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, 2022

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, Suite 824, 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

Securities registered pursuant to Section 12(b) of the Act: NONE

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, smaller reporting company. or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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

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

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: 7,415,329 shares of common stock, $0.001 par value, outstanding as of May 12, 2022.

TABLE OF CONTENTS

		Page
	PART I Financial Information
Item I.	Unaudited Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets as of March 31, 2022 and June 30, 2021 (Unaudited)	2
	Condensed Consolidated Statements of Operations for the three-month and nine-month periods ended March 31, 2022 and 2021 (unaudited)	3
	Condensed Consolidated Statements of Shareholders' Equity for the three-month and nine-month periods ended March 31, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine-month periods ended March 31, 2022 and 2021 (unaudited)	5
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
	PART II Other Information
Item 6.	Exhibits	23

1

PART I. FINANCIAL INFORMATION

ESCALON MEDICAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31, 2022		June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,048,500	$	1,650,970
Restricted cash	256,133		255,920
Accounts receivable, net	1,129,648		1,081,702
Inventories, net	1,544,822		1,416,727
Other current assets	191,626		187,357
Total current assets	4,170,729		4,592,676
Property and equipment, net	59,238		81,442
Right-of-use assets	634,282		843,559
License, net	87,663		102,400
Other long term assets	62,789		62,789
Total assets	$	5,014,701	$	5,682,866
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	201,575	$	201,575
Current portion of note payable	3,401		3,401
Current portion of PPP loan	—		500,000
Current portion of EIDL loan	2,943		2,862
Accounts payable	1,118,778		1,102,125
Accrued expenses	867,202		695,553
Related party accrued interest	112,389		112,389
Current portion of operating lease liabilities	236,635		279,051
Deferred revenue	302,698		363,700
Other short-term liabilities	129,961		136,107
Total current liabilities	2,975,582		3,396,763
Note payable, net of current portion	4,903		7,839
EIDL loan, net of current portion	150,486		147,138
Operating lease liabilities, net of current portion	455,744		630,330
Other long-term liabilities	—		40,860
Total long-term liabilities	611,133		826,167
Total liabilities	3,586,715		4,222,930
Shareholders' equity:
Series A convertible preferred stock, $0.001 par value; 2,000,000 shares authorized; 2,000,000 shares issued and outstanding (liquidation value of $858,149 and $819,131)	645,000		645,000
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding	7,415		7,415
Additional paid-in capital	69,702,043		69,702,043
Accumulated deficit	(68,926,472)		(68,894,522)
Total shareholders’ equity	1,427,986		1,459,936
Total liabilities and shareholders’ equity	$	5,014,701	$	5,682,866

See notes to unaudited condensed consolidated financial statements

2

ESCALON MEDICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2022		2021		2022		2021
Net revenues:
Products	$	2,259,860	$	2,098,038	$	7,261,134	$	6,937,750
Service plans	156,267		226,869		530,819		699,039
Revenues, net	2,416,127		2,324,907		7,791,953		7,636,789
Costs and expenses:
Cost of goods sold	1,477,651		1,383,267		4,681,088		4,552,956
Marketing, general and administrative	1,001,074		858,165		2,855,373		2,634,329
Research and development	229,315		215,700		780,943		669,551
Total costs and expenses	2,708,040		2,457,132		8,317,404		7,856,836
Loss from operations	(291,913)		(132,225)		(525,451)		(220,047)
Other income (expense)
Other income	—		—		506,305		—
Interest income	31		158		213		890
Interest expense	(4,134)		(5,398)		(13,017)		(16,385)
Total other income (expense), net	(4,103)		(5,240)		493,501		(15,495)
Net loss	(296,016)		(137,465)		(31,950)		(235,542)
Undeclared dividends on preferred stocks	13,006		12,723		39,018		38,699
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)	$	(274,241)
Net loss per share
Basic loss per share	$	(0.04)	$	(0.02)	$	(0.01)	$	(0.04)
Diluted loss per share	$	(0.04)	$	(0.02)	$	(0.01)	$	(0.04)
Weighted average shares—basic	7,415,329		7,415,329		7,415,329		7,415,329
Weighted average shares—diluted	7,415,329		7,415,329		7,415,329		7,415,329

See notes to unaudited condensed consolidated financial statements

3

ESCALON MEDICAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND MARCH 31, 2021

(UNAUDITED)

	Series A Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount
Balance at June 30, 2021	2,000,000	$	645,000	7,415,329	$	7,415	$	69,702,043	$	(68,894,522)	$	1,459,936
Net income	—	—		—	—		—		317,220		317,220
Balance at September 30, 2021	2,000,000	645,000		7,415,329	7,415		69,702,043		(68,577,302)		1,777,156
Net loss	—	—		—	—		—		(53,154)		(53,154)
Balance at December 31, 2021	2,000,000	645,000		7,415,329	7,415		69,702,043		(68,630,456)		1,724,002
Net loss	—	—		—	—		—		(296,016)		(296,016)
Balance at March 31, 2022	2,000,000	$	645,000	7,415,329	$	7,415	$	69,702,043	$	(68,926,472)	$	1,427,986

	Series A Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount
Balance at June 30, 2020	2,000,000	$	645,000	7,415,329	$	7,415	$	69,702,043	$	(68,842,499)	$	1,511,959
Net loss	—	—		—	—		—		(196,553)		(196,553)
Balance at September 30, 2020	2,000,000	645,000		7,415,329	7,415		69,702,043		(69,039,052)		1,315,406
Net income	—	—		—	—		—		98,476		98,476
Balance at December 31, 2020	2,000,000	645,000		7,415,329	7,415		69,702,043		(68,940,576)		1,413,882
Net loss	—	—		—	—		—		(137,465)		(137,465)
Balance at March 31, 2021	2,000,000	$	645,000	7,415,329	$	7,415	$	69,702,043	$	(69,078,041)	$	1,276,417

See notes to unaudited condensed consolidated financial statements

4

ESCALON MEDICAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	For Nine Months Ended March 31,
	2022		2021
Cash Flows from Operating Activities:
Net loss	$	(31,950)	$	(235,542)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Increase in allowance of doubtful accounts	15,000		—
Other income	(506,305)		—
Depreciation and amortization	36,941		32,930
Non cash lease expense	209,277		206,854
Change in operating assets and liabilities:
Accounts receivable	(62,946)		339,459
Inventories	(128,095)		411,219
Other current and non-current assets	(4,269)		3,437
Accounts payable	16,653		194,368
Accrued expenses	183,579		39,518
Change in operating lease liability	(217,002)		(207,613)
Deferred revenue	(61,002)		(21,615)
Other short term and long term liabilities	(47,006)		76,771
Net cash (used in) provided by operating activities	(597,125)		839,786
Cash Flows from Investing Activities:
Purchase of equipment	—		(9,390)
Net cash used in investing activities	—		(9,390)
Cash Flows from Financing Activities:
Repayment of note payable	(2,936)		(2,724)
Repayment of EIDL loan	(2,196)		—
Net cash used in financing activities	(5,132)		(2,724)
Net (decrease) increase in cash, cash equivalents and restricted cash	(602,257)		827,672
Cash, cash equivalents and restricted cash, beginning of period	1,906,890		1,081,239
Cash, cash equivalents and restricted cash, end of period	$	1,304,633	$	1,908,911
Cash, cash equivalents and restricted cash consist of the following:
End of period
Cash and cash equivalents	$	1,048,500	$	1,653,087
Restricted cash	256,133		255,824
	$	1,304,633	$	1,908,911

5

Beginning of period
Cash and cash equivalents	$	1,650,970	$	825,958
Restricted cash	255,920		255,281
	$	1,906,890	$	1,081,239

Supplemental Schedule of Cash Flow Information:

Income Taxes paid
Interest paid	$	12,534	$	8,420
Non Cash Finance Activities
Record right-of-use assets per ASC 842, net of deferred rent reclassification	$	—	$	20,200
Record lease liability per ASC 842	$	—	$	20,200
Dispose right-of-use assets	$	—	$	9,154
Dispose lease liability	$	—	$	9,154

See notes to unaudited condensed consolidated financial statements

6

Escalon Medical Corp. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Basis of Presentation

          Escalon Medical Corp. ("Escalon" or "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, which includes its division called "Trek" and its wholly owned subsidiaries: Sonomed, Inc. (“Sonomed”), Escalon Digital Solutions, Inc. (“EMI”), and Sonomed IP Holdings, Inc.

    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 government authorities require 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 unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments (consisting of only normal and recurring adjustments) which are, in the opinion of management, necessary to present fairly the unaudited condensed consolidated financial information required herein. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United Statements of America ("US GAAP") have been condensed or omitted pursuant to such rules and regulations. While management believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K filed with the Security and Exchange Commission for the fiscal year ended June 30, 2021. The results of operations for the nine months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.

    On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. This pandemic has had a significant impact on the global and domestic economy, and is likely to impact the operations of the Company. The Company has been assessing the impact of the COVID-19 pandemic on the business, including the impact on the financial condition and results of operations, financial resources, changes in accounting judgment as well as the impact on the supply and demand, etc. The Company is considered an essential business and was able to maintain operations during the lockdown. However, the Company does not know the extent and duration of the impact of COVID-19 on its business due to the uncertainty about the spread of the virus. The Company applied for and received $500,000 in April 2020 under the Payroll Protection Program (PPP loan) which helped reverse the negative impact in terms of the liquidity. The maturity date was two years from the date of the note. The interest rate was 1.00% per year. The full amount of the PPP loan and accrued interest were forgiven on August 13, 2021 and was included in other income in the unaudited condensed consolidated statement of operations for the nine-month period ended March 31, 2022. The Company received a $150,000 Economic Injury Disaster ("EIDL") loan. The annual interest rate is 3.75%. The payment term is 30 years and the monthly payment of $731 started on July 1, 2021. In February 2022, Russia invaded Ukraine. As military activity proceeds and sanctions, export controls and other measures are imposed by many countries against Russia, Belarus and specific areas of Ukraine, the war is increasingly affecting the global economy and financial markets, as well as exacerbating ongoing economic challenges, including rising inflation and global supply-chain disruption. The Company has operations or activities in countries and regions outside the United States. As a result, its global operations are affected by economic, political and other conditions in the foreign countries in which the Company has business as well as U.S. laws regulating international trade, although the Company has not yet assessed that the war has had a material effect on its financial position or results of operations. The Company will continue to monitor the impacts of the Russia-Ukraine war on macroeconomic conditions and continually assess the effect these matters may have on customer demand, suppliers’ ability to deliver products, cybersecurity risks and its liquidity and access to capital.

    The Company’s common stock trades on the OTCQB Market under the symbol “ESMC.”

2. Going Concern

The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the continuous enhancement of the current products, development of new products; changes in domestic and foreign regulations; ability of manufacture successfully; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, the Company’s products and its ability to raise capital to support its operations.

7

To date, the Company’s operations have not generated sufficient revenues to enable profitability. As of March 31, 2022, the Company had an accumulated deficit of $68.9 million, and incurred recurring losses from operations and incurred negative cash flows from operating activities. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These unaudited condensed consolidated financial statements do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company's continuance as a going concern is dependent on its future profitability and on the on-going support of its shareholders, affiliates and creditors. In order to mitigate the going concern issues, the Company is actively pursuing business partnerships, managing its continuing operations, implementing cost-cutting measures and seeking to sell certain assets. The Company may not be successful in any of these efforts.

3. Summary of Significant Accounting Policies

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For the purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and highly liquid investments with original maturities of 90 days or less to be cash and cash equivalents. From time to time cash balances exceed federal insurance limits.

Restricted Cash

As of March 31, 2022 and June 30, 2021 restricted cash included approximately $256,000, which was pursuant to the requirements in the TD Bank Loan entered into June 2018 (see Note 6).

Foreign Currency Translation

The Company's functional currency is the US dollar. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction gains or losses included in net loss were immaterial for the three and nine months ended March 31, 2022 and 2021.

Accounts Receivable

Accounts receivable are recorded at net realizable value. The Company performs ongoing credit evaluations of customers’ financial condition and does not require collateral for accounts receivable arising in the normal course of business. The Company maintains allowances for potential credit losses based on the Company’s historical trends, specific customer issues and current economic trends. Accounts are written off against the allowance when they are determined to be uncollectible based on management’s assessment of individual accounts. The Company recorded an allowance for doubtful accounts of approximately $110,000 and $100,000 as of March 31, 2022 and June 30, 2021, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis and include freight-in materials, labor and overhead costs. Inventories are written down if the estimated net realizable value is less than the recorded value. The Company reviews the carrying cost of inventories by product to determine the adequacy of

8

reserves for obsolescence. In accounting for inventories, the Company must make estimates regarding the estimated realizable value of inventory. The estimate is based, in part, on the Company’s forecasts of future sales and age of inventory. If actual conditions are less favorable than those the Company has projected, the Company may need to increase its reserves for excess and obsolete inventories. Any increases in the reserves will adversely impact the Company’s results of operations. The establishment of a reserve for excess and obsolete inventory establishes a new cost basis in the inventory. Such reserves are not reduced until the product is sold. If the Company is able to sell such inventory any related reserves would be reversed in the period of sale. In accordance with industry practice, service parts inventory is included in current assets, although service parts are carried for established requirements during the serviceable lives of the products and, therefore, not all parts are expected to be sold within one year.

    Intangible Assets and Long-Lived Assets

Long-lived assets including intangible assets deemed to have finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit or material adverse changes in the business climate that indicate that the carrying amount of an asset may be impaired. When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the projected undiscounted cash flows from the asset are less than the carrying value of the asset the asset is considered to be impaired. The impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For the three and nine-month periods ended March 31, 2022 and 2021, no impairments were recorded.

