10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended March 31, 2019

¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from________ to ________

Commission File Number: 0-19266

ALLIED HEALTHCARE PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

Delaware	25-1370721
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)

1720 Sublette Avenue, St. Louis, Missouri 63110

(Address of principal executive offices, including zip code)

(314) 771-2400

(Registrant’s telephone number, including area code)

N/A

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

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

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   x   No   ¨

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   ¨   No   x

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

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

The number of shares of common stock outstanding at May 1, 2019 is 4,013,537 shares.

INDEX

			Page
			Number
Part I –	Financial Information		3
	Item 1.	Financial Statements Statement of Operations -  Three and nine months ended March 31, 2019 and 2018 (Unaudited)	3
		Balance Sheet - March 31, 2019 (Unaudited) and June 30, 2018	4 - 5
		Statement of Changes in Stockholder’s Equity - Three and nine months ended March 31, 2019 and 2018 (Unaudited)	6
		Statement of Cash Flows - Three and nine months ended March 31, 2019 and 2018 (Unaudited)	7
		Notes to Financial Statements (Unaudited)	8 – 14
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15 – 20
	Item 3.	Quantitative and Qualitative Disclosure about Market Risk	20
	Item 4.	Controls and Procedures	20
Part II -	Other Information		20
	Item 5.	Legal Proceedings	20-21
	Item 6.	Exhibits	21-22
		Signature	22

SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements contained in this Report, which are not historical facts or information, are "forward-looking statements." Words such as "believe," "expect," "intend," "will," "should," and other expressions that indicate future events and trends identify such forward-looking statements. These forward-looking statements involve risks and uncertainties, which could cause the outcome and future results of operations, and financial condition to be materially different than stated or anticipated based on the forward-looking statements. Such risks and uncertainties include both general economic risks and uncertainties, risks and uncertainties affecting the demand for and economic factors affecting the delivery of health care services, both in the United States and in our overseas markets, impacts of the U.S. Affordable Care Act, our history of net losses and negative cash flows and other specific matters which relate directly to the Company's operations and properties as discussed in the Company’s annual report on Form 10-K for the year ended June 30, 2018. The Company cautions that any forward-looking statements contained in this report reflect only the belief of the Company or its management at the time the statement was made. Although the Company believes such forward-looking statements are based upon reasonable assumptions, such assumptions may ultimately prove inaccurate or incomplete. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement was made.

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALLIED HEALTHCARE PRODUCTS, INC.

STATEMENT OF OPERATIONS

(UNAUDITED)

	Three months ended						Nine months ended
	March 31,						March 31,
	2019			2018			2019			2018
Net sales	$	8,316,027		$	8,466,825		$	23,691,922		$	25,082,280
Cost of sales		6,765,552			7,234,067			20,057,379			20,583,535
Gross profit		1,550,475			1,232,758			3,634,543			4,498,745
Selling, general and administrative expenses		1,903,408			2,120,384			5,975,580			6,397,903
Loss from operations		(352,933	)		(887,626	)		(2,341,037	)		(1,899,158	)
Other (income) expenses:
Interest expense		18,590			13,433			44,548			13,433
Interest income		(47	)		(23	)		(107	)		(249	)
Legal settlement		(750,000	)		-			(750,000	)		-
Other, net		45			1			45			238
		(731,412	)		13,411			(705,514	)		13,422
Income (loss) before income taxes		378,479			(901,037	)		(1,635,523	)		(1,912,580	)
Provision for income taxes		-			-			-			136,386
Net income (loss)	$	378,479		$	(901,037	)	$	(1,635,523	)	$	(2,048,966	)
Basic income (loss) per share	$	0.09		$	(0.22	)	$	(0.41	)	$	(0.51	)
Diluted income (loss) per share	$	0.09		$	(0.22	)	$	(0.41	)	$	(0.51	)
Weighted average shares outstanding - basic		4,013,537			4,013,537			4,013,537			4,013,537
Weighted average shares outstanding - diluted		4,013,537			4,013,537			4,013,537			4,013,537

See accompanying Notes to Financial Statements.

3

ALLIED HEALTHCARE PRODUCTS, INC.

BALANCE SHEET

ASSETS

	(Unaudited)
	March 31,		June 30,
	2019		2018
Current assets:
Cash and cash equivalents	$	135,810	$	136,112
Accounts receivable, net of allowances of $170,000		3,424,371		3,747,993
Inventories, net		7,893,445		7,830,541
Income tax receivable		20,298		12,178
Other current assets		290,271		250,605
Total current assets		11,764,195		11,977,429
Property, plant and equipment, net		4,187,281		4,823,149
Deferred income taxes		520,663		520,663
Total assets	$	16,472,139	$	17,321,241

See accompanying Notes to Financial Statements.

(CONTINUED)

4

ALLIED HEALTHCARE PRODUCTS, INC.

