10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY PERIOD PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended March 31, 2015

Commission File Number 0-20127

Escalon Medical Corp.

(Exact name of registrant as specified in its charter)

Pennsylvania	33-0272839
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

435 Devon Park Drive, Building 100, Wayne, PA 19087

(Address of principal executive offices, including zip code)

(610) 688-6830

(Registrant’s telephone number, including area code)

N/A

Former name, former address and former fiscal year, if changed since last report

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  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes  x    No  o

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 7,526,430 shares of common stock, $0.001 par value, outstanding as of May 13, 2015.

TABLE OF CONTENTS
		Page
	PART I Financial Information
Item I.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2015 and June 30, 2014 (Unaudited)	2
	Condensed Consolidated Statements of Operations for the three-month and nine-month periods ended March 31, 2015 and 2014 (unaudited)	3
	Condensed Consolidated Statement of Shareholders' Equity for the nine-month period ended March 31, 2015 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine-month periods ended March 31, 2015 and 2014 (unaudited)	5
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
	PART II Other Information
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 6.	Exhibits	18

1

Item 1. Condensed Consolidated Financial Statements

ESCALON MEDICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	March 31, 2015			June 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	1,214,817		$	2,009,554
Accounts receivable, net	2,262,601			1,690,156
Inventory, net	2,409,428			2,910,727
Other current assets	232,435			286,548
Total current assets	6,119,281			6,896,985
Property and equipment, net	46,559			24,456
Goodwill	125,027			125,027
Trademarks and trade names	605,006			605,006
Patents, net	3,600			4,800
Total assets	$	6,899,473		$	7,656,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,068,363		$	1,486,081
Accrued expenses	1,324,072			1,169,943
Current portion of accrued post-retirement benefits	101,891			101,891
Liabilities of discontinued operations	559,839			592,837
Total current liabilities	3,054,165			3,350,752
Accrued post-retirement benefits, net of current portion	806,927			841,699
Total long-term liabilities	806,927			841,699
Total liabilities	3,861,092			4,192,451
Shareholders' equity:
Preferred stock, $0.001 par value; 2,000,000 shares authorized; no shares issued	—			—
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,526,430 issued and outstanding	7,526			7,526
Additional paid-in capital	69,613,586			69,562,522
Accumulated deficit	(66,582,731		)	(66,106,225		)
Total shareholders’ equity	3,038,381			3,463,823
Total liabilities and shareholders’ equity	$	6,899,473		$	7,656,274

See notes to condensed consolidated financial statements

2

ESCALON MEDICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended March 31,					Nine Months Ended March 31,
	2015		2014			2015			2014
Net revenues:
Product revenue	$	3,427,564	$	3,151,651		$	9,757,538		$	9,360,219
Revenues, net	3,427,564		3,151,651			9,757,538			9,360,219
Costs and expenses:
Cost of goods sold	1,806,877		1,473,334			5,076,847			4,539,870
Marketing, general and administrative	1,323,419		1,250,159			4,192,428			3,743,548
Research and development	289,848		315,850			997,852			1,016,082
Total costs and expenses	3,420,144		3,039,343			10,267,127			9,299,500
Income (loss) from operations	7,420		112,308			(509,589		)	60,719
Other income
Other income	—		—			—			7,543
Interest income	20		46			85			164
Total other income	20		46			85			7,707
Net income (loss) from continuing operations	7,440		112,354			(509,504		)	68,426
Net income (loss) from discontinued operations	49,102		(26,270		)	32,998			(77,649		)
Net income (loss)	$	56,542	$	86,084		$	(476,506	)	$	(9,223	)
Net income (loss) per share
Basic:
Continuing operations	$	—	$	0.01		$	(0.07	)	$	0.01
Discontinued operations	0.01		—			0.01			(0.01		)
Net income (loss)	$	0.01	$	0.01		$	(0.06	)	$	—
Diluted:
Continuing operations	$	—	$	0.01		$	(0.07	)	$	0.01
Discontinued operations	0.01		—			0.01			(0.01		)
Net income (loss)	$	0.01	$	0.01		$	(0.06	)	$	—
Weighted average shares—basic	7,526,430		7,526,430			7,526,430			7,526,430
Weighted average shares—diluted	7,526,430		7,526,430			7,526,430			7,526,430

See notes to condensed consolidated financial statements

3

ESCALON MEDICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED MARCH 31, 2015 (UNAUDITED)
	Common Stock			Additional Paid-in Capital		Accumulated Deficit			Total Shareholders' Equity
	Shares	Amount
Balance at June 30, 2014	7,526,430	$	7,526	$	69,562,522	$	(66,106,225	)	$	3,463,823
Net loss	—	—		—		(476,506		)	(476,506		)
Compensation expense	—	—		51,064		—			51,064
Balance at March 31, 2015	7,526,430	$	7,526	$	69,613,586	$	(66,582,731	)	$	3,038,381

See notes to condensed consolidated financial statements

4

ESCALON MEDICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Nine Months Ended March 31,
	2015			2014
Cash Flows from Operating Activities:
Net loss	$	(476,506	)	$	(9,223	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities of continuing operations:
(Income) loss from discontinued operations	(32,998		)	77,649
Depreciation and amortization	10,516			7,458
Compensation expense related to stock options	51,064			6,472
Change in operating assets and liabilities:
Accounts receivable, net	(572,445		)	38,984
Inventory, net	501,299			(611,370		)
Other current assets	54,113			63,310
Accounts payable and accrued expenses	(263,589		)	290,272
Change in accrued post-retirement benefits	(34,772		)	(61,321		)
Net cash (used in) operating activities from continuing operations	(763,318		)	(197,769		)
Net cash (used in) operating activities from discontinued operations	—			(27,702		)
Net cash (used in) operating activities	(763,318		)	(225,471		)
Cash Flows from Investing Activities:
Purchase of property and equipment	(31,419		)	(19,834		)
Net cash (used in) investing activities from continuing operations	(31,419		)	(19,834		)
Net cash (used in) investing activities	(31,419		)	(19,834		)
Net (decrease) in cash and cash equivalents	(794,737		)	(245,305		)
Cash and cash equivalents, beginning of period	2,009,554			2,654,701
Cash and cash equivalents, end of period	$	1,214,817		$	2,409,396
Supplemental Schedule of Cash Flow Information:
Income taxes paid	$	27,300		$	25,000

See notes to condensed consolidated financial statements

5

Escalon Medical Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(UNAUDITED)

1. Basis of Presentation

 Escalon Medical Corp. (“Escalon” or the “Company” ) is a Pennsylvania corporation initially incorporated in California in 1987, and reincorporated in Pennsylvania in November 2001. Within this document, the “Company” collectively shall mean Escalon and its wholly owned subsidiaries: Sonomed, Inc. (“Sonomed”), Trek, Inc. (“Trek”), Escalon Medical Europe GmbH (“EME”), Escalon Digital Solutions, Inc. (“EMI”), Escalon Pharmaceutical, Inc. (“Pharmaceutical” inactive), Escalon Holdings, Inc. (“EHI”), Escalon IP Holdings, Inc., Sonomed IP Holdings, Inc., Drew Scientific Holdings, Inc. (discontinued), Drew Scientific Inc. (discontinued), and Drew Scientific Group, Plc (“Drew”) and its subsidiaries (discontinued), collectively the discontinued Drew entities are referred to as "ECD" and were discontinued on October 3, 2012. All intercompany accounts and transactions have been eliminated.

The Company operates in the healthcare market, specializing in the development, manufacture, marketing, and distribution of medical devices and pharmaceuticals in the area of ophthalmology. The Company and its products are subject to regulation and inspection by the United States Food and Drug Administration (the “FDA”). The FDA and other governmental authorities require extensive testing of new products prior to sale and have jurisdiction over the safety, efficacy and manufacture of products, as well as product labeling and marketing.

Management historically reviewed financial information, allocated resources, and managed the business as two segments: Sonomed-Escalon and Escalon Medical Corp. (“Corporate”). The Sonomed-Escalon segment consisted of Sonomed, Inc., EMI and Trek, all of which are engaged in the development and sale of ophthalmic medical devices. The Escalon Medical Corp. segment includes the administrative corporate operations of the consolidated group. As the consolidated group is focused on one market, medical devices, segment reporting is no longer deemed necessary. Beginning with the first quarter of fiscal 2015 filing management reviews financial information and manages the business as one entity engaged in the development and sale of ophthalmic medical devices. As a result of this change certain amounts in prior years were reclassified to conform to current year presentation.

2. Stock-Based Compensation

Valuations are based upon highly subjective assumptions about the future, including stock price volatility and exercise patterns. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of the Company's stock. The Company uses historical data to estimate option exercise and employee terminations. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The Company has historically granted options under the Company's option plans with an option exercise price equal to the closing market value of the stock on the date of the grant and with vesting, primarily for Company employees, either in equal annual amounts over a two- to five-year period or immediately and, primarily for non-employee directors, immediately.

As of March 31, 2015 and 2014 total unrecognized compensation cost related to non-vested share-based compensation arrangements granted to employees under the 2004 Equity Incentive Plan was $71,178 and $4,314, respectively. The remaining cost is expected to be recognized over a weighted average period of 1.07 years. For the three-month periods ended March 31, 2015 and 2014, $11,941 and $2,158 was recorded as compensation expense, respectively. For the nine-month periods ended March 31, 2015 and 2014, $35,800 and $6,472 was recorded as compensation expense, respectively.

The Company did not receive any cash from share option exercises under stock-based payment plans for the nine-month periods ended March 31, 2015 and 2014. The Company did not realize any tax effect, which would be a reduction in its tax rate, on options due to the full valuation allowances established on its deferred tax assets.