Accrued Warranties

The Company provides a limited one-year warranty against manufacturer’s defects on its products sold to customers. The Company’s standard warranties require the Company to repair or replace, at the Company’s discretion, defective parts during such warranty period. The Company accrues for its product warranty liabilities based on estimates of costs to be incurred during the warranty period, based on historical repair information for warranty costs.

PPP Loans

    The Company's policy is to account for the PPP loan (See Note 7) as debt. The Company will continue to record the loan as debt until either (1) the loan is partially or entirely forgiven and the Company has been legally released, at which point the amount forgiven will be recorded as income or (2) the Company pays off the loan. The full amount of the PPP loan and accrued interest were forgiven on August 13, 2021 and was included in other income in the unaudited condensed consolidated income statement for the nine-month period ended March 31, 2022.

Fair Value of Financial Instruments

The carrying amounts for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value because of their short-term maturity. The Company determined that the carrying amount of the notes payable and lease liabilities approximates fair value since such debt borrowing bears interest at the approximate current market rate. While the Company believes the carrying value of the assets and liabilities are reasonable, considerable judgment is used to develop estimates of fair value; thus the estimates are not necessarily indicative of the amounts that could be realized in a current market exchange.

Revenue Recognition

    The Company recognizes revenue when its performance obligations with its customers have been satisfied. At contract inception, the Company determines if the contract is within the scope of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and then evaluates the contract using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period.

    The Company generates product revenue from the sale of medical device products and the sale and installation of the Company's AXIS image management system software. Revenue for service plans relate to the customer care plans for the Company’s equipment and AXIS image management system software.

    Revenue is recognized upon transfer of control of the promised goods or services to the customer for an amount that

9

reflects the consideration that the Company expects to be entitled in exchange for those goods or services. The Company’s performance obligations are for product sales, installation of AXIS image management system software and customer care plans. The performance obligations are determined at contract inception based upon promises within the contract that are distinct.

    The product sales and installation of AXIS image management system software performance obligations are satisfied at a point in time, which is upon shipment for product sales and upon successful installation for the AXIS image management system. The performance obligation for customer care plans is satisfied over time as the customer receives and consumes the Company’s services.

    The Company invoices its customers upon shipment for product sales. For the installation of AXIS image management system software and customer care plans, the Company invoices its customers upon successful installation. Invoice payments are generally due within 30 days of invoice date. The transaction price is determined based on fixed consideration in the Company’s customer contracts and is recorded net of variable consideration. In determining the transaction price, a significant financing component does not exist since the timing from when the Company invoices its customers to when payment is received as it is less than one year.

    Revenue for product sales and installation of AXIS image management system software is recognized when delivered or installed. The customer care plan revenues are recognized proportionately over the service period, which is a 12-month period.

    The Company has elected the following practical expedients in applying ASC 606:

•Unsatisfied Performance Obligations - all performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in ASC 606 and therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

•Contract Costs - all incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration.

•Significant Financing Component - the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

•Sales Tax Exclusion from the Transaction Price - the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer.

•Shipping and Handling Activities - the Company elected to account for shipping and handling activities as a fulfillment cost rather than as a separate performance obligation.

•Portfolio Approach - the Company applied the Portfolio Approach to contract reviews within its identified revenue streams that have similar characteristics and the Company believes this approach would not differ materially than if applying Topic 606 to each individual contract.

Deferred Revenues

    The Company records deferred revenues when cash payments are received or due in advance of its performance. The Company’s deferred revenues relate to payments received for the customer care plans for a 12-month period. The consideration received is recognized monthly over the service period.

(in thousands)	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Beginning of Period	$	311	$	572	$	364	$	516
Additions	148		149		470		677
Revenue Recognized	156		227		531		699
End of Period	$	303	$	494	$	303	$	494

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Loss Per Share    

Loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. All outstanding stock options are considered potential common stock. All outstanding convertible preferred stock are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. The dilutive effect, if any, of stock options is calculated using the treasury stock method. As of March 31, 2022 and 2021, the average market prices for the for the three-month and nine-month periods then ended are less than the exercise price of all the outstanding stock options and, therefore, the inclusion of the stock options would be anti-dilutive. In addition, since the effect of common stock equivalents is anti-dilutive with respect to losses, the convertible preferred stock has also been excluded from the Company’s computation of loss per common for the three-month and nine-month periods ended March 31, 2021 and 2021. Therefore, basic and diluted loss per common share for the three-month and nine-month periods ended March 31, 2022 and 2021 are the same.

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2022		2021		2022			2021
Numerator:
Numerator for basic loss per share:
Net loss	$	(296,016)	$	(137,465)	$	(31,950)		$	(235,542)
Undeclared dividends on preferred stock	13,006		12,723		$	39,018		38,699
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Numerator for diluted earnings per share:
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Undeclared dividends on preferred stock	—		—		—			—
Diluted loss	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Denominator for basic loss per share
Denominator for basic loss per share - weighted average shares outstanding	7,415,329		7,415,329		7,415,329			7,415,329
Weighted average preferred stock converted to common stock	—		—		—			—
Denominator for diluted loss earnings assumed conversion	7,415,329		7,415,329		7,415,329		0	7,415,329
Net loss per share:
Basic net loss per share	$	(0.04)	$	(0.02)	$	(0.01)		$	(0.04)
Diluted net loss per share	$	(0.04)	$	(0.02)	$	(0.01)		$	(0.04)

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The following table summarizes convertible preferred stock and securities that, if exercised would have an anti-dilutive effect on earnings per share.

	For the Three Months Ended March 31,		For the Nine Months Ended March 31,
	2022	2021	2022	2021
Stock options	157,000	157,000	157,000	157,000
Convertible preferred stock	5,720,993	5,376,053	5,720,993	5,376,053
Total potential dilutive securities not included in income per share	5,877,993	5,533,053	5,877,993	5,533,053

Income Taxes

    The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

    The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. As of March 31, 2022 and June 30, 2021, the Company has a fully recorded valuation allowance against its deferred tax assets.

    The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

    The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying unaudited condensed consolidated statements of operations. As of March 31, 2022 and June 30, 2021, no accrued interest or penalties were required to be included on the related tax liability line in the unaudited condensed consolidated balance sheets.

Leases

    The Company determines if an arrangement is a lease at the inception of a contract. Operating lease right-of-use ("ROU") assets are included in right-of-use assets on the unaudited condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current portion of operating lease liabilities and operating lease liabilities, net of current portion, respectively on the unaudited condensed consolidated balance sheets.

    Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded in the balance sheet.

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New Accounting Pronouncements

Recently Issued Accounting Standards

     The Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews new accounting standards that are issued.

    New Accounting Pronouncements Not Yet Adopted

    In June 2016 the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. The guidance in ASU 2016-13 is effective for “public business entities,” as defined, that are SEC filers for fiscal years and for interim periods with those fiscal years beginning after December 15, 2022. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this standard is not expected to have a material impact to the Company’s unaudited condensed consolidated financial statements.

4. Inventories

	March 31,		June 30,
(in thousands)	2022		2021
Inventories, net:
Raw Material	$	826	$	833
Work-In-Process	222		171
Finished Goods	847		773
Total inventories	$	1,895	$	1,777
Allowance for obsolete inventory	(350)		(360)
Inventories, net	$	1,545	$	1,417

5. Related Party Transactions and Preferred Stock

    On February 14, 2018, the Company entered into a Debt Exchange Agreement (the “Exchange Agreement”) with Richard DePiano, Sr.,(Mr. DePiano Sr.), the Company's former Chairman and DP Associates Inc. Profit-Sharing Plan of which Mr. DePiano Sr. is the sole owner and sole trustee (the “Holders”).  Pursuant to the terms of the Exchange Agreement, effective February 15, 2018, the Holders exchanged a total of $645,000 principal amount of debt related to the accounts receivable factoring program the Company owes the Holders for 2,000,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”).

    Each share of Preferred Stock entitles the Holder thereof to 13 votes per share and will vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the Company’s stockholders.  As a result of this voting power, the Holders as March 31, 2022 beneficially own approximately 77.81% of the voting power on all actions to be taken by the Company’s shareholders.

    Subject to the terms and conditions of Preferred Stock, the holder of any share or shares of the Preferred Stock has the right, at its option at any time, to convert each such share of Preferred Stock (except that, upon any liquidation of the Company, the right of conversion will terminate at the close of business on the business day fixed for payment of the amounts distributable on the Preferred Stock) into 2.15 shares of Common Stock (the “Conversion Ratio”).  The Conversion Ratio is subject to standard provisions for adjustment in the event of a subdivision or combination of the Company’s Common Stock and upon any reorganization or reclassification of the capital stock of the Company. If the Holders were to convert their shares of Preferred Stock into Common Stock at the Conversion Ratio the Holders would receive a total of 4,300,000 shares of Common Stock, or approximately 36.70% of the then outstanding shares of Common Stock assuming such conversion.

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    Each outstanding share of the Preferred Stock accrues dividends calculated cumulatively at the annual rate of $.0258 per share (such amount subject to equitable adjustment in the event of any stock dividend, stock split, combination, reclassification other similar event), payable upon the earlier of (i) a liquidation, dissolution or winding up of the Company or (ii) conversion of the Preferred Stock into Common Stock. Upon either of such events, all such accrued and unpaid dividends, whether or not earned or declared, to and until the date of such event, will become immediately due and payable and will be paid in full. The dividends payable to the holders of the Preferred Stock is payable in cash or, at the election of any such holder, in a number of additional shares of Common Stock equal to the amount of the dividend expressed in dollars divided by the then applicable Conversion Ratio, described above. As of March 31, 2022 and June 30, 2021 the cumulative dividends payable is $213,149 ($0.1066 per share) and $174,131 ($0.0871 per share), respectively.

    Mr. DePiano Sr. passed away on October 3, 2019 and left a will by which he appointed Richard J. DePiano, Jr., the Chief Executive Officer of the Company, as executor. Richard DePiano Jr. was elected to serve as chairman of the Company's board. Mr. DePiano, Jr. qualified as executor and has control over the listed shares in his capacity as executor of Mr. DePiano Sr.'s estate.

6. Line of Credit

    On June 29, 2018 the Company entered a business loan agreement with TD bank receiving a line of credit evidenced by a promissory note of $250,000. The interest is subject to change based on changes in an independent index which the Wall Street Journal Prime. The index rate at the date of the agreement is 5.0% per annum. Interest on the unpaid principal balance of the note is calculated using a rate of 0.74 percentage points over the index, adjusted if necessary for any minimum and maximum rate limitations, resulting in an initial rate of 5.74% per annum based on a year of 360 days. The interest rate was 3.99% as of March 31, 2022. The Company was required to put $250,000 in the TD bank savings account as collateral. Mr. Richard J. DePiano Sr., former Chairman of the Company executed a guarantee of the loan in favor of TD Bank. Mr. DePiano Sr. passed away on October 3, 2019, therefore the guarantee is now assumed by his estate.

    As of March 31, 2022 and June 30, 2021, the line of credit balance was $201,575 with TD bank. The line of credit interest expense was approximately $3,000 for the three months ended March 31, 2022 and 2021, respectively. The line of credit interest expense was approximately $8,000 for the nine months ended March 31, 2022 and 2021, respectively.

7. Long-term debt

Paycheck Protection Program ("PPP") loan

    On April 27, 2020, the Company entered into a PPP loan for $500,000 in connection with the CARES Act related to COVID-19. The promissory note had a fixed payment schedule. The PPP loan was unsecured. A final payment for the unpaid principal and accrued interest was payable no later than two years after the funding date. The note bore interest at a rate of 1.00% per annum. The Company submitted the loan forgiveness application on August 2, 2021. The full amount of the PPP loan and accrued interest were forgiven on August 13, 2021 and was included in other income in the unaudited condensed consolidated statement of operations for the nine-month period ended March 31, 2022.

Economic Injury Disaster ("EIDL") Loan

    EIDL is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to the Coronavirus (COVID-19) pandemic. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation to health care benefits, rent, utilities, and fixed debt payments. The Company received a $150,000 EIDL loan. The annual interest rate is 3.75%. The payment term is 30 years and the monthly payment of $731 started on July 1st, 2021. The EIDL loan is secured by the tangible and intangible personal property of the Company. The Company submitted an EIDL loan increase application on May 6, 2022, increasing the loan amount from $150,000 to $200,000. The loan modification is being proceed.

    The future annual principal amounts to be paid as of March 31, 2022 are as follows:

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Year ending June 30,	EIDL Loan Payment
2022(remainder of FY 2022)	$	725
2023	2,971
2024	3,084
2025	3,202
2026	3,324
Thereafter	140,123
Total	$	153,429

Other Long-term Liabilities

    The CARES Act allows employers to defer the deposit and payment of the employer share of Social Security tax that would otherwise be due on or after March 27, 2020, and before January 1, 2021. The Company had deferred approximately $82,000 of the social security tax. 50% of the deferred employment taxes was paid before December 31, 2021. The remaining 50% is not due until December 31, 2022. Approximately $41,000 was reported as short-term other liabilities as of March 31, 2022.

8. Concentration of Credit Risk

Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and cash equivalents, restricted cash and trade receivables. Concentration of credit risk with respect to trade receivables is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across geographic areas principally within the United States and international. The Company routinely address the financial strength of its customer and, as a consequence, believes that its receivable credit risk exposure is limited. The Company does not require customers to post collateral.

Major Customer

    No customer accounted for more than 10% during the three-month period ended March 31, 2022. One customer accounted for 12% of net sales during the nine months ended March 31, 2022. No customer accounted for more than 10% during the three-month period ended March 31, 2021 and one customer accounted for 14% of net sales during the nine-month period ended March 31, 2021.

