contain certain financial and non-financial covenants that include a minimum tangible net worth covenant of not less than $<span id="xdx_909_ecustom--DebtInstrumentCovenantComplianceAmount_iI_c20240331_zBVZ5Edc8Kc5" title="Minimum tangible net worth to be maintained">10,125,000</span> and restrictions on the Company’s ability to incur certain additional indebtedness or pay dividends.</p> 2500000 0.0850 0.0100 2500000 0.5700 2500000 10125000 <p id="xdx_80C_ecustom--CommonStockTextBlock_zQDN9ghpIpQ6" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Note 7. <span id="xdx_825_z5J5kueLVl9l">Common Stock</span></p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; background-color: white"><b>Authorized shares:</b> The Company’s Articles of Incorporation, as amended, have established <span id="xdx_909_eus-gaap--CommonStockSharesAuthorized_iI_pid_uShares_c20240331__us-gaap--StatementClassOfStockAxis__custom--CapitalStockMember_z682guEQahR7" title="Common stock, authorized">15,000,000</span> authorized shares of capital stock consisting of <span id="xdx_90A_eus-gaap--CommonStockSharesAuthorized_iI_pid_uShares_c20240331__us-gaap--StatementEquityComponentsAxis__us-gaap--CommonStockMember_zQq7QjSJr3ea" title="Common stock, authorized">13,000,000</span> shares of common stock, par value $<span id="xdx_902_eus-gaap--CommonStockParOrStatedValuePerShare_iI_pid_uUSDPShares_c20240331__us-gaap--StatementEquityComponentsAxis__us-gaap--CommonStockMember_zeBcI0JXoV9d" title="Common stock, par value (in dollars per share)">0.01</span> per share, and <span id="xdx_90E_eus-gaap--CommonStockSharesAuthorized_iI_pid_uShares_c20240331__us-gaap--StatementClassOfStockAxis__custom--AuthorizedSharesUndesignatedStockMember_z7JG0bP7Rme3" title="Common stock, authorized">2,000,000</span> shares of undesignated stock.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; background-color: white"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; background-color: white">On May 26, 2021, the Company’s Board of Directors (the “Board”) approved a stock repurchase authorization. Under the authorization, the Company was originally able to repurchase up to $<span id="xdx_90B_eus-gaap--CommonStockSharesAuthorized_iI_pid_dxL_uShares_c20220526__srt--TitleOfIndividualAxis__srt--BoardOfDirectorsChairmanMember_zI1MECSgvjEa" title="Common stock, authorized::XDX::3000000"><span style="-sec-ix-hidden: xdx2ixbrl0789">3.0</span></span> million of shares of common stock through May 26, 2022. On May 26, 2022, the Board removed the date limitation. As of March 31, 2024, a total of <span id="xdx_90C_eus-gaap--StockRepurchasedAndRetiredDuringPeriodShares_pid_uShares_c20230701__20240331_zoJHI8boyXda" title="Number of share repurchased">239,995</span> shares have been repurchased and retired under this authorization for a total cost of $<span id="xdx_90D_eus-gaap--StockRepurchasedAndRetiredDuringPeriodValue_c20230701__20240331_zvOtCxteYhk1" title="Repurchase of common stock">2,725,000</span>, or $<span id="xdx_90F_eus-gaap--SharePrice_iI_pid_uUSDPShares_c20240331_zY80ZhTFFHo4" title="Share price">11.36</span> per share. Repurchased shares have been retired and constitute authorized but unissued shares. There were no share repurchases for the three and nine months ended March 31, 2024.</p> 15000000 13000000 0.01 2000000 239995 2725000 11.36 <p id="xdx_80A_eus-gaap--DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock_zOXfMTMIGVTh" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Note 8. <span id="xdx_82B_zMfluXT7CJk">Share-Based Compensation</span></p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The Company’s share-based compensation plans are described in Note 8 to the financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2023. Share-based compensation expense was $<span id="xdx_90A_eus-gaap--ShareBasedCompensation_c20230701__20240331_zXPyGbof3iHi" title="Share-based compensation expense">1,250,000</span> and $<span id="xdx_90C_eus-gaap--ShareBasedCompensation_c20220701__20230331_zsrqpwANuSG7" title="Share-based compensation expense">506,000</span> for the nine months ended March 31, 2024, and 2023, respectively. This expense is included in selling, general and administrative expense in the Condensed Statements of Operations.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: italic bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Stock Options</p> <p style="font: italic bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <p id="xdx_890_eus-gaap--ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock_zumnIQK8uPSj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span id="xdx_8B2_zxAZehqLMGd7">Stock option transactions during the nine months ended March 31, 2024, are summarized as follows:</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: right"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Number of Shares</b></p></td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Weighted-Average Exercise Price per</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Share</b></p></td><td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 70%; text-align: left">Outstanding on June 30, 2023</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td id="xdx_987_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iS_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zE70uOCO53cl" style="width: 12%; text-align: right" title="Option outstanding , beginning">451,570</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_98D_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValue_iS_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zME4QujcTkbg" style="width: 12%; text-align: right" title="Weighted average grant date fair value, beginning">6.93</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 0.125in">Granted</td><td> </td> <td style="text-align: left"> </td><td id="xdx_986_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zWCmIaLwt0qh" style="text-align: right" title="Granted">263,162</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td id="xdx_985_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zyWSVooyBUol" style="text-align: right" title="Granted">10.70</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-left: 0.125in">Exercised</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98D_eus-gaap--StockIssuedDuringPeriodSharesStockOptionsExercised_iN_pid_di_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_z3A8sKHmYWzf" style="text-align: right" title="Exercised">(56,063</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left">$</td><td id="xdx_988_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zOCLj6Aa1j58" style="text-align: right" title="Exercised">5.45</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0.125in">Cancelled or Forfeited</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_983_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriod_iN_pid_di_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_z400WmW0SxNb" style="border-bottom: Black 1pt solid; text-align: right" title="Cancelled or Forfeited">(21,079</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="text-align: left">$</td><td id="xdx_98F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriodWeightedAverageExercisePrice_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zpCMN0jMArKb" style="text-align: right" title="Cancelled or Forfeited">10.46</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-bottom: 2.5pt">Outstanding on March 31, 2024</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_982_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iE_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zS4dqLYVfTz7" style="border-bottom: Black 2.5pt double; text-align: right" title="Option outstanding, ending">637,590</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="text-align: left">$</td><td id="xdx_987_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValue_iE_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zi2wxlJ37fdd" style="text-align: right" title="Weighted average grant date fair value, ending">8.50</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> <p id="xdx_8AA_zG0JWBYLyZ02" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <p id="xdx_895_eus-gaap--ScheduleOfShareBasedPaymentAwardStockOptionsValuationAssumptionsTableTextBlock_zX5dp4CSbCH2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span id="xdx_8B9_zn9k6wNWkPP9">The following assumptions were used to estimate the fair value of stock options granted:</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: left; padding-bottom: 1pt"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><span style="font-size: 10pt"><b>Nine Months Ended <br/> March 31, 2024</b></span></td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><span style="font-size: 10pt"><b>Fiscal Year Ended <br/> June 30, 2023</b></span></td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Risk-free interest rate</td><td> </td> <td style="text-align: center"><span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMinimum_pid_dp_uPure_c20230701__20240331_zVgI5ZwIXkqc" title="Risk free interest rate - minimum">3.85</span> – <span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMaximum_pid_dp_uPure_c20230701__20240331_zpT5bIFLny13" title="Risk free interest rate - maximum">4.64</span>%</td><td> </td> <td style="text-align: center"><span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMinimum_pid_dp_uPure_c20220701__20230630_zpKEHP2lyrKc" title="Risk free interest rate - minimum">2.88</span> - <span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMaximum_pid_dp_uPure_c20220701__20230630_zJEBSINnZ0A9" title="Risk free interest rate - maximum">4.23</span>%</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 70%; text-align: left">Expected term (years)</td><td style="width: 1%"> </td> <td style="width: 13%; text-align: center"><span id="xdx_90E_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dxL_c20230701__20240331_zI8CZEv7Wn5g" title="Expected term (years)::XDX::P6Y"><span style="-sec-ix-hidden: xdx2ixbrl0835">6</span></span></td><td style="width: 2%"> </td> <td style="width: 13%; text-align: center"><span id="xdx_908_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dxL_c20220701__20230630_zKyh0mXX5Vv" title="Expected term (years)::XDX::P6Y"><span style="-sec-ix-hidden: xdx2ixbrl0837">6</span></span></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Expected volatility</td><td> </td> <td style="text-align: center"><span id="xdx_904_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMinimum_pid_dp_uPure_c20230701__20240331_zcQ0pAiDt9Wj" title="Expected volatility - maximum">51</span> - <span id="xdx_907_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMaximum_pid_dp_uPure_c20230701__20240331_zO03QdZM8Jf2" title="Expected volatility - maximum">53</span>%</td><td> </td> <td style="text-align: center"><span id="xdx_906_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMinimum_pid_dp_uPure_c20220701__20230630_zdxHq7Od5VXb" title="Expected volatility - maximum">53</span>% - <span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMaximum_pid_dp_uPure_c20220701__20230630_ztJoWmdSrCqi" title="Expected volatility - maximum">54</span>%</td> <td> </td></tr> </table> <p id="xdx_8AD_zqsm67Q3oani" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. On March 31, 2024, the weighted average remaining contractual term for all outstanding stock options was <span id="xdx_90E_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingWeightedAverageRemainingContractualTerm1_dtxL_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zXXOKnLWKhw8" title="Weighted average contractual term outstanding stock options::XDX::P6Y8M12D"><span style="-sec-ix-hidden: xdx2ixbrl0847">6.7</span></span> years and the aggregate intrinsic value of the options was $<span id="xdx_90E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iI_c20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zs6POasDePM3" title="Options exercisable, intrinsic value">4,878,000</span>. Outstanding on March 31, 2024, were <span id="xdx_904_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iI_pid_uShares_c20240331_zIFK9I6TRklg" title="Stock option issued to employee">637,590</span> stock options issued to employees, of which <span id="xdx_903_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber_iI_pid_uShares_c20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_z6lSl0jwIEDa" title="Vested and exercisable">319,088</span> were vested and exercisable and had an aggregate intrinsic value of $<span id="xdx_90B_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableIntrinsicValue1_iI_c20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zSDkFfNWHh92" title="Options exercisable, intrinsic value">3,118,000</span>. As of March 31, 2024, $<span id="xdx_908_ecustom--UnrecognizedCompensationExpense_iI_c20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zcWuzwlNl9X7" title="Unrecognized compensation expense">925,000</span> of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of approximately <span id="xdx_903_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1_dtxL_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zRnw05cKMxPj" title="Unrecognized compensation expense, period for recognition::XDX::P2Y9M18D"><span style="-sec-ix-hidden: xdx2ixbrl0859">2.8</span></span> years.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: italic bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Restricted Stock</p> <p style="font: italic bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">During the nine months ended March 31, 2024, the Company issued restricted stock awards to employees totaling <span id="xdx_907_eus-gaap--StockIssuedDuringPeriodSharesRestrictedStockAwardGross_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember__us-gaap--PlanNameAxis__custom--EmployeeMember_zJ4bQe5k0bVg" title="Stock issued">23,428</span> shares of common stock, with a weighted average vesting term of <span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardVestingPeriod1_dxL_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember__us-gaap--PlanNameAxis__custom--EmployeeMember_zmn6n0VKYtw6" title="Vesting term::XDX::P3Y"><span style="-sec-ix-hidden: xdx2ixbrl0863">3.0</span></span> years and a weighted average fair value of $<span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember__us-gaap--PlanNameAxis__custom--EmployeeMember_zzFVPVgDvspk" title="Fair value of per share">10.74</span> per share, and to directors totaling <span id="xdx_904_eus-gaap--StockIssuedDuringPeriodSharesRestrictedStockAwardGross_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember__srt--TitleOfIndividualAxis__srt--DirectorMember_z9NCUcj4AWW9" title="Stock issued">21,000</span> shares of common stock, with a vesting term of six months and a weighted average fair value of $<span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember__srt--TitleOfIndividualAxis__srt--DirectorMember_zj0fyAiGJbqh" title="Fair value of per share">10.44</span> per share. There were <span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber_iI_pid_uShares_c20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember_zKraAHLXYng3" title="Restricted stock - unvested">57,661</span> shares of unvested restricted stock with a weighted average fair value of $<span id="xdx_908_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue_iI_pid_uUSDPShares_c20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember_zR3mgjZdttT2" title="Weight average fair value - unvested restricted stock (per share)">10.53</span> per share outstanding as of March 31, 2024. As of March 31, 2024, $<span id="xdx_90F_ecustom--UnrecognizedCompensationExpense_iI_c20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember_zGvzIkQjMbGd" title="Unrecognized compensation expense">253,000</span> of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of approximately <span id="xdx_900_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingWeightedAverageRemainingContractualTerm1_dtxL_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockMember_z8XDS63bw4Hl" title="Unrecognized compensation expense, period for recognition::XDX::P1Y4M24D"><span style="-sec-ix-hidden: xdx2ixbrl0877">1.6</span></span> years.