The Company measures compensation expense for non-employee stock-based compensation based on the fair value of the options issued, as this is more reliable than the fair value of the services received. Fair value is measured as the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital. There was $4,361 and $0 non-employee compensation expense for the three-month periods ended March 31, 2015 and 2014. There was $15,264 and $0 non-employee compensation expense for the nine-month periods ended March 31, 2015 and 2014.

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3. Net Income (Loss) earnings per Share

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2015		2014			2015			2014
Numerator:
Numerator for basic and diluted earnings per share
Income (loss) from continuing operations	$	7,440	$	112,354		$	(509,504	)	$	68,426
Income (loss) from discontinued operations	49,102		(26,270		)	32,998			(77,649		)
Net income (loss)	$	56,542	$	86,084		$	(476,506	)	$	(9,223	)
Denominator:
Denominator for basic earnings per share - weighted average shares	7,526,430		7,526,430			7,526,430			7,526,430
Effect of dilutive securities:
Stock options and warrants	—		—			—			—
Shares reserved for future exchange	—		—			—			—
Denominator for diluted earnings per share - weighted average and assumed conversion	7,526,430		7,526,430			7,526,430			7,526,430
Net income (loss) per share
Basic:
Continuing operations	$	—	$	0.01		$	(0.07	)	$	0.01
Discontinued operations	0.01		—			0.01			(0.01		)
	$	0.01	$	0.01		$	(0.06	)	$	—
Diluted:
Continuing operations	$	—	$	0.01		$	(0.07	)	$	0.01
Discontinued operations	0.01		—			0.01			(0.01		)
	$	0.01	$	0.01		$	(0.06	)	$	—

4. Legal Proceedings

The Company, from time to time, is involved in various legal proceedings and disputes that arise in the normal course of business. These matters have previously and may in the future pertain to intellectual property disputes, commercial contract disputes, employment disputes, and other matters. The Company does not believe that the resolution of any of these matters has had or is likely to have a material adverse impact on the Company's business, financial condition or results of operations.

5. Recently Issued Accounting Standards

In July 2013, FASB issued Accounting Standards Update 2014-02 Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits. Under the new provision an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward with some exceptions. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this standard did not have a material impact to the Company’s consolidated financial statements.

7

In March 2014, FASB issued Accounting Standards Update 2014-07 Consolidation (Topic 810) Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements. The amendments permit a private company lessee (the reporting entity) to elect an alternative not to apply VIE guidance to a lessor entity if (a) the private company lessee and the lessor entity are under common control, (b) the private company lessee has a lease arrangement with the lessor entity, (c) substantially all of the activities between the private company lessee and the lessor entity are related to leasing activities (including supporting leasing activities) between those two entities, and (d) if the private company lessee explicitly guarantees or provides collateral for any obligation of the lessor entity related to the asset leased by the private company, then the principal amount of the obligation at inception of such guarantee or collateral arrangement does not exceed the value of the asset leased by the private company from the lessor entity. The alternative will be effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In April 2014 FASB issued Accounting Standards Update 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under the new provision only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements; a business or nonprofit activity that, on acquisition, meets the criteria to be classified as held for sale is reported in discontinued operations; and a disposal of an equity method investment that meets the definition of discontinued operation is reported in discontinued operations. The amendments are effective for all disposals (or classifications as held for sale) of components of a public business entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years and all businesses or nonprofit activities that, on acquisition, are classified as held for sale that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years.The adoption of this standard did not have a material impact to the Company’s consolidated financial statements.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) that will supersede most current revenue recognition guidance, including industry-specific guidance. The core principle of the new guidance is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Additionally, the guidance requires disaggregated disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized. The amendments are required to be adopted by the Company on January 1, 2017. The FASB has proposed a one year delay in the effective date of Topic 606. Transition to the new guidance may be done using either a full or modified retrospective method. The Company is currently evaluating the full effect that the adoption of this standard will have on the Company’s [consolidated] financial statements.

In June 2014 FASB issued Accounting Standards Update 2014-12 Compensation-Stock Compensation (Topic 718). Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In August 2014 FASB issued Presentation of Financial Statements-Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards.The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In November 2014 FASB issued Derivatives and Hedging (Topic 815)Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. For hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract.The amendments in this Update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In November 2014 FASB issued Business Combinations (Topic 805) Pushdown Accounting. The amendments in this Update provide an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity.The amendments in this Update are effective

8

on November 18, 2014. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In December 2014 FASB issued Business Combinations (Topic 805) Accounting for Identifiable Intangible Assets in a Business Combination. An entity within the scope of this Update that elects the accounting alternative to recognize or otherwise consider the fair value of intangible assets as a result of any in-scope transactions should no longer recognize separately from goodwill.The amendments in this Update, at an entity’s election, apply to all entities except for public business entities and not-for-profit entities The decision to adopt the accounting alternative in this Update must be made upon the occurrence of the first transaction within the scope of this accounting alternative in fiscal years beginning after December 15, 2015, and the effective date of adoption depends on the timing of that first in-scope transaction. (1) customer-related intangible assets unless they are capable of being sold or licensed independently from the other assets of the business and (2) noncompetition agreements. The amendments in this Update are effective on November 18, 2014. The adoption of this standard did not have a material impact to the Company’s consolidated financial statements.

In January 2015, FASB issued Accounting Standards Update 2015-01 Income Statement - Extraordinary and unusual items simplifying Income Statement presentation by eliminating the concept of extraordinary items. The amendment will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In February 2015, FASB issued Accounting Standards Update 2015-02 Consolidation Amendments to the consolidation analysis. The amendments affect those entities who are required to evaluate whether they should consolidate certain legal entities and affect the following areas: limited partnership and similar legal entities, evaluating fees paid to a decision maker or a service provider as a variable interest, the effect of fee arrangements on the primary beneficiary determination, the effect of related parties on the primary beneficiary determination, and certain investment funds. The amendments in this update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this Update are effective for fiscal year beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.    

6. Fair Value Measurements

On July 1, 2008, the Company adopted the FASB-issued authoritative guidance for the fair value of financial assets and liabilities. This standard defines fair value and establishes a hierarchy for reporting the reliability of input measurements used to assess fair value for all assets and liabilities. The FASB-issued authoritative guidance defines fair value as the selling price that would be received for an asset, or paid to transfer a liability, in the principal or most advantageous market on the measurement date. The hierarchy prioritizes fair value measurements based on the types of inputs used in the valuation technique. The inputs are categorized into the following levels:

Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities.

Level 2—Directly or indirectly observable inputs for quoted and other than quoted prices for identical or similar assets and liabilities in active or non-active markets.

Level 3—Unobservable inputs not corroborated by market data, therefore requiring the entity to use the best available information available in the circumstances, including the entity’s own data.

Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses.

7. Continuing Operations

The accompanying condensed consolidated financial statements have been prepared on the going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

We believe that our existing cash and cash flow from operations will be sufficient to fund our activities for the remainder of fiscal 2015 and throughout fiscal 2016. However, we have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development and commercialization sooner than planned. Our forecast of the period of time through which our financial resources will be adequate to support our operations

9

is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed in “Risk Factors” on the Company's Form 10-K for the year ended June 30, 2014.

8. Discontinued Operations

BH Holdings, S.A.S ("BHH")

On January 12, 2012 BHH initiated the filing of an insolvency declaration with the Tribunal de Commerce de Rennes, France ("Commercial Court").  The Commercial Court on January 18, 2012 opened the liquidation proceedings with continuation of BHH's activity for 3 months and named an administrator to manage BHH. Since Drew no longer had a controlling financial interest in BHH it was deconsolidated in the December 31, 2011 quarterly condensed consolidated financial statements and prior period amounts were presented as discontinued operations.

The following tables summarize the results of discontinued operations of BHH for the three months and nine months periods ended March 31, 2015 and 2014 (in thousands):

For the three Months Ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	23			25
Research & development	—			—
Total Costs and expenses	23			25
Loss from discontinued operations	(23		)	(25		)
Other income related to change in foreign exchange rate	72			—
Net income (loss)	$	49		$	(25	)

For the nine-months ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	19			75
Research & development	—			—
Total Costs and expenses	19			75
Loss from discontinued operations	(19		)	(75		)
Other income related to change in foreign exchange rate	58			—
Net income (loss)	$	39		$	(75	)

Assets and liabilities of discontinued operations of BHH included in the condensed consolidated balance sheets are summarized as follows at March 31, 2015 and June 30, 2014 (in thousands):

	March 31,			June 30,
	2015			2014
Assets
Total assets	$	—		$	—
Liabilities
Accrued lease termination costs	560			593
Total liabilities	560			593
Net liabilities of discontinued operations	$	(560	)	$	(593	)

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The following tables summarize the results of discontinued operations of ECD for the three month and nine month periods ended March 31, 2015 and 2014 (in thousands):

For the three months ended March 31,	2015		2014
Revenue, net	$	—	$	—
Cost of goods sold	—		—
Marketing, general and administrative	—		1
Research & development	—		—
Total costs and expenses	—		1
Net (loss) from discontinued operations	$	—	$	(1	)

For the nine months ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	6			3
Research & development	—			—
Total costs and expenses	6			3
Net (loss) from discontinued operations	$	(6	)	$	(3	)

9. Inventory

(In thousands)	March 31,		June 30
	2,015		2014
Inventories, net:
Raw Material	$	1,368	$	1,279
Work-In-Process	166		599
Finished Goods	875		1,033
Total	$	2,409	$	2,911

10. Related Party

The Company purchased furniture from DePiano Interiors, L.L.C. which is owned by the mother of the Company's Chief Executive Officer, Richard DePiano, Jr. Total purchases were $26,275 and $12,611 for the nine-month periods ended March 31, 2015 and 2014, respectively.