    As of March 31, 2022 the Company had one customer that represented 10% of the total accounts receivable balance. As of June 30, 2021 the Company had one customer that represents 23% of the total accounts receivable balance.

Major Supplier

    The Company's two largest supplier accounted for 37% and 16% of the total purchase for the three-month period ended March 31, 2022. The Company's two largest suppliers accounted for 39% and 13% of the total purchase for the nine-month period ended March 31, 2022. The Company's two largest suppliers accounted for of total purchases for 45% and 17% of total purchase for the three-month period ended March 31, 2021.The Company's two largest suppliers accounted for of total purchases for 40% and 14% of total purchase for the nine-month period ended March 31, 2021.

    As of March 31, 2022 the Company had one supplier that represented 39% of the total accounts payable balance. As of June 30, 2021 the Company had two suppliers that represent approximately 39% and 12% of the total accounts payable balance.

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Disaggregated Revenue

    Domestic and international sales from operations are as follows:

( in thousands)	For the Three Months Ended March 31,								For the Nine Months Ended March 31,
	2022				2021				2022				2021
Domestic	$	1,266	52.4	%	$	1,107	47.6	%	4,251		54.6	%	$	4,514	59.1	%
Foreign	1,150		47.6	%	1,218		52.4	%	3,541		45.4	%	3,123		40.9	%
Total	$	2,416	100.0	%	$	2,325	100.0	%	$	7,792	100	%	$	7,637	100	%

9. Leases

    The Company leases certain facilities and equipment under operating leases. Total lease expense, under ASC 842, was included in cost of goods sold and marketing, general and administrative costs in our unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2022 and 2021 as follows:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease costs:
Fixed	$	84,245	$	84,245	$	252,735	$	262,351
Total:	$	84,245	$	84,245	$	252,735	$	262,351

    Supplemental cash flow information was as follows:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	84,187	$	82,390	$	250,365	$	253,197
Total	$	84,187	$	82,390	$	250,365	$	253,197

    The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate)

under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheets as of March 31, 2022:

	Operating
2022 (remainder of FY 2022)	$	71,157
2023	263,162
2024	268,372
2025	141,865
2026	2,728
Total lease payments	747,284
Less interest	54,905
Present value of lease liabilities	$	692,379

    Average lease terms and discount rates were as follows:

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	March 31,		June 30,
	2022		2021
Weighted-average remaining lease terms (years)
Operating leases	2.76		3.35
Weighted-average discount rate
Operating leases	5.65	%	5.65	%

On April 28, 2022 the Company extended lease agreement for its Wisconsin warehouse, which will end in April 30, 2022 for a term of three years. The lease agreement has a lease ROU assets and lease liability of approximately $224,000, respectively. The Company classified the amended lease as an operating lease under ASC 842.

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, the Company's ability to continue as a going concern, 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, intellectual property and patent protection and infringement, the loss of revenue due to the expiration or 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, information security, cybersecurity and data privacy risks, 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, including risks related to the COVID-19 pandemic, inflation, and other risks described in the Company's Form 10-K for the fiscal year ended June 30, 2021. 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, 2021 and this Form 10-Q quarterly report to be an exhaustive statement of all risks, uncertainties or potentially inaccurate assumptions.

Executive Overview—nine-month periods ended March 31, 2022 and 2021

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 net revenue increased approximately $155,000 or 2.0%, to $7,792,000 during the nine months ended March 31, 2022, as compared to the same period of last fiscal year. The increase in net revenue is attributed to an increase in sales in Sonomed's ultrasound products of $559,000 offset by a decrease in Trek revenue of $144,000, a decrease in service plans revenue of $168,000, and a decrease in sales of AXIS products of $92,000.

•Consolidated cost of goods sold totaled approximately $4,681,000, or 60.1%, of total revenue for the nine months ended March 31, 2022, as compared to $4,553,000, or 59.6%, of total revenue of the same period of last fiscal year. The Increase of 0.5% in cost of goods sold as a percentage of total revenue is mainly due to changes in product sales mix and geographic differences.

•Consolidated marketing, general and administrative expenses increased $221,000, or 8.4%, to $2,855,000 for the nine months ended March 31, 2022, as compared to the same period of last fiscal year. The increase in marketing, general

17

and administrate expenses is mainly due to increased sales compensation, increased expense for network improvement, consultant placement expense, increased trade show and travel expense.

•Consolidated research and development expenses increased $111,000, or 16.6%, to $781,000 for the nine months ended March 31, 2022, as compared to the same period of last fiscal year. Research and development expenses were primarily expenses associated with the introduction of new or enhanced products. The increase in research and development expense is mainly due to increased consulting expense during the nine months ended March 31, 2022.

Company Overview

    The following discussion should be read in conjunction with the interim unaudited 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. Under the trade name of Sonomed-Escalon the Company 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 image management systems.

Critical Accounting Policies and Estimates

The preparation of unaudited condensed consolidated financial statements requires management to make estimates and assumptions that impact amounts reported therein. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see the notes to consolidated financial statements included in the Form 10-K for the year ended June 30, 2021, as well as Note 3 to our unaudited condensed consolidated financial statements for the three and nine months ended March 31, 2022.

During the three and nine months ended March 31, 2022, there were no significant changes in our accounting policies and estimates to our unaudited condensed consolidated financial statements.

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Results of Operations

Three and Nine Months Ended March 31, 2022 and 2021

The following table shows consolidated net revenue, as well as identifying trends in revenues for the three and nine months ended March 31, 2022 and 2021. Table amounts are in thousands:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2022		2021		% Change		2022		2021		% Change
Net Revenue:
Products	$	2,260	$	2,098	7.7	%	$	7,261	$	6,938	4.7	%
Service plans	156		227		(31.3)	%	531		699		(24.0)	%
Total	$	2,416	$	2,325	3.9	%	$	7,792	$	7,637	2.0	%

Consolidated net revenue increased approximately $91,000 or 3.9%, to $2,416,000 during the three months ended March 31, 2022 as compared to the same period of last fiscal year. The increase in net revenue is attributed to an increase in sales in Trek revenue of $207,000, and an increase in Sonomed's ultrasound products of $23,000 offset by a decrease in sales of AXIS products of $68,000, and a decrease in service plans revenue of $71,000.

Consolidated net revenue increased approximately $155,000 or 2.0%, to $7,792,000 during the nine months ended March 31, 2022 as compared to the same period of last fiscal year. The increase in net revenue is attributed to an increase in sales in Sonomed's ultrasound products of $559,000 offset by a decrease in Trek revenue of $144,000, a decrease in service plans revenue of $168,000, and a decrease in sales of AXIS products of $92,000.

The following table presents the domestic and foreign sales for the three and nine months ended March 31, 2022 and 2021. The table amounts are in thousands:

	For the Three Months Ended March 31,								For the Nine Months Ended March 31,
	2022				2021				2022				2021
Domestic	$	1,266	52.4	%	$	1,107	47.6	%	$	4,251	54.6	%	$	4,514	59.1	%
Foreign	1,150		47.6	%	1,218		52.4	%	3,541		45.4	%	3,123		40.9	%
Total	$	2,416	100.0	%	$	2,325	100.0	%	$	7,792	100.0	%	$	7,637	100.0	%

The following table presents consolidated cost of goods sold and as a percentage of revenues for the three and nine months ended March 31, 2022 and 2021. Table amounts are in thousands:

 

	For the Three Months Ended March 31,								For the Nine Months Ended March 31,
	2022		%		2021		%		2022	%		2021	%
Cost of Goods Sold:
	$	1,478	61.2	%	$	1,383	59.5	%	4,681	60.1	%	4,553	59.6	%
Total	$	1,478	61.2	%	$	1,383	59.5	%	4,681	60.1	%	4,553	59.6	%

Consolidated cost of goods sold totaled approximately $1,478,000, or 61.2%, of total revenue for the three months ended March 31, 2022, as compared to $1,383,000, or 59.5%, of total revenue of the same period of last fiscal year. The increase of 1.7% in cost of goods sold as a percentage of total revenue is mainly due to changes in product sales mix and geographic differences.

Consolidated cost of goods sold totaled approximately $4,681,000, or 60.1%, of total revenue for the nine months ended March 31, 2022, as compared to $4,553,000, or 59.6%, of total revenue of the same period of last fiscal year. The increase of 0.5% in cost of goods sold as a percentage of total revenue is mainly due to changes in product sales mix and geographic differences.

    The following table presents consolidated marketing, general and administrative expenses for three and nine months ended March 31, 2022 and 2021. Table amounts are in thousands:

19

20

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2022		2021		% Change		2022	2021	% Change
Marketing, General and Administrative:
	$	1,001	$	858	16.7	%	2,855	2,634	8.4	%
Total	$	1,001	$	858	16.7	%	2,855	2,634	8.4	%

Consolidated marketing, general and administrative expenses increased $143,000, or 16.7%, to $1,001,000 for the three months ended March 31, 2022, as compared to the same period of last fiscal year. The increase in marketing, general and administrate expenses is mainly due to increased sales compensation, increased expense for network improvement, consultant placement expense, and increased trade show and travel expense.

Consolidated marketing, general and administrative expenses increased $221,000, or 8.4%, to $2,855,000 for the nine months ended March 31, 2022, as compared to the same period of last fiscal year. The increase in marketing, general and administrate expenses is mainly due to increased sales compensation, increased expense for network improvement, consultant placement expense, and increased trade show and travel expense.

The following table presents consolidated research and development expenses for the three and nine months ended March 31, 2022 and 2021.

Table amounts are in thousands:

	For Nine Months Ended March 31,						For Nine Months Ended March 31,
	2022		2021		% Change		2022		2021		% Change
Research and Development:
	$	229	$	216	6.0	%	781		$	670	16.6	%
Total	$	229	$	216	6.0	%	$	781	$	670	16.6	%

=

Consolidated research and development expenses increased $13,000, or 6.0%, to $229,000 for the three months ended March 31, 2022, as compared to the same period of last fiscal year. Research and development expenses were primarily expenses associated with the introduction of new or enhanced products. The increase in research and development expense is mainly due to increased consulting expense during the three months ended March 31, 2022.

Consolidated research and development expenses increased $111,000, or 16.6%, to $781,000 for the nine months ended March 31, 2022, as compared to the same period of last fiscal year. Research and development expenses were primarily expenses associated with the introduction of new or enhanced products. The increase in research and development expense is mainly due to increased consulting expense during the nine months ended March 31, 2022.

Other income (expense)

On April 27, 2020, the Company entered into a PPP loan for $500,000 in connection with the CARES Act related to COVID-19. The promissory note has a fixed payment schedule. The PPP loan is unsecured. A final payment for the unpaid principal and accrued interest will be payable no later than two years after the funding date. The note will bear interest at a rate of 1.00% per annum. The Company submitted the loan forgiveness application on August 2, 2021. The full amount of the PPP loan and accrued interest of $6,305 were forgiven on August 13, 2021 and reported as other income during the nine-month period ended March 31, 2022.

COVID-19 Disclosure

    On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. This pandemic has had a significant impact on the global and domestic economy and is likely to impact the operations of the company. The Company has been assessing the impact of the COVID-19 pandemic on the business, including the impact on the financial condition and results of operations, financial resources, changes in accounting judgment as well as the impact on the supply and demand, etc. The Company is considered an essential business and was able to maintain operations during the lockdown. However, the Company does not know the extent and duration of the impact of COVID-19 on its business due to the uncertainty about the spread of the virus.

21

Russia-Ukraine War

In February 2022, Russia invaded Ukraine. As military activity proceeds and sanctions, export controls and other measures are imposed by many countries against Russia, Belarus and specific areas of Ukraine, the war is increasingly affecting the global economy and financial markets, as well as exacerbating ongoing economic challenges, including rising inflation and global supply-chain disruption. The Company has operations or activities in countries and regions outside the United States. As a result, its global operations are affected by economic, political and other conditions in the foreign countries in which it does business as well as U.S. laws regulating international trade, although the Company has not yet assessed that the war has had a material effect on its financial position or results of operations. The Company will continue to monitor the impacts of the Russia-Ukraine war on macroeconomic conditions and continually assess the effect these matters may have on customer demand, suppliers’ ability to deliver products, cybersecurity risks and the Company's liquidity and access to capital.

Liquidity and Capital Resources

Our total cash on hand as of March 31, 2022 was approximately $1,049,000 excluding restricted cash of approximately $256,000 compared to approximately $1,651,000 of cash on hand and restricted cash of $256,000 as of June 30, 2021. Approximately $48,000 was available under our line of credit as of March 31, 2022.

Because the Company's operations have not historically generated sufficient revenues to enable profitability, we will continue to monitor costs and expenses closely and may need to raise additional capital in order to fund operations.

The Company expect to continue to fund operations from cash on hand and through capital raising sources if possible and available, which may be dilutive to existing stockholders, through revenues from the licensing of the Company's products, or through strategic alliances. Additionally, we may seek to sell additional equity or debt securities through one or more discrete transactions, or enter into a strategic alliance arrangement, but can provide no assurances that any such financing or strategic alliance arrangement will be available on acceptable terms, or at all. Moreover, the incurrence of indebtedness in connection with a debt financing would result in increased fixed obligations and could contain covenants that would restrict our operations.

As of March 31, 2022 we had an accumulated deficit of approximately $68.9 million, incurred recurring losses from operations and negative cash flows from operating activities. These factors raise substantial doubt regarding our ability to continue as a going concern, and our ability to generate cash to meet our cash requirements for the following twelve months as of the date of this form 10-Q.