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b><i>Performance-Based Restricted Stock Units</i></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The Company granted <span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_z88J7hgo9uv2" title="Shares granted">175,000</span> performance-based restricted stock units (“PSUs”) to our CEO in connection with his appointment as CEO on July 1, 2023. The PSUs are to be earned based on the extent to which performance goals tied to Total Shareholder Return (“TSR”) are achieved. <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardPlanModificationDescriptionAndTerms_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_ztOIC0y16XR1" title="Other description">The performance-based restricted stock units will be eligible to vest and settle into shares of common stock on a 1-for-1 basis with respect to one-half of the shares upon achieving a total shareholder return of 50% and the remaining shares upon a total shareholder return of 100%, in each case within four years of the date of grant. The grant date fair value of the awards was determined using a Monte Carlo valuation model with an expected term of four years.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Stock based compensation expense recognized for PSUs was $<span id="xdx_905_eus-gaap--ShareBasedCompensation_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_z7urHSTIWdE7" title="Share-based compensation expense">217,000</span> and $<span id="xdx_90A_eus-gaap--ShareBasedCompensation_c20220701__20230331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_zUIYu97ez3xl" title="Share-based compensation expense">0</span> for the nine months ended March 31, 2024, and 2023, respectively. The weighted average grant date fair value per unit was $<span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_zvYxalwuk8G8" title="Fair value of per share">6.58</span> and as of March 31, 2024, there are <span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iI_pid_uShares_c20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_zVDqIu8WSsdg" title="Shares outstanding">175,000</span> PSUs outstanding. On March 31, 2024, there was approximately $<span id="xdx_902_ecustom--UnrecognizedCompensationExpense_iI_c20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_zwkybddAsKF4" title="Unrecognized compensation expense">935,000</span> of total unrecognized compensation expense related to outstanding PSUs that is expected to be recognized over a period of <span id="xdx_90A_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingWeightedAverageRemainingContractualTerm1_dtxL_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_zGttNv6pjUN" title="Unrecognized compensation expense, period for recognition::XDX::P3Y2M30D"><span style="-sec-ix-hidden: xdx2ixbrl0893">3.25</span></span> years.</p> 1250000 506000 <p id="xdx_890_eus-gaap--ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock_zumnIQK8uPSj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span id="xdx_8B2_zxAZehqLMGd7">Stock option transactions during the nine months ended March 31, 2024, are summarized as follows:</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: right"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Number of Shares</b></p></td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Weighted-Average Exercise Price per</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Share</b></p></td><td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="width: 70%; text-align: left">Outstanding on June 30, 2023</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td id="xdx_987_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iS_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zE70uOCO53cl" style="width: 12%; text-align: right" title="Option outstanding , beginning">451,570</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td id="xdx_98D_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValue_iS_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zME4QujcTkbg" style="width: 12%; text-align: right" title="Weighted average grant date fair value, beginning">6.93</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 0.125in">Granted</td><td> </td> <td style="text-align: left"> </td><td id="xdx_986_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zWCmIaLwt0qh" style="text-align: right" title="Granted">263,162</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td id="xdx_985_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zyWSVooyBUol" style="text-align: right" title="Granted">10.70</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-left: 0.125in">Exercised</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98D_eus-gaap--StockIssuedDuringPeriodSharesStockOptionsExercised_iN_pid_di_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_z3A8sKHmYWzf" style="text-align: right" title="Exercised">(56,063</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left">$</td><td id="xdx_988_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zOCLj6Aa1j58" style="text-align: right" title="Exercised">5.45</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0.125in">Cancelled or Forfeited</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_983_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriod_iN_pid_di_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_z400WmW0SxNb" style="border-bottom: Black 1pt