The Company rented an apartment from Richard DePiano, Sr. for use by a visiting Company Executive. Total rent for the three and nine months ended March 31, 2015 and 2014 was $10,000 and $0, respectivelyZ.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Forward Looking Statements

Certain statements contained in, or incorporated by reference in, this report are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which provide current expectations or forecasts of future events. Such statements can be identified by the use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “possible,” “project,” “should,” “will,” and similar words or expressions. The Company's forward-looking statements include certain information relating to general business strategy, growth strategies, financial results, liquidity, cash reserves, discontinued operations, research and development, product development, the introduction of new products, the potential markets and uses for the Company's products, the Company's ability to increase its sales campaign effectively, the Company's regulatory filings with the FDA, acquisitions, dispositions, the development of joint venture opportunities,

11

intellectual property and patent protection and infringement, the loss of revenue due to the expiration on termination of certain agreements, the effect of competition on the structure of the markets in which the Company competes, increased legal, accounting and Sarbanes-Oxley compliance costs, compliance with Nasdaq continued listing qualifications, defending the Company in litigation matters and the Company's cost saving initiatives. The reader must carefully consider forward-looking statements and understand that such statements involve a variety of risks and uncertainties, known and unknown, and may be affected by assumptions that fail to materialize as anticipated. Consequently, no forward-looking statement can be guaranteed, and actual results may vary materially. It is not possible to foresee or identify all factors affecting the Company's forward-looking statements, and the reader therefore should not consider the list of such factors contained in its periodic report on Form 10-K for the year ended June 30, 2014 and this Form 10-Q quarterly report to be an exhaustive statement of all risks, uncertainties or potentially inaccurate assumptions.

Executive Overview— Nine-Months Ended March 31, 2015 and 2014.

The following highlights are discussed in further detail within this Form 10-Q. The reader is encouraged to read this

Form 10-Q in its entirety to gain a more complete understanding of factors impacting Company performance and financial

condition.

• Consolidated product revenue from continuing operations increased approximately $398,000, or 4.3%, to $9,758,000 during the nine months ended March 31, 2015 as compared to same period of the last fiscal year. The increase in revenue is attributed to a increase of $294,000 in digital imaging cameras and AXIS image management systems, an increase of $50,000 in ultrasound products, and an increase of $54,000 in surgical products.

• Consolidated cost of goods sold from continuing operations totaled approximately $5,077,000, or 52.0%, of product revenue from continuing operations, for the nine months ended March 31, 2015, as compared to $4,540,000, or 48.5%, of product revenue from continuing operations, for the same period of the prior fiscal year. The increase of 3.5% in cost of goods sold as a percentage of revenue is due mainly to the decreased margin in ultrasound products.

• Total operating expenses increased approximately $431,000, or 9.0%, during the nine-month period ended March 31, 2015 as compared to the same period of prior fiscal year. This was due to increased marketing, general and administrative expenses of $448,000, or 12.0% and a decrease of $18,000 or 1.8%, in research and development expenses.

• Net loss from continuing operations was approximately $510,000 for the nine months ended March 31, 2015. The loss is mainly due to increased marketing, general and administrative expense and reduced margin.

Company Overview

The following discussion should be read in conjunction with interim condensed consolidated financial statements and

the notes thereto, which are set forth in Item 1 of this report.

The Company operates in the healthcare market specializing in the development, manufacture, marketing and distribution of medical devices and pharmaceuticals in the area of ophthalmology. The Company and its products are subject to regulation and inspection by the FDA. The FDA requires extensive testing of new products prior to sale and has jurisdiction over the safety, efficacy and manufacture of products, as well as product labeling and marketing. The Company's Internet address is www.escalonmed.com. Sonomed-Escalon develops, manufactures and markets ultrasound systems used for diagnosis or biometric applications in ophthalmology, develops, manufactures and distributes ophthalmic surgical products under the Trek Medical Products name, and manufactures and markets digital camera systems for ophthalmic fundus photography and image management systems.

Critical Accounting Policies

The preparation of financial statements requires management to make estimates and assumptions that impact amounts reported therein. The most significant of those involve the application of FASB-issued authoritative guidance concerning Revenue Recognition, Goodwill and Other Intangible Assets, discussed further in the notes to consolidated financial statements included in the Form 10-K for the year ended June 30, 2014. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and, as such, include amounts based on informed estimates and judgments of management. For example, estimates are used in determining valuation allowances for deferred income taxes, uncollectible receivables, obsolete inventory, sales returns and rebates, warranty liabilities and valuation of purchased intangible assets. Actual

12

results achieved in the future could differ from current estimates. The Company used what it believes are reasonable assumptions and, where applicable, established valuation techniques in making its estimates.

Revenue Recognition

The Company recognizes revenue from the sale of its products at the time of shipment, when title and risk of loss transfer. The Company provides products to its distributors at agreed upon wholesale prices and to the balance of its customers at set retail prices. Distributors can receive discounts for accepting high volume shipments. The discounts are reflected immediately in the net invoice price, which is the basis for revenue recognition. No further material discounts are given.

The Company's considerations for recognizing revenue upon shipment of product to a distributor are based on the following:

Persuasive evidence that an arrangement (purchase order and sales invoice) exists between a willing buyer (distributor) and the Company that outlines the terms of the sale (company information, quantity of goods, purchase price and payment terms). The buyer (distributor) does not have a right of return.

Shipping terms are ex-factory shipping point. At this point the buyer (distributor) takes title to the goods and is responsible for all risks and rewards of ownership, including insuring the goods as necessary.

The Company's price to the buyer (distributor) is fixed and determinable as specifically outlined on the sales invoice. The sales arrangement does not have customer cancellation or termination clauses.

The buyer (distributor) places a purchase order with the Company; the terms of the sale are cash, COD or credit. Customer credit is determined based on the Company's policies and procedures related to the buyer's (distributor's) creditworthiness. Based on this determination, the Company believes that collectibility is reasonably assured.

The Company assesses collectibility based on creditworthiness of the customer and past transaction history. The Company performs ongoing credit evaluations of its customers and does not require collateral from its customers. For many of the Company's international customers, the Company requires an irrevocable letter of credit to be issued by the customer before the purchase order is accepted.

Valuation of Intangible Assets

The Company annually, and as circumstances require, evaluates for impairment its intangible assets and goodwill in accordance with FASB guidance related to goodwill and other intangible assets, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. These intangible assets include goodwill, trademarks and trade names. Recoverability of these assets is measured by comparison of their carrying amounts to future discounted cash flows the assets are expected to generate. If identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value. The Company does not amortize intangible assets with indefinite useful lives; rather, such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company performs its intangible asset impairment tests on or about June 30, of each year. Any such impairment charge could be significant and could have a material adverse impact on the Company's financial statements if and when an impairment charge is recorded.

Income/(Loss) Per Share

The Company computes net income/(loss) per share under the provisions of FASB issued authoritative guidance.

Under the provisions of FASB issued authoritative guidance, basic and diluted net income/(loss) per share is computed by dividing the net income/(loss) for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income/(loss) per share excludes potential common shares if the impact is anti-dilutive. Basic earnings per share are computed by dividing net income/(loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are determined in the same manner as basic earnings per share, except that the number of shares is increased by assuming exercise of dilutive stock options and warrants using the treasury stock method.

Taxes

13

Estimates of taxable income of the various legal entities and jurisdictions are used in the tax rate calculation. Management uses judgment in estimating what the Company's income tax will be for the year. Since judgment is involved, there is a risk that the tax rate may increase or decrease in any period.

In determining income/(loss) for financial statement purposes, management must make certain estimates and judgments. These estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense. FASB issued authoritative guidance concerning accounting for income taxes also requires that the deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that all or some portion of the recorded deferred tax assets will not be realized in future periods.

In evaluating the Company's ability to recover the Company's deferred tax assets, management considers all available positive and negative evidence including the Company's past operating results, the existence of cumulative losses and near-term forecasts of future taxable income that is consistent with the plans and estimates management is using to manage the underlying businesses.

Through March 31, 2015, the Company has recorded a valuation allowance against the Company's deferred tax assets arising from net operating losses due to uncertainty of their realization as a result of the Company's earnings history, the number of years the Company's net operating losses and tax credits can be carried forward, the existence of taxable temporary differences and near-term earnings expectations. The amount of the valuation allowance could decrease if facts and circumstances change that materially increase taxable income prior to the expiration of the loss carryforwards. Any reduction in the valuation allowance would result in an income tax benefit in the period such determination is made by the Company.

The Company has adopted FASB issued guidance related to accounting for uncertainty in income taxes, which provides a comprehensive model for the recognition, measurement, and disclosure in financial statements of uncertain income tax positions that a company has taken or expects to take on a tax return. Under the FASB guidance a company can recognize the benefit of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit can be recognized. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Additionally, companies are required to accrue interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. The Company has elected to recognize interest expense and penalties, if any, related to uncertain tax positions as a component of its provision for income taxes.

Stock-Based Compensation

Stock-based compensation expense for all stock-based compensation awards granted after July 1, 2006 is based on the grant-date fair value estimate in accordance with the provisions of the FASB issued guidance. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award.

Valuations are based on highly subjective assumptions about the future, including stock price volatility and exercise patterns. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of the Company's stock. The Company uses historical data to estimate option exercise and employee terminations. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

Results of Operations

Three-Month and Nine-Month Periods Ended March 31, 2015 and 2014

The following table shows consolidated product revenue, as well as identifying trends in revenues for the three-month and nine-month periods ended March 31, 2015 and 2014.