The following table presents overall liquidity and capital resources as of March 31, 2022 and June 30, 2021. Table amounts are in thousands:

	March 31,	June 30,
	2022	2021
Current Ratio:
Current assets	$4,171	$4,593
Less: Current liabilities	2,976	3,397
Working capital	$1,195	$1,196
Current ratio	1.40 to 1	1.35 to 1
Debt to Total Capital Ratio:
Line of credit, note payable, lease liabilities, and EIDL loan	$1,056	$1,772
Total debt	1,056	1,772
Total equity	1,428	1,460
Total capital	$2,484	$3,232
Total debt to total capital	42.5%	54.8%

22

Working Capital Position

Working capital decreased approximately $1,000 as of March 31, 2022, and the current ratio increased to 1.40 to 1 from 1.35 to 1 when compared to June 30, 2021. The decrease in working capital is due to a decrease in current liabilities of $421,000 during the quarter ended March 31, 2022, offset by a decrease in current assets of $422,000. The PPP loan forgiveness mainly contributes to the decrease of the current liabilities.

Debt to total capital ratio was 42.5% and 54.8% as of March 31, 2022 and June 30, 2021, respectively. The decrease of debt to total capital ratio is also due to the PPP loan forgiveness.

Cash Flow Used in (Provided By) Operating Activities

During the nine months ended March 31, 2022 the Company used approximately $597,000 of cash in operating activities as compared to cash of approximately $840,000 provided by operating activities during the nine months ended March 31, 2021.

    For the nine months ended March 31, 2022, its cash used in operations is mainly as a result of net loss, including the non-cash adjustment for PPP loan forgiveness, along with the increase in inventories of $128,000, an increase in accounts receivable of approximately $63,000, a decrease in deferred revenue of $61,000, a repayment of employer tax deferral of $41,000, and decrease in operating liabilities of $217,000 offset by an increase in accrued expense of $184,000. The remaining offsetting items for cash provided by operations is comprised of less significant items.

    For the nine months ended March 31, 2021, its cash provided by operations is mainly due to decreases in accounts receivable and inventory of approximately $751,000, increase in accounts payable and accrued expenses of approximately $234,000 offset by a decrease in deferred revenue of $22,000. The remaining offsetting items for cash provided by operations is comprised of less significant items. The change in the mentioned working capital accounts are due to timing as well as the Company's focus on preserving cash due to uncertainty in the current economic climate.

Cash Flows used in Investing Activities

Cash flows used in investing activities for the nine-month period ended March 31, 2021 was due to the purchase of equipment of $9,000.

Cash Flows Used in Financing Activities

For the nine months ended March 31, 2022 the cash used in financing activities was due to an auto loan payment of employer $3,000 and repayment of EIDL loan of $2,000. For the nine months ended March 31, 2021 the cash used in financing activities of $3,000 was due to auto loan payment.

Debt Financing

    On June 29, 2018 the Company entered a business loan agreement with TD bank receiving a line of credit evidenced by a promissory note of $250,000. The interest is subject to change based on changes in an independent index which the Wall Street Journal Prime. The index rate at the date of the agreement is 5.000% per annum. Interest on the unpaid principal balance of the note will be calculated using a rate of 0.740 percentage points over the index, adjusted if necessary for any minimum and maximum rate limitations, resulting in an initial rate of 5.740% per annum based on a year of 360 days. The interest rate was 5.00% as of March 31, 2022. The Company was required to put $250,000 in the TD bank savings account as collateral.

    As of March 31, 2022 and June 30, 2021, the line of credit balance was $201,575 with TD bank. The line of credit interest expense was approximately $3,000 and $3,000 for the three months ended March 31, 2022 and 2021, respectively. The line of credit interest expense was approximately $8,000 for the nine months ended March 31, 2022 and 2021, respectively.

COVID-19 Relief Loans and Liabilities

Payroll Protection Program ("PPP")

    On April 27, 2020, the Company entered into a PPP loan for $500,000 in connection with the CARES Act related to COVID-19. The promissory note had a fixed payment schedule. The PPP loan was unsecured. A final payment for the unpaid principal and accrued interest was payable no later than two years after the funding date. The note bore interest at a rate of 1.00% per annum. The full amount of the PPP loan and accrued interest were forgiven on August 13, 2021 and reported as other income during the nine-month period ended March 31, 2022.

Economic Injury Disaster Loan ("EIDL")

23

    EIDL is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to the Coronavirus (COVID-19) pandemic. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation to health care benefits, rent, utilities, and fixed debt payments. The Company received $150,000 EIDL loan. The annual interest rate is 3.75%, the payment term is 30 years and the monthly payment of $731 started on July 1st, 2021. The EIDL loan is secured by the tangible and intangible personal property of the Company. The Company submitted an EIDL loan increase application on May 6, 2022, increasing the loan amount from $150,000 to $200,000. The loan modification is being proceed.

Employer Payroll Tax Withholding

    The CARES Act allows employers to defer the deposit and payment of the employer share of Social Security tax that would otherwise be due on or after March 27, 2020, and before January 1, 2021. The Company has deferred approximately $82,000 of the social security tax. 50% of the deferred employment taxes was paid before December 31, 2021. The remaining 50% is not due until December 31, 2022. Approximately $41,000 was reported as short-term other liabilities as of March 31, 2022.

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, 2022, 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 quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Part II. OTHER INFORMATION

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

24

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.

	Escalon Medical Corp.
	(Registrant)
Date: May 13, 2022	By:	/s/ Richard J. DePiano, Jr.
		Richard J. DePiano, Jr.
		Chief Executive Officer
Date: May 13, 2022	By:	/s/ Mark Wallace
		Mark Wallace
		Chief Operating Officer and Principal Accounting & Financial Officer

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

I, Richard J. DePiano, certify that:

1.I have reviewed this annual report on Form 10-Q 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: May 13, 2022

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

I, Mark Wallace, certify that:

1.I have reviewed this annual report on Form 10-Q 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/    Mark Wallace

Mark Wallace

Date: May 13, 2022

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, 2022 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 13, 2022

/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, Mark Wallace, Chief Operating Officer and Principal Accounting & 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, 2022 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 13, 2022

/s/    Mark Wallace

Mark Wallace

Chief Operating Officer and Principal Accounting & Financial Officer

XML

Cover - shares	9 Months Ended
	Mar. 31, 2022	May 12, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Entity Registrant Name	Escalon Medical Corp.
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	33-0272839
Entity Address, Address Line One	435 Devon Park Drive
Entity Address, City or Town	Wayne
Document Transition Report	false
Entity File Number	000-20127
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19087
City Area Code	(610)
Local Phone Number	688-6830
Entity Emerging Growth Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		7,415,329
Title of 12(b) Security	common stock, $0.001 par value
Entity Central Index Key	0000862668
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes

XML

Consolidated Balance Sheets - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Current assets:
Cash and cash equivalents	$ 1,048,500	$ 1,650,970
Restricted Cash, Current	256,133	255,920
Accounts receivable, net	1,129,648	1,081,702
Inventory, net	1,544,822	1,416,727
Other current assets	191,626	187,357
Total current assets	4,170,729	4,592,676
Property and equipment, net	59,238	81,442
Operating Lease, Right-of-Use Asset	634,282	843,559
Finite-Lived Intangible Assets, Net	87,663	102,400
Deposits Assets, Noncurrent	62,789	62,789
Total assets	5,014,701	5,682,866
Current liabilities:
Line of credit	201,575	201,575
Other Notes Payable, Current	3,401	3,401
Secured Debt, Current	2,943	2,862
Accounts payable	1,118,778	1,102,125
Accrued expenses	867,202	695,553
Interest Payable, Current	112,389	112,389
Operating Lease, Liability, Current	236,635	279,051
Deferred Revenue	302,698	363,700
Other short-term liabilities	129,961	136,107
Total current liabilities	2,975,582	3,396,763
Other Notes Payable, Noncurrent	4,903	7,839
Operating Lease, Liability, Noncurrent	455,744	630,330
Other Liabilities, Noncurrent	0	40,860
Total long-term liabilities	611,133	826,167
Total liabilities	3,586,715	4,222,930
Shareholders equity:
Series A convertible preferred stock, $0.001 par value; 2,000,000 shares authorized;2,000,000 issued and outstanding	645,000	645,000
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding	7,415	7,415
Additional paid-in capital	69,702,043	69,702,043
Accumulated deficit	(68,926,472)	(68,894,522)
Total shareholders' equity	1,427,986	1,459,936
Total liabilities and shareholders' equity	5,014,701	5,682,866
Payroll Protection Program Loan [Member]
Current liabilities:
Long-term Debt, Current Maturities	0	500,000
Secured Debt [Member]
Current liabilities:
Secured Long-term Debt, Noncurrent	$ 150,486	$ 147,138

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2022	Jun. 30, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred Stock, Shares Issued	2,000,000	2,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	35,000,000	35,000,000
Common stock, shares issued	7,415,329	7,415,329
Common stock, shares outstanding	7,415,329	7,415,329

XML

Consolidated Statements Of Operations - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Revenue from External Customer [Line Items]
Net Income (Loss) Available to Common Stockholders, Basic	$ (309,022)	$ (150,188)	$ (70,968)	$ (274,241)
Revenues	$ 2,416,127	$ 2,324,907	$ 7,791,953	$ 7,636,789
Weighted average shares - basic	7,415,329	7,415,329	7,415,329	7,415,329
Cost of Goods and Services Sold	$ 1,477,651	$ 1,383,267	$ 4,681,088	$ 4,552,956
Research and development	229,315	215,700	780,943	669,551
Other Nonoperating Income (Expense)	0	0	506,305	0
Interest income	31	158	213	890
Interest Expense	4,134	5,398	13,017	16,385
Loss from operations	(291,913)	(132,225)	(525,451)	(220,047)
Net loss	(296,016)	(137,465)	(31,950)	(235,542)
Preferred Stock Dividends, Income Statement Impact	13,006	12,723	39,018	38,699
Marketing, general and administrative	1,001,074	858,165	2,855,373	2,634,329
Costs and Expenses	2,708,040	2,457,132	8,317,404	7,856,836
Nonoperating Income (Expense)	$ (4,103)	$ (5,240)	$ 493,501	$ (15,495)
Earnings (Loss) Per Share, Basic	$ (0.04)	$ (0.02)	$ (0.01)	$ (0.04)
Weighted Average Number of Shares Outstanding, Diluted	7,415,329	7,415,329	7,415,329	7,415,329
Earnings (Loss) Per Share, Diluted	$ (0.04)	$ (0.02)	$ (0.01)	$ (0.04)
Costs and expenses:
Cost of Goods and Services Sold	$ 1,477,651	$ 1,383,267	$ 4,681,088	$ 4,552,956
Marketing, general and administrative	1,001,074	858,165	2,855,373	2,634,329
Research and development	229,315	215,700	780,943	669,551
Total costs and expenses	2,708,040	2,457,132	8,317,404	7,856,836
Loss from operations	(291,913)	(132,225)	(525,451)	(220,047)
Other (expense) income:
Other Nonoperating Income (Expense)	0	0	506,305	0
Interest income	31	158	213	890
Interest expense	(4,134)	(5,398)	(13,017)	(16,385)
Total other (expense) income	(4,103)	(5,240)	493,501	(15,495)
Net loss	(296,016)	(137,465)	(31,950)	(235,542)
Preferred Stock Dividends, Income Statement Impact	13,006	12,723	39,018	38,699
Net Income (Loss) Available to Common Stockholders, Basic	$ (309,022)	$ (150,188)	$ (70,968)	$ (274,241)
Net income (loss) per share
Earnings (Loss) Per Share, Basic	$ (0.04)	$ (0.02)	$ (0.01)	$ (0.04)
Earnings (Loss) Per Share, Diluted	$ (0.04)	$ (0.02)	$ (0.01)	$ (0.04)
Weighted average shares - basic	7,415,329	7,415,329	7,415,329	7,415,329
Weighted Average Number of Shares Outstanding, Diluted	7,415,329	7,415,329	7,415,329	7,415,329
Geographic Concentration Risk [Member]
Revenue from External Customer [Line Items]
Revenues				$ 7,637,000
Revenue Benchmark [Member] | Geographic Concentration Risk [Member]
Revenue from External Customer [Line Items]
Revenues	$ 2,416,000	$ 2,325,000	$ 7,792,000	7,637,000
International [Member] | Geographic Concentration Risk [Member]
Revenue from External Customer [Line Items]
Revenues				3,123,000
International [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member]
Revenue from External Customer [Line Items]
Revenues	1,150,000	1,218,000	3,541,000	3,123,000
Product [Member]
Revenue from External Customer [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	2,259,860	2,098,038	7,261,134	6,937,750
Service [Member]
Revenue from External Customer [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 156,267	$ 226,869	$ 530,819	$ 699,039