solid; text-align: right" title="Cancelled or Forfeited">(21,079</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="text-align: left">$</td><td id="xdx_98F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriodWeightedAverageExercisePrice_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zpCMN0jMArKb" style="text-align: right" title="Cancelled or Forfeited">10.46</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left; padding-bottom: 2.5pt">Outstanding on March 31, 2024</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_982_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iE_pid_uShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zS4dqLYVfTz7" style="border-bottom: Black 2.5pt double; text-align: right" title="Option outstanding, ending">637,590</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="text-align: left">$</td><td id="xdx_987_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValue_iE_pid_uUSDPShares_c20230701__20240331__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zi2wxlJ37fdd" style="text-align: right" title="Weighted average grant date fair value, ending">8.50</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> 451570 6.93 263162 10.70 56063 5.45 21079 10.46 637590 8.50 <p id="xdx_895_eus-gaap--ScheduleOfShareBasedPaymentAwardStockOptionsValuationAssumptionsTableTextBlock_zX5dp4CSbCH2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><span id="xdx_8B9_zn9k6wNWkPP9">The following assumptions were used to estimate the fair value of stock options granted:</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: left; padding-bottom: 1pt"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><span style="font-size: 10pt"><b>Nine Months Ended <br/> March 31, 2024</b></span></td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><span style="font-size: 10pt"><b>Fiscal Year Ended <br/> June 30, 2023</b></span></td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Risk-free interest rate</td><td> </td> <td style="text-align: center"><span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMinimum_pid_dp_uPure_c20230701__20240331_zVgI5ZwIXkqc" title="Risk free interest rate - minimum">3.85</span> – <span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMaximum_pid_dp_uPure_c20230701__20240331_zpT5bIFLny13" title="Risk free interest rate - maximum">4.64</span>%</td><td> </td> <td style="text-align: center"><span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMinimum_pid_dp_uPure_c20220701__20230630_zpKEHP2lyrKc" title="Risk free interest rate - minimum">2.88</span> - <span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMaximum_pid_dp_uPure_c20220701__20230630_zJEBSINnZ0A9" title="Risk free interest rate - maximum">4.23</span>%</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 70%; text-align: left">Expected term (years)</td><td style="width: 1%"> </td> <td style="width: 13%; text-align: center"><span id="xdx_90E_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dxL_c20230701__20240331_zI8CZEv7Wn5g" title="Expected term (years)::XDX::P6Y"><span style="-sec-ix-hidden: xdx2ixbrl0835">6</span></span></td><td style="width: 2%"> </td> <td style="width: 13%; text-align: center"><span id="xdx_908_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dxL_c20220701__20230630_zKyh0mXX5Vv" title="Expected term (years)::XDX::P6Y"><span style="-sec-ix-hidden: xdx2ixbrl0837">6</span></span></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(214,243,232)"> <td style="text-align: left">Expected volatility</td><td> </td> <td style="text-align: center"><span id="xdx_904_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMinimum_pid_dp_uPure_c20230701__20240331_zcQ0pAiDt9Wj" title="Expected volatility - maximum">51</span> - <span id="xdx_907_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMaximum_pid_dp_uPure_c20230701__20240331_zO03QdZM8Jf2" title="Expected volatility - maximum">53</span>%</td><td> </td> <td style="text-align: center"><span id="xdx_906_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMinimum_pid_dp_uPure_c20220701__20230630_zdxHq7Od5VXb" title="Expected volatility - maximum">53</span>% - <span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMaximum_pid_dp_uPure_c20220701__20230630_ztJoWmdSrCqi" title="Expected volatility - maximum">54</span>%</td> <td> </td></tr> </table> 0.0385 0.0464 0.0288 0.0423 0.51 0.53 0.53 0.54 4878000 637590 319088 3118000 925000 23428 10.74 21000 10.44 57661 10.53 253000 175000 The performance-based restricted stock units will be eligible to vest and settle into shares of common stock on a 1-for-1 basis with respect to one-half of the shares upon achieving a total shareholder return of 50% and the remaining shares upon a total shareholder return of 100%, in each case within four years of the date of grant. The grant date fair value of the awards was determined using a Monte Carlo valuation model with an expected term of four years. 217000 0 6.58 175000 935000 <p id="xdx_80F_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_zqAylbtMSjKc" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">Note 9. <span id="xdx_821_z6d9kdZ4Ko5e">Commitments and Contingencies</span></p> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">The Company is occasionally involved in claims and disputes arising in the ordinary course of business. The Company insures certain 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.</p>