Table amounts are in thousands:

	Three Months Ended March 31,						Nine Months Ended March 31,
	2015		2014		% Change		2015		2014		% Change
Product Revenue:
Sonomed-Escalon	$	3,428	$	3,152	8.8	%	$	9,758	$	9,360	4.3	%
Total	$	3,428	$	3,152	8.8	%	$	9,758	$	9,360	4.3	%

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Consolidated product revenue from continuing operations increased approximately $276,000 , or 8.8%, to $3,428,000 during the three months ended March 31, 2015 as compared to same period of the last fiscal year. The increase in revenue is attributed to an increase of $115,000 in digital imaging cameras and AXIS image management systems, an increase of $105,000 in ultrasound products, and an increase of $56,000 in surgical products.

Consolidated product revenue from continuing operations increased approximately $398,000 , or 4.3%, to $9,758,000 during the nine months ended March 31, 2015 as compared to same period of the last fiscal year. The increase in revenue is attributed to an increase of $294,000 in digital imaging cameras and AXIS image management systems, an increase of $50,000 in ultrasound products, and an increase of $54,000 in surgical products.

The following table presents consolidated cost of goods sold as a percentage of product revenues for the three months and nine months ended March 31, 2015 and 2014. Table amounts are in thousands:

	Three Months Ended March 31,								Nine Months Ended March 31,
	2015		%		2014		%		2015		%		2014		%
Cost of Goods Sold:
Sonomed-Escalon	$	1,807	52.7	%	$	1,473	46.7	%	$	5,077	52.0	%	$	4,540	48.5	%
Total	$	1,807	52.7	%	$	1,473	46.7	%	$	5,077	52.0	%	$	4,540	48.5	%

Consolidated cost of goods sold from continuing operations totaled approximately $1,807,000, or 52.7%, of product revenue from continuing operations, for the three months ended March 31, 2015, as compared to $1,473,000, or 46.7%, of product revenue from continuing operations, for the same period of the prior fiscal year. The increase of 6% in cost of goods sold as a percentage of revenue is due mainly to the decreased margin in ultrasound products related to the phasing out of older technologies with lower margins in favor of the new higher margin VuPad. Once the older products are no longer available for sale margins are expected to increase to the 50% to 54% level.

Consolidated cost of goods sold from continuing operations totaled approximately $5,077,000, or 52.0%, of product revenue from continuing operations, for the nine months ended March 31, 2015, as compared to $4,540,000, or 48.5%, of product revenue from continuing operations, for the same period of the prior fiscal year. The increase of 3.5% in cost of goods sold as a percentage of revenue is due mainly to the decreased margin in ultrasound products.

The following table presents consolidated marketing, general and administrative expenses as well as identifying trends in marketing, general and administrative expenses for the three months and nine months ended March 31, 2015 and 2014. Table amounts are in thousands:

	Three Months Ended March 31,						Nine Months Ended March 31,
	2015		2014		% Change		2015		2014		% Change
Marketing, General and Administrative:
Sonomed-Escalon	$	1,323	$	1,250	5.8	%	$	4,192	$	3,744	12.0	%
Total	$	1,323	$	1,250	5.8	%	$	4,192	$	3,744	12.0	%

Consolidated marketing, general and administrative expenses from continuing operations increased $73,000, or 5.8%, to $1,323,000 during the three-month period ended March 31, 2015, as compared to the same period of the prior fiscal year. The increase is due to increased stock option expense, executive retirement expense, commission expense, headcount in sales and and a commercial insurance refund recorded in the prior period offset by reduced meeting and exhibition expense, advertising expense and international consulting expense.

Consolidated marketing, general and administrative expenses from continuing operations increased $448,000, or 12.0%, to $4,192,000 during the nine-month period ended March 31, 2015, as compared to the same period of the prior fiscal year. The increase is due to increased executive retirement expense, added head count in sales, quality, and production management and increased travel, and a commercial insurance refund recorded in the prior period.

The following table presents consolidated research and development expenses from continuing operations for the three-month and nine-month periods ended March 31, 2015 and 2014. Table amounts are in thousands:

15

	Three Months Ended March 31,						Nine Months Ended March 31,
	2015		2014		% Change		2015		2014		% Change
Research and Development:
Sonomed Escalon	$	290	$	316	(8.2	)%	$	998	$	1,016	(1.8	)%
Total	$	290	$	316	(8.2	)%	$	998	$	1,016	(1.8	)%

Consolidated research and development expenses from continuing operations decreased $26,000, or 8.2% to $290,000 during the three-months ended March 31, 2015, as compared to the same period of the prior fiscal year. Research and development expenses were primarily expenses associated with the planned introduction of new or enhanced products.

Consolidated research and development expenses from continuing operations decreased $18,000, or 1.8%, to $998,000 during the nine-month period ended March 31, 2015, as compared to the same period of the prior fiscal year. Research and development expenses were primarily expenses associated with the planned introduction of new or enhanced products.

Discontinued Operations

For the three-months ended March 31, 2015 and 2014, the Company had a net income and net loss from discontinued operations of the BHH segment of $49,000 and $26,000, respectively. For the nine-month period ended March 31, 2015 and 2014, the Company had a net income and net loss from discontinued operations of the BHH segment of $33,000 and $78,000, respectively. Discontinued operations of BHH is related to a BHH lease guaranteed by the Company. The income is due to the foreign exchange rate variance.

Other Income

The Company did not have significant other income during the three-months or nine-months ended March 31, 2015 and 2014.

Liquidity and Capital Resources

The following table presents overall liquidity and capital resources as of March 31, 2015 and June 30, 2014. Table amounts are in thousands:

	March 31, 2015			June 30, 2014
Current Ratio:
Current assets	$	6,119		$	6,897
Less: Current liabilities	3,054			3,351
Working capital	$	3,065		$	3,546
Current ratio	2.0 to 1			2.1 to 1
Debt to Total Capital Ratio:
Note payable and long-term debt	$	—		$	—
Total debt	—			—
Total equity	3,038			3,464
Total capital	$	3,038		$	3,464
Total debt to total capital	—		%	—		%

The Company experiences fluctuations in sales on a quarterly basis related to the timing of major trade shows during the year and to customer year end buying trends.

Working Capital Position

Working capital decreased approximately $481,000 as of March 31, 2015, and the current ratio decreased to 2.0 to 1 from 2.1 to 1 when compared to June 30, 2014.

Debt to Total Capital Ratio was 0% as of March 31, 2015 and June 30, 2014.

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Cash Used In or Provided By Operating Activities

During the nine-month periods ended March 31, 2015 and 2014, the Company experienced cash outflows from continuing operating activities of $763,000 and $198,000, respectively. The net decrease in cash provided by operating activities of approximately $565,000 for the nine-month period ended March 31, 2015, as compared to the same period in the prior fiscal year is due primarily to the following factors:

For the nine-month period ended March 31, 2015, the Company had a net loss of $477,000, which includes net income from discontinued operations of $33,000, and experienced net cash in flows from a decrease in other current assets of $54,000, a decrease in inventory of $501,000, an increase in non-cash expenditures on depreciation and amortization and compensation expense related to stock options of approximately $11,000 and $51,000, respectively. These cash in-flows were offset by a decrease in accounts payable and accrued expense of $264,000, an increase in accounts receivable of $572,000 and a payment of post-retirement benefits of $35,000.

For the nine-month period ended March 31, 2014, the Company had a net loss of $9,000, which includes net loss from discontinued operations of $78,000, and experienced net cash in flows from a decrease in other current assets of $63,000, a decrease in accounts receivable of $39,000, an increase in accounts payable and accrued expenses of $290,000 and non-cash expenditures on depreciation and amortization and compensation expense related to stock options of approximately $7,000 and $6,000, respectively. These cash in-flows were offset by an increase in inventory and payment of post-retirement benefits of $611,000 and $61,000, respectively.

Cash Flows Used In Investing and Financing Activities

Cash flows used in investing activities of $31,000 were due to the purchase of fixed assets during the nine-month period ended March 31, 2015.

Cash flows used in investing activities of $20,000 were due to the purchase of fixed assets during the nine-month period ended March 31,2014.

There were no cash flows used in or provided by financing activities during the nine-month periods ended March 31, 2015 and 2014.

Continuing Operations

The accompanying condensed financial statements have been prepared on the going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

We believe that our existing cash and cash flow from operations will be sufficient to fund our activities throughout fiscal 2015 and throughout fiscal year 2016. However, we have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development and commercialization sooner than planned. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed in “Risk Factors” on the Company's Form 10-K for the year ended June 30, 2014.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company was not a party to any off-balance sheet arrangements during the three-month or nine-month periods ended March 31, 2015 and 2014.

The following table presents the Company's contractual obligations as of March 31, 2015 (excluding interest):

			Less than				3-5		More than
	Total		1 Year		2-3 Years		Years		5 Years
Operating lease agreements	$	1,363,786	$	525,168	$	691,331	$	147,287	$	—
Total	$	1,363,786	$	525,168	$	691,331	$	147,287	$	—

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

None.

Item 4. Controls and Procedures

(A)Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Company's Chief Executive Officer and Principal Financial and Accounting Officer, have established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company's financial reports and to other members of senior management and the Board of Directors.

Based on their evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2015, the Chief Executive Officer and Principal Financial and Accounting Officer of the Company have concluded that such disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer and Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosure.

(B)Internal Control over Financial Reporting

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act), during the third fiscal quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Item 1.Legal Proceedings

See footnote 4of the notes to the condensed consolidated financial statements for further information regarding the Company's legal proceedings.

Item 1A. Risk Factors

There are no material changes from the risks previously disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2014.

Item 6.Exhibits

31.1    Certificate of Chief Executive Officer under Rule 13a-14(a).

31.2    Certificate of Principal Financial and Accounting Officer under Rule 13a-14(a).

32.1 Certificate of Chief Executive Officer under Section 1350 of Title 18 of the United States Code.

32.2 Certificate of Principal Financial and Accounting Officer under Section 1350 of Title 18 of the United States Code

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.