XML

Consolidated Statements Of Shareholders' Equity and Comprehensive Loss - USD ($)	Total	Common Stock [Member]	Preferred Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]
Preferred Stock, Shares Outstanding			2,000,000
Preferred Stock, Value, Issued			$ 645,000
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding		$ 7,415
Common Stock, Shares, Outstanding		7,415,329
Balance at Jun. 30, 2020	$ 1,511,959			$ 69,702,043	$ (68,842,499)
Net loss	(196,553)	$ 0	$ 0	0	(196,553)
Balance at Sep. 30, 2020	1,315,406			69,702,043	(69,039,052)
Balance at Jun. 30, 2020	1,511,959			69,702,043	(68,842,499)
Net loss	(235,542)
Balance at Mar. 31, 2021	1,276,417			69,702,043	(69,078,041)
Preferred Stock, Shares Outstanding			2,000,000
Preferred Stock, Value, Issued			$ 645,000
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding		$ 7,415
Common Stock, Shares, Outstanding		7,415,329
Balance at Sep. 30, 2020	1,315,406			69,702,043	(69,039,052)
Net loss	98,476	$ 0	$ 0	0	98,476
Balance at Dec. 31, 2020	1,413,882	$ 7,415		69,702,043	(68,940,576)
Preferred Stock, Shares Outstanding			2,000,000
Shares, Outstanding		7,415,329
Preferred Stock, Value, Issued			$ 645,000
Net loss	(137,465)	$ 0	$ 0	0	(137,465)
Balance at Mar. 31, 2021	1,276,417			69,702,043	(69,078,041)
Preferred Stock, Shares Outstanding			2,000,000
Preferred Stock, Value, Issued			$ 645,000
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding		$ 7,415
Common Stock, Shares, Outstanding		7,415,329
Preferred Stock, Shares Outstanding			2,000,000
Preferred Stock, Value, Issued	645,000		$ 645,000
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding	$ 7,415	$ 7,415
Common Stock, Shares, Outstanding	7,415,329	7,415,329
Balance at Jun. 30, 2021	$ 1,459,936			69,702,043	(68,894,522)
Net loss	317,220	$ 0	$ 0	0	317,220
Balance at Sep. 30, 2021	1,777,156			69,702,043	(68,577,302)
Balance at Jun. 30, 2021	1,459,936			69,702,043	(68,894,522)
Net loss	(31,950)
Balance at Mar. 31, 2022	1,427,986			69,702,043	(68,926,472)
Preferred Stock, Shares Outstanding			2,000,000
Preferred Stock, Value, Issued			$ 645,000
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding		$ 7,415
Common Stock, Shares, Outstanding		7,415,329
Balance at Sep. 30, 2021	1,777,156			69,702,043	(68,577,302)
Net loss	(53,154)	$ 0	$ 0	0	(53,154)
Balance at Dec. 31, 2021	1,724,002			69,702,043	(68,630,456)
Preferred Stock, Shares Outstanding			2,000,000
Preferred Stock, Value, Issued			$ 645,000
Common Stock, Shares, Outstanding		7,415,329
Net loss	(296,016)	$ 0	$ 0	0	(296,016)
Balance at Mar. 31, 2022	$ 1,427,986			$ 69,702,043	$ (68,926,472)
Preferred Stock, Shares Outstanding			2,000,000
Convertible Preferred Stock, Shares Issued upon Conversion	2.15
Preferred Stock, Value, Issued	$ 645,000		$ 645,000
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding	$ 7,415	$ 7,415
Common Stock, Shares, Outstanding	7,415,329	7,415,329

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Consolidated Statements Of Cash Flows - USD ($)	3 Months Ended				9 Months Ended		12 Months Ended
	Mar. 31, 2022	Sep. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Mar. 31, 2022	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2020
Cash Flows from Operating Activities:
Net loss	$ (296,016)	$ 317,220	$ (137,465)	$ (196,553)	$ (31,950)	$ (235,542)
Accounts Receivable, Credit Loss Expense (Reversal)					15,000	0
Other Noncash Income (Expense)					(506,305)	0
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization					36,941	32,930
Impairment of Intangible Assets (Excluding Goodwill)							$ 0
us-gaap_OtherNonoperatingIncomeExpensenoncash					506,305	0
Change in operating assets and liabilities:
Increaser(Decrease) in Accounts Receivable					(62,946)	339,459
Increase (Decrease) in Inventories					(128,095)	411,219
Increase (Decrease) in Other Operating Assets					(4,269)	3,437
Increase (Decrease) in Deferred Revenue					(61,002)	(21,615)
Increase (Decrease) in Accounts Payable					16,653	194,368
Increase (Decrease) in Accrued Liabilities					183,579	39,518
Increase (Decrease) in Other Operating Liabilities					(217,002)	(207,613)
Other Operating Activities, Cash Flow Statement					209,277	206,854
Impairment of Intangible Assets (Excluding Goodwill)							0
Increase (Decrease) in Other Deferred Liability					(47,006)	76,771
Net Cash Provided by (Used in) Operating Activities					(597,125)	839,786
Cash Flows from Investing Activities:
Payments to Acquire Productive Assets					0	(9,390)
Net Cash Provided by (Used in) Investing Activities					0	(9,390)
Net Cash provided by (used in) Financing Activities:
Repayments of Notes Payable					(2,936)	(2,724)
Repayment of EIDL loan					(2,196)	0
Net Cash Provided by (Used in) Financing Activities					(5,132)	(2,724)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect					(602,257)	827,672
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning of Period		$ 1,906,890		$ 1,081,239	1,906,890	1,081,239	$ 1,906,890	$ 1,081,239
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period	1,304,633		1,908,911		1,304,633	1,908,911		1,906,890
Cash and cash equivalents	1,048,500		1,653,087		1,048,500	1,653,087		1,650,970	$ 825,958
Restricted Cash	256,133		255,824		256,133	255,824		255,920	255,281
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	$ 1,304,633		$ 1,908,911		1,304,633	1,908,911		$ 1,906,890	$ 1,081,239
Supplemental Schedule of Cash Flow Information:
Record lease liabilities					0	20,200
DisposeROUassets					0	9,154
DisposeLeaseLiabilities					0	9,154
RecordROUassets					0	20,200
Interest Paid, Excluding Capitalized Interest, Operating Activities					$ 12,534	$ 8,420
Weighted average shares - basic	7,415,329		7,415,329		7,415,329	7,415,329

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Organization and Description of Business

9 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business and Business Conditions

Escalon Medical Corp. ("Escalon" or "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, which includes its division called "Trek" and its wholly owned subsidiaries: Sonomed, Inc. (“Sonomed”), Escalon Digital Solutions, Inc. (“EMI”), and Sonomed IP Holdings, Inc.

    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 government authorities require 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 unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments (consisting of only normal and recurring adjustments) which are, in the opinion of management, necessary to present fairly the unaudited condensed consolidated financial information required herein. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United Statements of America ("US GAAP") have been condensed or omitted pursuant to such rules and regulations. While management believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K filed with the Security and Exchange Commission for the fiscal year ended June 30, 2021. The results of operations for the nine months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.

    On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. This pandemic has had a significant impact on the global and domestic economy, and is likely to impact the operations of the Company. The Company has been assessing the impact of the COVID-19 pandemic on the business, including the impact on the financial condition and results of operations, financial resources, changes in accounting judgment as well as the impact on the supply and demand, etc. The Company is considered an essential business and was able to maintain operations during the lockdown. However, the Company does not know the extent and duration of the impact of COVID-19 on its business due to the uncertainty about the spread of the virus. The Company applied for and received $500,000 in April 2020 under the Payroll Protection Program (PPP loan) which helped reverse the negative impact in terms of the liquidity. The maturity date was two years from the date of the note. The interest rate was 1.00% per year. The full amount of the PPP loan and accrued interest were forgiven on August 13, 2021 and was included in other income in the unaudited condensed consolidated statement of operations for the nine-month period ended March 31, 2022. The Company received a $150,000 Economic Injury Disaster ("EIDL") loan. The annual interest rate is 3.75%. The payment term is 30 years and the monthly payment of $731 started on July 1, 2021. In February 2022, Russia invaded Ukraine. As military activity proceeds and sanctions, export controls and other measures are imposed by many countries against Russia, Belarus and specific areas of Ukraine, the war is increasingly affecting the global economy and financial markets, as well as exacerbating ongoing economic challenges, including rising inflation and global supply-chain disruption. The Company has operations or activities in countries and regions outside the United States. As a result, its global operations are affected by economic, political and other conditions in the foreign countries in which the Company has business as well as U.S. laws regulating international trade, although the Company has not yet assessed that the war has had a material effect on its financial position or results of operations. The Company will continue to monitor the impacts of the Russia-Ukraine war on macroeconomic conditions and continually assess the effect these matters may have on customer demand, suppliers’ ability to deliver products, cybersecurity risks and its liquidity and access to capital.

    The Company’s common stock trades on the OTCQB Market under the symbol “ESMC.”

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Going concern (Notes)

9 Months Ended

Mar. 31, 2022

Going concern [Abstract]

Liquidity Disclosure [Policy Text Block]

. Going ConcernThe Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the continuous enhancement of the current products, development of new products; changes in domestic and foreign regulations; ability of manufacture successfully; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, the Company’s products and its ability to raise capital to support its operations.

To date, the Company’s operations have not generated sufficient revenues to enable profitability. As of March 31, 2022, the Company had an accumulated deficit of $68.9 million, and incurred recurring losses from operations and incurred negative cash flows from operating activities. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These unaudited condensed consolidated financial statements do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company's continuance as a going concern is dependent on its future profitability and on the on-going support of its shareholders, affiliates and creditors. In order to mitigate the going concern issues, the Company is actively pursuing business partnerships, managing its continuing operations, implementing cost-cutting measures and seeking to sell certain assets. The Company may not be successful in any of these efforts.

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Significant Accounting Policies

9 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Significant Accounting Policies

Summary of Significant Accounting Policies

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For the purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and highly liquid investments with original maturities of 90 days or less to be cash and cash equivalents. From time to time cash balances exceed federal insurance limits.

Restricted Cash

As of March 31, 2022 and June 30, 2021 restricted cash included approximately $256,000, which was pursuant to the requirements in the TD Bank Loan entered into June 2018 (see Note 6).

Foreign Currency Translation

The Company's functional currency is the US dollar. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction gains or losses included in net loss were immaterial for the three and nine months ended March 31, 2022 and 2021.

Accounts Receivable

Accounts receivable are recorded at net realizable value. The Company performs ongoing credit evaluations of customers’ financial condition and does not require collateral for accounts receivable arising in the normal course of business. The Company maintains allowances for potential credit losses based on the Company’s historical trends, specific customer issues and current economic trends. Accounts are written off against the allowance when they are determined to be uncollectible based on management’s assessment of individual accounts. The Company recorded an allowance for doubtful accounts of approximately $110,000 and $100,000 as of March 31, 2022 and June 30, 2021, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis and include freight-in materials, labor and overhead costs. Inventories are written down if the estimated net realizable value is less than the recorded value. The Company reviews the carrying cost of inventories by product to determine the adequacy of

reserves for obsolescence. In accounting for inventories, the Company must make estimates regarding the estimated realizable value of inventory. The estimate is based, in part, on the Company’s forecasts of future sales and age of inventory. If actual conditions are less favorable than those the Company has projected, the Company may need to increase its reserves for excess and obsolete inventories. Any increases in the reserves will adversely impact the Company’s results of operations. The establishment of a reserve for excess and obsolete inventory establishes a new cost basis in the inventory. Such reserves are not reduced until the product is sold. If the Company is able to sell such inventory any related reserves would be reversed in the period of sale. In accordance with industry practice, service parts inventory is included in current assets, although service parts are carried for established requirements during the serviceable lives of the products and, therefore, not all parts are expected to be sold within one year.

    Intangible Assets and Long-Lived Assets

Long-lived assets including intangible assets deemed to have finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit or material adverse changes in the business climate that indicate that the carrying amount of an asset may be impaired. When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the projected undiscounted cash flows from the asset are less than the carrying value of the asset the asset is considered to be impaired. The impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For the three and nine-month periods ended March 31, 2022 and 2021, no impairments were recorded.

Accrued Warranties

The Company provides a limited one-year warranty against manufacturer’s defects on its products sold to customers. The Company’s standard warranties require the Company to repair or replace, at the Company’s discretion, defective parts during such warranty period. The Company accrues for its product warranty liabilities based on estimates of costs to be incurred during the warranty period, based on historical repair information for warranty costs.

PPP Loans

    The Company's policy is to account for the PPP loan (See Note 7) as debt. The Company will continue to record the loan as debt until either (1) the loan is partially or entirely forgiven and the Company has been legally released, at which point the amount forgiven will be recorded as income or (2) the Company pays off the loan. The full amount of the PPP loan and accrued interest were forgiven on August 13, 2021 and was included in other income in the unaudited condensed consolidated income statement for the nine-month period ended March 31, 2022.

Fair Value of Financial Instruments

The carrying amounts for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value because of their short-term maturity. The Company determined that the carrying amount of the notes payable and lease liabilities approximates fair value since such debt borrowing bears interest at the approximate current market rate. While the Company believes the carrying value of the assets and liabilities are reasonable, considerable judgment is used to develop estimates of fair value; thus the estimates are not necessarily indicative of the amounts that could be realized in a current market exchange.

Revenue Recognition

    The Company recognizes revenue when its performance obligations with its customers have been satisfied. At contract inception, the Company determines if the contract is within the scope of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and then evaluates the contract using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period.

    The Company generates product revenue from the sale of medical device products and the sale and installation of the Company's AXIS image management system software. Revenue for service plans relate to the customer care plans for the Company’s equipment and AXIS image management system software.

    Revenue is recognized upon transfer of control of the promised goods or services to the customer for an amount that

reflects the consideration that the Company expects to be entitled in exchange for those goods or services. The Company’s performance obligations are for product sales, installation of AXIS image management system software and customer care plans. The performance obligations are determined at contract inception based upon promises within the contract that are distinct.

    The product sales and installation of AXIS image management system software performance obligations are satisfied at a point in time, which is upon shipment for product sales and upon successful installation for the AXIS image management system. The performance obligation for customer care plans is satisfied over time as the customer receives and consumes the Company’s services.

    The Company invoices its customers upon shipment for product sales. For the installation of AXIS image management system software and customer care plans, the Company invoices its customers upon successful installation. Invoice payments are generally due within 30 days of invoice date. The transaction price is determined based on fixed consideration in the Company’s customer contracts and is recorded net of variable consideration. In determining the transaction price, a significant financing component does not exist since the timing from when the Company invoices its customers to when payment is received as it is less than one year.

    Revenue for product sales and installation of AXIS image management system software is recognized when delivered or installed. The customer care plan revenues are recognized proportionately over the service period, which is a 12-month period.

    The Company has elected the following practical expedients in applying ASC 606:

•Unsatisfied Performance Obligations - all performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in ASC 606 and therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

•Contract Costs - all incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration.

•Significant Financing Component - the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

•Sales Tax Exclusion from the Transaction Price - the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer.

•Shipping and Handling Activities - the Company elected to account for shipping and handling activities as a fulfillment cost rather than as a separate performance obligation.

•Portfolio Approach - the Company applied the Portfolio Approach to contract reviews within its identified revenue streams that have similar characteristics and the Company believes this approach would not differ materially than if applying Topic 606 to each individual contract.

Deferred Revenues

    The Company records deferred revenues when cash payments are received or due in advance of its performance. The Company’s deferred revenues relate to payments received for the customer care plans for a 12-month period. The consideration received is recognized monthly over the service period.

(in thousands)	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Beginning of Period	$	311	$	572	$	364	$	516
Additions	148		149		470		677
Revenue Recognized	156		227		531		699
End of Period	$	303	$	494	$	303	$	494

Loss Per Share    

Loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. All outstanding stock options are considered potential common stock. All outstanding convertible preferred stock are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. The dilutive effect, if any, of stock options is calculated using the treasury stock method. As of March 31, 2022 and 2021, the average market prices for the for the three-month and nine-month periods then ended are less than the exercise price of all the outstanding stock options and, therefore, the inclusion of the stock options would be anti-dilutive. In addition, since the effect of common stock equivalents is anti-dilutive with respect to losses, the convertible preferred stock has also been excluded from the Company’s computation of loss per common for the three-month and nine-month periods ended March 31, 2021 and 2021. Therefore, basic and diluted loss per common share for the three-month and nine-month periods ended March 31, 2022 and 2021 are the same.

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2022		2021		2022			2021
Numerator:
Numerator for basic loss per share:
Net loss	$	(296,016)	$	(137,465)	$	(31,950)		$	(235,542)
Undeclared dividends on preferred stock	13,006		12,723		$	39,018		38,699
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Numerator for diluted earnings per share:
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Undeclared dividends on preferred stock	—		—		—			—
Diluted loss	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Denominator for basic loss per share
Denominator for basic loss per share - weighted average shares outstanding	7,415,329		7,415,329		7,415,329			7,415,329
Weighted average preferred stock converted to common stock	—		—		—			—
Denominator for diluted loss earnings assumed conversion	7,415,329		7,415,329		7,415,329		0	7,415,329
Net loss per share:
Basic net loss per share	$	(0.04)	$	(0.02)	$	(0.01)		$	(0.04)
Diluted net loss per share	$	(0.04)	$	(0.02)	$	(0.01)		$	(0.04)

The following table summarizes convertible preferred stock and securities that, if exercised would have an anti-dilutive effect on earnings per share.

	For the Three Months Ended March 31,		For the Nine Months Ended March 31,
	2022	2021	2022	2021
Stock options	157,000	157,000	157,000	157,000
Convertible preferred stock	5,720,993	5,376,053	5,720,993	5,376,053
Total potential dilutive securities not included in income per share	5,877,993	5,533,053	5,877,993	5,533,053

Income Taxes

    The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

    The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. As of March 31, 2022 and June 30, 2021, the Company has a fully recorded valuation allowance against its deferred tax assets.

    The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

    The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying unaudited condensed consolidated statements of operations. As of March 31, 2022 and June 30, 2021, no accrued interest or penalties were required to be included on the related tax liability line in the unaudited condensed consolidated balance sheets.

Leases

    The Company determines if an arrangement is a lease at the inception of a contract. Operating lease right-of-use ("ROU") assets are included in right-of-use assets on the unaudited condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current portion of operating lease liabilities and operating lease liabilities, net of current portion, respectively on the unaudited condensed consolidated balance sheets.

    Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded in the balance sheet.

New Accounting Pronouncements

Recently Issued Accounting Standards

     The Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews new accounting standards that are issued.

    New Accounting Pronouncements Not Yet Adopted

    In June 2016 the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. The guidance in ASU 2016-13 is effective for “public business entities,” as defined, that are SEC filers for fiscal years and for interim periods with those fiscal years beginning after December 15, 2022. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this standard is not expected to have a material impact to the Company’s unaudited condensed consolidated financial statements.

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Inventory (Notes)

9 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Inventories

	March 31,		June 30,
(in thousands)	2022		2021
Inventories, net:
Raw Material	$	826	$	833
Work-In-Process	222		171
Finished Goods	847		773
Total inventories	$	1,895	$	1,777
Allowance for obsolete inventory	(350)		(360)
Inventories, net	$	1,545	$	1,417

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Long term debt (Notes)

9 Months Ended

Mar. 31, 2022

Debt Instrument [Line Items]

Long-term Debt [Text Block]

Paycheck Protection Program ("PPP") loan

    On April 27, 2020, the Company entered into a PPP loan for $500,000 in connection with the CARES Act related to COVID-19. The promissory note had a fixed payment schedule. The PPP loan was unsecured. A final payment for the unpaid principal and accrued interest was payable no later than two years after the funding date. The note bore interest at a rate of 1.00% per annum. The Company submitted the loan forgiveness application on August 2, 2021. The full amount of the PPP loan and accrued interest were forgiven on August 13, 2021 and was included in other income in the unaudited condensed consolidated statement of operations for the nine-month period ended March 31, 2022.

Economic Injury Disaster ("EIDL") Loan

    EIDL is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to the Coronavirus (COVID-19) pandemic. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation to health care benefits, rent, utilities, and fixed debt payments. The Company received a $150,000 EIDL loan. The annual interest rate is 3.75%. The payment term is 30 years and the monthly payment of $731 started on July 1st, 2021. The EIDL loan is secured by the tangible and intangible personal property of the Company. The Company submitted an EIDL loan increase application on May 6, 2022, increasing the loan amount from $150,000 to $200,000. The loan modification is being proceed.

    The future annual principal amounts to be paid as of March 31, 2022 are as follows:

Year ending June 30,	EIDL Loan Payment
2022(remainder of FY 2022)	$	725
2023	2,971
2024	3,084
2025	3,202
2026	3,324
Thereafter	140,123
Total	$	153,429

Other Long-term Liabilities

    The CARES Act allows employers to defer the deposit and payment of the employer share of Social Security tax that would otherwise be due on or after March 27, 2020, and before January 1, 2021. The Company had deferred approximately $82,000 of the social security tax. 50% of the deferred employment taxes was paid before December 31, 2021. The remaining 50% is not due until December 31, 2022. Approximately $41,000 was reported as short-term other liabilities as of March 31, 2022.

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Related Party Transactions

9 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions and Preferred Stock

    On February 14, 2018, the Company entered into a Debt Exchange Agreement (the “Exchange Agreement”) with Richard DePiano, Sr.,(Mr. DePiano Sr.), the Company's former Chairman and DP Associates Inc. Profit-Sharing Plan of which Mr. DePiano Sr. is the sole owner and sole trustee (the “Holders”).  Pursuant to the terms of the Exchange Agreement, effective February 15, 2018, the Holders exchanged a total of $645,000 principal amount of debt related to the accounts receivable factoring program the Company owes the Holders for 2,000,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”).

    Each share of Preferred Stock entitles the Holder thereof to 13 votes per share and will vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the Company’s stockholders.  As a result of this voting power, the Holders as March 31, 2022 beneficially own approximately 77.81% of the voting power on all actions to be taken by the Company’s shareholders.

    Subject to the terms and conditions of Preferred Stock, the holder of any share or shares of the Preferred Stock has the right, at its option at any time, to convert each such share of Preferred Stock (except that, upon any liquidation of the Company, the right of conversion will terminate at the close of business on the business day fixed for payment of the amounts distributable on the Preferred Stock) into 2.15 shares of Common Stock (the “Conversion Ratio”).  The Conversion Ratio is subject to standard provisions for adjustment in the event of a subdivision or combination of the Company’s Common Stock and upon any reorganization or reclassification of the capital stock of the Company. If the Holders were to convert their shares of Preferred Stock into Common Stock at the Conversion Ratio the Holders would receive a total of 4,300,000 shares of Common Stock, or approximately 36.70% of the then outstanding shares of Common Stock assuming such conversion.

    Each outstanding share of the Preferred Stock accrues dividends calculated cumulatively at the annual rate of $.0258 per share (such amount subject to equitable adjustment in the event of any stock dividend, stock split, combination, reclassification other similar event), payable upon the earlier of (i) a liquidation, dissolution or winding up of the Company or (ii) conversion of the Preferred Stock into Common Stock. Upon either of such events, all such accrued and unpaid dividends, whether or not earned or declared, to and until the date of such event, will become immediately due and payable and will be paid in full. The dividends payable to the holders of the Preferred Stock is payable in cash or, at the election of any such holder, in a number of additional shares of Common Stock equal to the amount of the dividend expressed in dollars divided by the then applicable Conversion Ratio, described above. As of March 31, 2022 and June 30, 2021 the cumulative dividends payable is $213,149 ($0.1066 per share) and $174,131 ($0.0871 per share), respectively.

    Mr. DePiano Sr. passed away on October 3, 2019 and left a will by which he appointed Richard J. DePiano, Jr., the Chief Executive Officer of the Company, as executor. Richard DePiano Jr. was elected to serve as chairman of the Company's board. Mr. DePiano, Jr. qualified as executor and has control over the listed shares in his capacity as executor of Mr. DePiano Sr.'s estate.

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Line of credit (Notes)	9 Months Ended
	Mar. 31, 2022
Line of Credit Facility [Line Items]
Debt Disclosure [Text Block]	On June 29, 2018 the Company entered a business loan agreement with TD bank receiving a line of credit evidenced by a promissory note of $250,000. The interest is subject to change based on changes in an independent index which the Wall Street Journal Prime. The index rate at the date of the agreement is 5.0% per annum. Interest on the unpaid principal balance of the note is calculated using a rate of 0.74 percentage points over the index, adjusted if necessary for any minimum and maximum rate limitations, resulting in an initial rate of 5.74% per annum based on a year of 360 days. The interest rate was 3.99% as of March 31, 2022. The Company was required to put $250,000 in the TD bank savings account as collateral. Mr. Richard J. DePiano Sr., former Chairman of the Company executed a guarantee of the loan in favor of TD Bank. Mr. DePiano Sr. passed away on October 3, 2019, therefore the guarantee is now assumed by his estate.     As of March 31, 2022 and June 30, 2021, the line of credit balance was $201,575 with TD bank. The line of credit interest expense was approximately $3,000 for the three months ended March 31, 2022 and 2021, respectively. The line of credit interest expense was approximately $8,000 for the nine months ended March 31, 2022 and 2021, respectively.

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Concentration of credit risk (Notes)

9 Months Ended

Mar. 31, 2021

Concentration Risk [Line Items]

Concentration Risk Disclosure [Text Block]

Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and cash equivalents, restricted cash and trade receivables. Concentration of credit risk with respect to trade receivables is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across geographic areas principally within the United States and international. The Company routinely address the financial strength of its customer and, as a consequence, believes that its receivable credit risk exposure is limited. The Company does not require customers to post collateral.

Major Customer

    No customer accounted for more than 10% during the three-month period ended March 31, 2022. One customer accounted for 12% of net sales during the nine months ended March 31, 2022. No customer accounted for more than 10% during the three-month period ended March 31, 2021 and one customer accounted for 14% of net sales during the nine-month period ended March 31, 2021.

    As of March 31, 2022 the Company had one customer that represented 10% of the total accounts receivable balance. As of June 30, 2021 the Company had one customer that represents 23% of the total accounts receivable balance.

Major Supplier

    The Company's two largest supplier accounted for 37% and 16% of the total purchase for the three-month period ended March 31, 2022. The Company's two largest suppliers accounted for 39% and 13% of the total purchase for the nine-month period ended March 31, 2022. The Company's two largest suppliers accounted for of total purchases for 45% and 17% of total purchase for the three-month period ended March 31, 2021.The Company's two largest suppliers accounted for of total purchases for 40% and 14% of total purchase for the nine-month period ended March 31, 2021.

    As of March 31, 2022 the Company had one supplier that represented 39% of the total accounts payable balance. As of June 30, 2021 the Company had two suppliers that represent approximately 39% and 12% of the total accounts payable balance.

Disaggregated Revenue

    Domestic and international sales from operations are as follows:

( in thousands)	For the Three Months Ended March 31,								For the Nine Months Ended March 31,
	2022				2021				2022				2021
Domestic	$	1,266	52.4	%	$	1,107	47.6	%	4,251		54.6	%	$	4,514	59.1	%
Foreign	1,150		47.6	%	1,218		52.4	%	3,541		45.4	%	3,123		40.9	%
Total	$	2,416	100.0	%	$	2,325	100.0	%	$	7,792	100	%	$	7,637	100	%

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Leases (Notes)

9 Months Ended

Mar. 31, 2022

Lessee Disclosure [Abstract]

Lease

Leases

    The Company leases certain facilities and equipment under operating leases. Total lease expense, under ASC 842, was included in cost of goods sold and marketing, general and administrative costs in our unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2022 and 2021 as follows:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease costs:
Fixed	$	84,245	$	84,245	$	252,735	$	262,351
Total:	$	84,245	$	84,245	$	252,735	$	262,351

    Supplemental cash flow information was as follows:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	84,187	$	82,390	$	250,365	$	253,197
Total	$	84,187	$	82,390	$	250,365	$	253,197

    The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate)

under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheets as of March 31, 2022:

	Operating
2022 (remainder of FY 2022)	$	71,157
2023	263,162
2024	268,372
2025	141,865
2026	2,728
Total lease payments	747,284
Less interest	54,905
Present value of lease liabilities	$	692,379

    Average lease terms and discount rates were as follows:

	March 31,		June 30,
	2022		2021
Weighted-average remaining lease terms (years)
Operating leases	2.76		3.35
Weighted-average discount rate
Operating leases	5.65	%	5.65	%

On April 28, 2022 the Company extended lease agreement for its Wisconsin warehouse, which will end in April 30, 2022 for a term of three years. The lease agreement has a lease ROU assets and lease liability of approximately $224,000, respectively. The Company classified the amended lease as an operating lease under ASC 842.