18

	Escalon Medical Corp.
	(Registrant)
Date: May 13, 2015	By:	/s/ Richard J. DePiano, Jr.
		Richard J. DePiano, Jr.
		Chief Executive Officer
Date: May 13, 2015	By:	/s/ Robert O’Connor
		Robert O’Connor
		Chief Financial Officer

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EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

I, Richard J. DePiano Jr., certify that:

1. I have reviewed this quarterly report on Form 10Q of Escalon Medical Corp.;

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 the 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.

/s/    Richard J. DePiano Jr.

Richard J. DePiano Jr.

Chief Executive Officer

Date: May14, 2015

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

I, Robert M. O’Connor, certify that:

1. I have reviewed this quarterly report on Form 10Q of Escalon Medical Corp.;

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 the 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.

/s/    Robert M. O’Connor

Robert M. O’Connor

Chief Financial Officer

Date: May 14, 2015

EX-32.1

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

I, Richard J. DePiano Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Quarterly Report of Escalon Medical Corp. on Form 10Q for the quarterly period ended March 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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 14, 2015

/s/    Richard J. DePiano Jr.

Richard J. DePiano Jr.

Chief Executive Officer

EX-32.2

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

I, Robert M. O’Connor, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Quarterly Report of Escalon Medical Corp. on Form 10-Q for the quarterly period ended March 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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 14, 2015

/s/    Robert M. O’Connor

Robert M. O’Connor

Chief Financial Officer

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Note 8. Discontinued Operations Results of discontinued operation -ECD (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Discontinued Operation, Amount of Other Income (Loss) from Disposition of Discontinued Operation, Net of Tax	$ 49,000	$ (25,000)
BH Holdings, S.A.S [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Revenue	0	0	0	0
Disposal Group, Including Discontinued Operation, Costs of Goods Sold	0	0	0	0
Disposal Group, Including Discontinued Operation, Selling, General and Administrative Expense	23,000	25,000	19,000	75,000
Disposal Group, Including Discontinued Operation, Research and Development Expense	0	0	0	0
Disposal Group, Including Discontinued Operation, Operating Expense	23,000	25,000	19,000	75,000
Disposal Group, Including Discontinued Operation, Operating Income (Loss)		(25,000)	(19,000)	(75,000)
ECD [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Revenue	0	0	0	0
Disposal Group, Including Discontinued Operation, Costs of Goods Sold	0	0	0	0
Disposal Group, Including Discontinued Operation, Selling, General and Administrative Expense	0	1,000	6,000	3,000
Disposal Group, Including Discontinued Operation, Research and Development Expense	0	0	0	0
Disposal Group, Including Discontinued Operation, Operating Expense	0	1,000	6,000	3,000
Disposal Group, Including Discontinued Operation, Operating Income (Loss)	$ 0	$ (1,000)	$ (6,000)	$ (3,000)

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Note 9. Composition of Certain Financial Statement Caption Composition of Certain Financial Statement (Tables)

9 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

(In thousands)	March 31,		June 30
	2,015		2014
Inventories, net:
Raw Material	$	1,368	$	1,279
Work-In-Process	166		599
Finished Goods	875		1,033
Total	$	2,409	$	2,911

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Note 2. Stock-Based Compensation

9 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

2. Stock-Based Compensation

Valuations are based upon highly subjective assumptions about the future, including stock price volatility and exercise patterns. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of the Company's stock. The Company uses historical data to estimate option exercise and employee terminations. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The Company has historically granted options under the Company's option plans with an option exercise price equal to the closing market value of the stock on the date of the grant and with vesting, primarily for Company employees, either in equal annual amounts over a two- to five-year period or immediately and, primarily for non-employee directors, immediately.

As of March 31, 2015 and 2014 total unrecognized compensation cost related to non-vested share-based compensation arrangements granted to employees under the 2004 Equity Incentive Plan was $71,178 and $4,314, respectively. The remaining cost is expected to be recognized over a weighted average period of 1.07 years. For the three-month periods ended March 31, 2015 and 2014, $11,941 and $2,158 was recorded as compensation expense, respectively. For the nine-month periods ended March 31, 2015 and 2014, $35,800 and $6,472 was recorded as compensation expense, respectively.

The Company did not receive any cash from share option exercises under stock-based payment plans for the nine-month periods ended March 31, 2015 and 2014. The Company did not realize any tax effect, which would be a reduction in its tax rate, on options due to the full valuation allowances established on its deferred tax assets.

The Company measures compensation expense for non-employee stock-based compensation based on the fair value of the options issued, as this is more reliable than the fair value of the services received. Fair value is measured as the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital. There was $4,361 and $0 non-employee compensation expense for the three-month periods ended March 31, 2015 and 2014. There was $15,264 and $0 non-employee compensation expense for the nine-month periods ended March 31, 2015 and 2014.

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Note 8. Discontinued Operations (Results of Discontinued Operations - BH Holdings, S.A.S) (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net income	$ 49,102	$ (26,270)	$ 32,998	$ (77,649)
BH Holdings, S.A.S [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue, net	0	0	0	0
Cost of goods	0	0	0	0
Market, general and administrative	23,000	25,000	19,000	75,000
Research and development	0	0	0	0
Total Costs and expenses	23,000	25,000	19,000	75,000
Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax	(22,842)
Income (loss) from discontinued operations		(25,000)	(19,000)	(75,000)
Net income					39,000	(75,000)
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax			58,000	0
ECD [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Other Income	71,944	0
Revenue, net	0	0	0	0
Cost of goods	0	0	0	0
Market, general and administrative	0	1,000	6,000	3,000
Research and development	0	0	0	0
Total Costs and expenses	0	1,000	6,000	3,000
Income (loss) from discontinued operations	$ 0	$ (1,000)	$ (6,000)	$ (3,000)

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Note 8. Discontinued Operations (BH Holdings, S.A.S) (Narrative) (Details) (BH Holdings, S.A.S [Member])	0 Months Ended
	Jan. 18, 2012
BH Holdings, S.A.S [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Liquidation period	3 months

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Note 8. Discontinued Operations (Assets and Liabilities of Discontinued Operations - BH Holdings, S.A.S) (Details) (BH Holdings, S.A.S [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
BH Holdings, S.A.S [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Assets	$ 0	$ 0
Liabilities [Abstract]
Other current liabilities	560	593
Total liabilities	560	593
Net assets of discontinued operations	$ (560)	$ (593)

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Note 8. Discontinued Operations (Results of Discontinued Operations - ECD) (Details) (ECD [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
ECD [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue, net	$ 0	$ 0	$ 0	$ 0
Cost of goods	0	0	0	0
Market, general and administrative	0	1	6	3
Research and development	0	0	0	0
Total Costs and expenses	0	1	6	3
Income (loss) from discontinued operations	$ 0	$ (1)	$ (6)	$ (3)

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Note. 1 Basis of Presentation

9 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Description and Basis of Presentation [Text Block]

1. Basis of Presentation

 Escalon Medical Corp. (“Escalon” or the “Company” ) is a Pennsylvania corporation initially incorporated in California in 1987, and reincorporated in Pennsylvania in November 2001. Within this document, the “Company” collectively shall mean Escalon and its wholly owned subsidiaries: Sonomed, Inc. (“Sonomed”), Trek, Inc. (“Trek”), Escalon Medical Europe GmbH (“EME”), Escalon Digital Solutions, Inc. (“EMI”), Escalon Pharmaceutical, Inc. (“Pharmaceutical” inactive), Escalon Holdings, Inc. (“EHI”), Escalon IP Holdings, Inc., Sonomed IP Holdings, Inc., Drew Scientific Holdings, Inc. (discontinued), Drew Scientific Inc. (discontinued), and Drew Scientific Group, Plc (“Drew”) and its subsidiaries (discontinued), collectively the discontinued Drew entities are referred to as "ECD" and were discontinued on October 3, 2012. All intercompany accounts and transactions have been eliminated.

The Company operates in the healthcare market, specializing in the development, manufacture, marketing, and distribution of medical devices and pharmaceuticals in the area of ophthalmology. The Company and its products are subject to regulation and inspection by the United States Food and Drug Administration (the “FDA”). The FDA and other governmental authorities require extensive testing of new products prior to sale and have jurisdiction over the safety, efficacy and manufacture of products, as well as product labeling and marketing.

Management historically reviewed financial information, allocated resources, and managed the business as two segments: Sonomed-Escalon and Escalon Medical Corp. (“Corporate”). The Sonomed-Escalon segment consisted of Sonomed, Inc., EMI and Trek, all of which are engaged in the development and sale of ophthalmic medical devices. The Escalon Medical Corp. segment includes the administrative corporate operations of the consolidated group. As the consolidated group is focused on one market, medical devices, segment reporting is no longer deemed necessary. Beginning with the first quarter of fiscal 2015 filing management reviews financial information and manages the business as one entity engaged in the development and sale of ophthalmic medical devices. As a result of this change certain amounts in prior years were reclassified to conform to current year presentation.