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Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Restrictions on Cash and Cash Equivalents [Table Text Block]

As of March 31, 2022 and June 30, 2021 restricted cash included approximately $256,000, which was pursuant to the requirements in the TD Bank Loan entered into June 2018 (see Note 6).

Foreign Currency Transactions and Translations Policy [Policy Text Block]

The Company's functional currency is the US dollar. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction gains or losses included in net loss were immaterial for the three and nine months ended March 31, 2022 and 2021.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For the purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and highly liquid investments with original maturities of 90 days or less to be cash and cash equivalents. From time to time cash balances exceed federal insurance limits.

Fair Value of Financial Instruments

The carrying amounts for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value because of their short-term maturity. The Company determined that the carrying amount of the notes payable and lease liabilities approximates fair value since such debt borrowing bears interest at the approximate current market rate. While the Company believes the carrying value of the assets and liabilities are reasonable, considerable judgment is used to develop estimates of fair value; thus the estimates are not necessarily indicative of the amounts that could be realized in a current market exchange.

Revenue Recognition

Revenue Recognition

    The Company recognizes revenue when its performance obligations with its customers have been satisfied. At contract inception, the Company determines if the contract is within the scope of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and then evaluates the contract using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period.

    The Company generates product revenue from the sale of medical device products and the sale and installation of the Company's AXIS image management system software. Revenue for service plans relate to the customer care plans for the Company’s equipment and AXIS image management system software.

    Revenue is recognized upon transfer of control of the promised goods or services to the customer for an amount that

reflects the consideration that the Company expects to be entitled in exchange for those goods or services. The Company’s performance obligations are for product sales, installation of AXIS image management system software and customer care plans. The performance obligations are determined at contract inception based upon promises within the contract that are distinct.

    The product sales and installation of AXIS image management system software performance obligations are satisfied at a point in time, which is upon shipment for product sales and upon successful installation for the AXIS image management system. The performance obligation for customer care plans is satisfied over time as the customer receives and consumes the Company’s services.

    The Company invoices its customers upon shipment for product sales. For the installation of AXIS image management system software and customer care plans, the Company invoices its customers upon successful installation. Invoice payments are generally due within 30 days of invoice date. The transaction price is determined based on fixed consideration in the Company’s customer contracts and is recorded net of variable consideration. In determining the transaction price, a significant financing component does not exist since the timing from when the Company invoices its customers to when payment is received as it is less than one year.

    Revenue for product sales and installation of AXIS image management system software is recognized when delivered or installed. The customer care plan revenues are recognized proportionately over the service period, which is a 12-month period.

    The Company has elected the following practical expedients in applying ASC 606:

•Unsatisfied Performance Obligations - all performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in ASC 606 and therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

•Contract Costs - all incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration.

•Significant Financing Component - the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

•Sales Tax Exclusion from the Transaction Price - the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer.

•Shipping and Handling Activities - the Company elected to account for shipping and handling activities as a fulfillment cost rather than as a separate performance obligation.

•Portfolio Approach - the Company applied the Portfolio Approach to contract reviews within its identified revenue streams that have similar characteristics and the Company believes this approach would not differ materially than if applying Topic 606 to each individual contract.

Deferred Revenues

    The Company records deferred revenues when cash payments are received or due in advance of its performance. The Company’s deferred revenues relate to payments received for the customer care plans for a 12-month period. The consideration received is recognized monthly over the service period.

(in thousands)	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Beginning of Period	$	311	$	572	$	364	$	516
Additions	148		149		470		677
Revenue Recognized	156		227		531		699
End of Period	$	303	$	494	$	303	$	494

Inventory

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis and include freight-in materials, labor and overhead costs. Inventories are written down if the estimated net realizable value is less than the recorded value. The Company reviews the carrying cost of inventories by product to determine the adequacy of reserves for obsolescence. In accounting for inventories, the Company must make estimates regarding the estimated realizable value of inventory. The estimate is based, in part, on the Company’s forecasts of future sales and age of inventory. If actual conditions are less favorable than those the Company has projected, the Company may need to increase its reserves for excess and obsolete inventories. Any increases in the reserves will adversely impact the Company’s results of operations. The establishment of a reserve for excess and obsolete inventory establishes a new cost basis in the inventory. Such reserves are not reduced until the product is sold. If the Company is able to sell such inventory any related reserves would be reversed in the period of sale. In accordance with industry practice, service parts inventory is included in current assets, although service parts are carried for established requirements during the serviceable lives of the products and, therefore, not all parts are expected to be sold within one year.

Accounts Receivable

Accounts receivable are recorded at net realizable value. The Company performs ongoing credit evaluations of customers’ financial condition and does not require collateral for accounts receivable arising in the normal course of business. The Company maintains allowances for potential credit losses based on the Company’s historical trends, specific customer issues and current economic trends. Accounts are written off against the allowance when they are determined to be uncollectible based on management’s assessment of individual accounts. The Company recorded an allowance for doubtful accounts of approximately $110,000 and $100,000 as of March 31, 2022 and June 30, 2021, respectively.

Intangible Assets

Long-lived assets including intangible assets deemed to have finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit or material adverse changes in the business climate that indicate that the carrying amount of an asset may be impaired. When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the projected undiscounted cash flows from the asset are less than the carrying value of the asset the asset is considered to be impaired. The impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For the three and nine-month periods ended March 31, 2022 and 2021, no impairments were recorded.

Accrued Warranties

The Company provides a limited one-year warranty against manufacturer’s defects on its products sold to customers. The Company’s standard warranties require the Company to repair or replace, at the Company’s discretion, defective parts during such warranty period. The Company accrues for its product warranty liabilities based on estimates of costs to be incurred during the warranty period, based on historical repair information for warranty costs.

Loan Commitments, Policy

The Company's policy is to account for the PPP loan (See Note 7) as debt. The Company will continue to record the loan as debt until either (1) the loan is partially or entirely forgiven and the Company has been legally released, at which point the amount forgiven will be recorded as income or (2) the Company pays off the loan. The full amount of the PPP loan and accrued interest were forgiven on August 13, 2021 and was included in other income in the unaudited condensed consolidated income statement for the nine-month period ended March 31, 2022.

Net Income (loss) Per Share

Loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. All outstanding stock options are considered potential common stock. All outstanding convertible preferred stock are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. The dilutive effect, if any, of stock options is calculated using the treasury stock method. As of March 31, 2022 and 2021, the average market prices for the for the three-month and nine-month periods then ended are less than the exercise price of all the outstanding stock options and, therefore, the inclusion of the stock options would be anti-dilutive. In addition, since the effect of common stock equivalents is anti-dilutive with respect to losses, the convertible preferred stock has also been excluded from the Company’s computation of loss per common for the three-month and nine-month periods ended March 31, 2021 and 2021. Therefore, basic and diluted loss per common share for the three-month and nine-month periods ended March 31, 2022 and 2021 are the same.

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2022		2021		2022			2021
Numerator:
Numerator for basic loss per share:
Net loss	$	(296,016)	$	(137,465)	$	(31,950)		$	(235,542)
Undeclared dividends on preferred stock	13,006		12,723		$	39,018		38,699
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Numerator for diluted earnings per share:
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Undeclared dividends on preferred stock	—		—		—			—
Diluted loss	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Denominator for basic loss per share
Denominator for basic loss per share - weighted average shares outstanding	7,415,329		7,415,329		7,415,329			7,415,329
Weighted average preferred stock converted to common stock	—		—		—			—
Denominator for diluted loss earnings assumed conversion	7,415,329		7,415,329		7,415,329		0	7,415,329
Net loss per share:
Basic net loss per share	$	(0.04)	$	(0.02)	$	(0.01)		$	(0.04)
Diluted net loss per share	$	(0.04)	$	(0.02)	$	(0.01)		$	(0.04)

The following table summarizes convertible preferred stock and securities that, if exercised would have an anti-dilutive effect on earnings per share.

	For the Three Months Ended March 31,		For the Nine Months Ended March 31,
	2022	2021	2022	2021
Stock options	157,000	157,000	157,000	157,000
Convertible preferred stock	5,720,993	5,376,053	5,720,993	5,376,053
Total potential dilutive securities not included in income per share	5,877,993	5,533,053	5,877,993	5,533,053

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

    The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. As of March 31, 2022 and June 30, 2021, the Company has a fully recorded valuation allowance against its deferred tax assets.

    The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

    The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying unaudited condensed consolidated statements of operations. As of March 31, 2022 and June 30, 2021, no accrued interest or penalties were required to be included on the related tax liability line in the unaudited condensed consolidated balance sheets.

Lessee, Leases [Policy Text Block]

The Company determines if an arrangement is a lease at the inception of a contract. Operating lease right-of-use ("ROU") assets are included in right-of-use assets on the unaudited condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current portion of operating lease liabilities and operating lease liabilities, net of current portion, respectively on the unaudited condensed consolidated balance sheets.     Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded in the balance sheet.

New Accounting Pronouncements

The Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews new accounting standards that are issued.

    New Accounting Pronouncements Not Yet Adopted

    In June 2016 the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. The guidance in ASU 2016-13 is effective for “public business entities,” as defined, that are SEC filers for fiscal years and for interim periods with those fiscal years beginning after December 15, 2022. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this standard is not expected to have a material impact to the Company’s unaudited condensed consolidated financial statements.

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Significant Accounting Policies (Tables)

6 Months Ended

9 Months Ended

Dec. 31, 2022

Mar. 31, 2022

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

The following table summarizes convertible preferred stock and securities that, if exercised would have an anti-dilutive effect on earnings per share.

	For the Three Months Ended March 31,		For the Nine Months Ended March 31,
	2022	2021	2022	2021
Stock options	157,000	157,000	157,000	157,000
Convertible preferred stock	5,720,993	5,376,053	5,720,993	5,376,053
Total potential dilutive securities not included in income per share	5,877,993	5,533,053	5,877,993	5,533,053

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

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2022		2021		2022			2021
Numerator:
Numerator for basic loss per share:
Net loss	$	(296,016)	$	(137,465)	$	(31,950)		$	(235,542)
Undeclared dividends on preferred stock	13,006		12,723		$	39,018		38,699
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Numerator for diluted earnings per share:
Net loss applicable to common shareholders	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Undeclared dividends on preferred stock	—		—		—			—
Diluted loss	$	(309,022)	$	(150,188)	$	(70,968)		$	(274,241)
Denominator for basic loss per share
Denominator for basic loss per share - weighted average shares outstanding	7,415,329		7,415,329		7,415,329			7,415,329
Weighted average preferred stock converted to common stock	—		—		—			—
Denominator for diluted loss earnings assumed conversion	7,415,329		7,415,329		7,415,329		0	7,415,329
Net loss per share:
Basic net loss per share	$	(0.04)	$	(0.02)	$	(0.01)		$	(0.04)
Diluted net loss per share	$	(0.04)	$	(0.02)	$	(0.01)		$	(0.04)

Schedule of Inventory, Current [Table Text Block]

	March 31,		June 30,
(in thousands)	2022		2021
Inventories, net:
Raw Material	$	826	$	833
Work-In-Process	222		171
Finished Goods	847		773
Total inventories	$	1,895	$	1,777
Allowance for obsolete inventory	(350)		(360)
Inventories, net	$	1,545	$	1,417

Deferred Revenue, by Arrangement, Disclosure [Table Text Block]

(in thousands)	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Beginning of Period	$	311	$	572	$	364	$	516
Additions	148		149		470		677
Revenue Recognized	156		227		531		699
End of Period	$	303	$	494	$	303	$	494

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Inventory (Tables)

9 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	March 31,		June 30,
(in thousands)	2022		2021
Inventories, net:
Raw Material	$	826	$	833
Work-In-Process	222		171
Finished Goods	847		773
Total inventories	$	1,895	$	1,777
Allowance for obsolete inventory	(350)		(360)
Inventories, net	$	1,545	$	1,417

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Long term debt (Tables)

9 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt [Table Text Block]

Year ending June 30,	EIDL Loan Payment
2022(remainder of FY 2022)	$	725
2023	2,971
2024	3,084
2025	3,202
2026	3,324
Thereafter	140,123
Total	$	153,429

Contractual Obligation, Fiscal Year Maturity

The future annual principal amounts to be paid as of March 31, 2022 are as follows:

Year ending June 30,	EIDL Loan Payment
2022(remainder of FY 2022)	$	725
2023	2,971
2024	3,084
2025	3,202
2026	3,324
Thereafter	140,123
Total	$	153,429

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Concentration of credit risk (Tables)

9 Months Ended

Mar. 31, 2022

Concentration of credit risks [Abstract]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

Domestic and international sales from operations are as follows:

( in thousands)	For the Three Months Ended March 31,								For the Nine Months Ended March 31,
	2022				2021				2022				2021
Domestic	$	1,266	52.4	%	$	1,107	47.6	%	4,251		54.6	%	$	4,514	59.1	%
Foreign	1,150		47.6	%	1,218		52.4	%	3,541		45.4	%	3,123		40.9	%
Total	$	2,416	100.0	%	$	2,325	100.0	%	$	7,792	100	%	$	7,637	100	%

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Leases (Tables) - USD ($)

3 Months Ended

9 Months Ended

Mar. 31, 2022

Mar. 31, 2021

Mar. 31, 2022

Mar. 31, 2021

Lessee Disclosure [Abstract]

Lease, Cost [Table Text Block]

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease costs:
Fixed	$	84,245	$	84,245	$	252,735	$	262,351
Total:	$	84,245	$	84,245	$	252,735	$	262,351

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	84,187	$	82,390	$	250,365	$	253,197
Total	$	84,187	$	82,390	$	250,365	$	253,197

	March 31,		June 30,
	2022		2021
Weighted-average remaining lease terms (years)
Operating leases	2.76		3.35
Weighted-average discount rate
Operating leases	5.65	%	5.65	%

On April 28, 2022 the Company extended lease agreement for its Wisconsin warehouse, which will end in April 30, 2022 for a term of three years. The lease agreement has a lease ROU assets and lease liability of approximately $224,000, respectively. The Company classified the amended lease as an operating lease under ASC 842.