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Note 8. Discontinued Operations Assets and Liabilities of Discontinued Operations -ECD (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accounts payable	$ 1,068,363	$ 1,486,081
Accrued Liabilities, Current	$ 1,324,072	$ 1,169,943

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Consolidated Balance Sheets (USD $)	Mar. 31, 2015	Jun. 30, 2014
Pension and Other Postretirement Defined Benefit Plans, Current Liabilities	$ 101,891	$ 101,891
ASSETS
Cash and cash equivalents	1,214,817	2,009,554
Accounts receivable, net	2,262,601	1,690,156
Inventory, net	2,409,428	2,910,727
Other current assets	232,435	286,548
Total current assets	6,119,281	6,896,985
Property and equipment, net	46,559	24,456
Goodwill	125,027	125,027
Trademarks and trade names	605,006	605,006
Patents, net	3,600	4,800
Total assets	6,899,473	7,656,274
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	1,068,363	1,486,081
Accrued expenses	1,324,072	1,169,943
Liabilities of discontinued operations	559,839	592,837
Total current liabilities	3,054,165	3,350,752
Accrued post-retirement benefits	806,927	841,699
Total long-term liabilities	806,927	841,699
Total liabilities	3,861,092	4,192,451
Shareholders equity:
Preferred stock, $0.001 par value; 2,000,000 shares authorized; no shares issued	0	0
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,526,430 issued and outstanding at December 31, 2012 and June 30, 2012	7,526	7,526
Additional paid-in capital	69,613,586	69,562,522
Accumulated deficit	(66,582,731)	(66,106,225)
Total shareholders' equity	3,038,381	3,463,823
Total liabilities and shareholders' equity	$ 6,899,473	$ 7,656,274

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Consolidated Statements Of Cash Flows (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Cash Flows from Operating Activities:
Net income (loss)	$ 56,542	$ 86,084	$ (476,506)	$ (9,223)
Adjustments to reconcile net income (loss) to cash provided by operating activities of continuing operations:
Income (loss) from discontinued operations	49,102	(26,270)	32,998	(77,649)
Depreciation and amortization			10,516	7,458
Compensation expense related to stock options			51,064	6,472
Increase (Decrease) in Pension and Postretirement Obligations			(34,772)	(61,321)
Change in operating assets and liabilities:
Accounts receivable, net			(572,445)	38,984
Inventory, net			501,299	(611,370)
Other current and long-term assets			54,113	63,310
Accounts payable and accrued expenses			(263,589)	290,272
Net cash (used in) operating activities from continuing operations			(763,318)	(197,769)
Net cash provided by (used in) operating activities from discontinued operations			0	(27,702)
Net cash (used in) operating activities			(763,318)	(225,471)
Cash Flows from Investing Activities:
Purchase of fixed assets			(31,419)	(19,834)
Net cash (used in) investing activities from continuing operations			(31,419)	(19,834)
Net cash provided by (used in) investing activities			(31,419)	(19,834)
Cash Flows from Financing Activities:
Net increase (decrease) in cash and cash equivalents			(794,737)	(245,305)
Cash and cash equivalents, beginning of period		2,409,396	2,009,554
Cash and cash equivalents, end of period	1,214,817		1,214,817
Income Taxes Paid	$ 27,300	$ 25,000

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Sigificant accounting policies Stock-based Compensation (Policies)

9 Months Ended

Mar. 31, 2015

Stock-based Compensation [Abstract]

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

Stock-based compensation expense for all stock-based compensation awards granted after July 1, 2006 is based on the grant-date fair value estimate in accordance with the provisions of the FASB issued guidance. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award.

Valuations are based on highly subjective assumptions about the future, including stock price volatility and exercise patterns. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of the Company's stock. The Company uses historical data to estimate option exercise and employee terminations. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

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Note 8. Discontinued Operations (Tables)

9 Months Ended

Mar. 31, 2015

BH Holdings, S.A.S [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Schedule of Discontinued Operations

BH Holdings, S.A.S ("BHH")

On January 12, 2012 BHH initiated the filing of an insolvency declaration with the Tribunal de Commerce de Rennes, France ("Commercial Court").  The Commercial Court on January 18, 2012 opened the liquidation proceedings with continuation of BHH's activity for 3 months and named an administrator to manage BHH. Since Drew no longer had a controlling financial interest in BHH it was deconsolidated in the December 31, 2011 quarterly condensed consolidated financial statements and prior period amounts were presented as discontinued operations.

The following tables summarize the results of discontinued operations of BHH for the three months and nine months periods ended March 31, 2015 and 2014 (in thousands):

For the three Months Ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	23			25
Research & development	—			—
Total Costs and expenses	23			25
Loss from discontinued operations	(23		)	(25		)
Other income related to change in foreign exchange rate	72			—
Net income (loss)	$	49		$	(25	)

For the nine-months ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	19			75
Research & development	—			—
Total Costs and expenses	19			75
Loss from discontinued operations	(19		)	(75		)
Other income related to change in foreign exchange rate	58			—
Net income (loss)	$	39		$	(75	)

Assets and liabilities of discontinued operations of BHH included in the condensed consolidated balance sheets are summarized as follows at March 31, 2015 and June 30, 2014 (in thousands):

	March 31,			June 30,
	2015			2014
Assets
Total assets	$	—		$	—
Liabilities
Accrued lease termination costs	560			593
Total liabilities	560			593
Net liabilities of discontinued operations	$	(560	)	$	(593	)

ECD [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Schedule of Discontinued Operations

The following tables summarize the results of discontinued operations of ECD for the three month and nine month periods ended March 31, 2015 and 2014 (in thousands):

For the three months ended March 31,	2015		2014
Revenue, net	$	—	$	—
Cost of goods sold	—		—
Marketing, general and administrative	—		1
Research & development	—		—
Total costs and expenses	—		1
Net (loss) from discontinued operations	$	—	$	(1	)

For the nine months ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	6			3
Research & development	—			—
Total costs and expenses	6			3
Net (loss) from discontinued operations	$	(6	)	$	(3	)

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Note 9. Composition of Certain Financial Statement Caption Composition of Certain Assets (USD $)	Mar. 31, 2015	Jun. 30, 2014
Inventory Disclosure [Abstract]
Inventory, Raw Materials, Net of Reserves	$ 1,368,000	$ 1,279,000
Inventory, Work in Process, Net of Reserves	166,000	599,000
Inventory, Finished Goods, Net of Reserves	875,000	1,033,000
Inventory, net	$ 2,409,428	$ 2,910,727

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Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Jun. 30, 2013
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	35,000,000	35,000,000
Common stock, shares issued	7,526,430	7,526,430
Common stock, shares outstanding	7,526,430	7,526,430

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Note 10. Related Party (Notes)

9 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

The Company purchased furniture from DePiano Interiors, L.L.C. which is owned by the mother of the Company's Chief Executive Officer, Richard DePiano, Jr. Total purchases were $26,275 and $12,611 for the nine-month periods ended March 31, 2015 and 2014, respectively.

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Document And Entity Information	9 Months Ended
	Mar. 31, 2015	May 13, 2015
Entity Information [Line Items]
Entity Registrant Name	ESCALON MEDICAL CORP.
Entity Central Index Key	0000862668
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		7,526,430
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

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Sigificant accounting policies Revenue Recognition (Policies)

9 Months Ended

Mar. 31, 2015

Revenue Recognition [Abstract]

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company recognizes revenue from the sale of its products at the time of shipment, when title and risk of loss transfer. The Company provides products to its distributors at agreed upon wholesale prices and to the balance of its customers at set retail prices. Distributors can receive discounts for accepting high volume shipments. The discounts are reflected immediately in the net invoice price, which is the basis for revenue recognition. No further material discounts are given.

The Company's considerations for recognizing revenue upon shipment of product to a distributor are based on the following:

Persuasive evidence that an arrangement (purchase order and sales invoice) exists between a willing buyer (distributor) and the Company that outlines the terms of the sale (company information, quantity of goods, purchase price and payment terms). The buyer (distributor) does not have a right of return.

Shipping terms are ex-factory shipping point. At this point the buyer (distributor) takes title to the goods and is responsible for all risks and rewards of ownership, including insuring the goods as necessary.

The Company's price to the buyer (distributor) is fixed and determinable as specifically outlined on the sales invoice. The sales arrangement does not have customer cancellation or termination clauses.

The buyer (distributor) places a purchase order with the Company; the terms of the sale are cash, COD or credit. Customer credit is determined based on the Company's policies and procedures related to the buyer's (distributor's) creditworthiness. Based on this determination, the Company believes that collectibility is reasonably assured.

The Company assesses collectibility based on creditworthiness of the customer and past transaction history. The Company performs ongoing credit evaluations of its customers and does not require collateral from its customers. For many of the Company's international customers, the Company requires an irrevocable letter of credit to be issued by the customer before the purchase order is accepted.

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Consolidated Statements Of Operations (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Net revenues:
Product revenue	$ 3,427,564	$ 3,151,651	$ 9,757,538	$ 9,360,219
Revenues, net	3,427,564	3,151,651	9,757,538	9,360,219
Costs and expenses:
Cost of goods sold	1,806,877	1,473,334	5,076,847	4,539,870
Marketing, general and administrative	1,323,419	1,250,159	4,192,428	3,743,548
Research and development	289,848	315,850	997,852	1,016,082
Total costs and expenses	3,420,144	3,039,343	10,267,127	9,299,500
Loss from operations	7,420	112,308	(509,589)	60,719
Other (expense) income:
Other Nonoperating Income (Expense)	0	0	0	7,543
Interest income	20	46	85	164
Total other (expense) income	20	46	85	7,707
Net income (loss) from continuing operations	7,440	112,354	(509,504)	68,426
Income (Loss) from Discontinued Operations, Net of Tax	49,102	(26,270)	32,998	(77,649)
Net income (loss)	$ 56,542	$ 86,084	$ (476,506)	$ (9,223)
Basic:
Continuing Operations	$ 0.00	$ 0.01	$ (0.07)	$ 0.01
Discontinued Operations	$ 0.01	$ 0.00	$ 0.01	$ (0.01)
Net income (loss)	$ 0.01	$ 0.01	$ (0.06)	$ 0.00
Diluted:
Continuing Operations	$ 0.00	$ 0.01	$ (0.07)	$ 0.01
Discontinued operations	$ 0.01	$ 0.00	$ 0.01	$ (0.01)
Net income (loss)	$ 0.01	$ 0.01	$ (0.06)	$ 0.00
Weighted Average Number of Shares Outstanding, Basic	7,526,430	7,526,430	7,526,430	7,526,430
Weighted Average Number of Shares Outstanding, Diluted	7,526,430	7,526,430	7,526,430	7,526,430

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Note 5. Recently Issued Accounting Standards

9 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

. Recently Issued Accounting Standards

In July 2013, FASB issued Accounting Standards Update 2014-02 Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits. Under the new provision an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward with some exceptions. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this standard did not have a material impact to the Company’s consolidated financial statements.

In March 2014, FASB issued Accounting Standards Update 2014-07 Consolidation (Topic 810) Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements. The amendments permit a private company lessee (the reporting entity) to elect an alternative not to apply VIE guidance to a lessor entity if (a) the private company lessee and the lessor entity are under common control, (b) the private company lessee has a lease arrangement with the lessor entity, (c) substantially all of the activities between the private company lessee and the lessor entity are related to leasing activities (including supporting leasing activities) between those two entities, and (d) if the private company lessee explicitly guarantees or provides collateral for any obligation of the lessor entity related to the asset leased by the private company, then the principal amount of the obligation at inception of such guarantee or collateral arrangement does not exceed the value of the asset leased by the private company from the lessor entity. The alternative will be effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In April 2014 FASB issued Accounting Standards Update 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under the new provision only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements; a business or nonprofit activity that, on acquisition, meets the criteria to be classified as held for sale is reported in discontinued operations; and a disposal of an equity method investment that meets the definition of discontinued operation is reported in discontinued operations. The amendments are effective for all disposals (or classifications as held for sale) of components of a public business entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years and all businesses or nonprofit activities that, on acquisition, are classified as held for sale that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years.The adoption of this standard did not have a material impact to the Company’s consolidated financial statements.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) that will supersede most current revenue recognition guidance, including industry-specific guidance. The core principle of the new guidance is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Additionally, the guidance requires disaggregated disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized. The amendments are required to be adopted by the Company on January 1, 2017. The FASB has proposed a one year delay in the effective date of Topic 606. Transition to the new guidance may be done using either a full or modified retrospective method. The Company is currently evaluating the full effect that the adoption of this standard will have on the Company’s [consolidated] financial statements.

In June 2014 FASB issued Accounting Standards Update 2014-12 Compensation-Stock Compensation (Topic 718). Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In August 2014 FASB issued Presentation of Financial Statements-Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards.The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In November 2014 FASB issued Derivatives and Hedging (Topic 815)Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. For hybrid financial instruments issued in the form of a share, an entity should determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract.The amendments in this Update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In November 2014 FASB issued Business Combinations (Topic 805) Pushdown Accounting. The amendments in this Update provide an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity.The amendments in this Update are effective on November 18, 2014. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In December 2014 FASB issued Business Combinations (Topic 805) Accounting for Identifiable Intangible Assets in a Business Combination. An entity within the scope of this Update that elects the accounting alternative to recognize or otherwise consider the fair value of intangible assets as a result of any in-scope transactions should no longer recognize separately from goodwill.The amendments in this Update, at an entity’s election, apply to all entities except for public business entities and not-for-profit entities The decision to adopt the accounting alternative in this Update must be made upon the occurrence of the first transaction within the scope of this accounting alternative in fiscal years beginning after December 15, 2015, and the effective date of adoption depends on the timing of that first in-scope transaction. (1) customer-related intangible assets unless they are capable of being sold or licensed independently from the other assets of the business and (2) noncompetition agreements. The amendments in this Update are effective on November 18, 2014. The adoption of this standard did not have a material impact to the Company’s consolidated financial statements.

In January 2015, FASB issued Accounting Standards Update 2015-01 Income Statement - Extraordinary and unusual items simplifying Income Statement presentation by eliminating the concept of extraordinary items. The amendment will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

In February 2015, FASB issued Accounting Standards Update 2015-02 Consolidation Amendments to the consolidation analysis. The amendments affect those entities who are required to evaluate whether they should consolidate certain legal entities and affect the following areas: limited partnership and similar legal entities, evaluating fees paid to a decision maker or a service provider as a variable interest, the effect of fee arrangements on the primary beneficiary determination, the effect of related parties on the primary beneficiary determination, and certain investment funds. The amendments in this update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this Update are effective for fiscal year beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted. The adoption of this standard is not expected to have a material impact to the Company’s consolidated financial statements.

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Note 4. Legal proceeding

9 Months Ended

Mar. 31, 2015

4. Legal Proceedings [Abstract]

Legal Matters and Contingencies [Text Block]

4. Legal Proceedings

The Company, from time to time, is involved in various legal proceedings and disputes that arise in the normal course of business. These matters have previously and may in the future pertain to intellectual property disputes, commercial contract disputes, employment disputes, and other matters. The Company does not believe that the resolution of any of these matters has had or is likely to have a material adverse impact on the Company's business, financial condition or results of operations.

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Note 3. Earning per Share (Tables)

9 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2015		2014			2015			2014
Numerator:
Numerator for basic and diluted earnings per share
Income (loss) from continuing operations	$	7,440	$	112,354		$	(509,504	)	$	68,426
Income (loss) from discontinued operations	49,102		(26,270		)	32,998			(77,649		)
Net income (loss)	$	56,542	$	86,084		$	(476,506	)	$	(9,223	)
Denominator:
Denominator for basic earnings per share - weighted average shares	7,526,430		7,526,430			7,526,430			7,526,430
Effect of dilutive securities:
Stock options and warrants	—		—			—			—
Shares reserved for future exchange	—		—			—			—
Denominator for diluted earnings per share - weighted average and assumed conversion	7,526,430		7,526,430			7,526,430			7,526,430
Net income (loss) per share
Basic:
Continuing operations	$	—	$	0.01		$	(0.07	)	$	0.01
Discontinued operations	0.01		—			0.01			(0.01		)
	$	0.01	$	0.01		$	(0.06	)	$	—
Diluted:
Continuing operations	$	—	$	0.01		$	(0.07	)	$	0.01
Discontinued operations	0.01		—			0.01			(0.01		)
	$	0.01	$	0.01		$	(0.06	)	$	—

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Sigificant accounting policies Valuation of Intangible Assets (Policies)

9 Months Ended

Mar. 31, 2015

Company overview [Abstract]

Goodwill and Intangible Assets, Policy [Policy Text Block]

Valuation of Intangible Assets

The Company annually, and as circumstances require, evaluates for impairment its intangible assets and goodwill in accordance with FASB guidance related to goodwill and other intangible assets, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. These intangible assets include goodwill, trademarks and trade names. Recoverability of these assets is measured by comparison of their carrying amounts to future discounted cash flows the assets are expected to generate. If identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value. The Company does not amortize intangible assets with indefinite useful lives; rather, such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company performs its intangible asset impairment tests on or about June 30, of each year. Any such impairment charge could be significant and could have a material adverse impact on the Company's financial statements if and when an impairment charge is recorded.

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Note 8. Discontinued Operations

9 Months Ended

Mar. 31, 2015

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Discontinued Operations

. Discontinued Operations

BH Holdings, S.A.S ("BHH")

On January 12, 2012 BHH initiated the filing of an insolvency declaration with the Tribunal de Commerce de Rennes, France ("Commercial Court").  The Commercial Court on January 18, 2012 opened the liquidation proceedings with continuation of BHH's activity for 3 months and named an administrator to manage BHH. Since Drew no longer had a controlling financial interest in BHH it was deconsolidated in the December 31, 2011 quarterly condensed consolidated financial statements and prior period amounts were presented as discontinued operations.

The following tables summarize the results of discontinued operations of BHH for the three months and nine months periods ended March 31, 2015 and 2014 (in thousands):

For the three Months Ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	23			25
Research & development	—			—
Total Costs and expenses	23			25
Loss from discontinued operations	(23		)	(25		)
Other income related to change in foreign exchange rate	72			—
Net income (loss)	$	49		$	(25	)

For the nine-months ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	19			75
Research & development	—			—
Total Costs and expenses	19			75
Loss from discontinued operations	(19		)	(75		)
Other income related to change in foreign exchange rate	58			—
Net income (loss)	$	39		$	(75	)

Assets and liabilities of discontinued operations of BHH included in the condensed consolidated balance sheets are summarized as follows at March 31, 2015 and June 30, 2014 (in thousands):

	March 31,			June 30,
	2015			2014
Assets
Total assets	$	—		$	—
Liabilities
Accrued lease termination costs	560			593
Total liabilities	560			593
Net liabilities of discontinued operations	$	(560	)	$	(593	)

The following tables summarize the results of discontinued operations of ECD for the three month and nine month periods ended March 31, 2015 and 2014 (in thousands):

For the three months ended March 31,	2015		2014
Revenue, net	$	—	$	—
Cost of goods sold	—		—
Marketing, general and administrative	—		1
Research & development	—		—
Total costs and expenses	—		1
Net (loss) from discontinued operations	$	—	$	(1	)

For the nine months ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	6			3
Research & development	—			—
Total costs and expenses	6			3
Net (loss) from discontinued operations	$	(6	)	$	(3	)

BH Holdings, S.A.S [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Schedule of Discontinued Operations

BH Holdings, S.A.S ("BHH")

On January 12, 2012 BHH initiated the filing of an insolvency declaration with the Tribunal de Commerce de Rennes, France ("Commercial Court").  The Commercial Court on January 18, 2012 opened the liquidation proceedings with continuation of BHH's activity for 3 months and named an administrator to manage BHH. Since Drew no longer had a controlling financial interest in BHH it was deconsolidated in the December 31, 2011 quarterly condensed consolidated financial statements and prior period amounts were presented as discontinued operations.