Short-term Lease Payments

$ 84,187

$ 82,390

$ 250,365

$ 253,197

Lessee, Operating Lease, Liability, Maturity

	Operating
2022 (remainder of FY 2022)	$	71,157
2023	263,162
2024	268,372
2025	141,865
2026	2,728
Total lease payments	747,284
Less interest	54,905
Present value of lease liabilities	$	692,379

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Organization and Description of Business (Details)	3 Months Ended
	Mar. 31, 2022 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
PPP loan amount	$ 500,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	1.00%

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Going concern (Details) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
Going concern [Abstract]
Retained Earnings (Accumulated Deficit)	$ (68,926,472)	$ (68,894,522)

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Significant Accounting Policies (Cash and Cash Equivalents) (Details) - USD ($)	3 Months Ended
	Sep. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020
Accounting Policies [Abstract]
Restricted Cash	$ 256,000	$ 256,133	$ 255,920	$ 255,824	$ 255,281
Maximum maturity of highly liquid investments, period	90 days

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Significant Accounting Policies (Inventory) (Details) - USD ($)	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021
schedule of inventory [Abstract]
Inventory, net	$ 1,417,000	$ 1,544,822	$ 1,416,727

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Significant Accounting Policies (Accounts Receivable) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Accounts Receivable, Allowance for Credit Loss	$ 110	$ 100

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Significant Accounting Policies (Net Income (loss) Per Share) (Details) - USD ($)	3 Months Ended						9 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Mar. 31, 2022	Mar. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net loss	$ (296,016)	$ (53,154)	$ 317,220	$ (137,465)	$ 98,476	$ (196,553)	$ (31,950)	$ (235,542)
Net Income (Loss) from Continuing Operations Available to Common Shareholders, Basic	$ (309,022)			$ (150,188)			$ (70,968)	$ (274,241)
Basic Weighted average shares outstanding	7,415,329			7,415,329			7,415,329	7,415,329
Weighted Average Number of Shares Outstanding, Diluted	7,415,329			7,415,329			7,415,329	7,415,329

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Significant Accounting Policies Earning per share details (Details) - USD ($)	3 Months Ended						9 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Mar. 31, 2022	Mar. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net loss	$ (296,016)	$ (53,154)	$ 317,220	$ (137,465)	$ 98,476	$ (196,553)	$ (31,950)	$ (235,542)
Preferred Stock Dividends, Income Statement Impact	13,006			12,723			39,018	38,699
Net Income (Loss) Available to Common Stockholders, Diluted	$ (309,022)			$ (150,188)			$ (70,968)	$ (274,241)
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,877,993			5,533,053			5,877,993	5,533,053
Net Income (Loss) from Continuing Operations Available to Common Shareholders, Basic	$ (309,022)			$ (150,188)			$ (70,968)	$ (274,241)
Convertible Preferred Dividends, Net of Tax	$ 0						$ 0
Dilutive Securities, Effect on Basic Earnings Per Share, Dilutive Convertible Securities				$ 0				$ 0
Weighted average shares - basic	7,415,329			7,415,329			7,415,329	7,415,329
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock	0						0	0
Weighted average shares - diluted	7,415,329			7,415,329			7,415,329	7,415,329
Earnings (Loss) Per Share, Basic	$ (0.04)			$ (0.02)			$ (0.01)	$ (0.04)
Earnings (Loss) Per Share, Diluted	$ (0.04)			$ (0.02)			$ (0.01)	$ (0.04)
Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	157,000			157,000			157,000	157,000
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,720,993			5,376,053			5,720,993	5,376,053

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Significant Accounting Policies Goodwill and intangible assets (Details)	12 Months Ended
	Jun. 30, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment of Intangible Assets (Excluding Goodwill)	$ 0

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Significant Accounting Policies deferred revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2022	Jun. 30, 2022	Sep. 30, 2021	Jun. 30, 2021	Jun. 30, 2020
Revenue Recognition and Deferred Revenue [Abstract]
Deferred Revenue	$ 302,698	$ 494,000	$ 302,698	$ 494,000	$ 311,000	$ 364,000	$ 572,000	$ 363,700	$ 516,000
Deferred Revenue, Additions	148,000	149,000	470,000	677,000
Deferred Revenue, Revenue Recognized	$ 156,000	$ 227,000	$ 531,000	$ 699,000

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Significant Accounting Policies New accounting pronouncements recently adopted (Details) - USD ($)	Mar. 31, 2022	Jun. 30, 2021
New accounting pronouncements recently adopted [Abstract]
Operating Lease, Right-of-Use Asset	$ 634,282	$ 843,559

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Inventory (Details) - USD ($)	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021
Inventory Disclosure [Abstract]
Inventory, net	$ 1,417,000	$ 1,544,822	$ 1,416,727
Inventory, Raw Materials, Gross	833,000	826,000
Inventory, Work in Process, Gross	171,000	222,000
Inventory, Finished Goods, Gross	773,000	847,000
Inventory Valuation Reserves	(360,000)	(350,000)
Inventory, Gross	$ 1,777,000	$ 1,895,000

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Long term debt (Details) - USD ($)	9 Months Ended
	Mar. 31, 2022	May 06, 2022	May 05, 2022	Sep. 30, 2021	Jun. 30, 2021
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment	$ 731
Other Long-term Debt	82,000
Other Short-term Borrowings	$ 41,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	1.00%
Secured Debt [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 150,000
Secured Debt [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 150,000
Long-term Debt, Weighted Average Interest Rate, at Point in Time	3.75%
Long-Term Debt, Maturity, after Year Five	$ 140,123
Long-Term Debt, Maturity, Year One	725
Long-Term Debt, Maturity, Year Two	2,971
Long-Term Debt, Maturity, Year Three	3,084
Long-Term Debt, Maturity, Year Four	3,202
Long-Term Debt, Maturity, Year Five	3,324
Long-term Debt	153,429
EIDL Monthly Payment including Principal and Interest	$ 731
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	3.75%
Secured Debt [Member] | Subsequent Event
Debt Instrument [Line Items]
Long-term Debt		$ 200,000	$ 150,000
Payroll Protection Program Loan [Member]
Debt Instrument [Line Items]
Long-term Debt, Current Maturities	$ 0			$ 500,000	$ 500,000

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Related Party Transactions (Details) - USD ($)	9 Months Ended	12 Months Ended
	Mar. 31, 2022	Jun. 30, 2021	Feb. 14, 2018
Related Party Transaction [Line Items]
Related Party Transaction, Due from (to) Related Party			$ 645,000
Preferred Stock, Shares Issued	2,000,000	2,000,000	2,000,000
Common Stock, Voting Rights	77.81
Convertible Preferred Stock, Shares Issued upon Conversion	2.15
Common Stock, Conversion Basis	4,300,000
Equity Method Investment, Ownership Percentage	36.70%
Dividends Payable, Date to be Paid	$ 213,149	$ 174,131
Dividends Payable, Amount Per Share	$ (0.1066)	$ (0.0871)	$ (0.0258)

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Line of credit (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 29, 2018
Line of Credit Facility [Line Items]
Line of Credit Facility, Periodic Payment, Interest	$ 3,000		$ 8,000
Line of Credit Facility, Interest Rate at Period End	0.99%		0.99%
Accrued expenses	$ 867,202		$ 867,202			$ 695,553
Interest Expense	4,134	$ 5,398	13,017	$ 16,385
Line of credit	$ 201,575		$ 201,575			$ 201,575
Notes Payable to Banks [Member]
Line of Credit Facility [Line Items]
Notes Payable to Bank							$ 250,000
Debt Instrument, Interest Rate, Stated Percentage							5.00%
Debt Instrument, Basis Spread on Variable Rate					74.00%
Debt Instrument, Interest Rate During Period					5.74%

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Concentration of credit risk (Details) - USD ($)

3 Months Ended

6 Months Ended

9 Months Ended

12 Months Ended

Mar. 31, 2022

Mar. 31, 2021

Dec. 31, 2022

Mar. 31, 2022

Mar. 31, 2021

Jun. 30, 2021

Concentration Risk [Line Items]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

Domestic and international sales from operations are as follows:

( in thousands)	For the Three Months Ended March 31,								For the Nine Months Ended March 31,
	2022				2021				2022				2021
Domestic	$	1,266	52.4	%	$	1,107	47.6	%	4,251		54.6	%	$	4,514	59.1	%
Foreign	1,150		47.6	%	1,218		52.4	%	3,541		45.4	%	3,123		40.9	%
Total	$	2,416	100.0	%	$	2,325	100.0	%	$	7,792	100	%	$	7,637	100	%

Concentration Risk, Supplier

o

two

two

two

Revenues

$ 2,416,127

$ 2,324,907

$ 7,791,953

$ 7,636,789

Customer Concentration Risk [Member] | Customer One [Member]

Concentration Risk [Line Items]

Concentration Risk, Customer

No

One

one

Geographic Concentration Risk [Member]

Concentration Risk [Line Items]

Revenues

$ 7,637,000

Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

10.00%

12.00%

Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Two [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

14.00%

Revenue Benchmark [Member] | Geographic Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

100.00%

100.00%

100.00%

100.00%

Revenues

$ 2,416,000

$ 2,325,000

$ 7,792,000

$ 7,637,000

Accounts Payable Benchmark [Member] | Supplier Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Supplier

one

two

Accounts Receivable Benchmark [Member]

Concentration Risk [Line Items]

Concentration Risk, Customer

one

Accounts Receivable

Concentration Risk [Line Items]

Concentration Risk, Customer

one

Accounts Receivable | Customer Concentration Risk [Member] | Customer One [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

10.00%

23.00%

Domestic [Member] | Geographic Concentration Risk [Member]

Concentration Risk [Line Items]

Revenues

$ 4,514,000

Domestic [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

52.40%

47.60%

54.60%

59.10%

Revenues

$ 1,266,000

$ 1,107,000

$ 4,251,000

$ 4,514,000

International [Member] | Geographic Concentration Risk [Member]

Concentration Risk [Line Items]

Revenues

$ 3,123,000

International [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

47.60%

52.40%

45.40%

40.90%

Revenues

$ 1,150,000

$ 1,218,000

$ 3,541,000

$ 3,123,000

Supplier one [Member] | Revenue Benchmark [Member] | Supplier Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

37.00%

45.00%

39.00%

40.00%

Supplier one [Member] | Accounts Payable Benchmark [Member] | Supplier Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

39.00%

39.00%

Supplier two [Member] | Revenue Benchmark [Member] | Supplier Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

17.00%

13.00%

Supplier two [Member] | Accounts Payable Benchmark [Member] | Supplier Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

12.00%

Supplier two [Member] | Cost of Goods and Service Benchmark | Supplier Concentration Risk [Member]

Concentration Risk [Line Items]

Concentration Risk, Percentage

14.00%

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Leases (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Jun. 30, 2022	Apr. 28, 2022	Jun. 30, 2021
Lessee, Lease, Description [Line Items]
Short-term Lease Payments	$ 84,187	$ 82,390	$ 250,365	$ 253,197
Net present value of new lease future payments	$ 692,379		$ 692,379
Operating Lease, Weighted Average Remaining Lease Term	2 years 9 months 3 days		2 years 9 months 3 days				3 years 4 months 6 days
Operating Leases, Future Minimum Payments Receivable, Remainder of Fiscal Year	$ 71,157		$ 71,157
Finance Lease, Liability, to be Paid, Year Two	263,162		263,162
Operating Lease, Right-of-Use Asset	634,282		634,282				$ 843,559
Finance Lease, Liability, to be Paid, Year Three	268,372		268,372
Finance Lease, Liability, to be Paid, Year Four	141,865		141,865
Finance Lease, Liability, to be Paid, Year Five	2,728		2,728
Operating Leases, Future Minimum Payments Due	747,284		747,284
Interest portion in the future lease payments	$ 54,905		$ 54,905
Operating Lease, Weighted Average Discount Rate, Percent	5.65%		5.65%		5.65%
Operating Lease, Liability, Current	$ 236,635		$ 236,635				279,051
Operating Lease, Liability, Noncurrent	455,744		455,744				$ 630,330
Operating Lease, Cost	$ 84,245	$ 84,245	$ 252,735	$ 262,351
Wisconsin Warehouse | Subsequent Event
Lessee, Lease, Description [Line Items]
Operating Lease, Right-of-Use Asset						$ 224,000
Lease term						3 years
Operating Lease, Liability						$ 224,000