The following tables summarize the results of discontinued operations of BHH for the three months and nine months periods ended March 31, 2015 and 2014 (in thousands):

For the three Months Ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	23			25
Research & development	—			—
Total Costs and expenses	23			25
Loss from discontinued operations	(23		)	(25		)
Other income related to change in foreign exchange rate	72			—
Net income (loss)	$	49		$	(25	)

For the nine-months ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	19			75
Research & development	—			—
Total Costs and expenses	19			75
Loss from discontinued operations	(19		)	(75		)
Other income related to change in foreign exchange rate	58			—
Net income (loss)	$	39		$	(75	)

Assets and liabilities of discontinued operations of BHH included in the condensed consolidated balance sheets are summarized as follows at March 31, 2015 and June 30, 2014 (in thousands):

	March 31,			June 30,
	2015			2014
Assets
Total assets	$	—		$	—
Liabilities
Accrued lease termination costs	560			593
Total liabilities	560			593
Net liabilities of discontinued operations	$	(560	)	$	(593	)

ECD [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Schedule of Discontinued Operations

The following tables summarize the results of discontinued operations of ECD for the three month and nine month periods ended March 31, 2015 and 2014 (in thousands):

For the three months ended March 31,	2015		2014
Revenue, net	$	—	$	—
Cost of goods sold	—		—
Marketing, general and administrative	—		1
Research & development	—		—
Total costs and expenses	—		1
Net (loss) from discontinued operations	$	—	$	(1	)

For the nine months ended March 31,	2015			2014
Revenue, net	$	—		$	—
Cost of goods sold	—			—
Marketing, general and administrative	6			3
Research & development	—			—
Total costs and expenses	6			3
Net (loss) from discontinued operations	$	(6	)	$	(3	)

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Note 6. Fair Value Measurements

9 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

. Fair Value Measurements

On July 1, 2008, the Company adopted the FASB-issued authoritative guidance for the fair value of financial assets and liabilities. This standard defines fair value and establishes a hierarchy for reporting the reliability of input measurements used to assess fair value for all assets and liabilities. The FASB-issued authoritative guidance defines fair value as the selling price that would be received for an asset, or paid to transfer a liability, in the principal or most advantageous market on the measurement date. The hierarchy prioritizes fair value measurements based on the types of inputs used in the valuation technique. The inputs are categorized into the following levels:

Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities.

Level 2—Directly or indirectly observable inputs for quoted and other than quoted prices for identical or similar assets and liabilities in active or non-active markets.

Level 3—Unobservable inputs not corroborated by market data, therefore requiring the entity to use the best available information available in the circumstances, including the entity’s own data.

Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses.

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Note 7. Continuing Operations

9 Months Ended

Mar. 31, 2015

Continuing Operations [Abstract]

Quarterly Financial Information [Text Block]

7. Continuing Operations

The accompanying condensed consolidated financial statements have been prepared on the going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

We believe that our existing cash and cash flow from operations will be sufficient to fund our activities for the remainder of fiscal 2015 and throughout fiscal 2016. However, we have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development and commercialization sooner than planned. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed in “Risk Factors” on the Company's Form 10-K for the year ended June 30, 2014.

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Note 9. Composition of Certain Financial Statement Caption Composition of Certain Financial Statement (Notes)

9 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

(In thousands)	March 31,		June 30
	2,015		2014
Inventories, net:
Raw Material	$	1,368	$	1,279
Work-In-Process	166		599
Finished Goods	875		1,033
Total	$	2,409	$	2,911

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Note 10. Related Party (Details) (USD $)	3 Months Ended	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2015
Related Party Transactions [Abstract]
Related Party Transaction, Purchases from Related Party	$ 26,275	$ 12,611

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Sigificant accounting policies Taxes (Policies)

9 Months Ended

Mar. 31, 2015

Taxes [Abstract]

Income Tax, Policy [Policy Text Block]

Taxes

Estimates of taxable income of the various legal entities and jurisdictions are used in the tax rate calculation. Management uses judgment in estimating what the Company's income tax will be for the year. Since judgment is involved, there is a risk that the tax rate may increase or decrease in any period.

In determining income/(loss) for financial statement purposes, management must make certain estimates and judgments. These estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense. FASB issued authoritative guidance concerning accounting for income taxes also requires that the deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that all or some portion of the recorded deferred tax assets will not be realized in future periods.

In evaluating the Company's ability to recover the Company's deferred tax assets, management considers all available positive and negative evidence including the Company's past operating results, the existence of cumulative losses and near-term forecasts of future taxable income that is consistent with the plans and estimates management is using to manage the underlying businesses.

Through March 31, 2015, the Company has recorded a valuation allowance against the Company's deferred tax assets arising from net operating losses due to uncertainty of their realization as a result of the Company's earnings history, the number of years the Company's net operating losses and tax credits can be carried forward, the existence of taxable temporary differences and near-term earnings expectations. The amount of the valuation allowance could decrease if facts and circumstances change that materially increase taxable income prior to the expiration of the loss carryforwards. Any reduction in the valuation allowance would result in an income tax benefit in the period such determination is made by the Company.

The Company has adopted FASB issued guidance related to accounting for uncertainty in income taxes, which provides a comprehensive model for the recognition, measurement, and disclosure in financial statements of uncertain income tax positions that a company has taken or expects to take on a tax return. Under the FASB guidance a company can recognize the benefit of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit can be recognized. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Additionally, companies are required to accrue interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. The Company has elected to recognize interest expense and penalties, if any, related to uncertain tax positions as a component of its provision for income taxes.

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Note 2. Stock-Based Compensation (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	$ 71,178		$ 71,178		$ 4,314
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term			1 year 0 months 26 days
Non-employee compensation expense	15,264	0
Stock Options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated Share-based Compensation Expense	$ 11,941	$ 2,158	$ 35,800	$ 6,472

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Consolidated Statements Of Shareholders' Equity and Comprehensive Loass (USD $)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]
Balance at Jun. 30, 2014	$ 3,463,823
Net income	(476,506)	0	0	(476,506)
Compensation expense	51,064	0	51,064	0
Balance at Mar. 31, 2015	$ 3,038,381	$ 7,526	$ 69,613,586	$ (66,582,731)
Balance, shares at Mar. 31, 2015		7,526,430

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Note 3. Earning per Share

9 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

3. Net Income (Loss) earnings per Share

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2015		2014			2015			2014
Numerator:
Numerator for basic and diluted earnings per share
Income (loss) from continuing operations	$	7,440	$	112,354		$	(509,504	)	$	68,426
Income (loss) from discontinued operations	49,102		(26,270		)	32,998			(77,649		)
Net income (loss)	$	56,542	$	86,084		$	(476,506	)	$	(9,223	)
Denominator:
Denominator for basic earnings per share - weighted average shares	7,526,430		7,526,430			7,526,430			7,526,430
Effect of dilutive securities:
Stock options and warrants	—		—			—			—
Shares reserved for future exchange	—		—			—			—
Denominator for diluted earnings per share - weighted average and assumed conversion	7,526,430		7,526,430			7,526,430			7,526,430
Net income (loss) per share
Basic:
Continuing operations	$	—	$	0.01		$	(0.07	)	$	0.01
Discontinued operations	0.01		—			0.01			(0.01		)
	$	0.01	$	0.01		$	(0.06	)	$	—
Diluted:
Continuing operations	$	—	$	0.01		$	(0.07	)	$	0.01
Discontinued operations	0.01		—			0.01			(0.01		)
	$	0.01	$	0.01		$	(0.06	)	$	—

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Note 3. Earning per Share (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ 7,440	$ 112,354	$ (509,504)	$ 68,426
Income(loss) from discontinued operations	49,102	(26,270)	32,998	(77,649)
Net income (loss)	56,542	86,084	(476,506)	(9,223)
Weighted Average Number of Shares Outstanding, Basic	7,526,430	7,526,430	7,526,430	7,526,430
Proceeds from Stock Options Exercised	$ 0	$ 0	$ 0	$ 0
Shares reserved for future exchange	0	0	0	0
Weighted Average Number of Shares Outstanding, Diluted	7,526,430	7,526,430	7,526,430	7,526,430
Continuing Operations	$ 0.00	$ 0.01	$ (0.07)	$ 0.01
Discontinued Operations	$ 0.01	$ 0.00	$ 0.01	$ (0.01)
Earnings Per Share, Basic	$ 0.01	$ 0.01	$ (0.06)	$ 0.00
Continuing Operations	$ 0.00	$ 0.01	$ (0.07)	$ 0.01
Income (Loss) from Discontinued Operations, Net of Tax, Per Diluted Share	$ 0.01	$ 0.00	$ 0.01	$ (0.01)
Earnings Per Share, Diluted	$ 0.01	$ 0.01	$ (0.06)	$ 0.00

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Uncategorized Items
[us-gaap_SharesOutstanding]	7,526,430
[us-gaap_StockholdersEquity]		69,562,522	7,526	(66,106,225)

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Sigificant accounting policies Income (Loss) Per Share (Policies)

9 Months Ended

Mar. 31, 2015

Income (Loss) Per Share [Abstract]

Earnings Per Share, Policy [Policy Text Block]

Income/(Loss) Per Share

The Company computes net income/(loss) per share under the provisions of FASB issued authoritative guidance.

Under the provisions of FASB issued authoritative guidance, basic and diluted net income/(loss) per share is computed by dividing the net income/(loss) for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income/(loss) per share excludes potential common shares if the impact is anti-dilutive. Basic earnings per share are computed by dividing net income/(loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are determined in the same manner as basic earnings per share, except that the number of shares is increased by assuming exercise of dilutive stock options and warrants using the treasury stock method.