BALANCE SHEET

(CONTINUED)

LIABILITIES AND STOCKHOLDERS' EQUITY

	(Unaudited)
	March 31,			June 30,
	2019			2018
Current liabilities:
Revolving credit facility	$	410,735		$	-
Accounts payable		1,833,469			1,473,618
Other accrued liabilities		1,864,213			1,850,683
Total current liabilities		4,108,417			3,324,301
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.01 par value; 1,500,000 shares authorized; no shares issued and outstanding		-			-
Series A preferred stock; $0.01 par value; 200,000 shares authorized; no shares issued and outstanding		-			-
Common stock; $0.01 par value; 30,000,000 shares authorized; 5,213,902 shares issued at March 31, 2019 and June 30, 2018;  4,013,537 shares outstanding at March 31, 2019 and June 30, 2018		52,139			52,139
Additional paid-in capital		48,490,525			48,488,220
Accumulated deficit		(15,198,154	)		(13,562,631	)
Less treasury stock, at cost; 1,200,365 shares at
March 31, 2019 and June 30, 2018, respectively		(20,980,788	)		(20,980,788	)
Total stockholders' equity		12,363,722			13,996,940
Total liabilities and stockholders' equity	$	16,472,139		$	17,321,241

See accompanying Notes to Financial Statements.

5

ALLIED HEALTHCARE PRODUCTS, INC.

STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY

(UNAUDITED)

	Three Months Ended March 31, 2019
			Additional
	Common		Paid-in		Accumulated			Treasury
	Stock		Capital		Deficit			Stock			Total
Balance at December 31, 2018	$	52,139	$	48,489,734	$	(15,576,633	)	$	(20,980,788	)	$	11,984,452
Stock based compensation		-		791		-			-			791
Net income (loss)		-		-		378,479			-			378,479
Balance at March 31, 2019	$	52,139	$	48,490,525	$	(15,198,154	)	$	(20,980,788	)	$	12,363,722

	Three Months Ended March 31, 2018
			Additional
	Common		Paid-in		Accumulated			Treasury
	Stock		Capital		Deficit			Stock			Total
Balance at December 31, 2017	$	52,139	$	48,486,743	$	(12,518,390	)	$	(20,980,788	)	$	15,039,704
Stock based compensation		-		739		-			-			739
Net loss		-		-		(901,037	)		-			(901,037	)
Balance at March 31, 2018	$	52,139	$	48,487,482	$	(13,419,427	)	$	(20,980,788	)	$	14,139,406

	Nine Months Ended March 31, 2019
			Additional
	Common		Paid-in		Accumulated			Treasury
	Stock		Capital		Deficit			Stock			Total
Balance at June 30, 2018	$	52,139	$	48,488,220	$	(13,562,631	)	$	(20,980,788	)	$	13,996,940
Stock based compensation		-		2,305		-			-			2,305
Net loss		-		-		(1,635,523	)		-			(1,635,523	)
Balance at March 31, 2019	$	52,139	$	48,490,525	$	(15,198,154	)	$	(20,980,788	)	$	12,363,722

	Nine Months Ended March 31, 2018
			Additional
	Common		Paid-in		Accumulated			Treasury
	Stock		Capital		Deficit			Stock			Total
Balance at June 30, 2017	$	52,139	$	48,485,390	$	(11,370,461	)	$	(20,980,788	)	$	16,186,280
Stock based compensation		-		2,092		-			-			2,092
Net loss		-		-		(2,048,966	)		-			(2,048,966	)
Balance at March 31, 2018	$	52,139	$	48,487,482	$	(13,419,427	)	$	(20,980,788	)	$	14,139,406

See accompanying Notes to Financial Statements.

6

ALLIED HEALTHCARE PRODUCTS, INC.

STATEMENT OF CASH FLOWS

(UNAUDITED)

	Nine months ended
	March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(1,635,523	)	$	(2,048,966	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		635,868			703,685
Stock based compensation		2,305			2,092
Provision for doubtful accounts and sales returns and allowances		20,178			(5,124	)
Deferred taxes		-			136,386
Changes in operating assets and liabilities:
Accounts receivable		303,444			(363,509	)
Inventories		(62,904	)		109,399
Income tax receivable		(8,120	)		(9,561	)
Other current assets		(39,666	)		59,304
Accounts payable		359,851			199,544
Other accrued liabilities		13,530			(195,081	)
Net cash used in operating activities		(411,037	)		(1,411,831	)
Cash flows from financing activities:
Borrowings under revolving credit agreement		24,375,484			7,025,454
Payments under revolving credit agreement		(23,964,749	)		(6,342,682	)
Net cash provided by financing activities		410,735			682,772
Net increase (decrease) in cash and cash equivalents		(302	)		(729,059	)
Cash and cash equivalents at beginning of period		136,112			995,704
Cash and cash equivalents at end of period	$	135,810		$	266,645

See accompanying Notes to Financial Statements.

7

ALLIED HEALTHCARE PRODUCTS, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. Summary of Significant Accounting and Reporting Policies

Basis of Presentation

The accompanying unaudited financial statements of Allied Healthcare Products, Inc. (the “Company”) have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the financial statements and notes to the financial statements thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018.

Adoption of new revenue recognition standard

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

The results for reporting periods beginning after July 1, 2018, are presented in accordance with the new standard, although comparative information has not been restated and continues to be reported under the accounting standards and policies in effect for those periods. See Note 2, Summary of Significant Accounting Policies, to the financial statements in our Annual Report on Form 10-K for the year ended June 30, 2018.

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

8

Recently Issued Accounting Guidance

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to recognize assets and liabilities for leases with lease terms of more than 12 months and disclose key information about leasing arrangements. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The update is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is in the process of evaluating the impact of this update on its financial statements.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and the revolving credit facility. The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to the short maturity of these instruments. The carrying amount of the revolving credit facility approximates fair value due to the debt having a variable interest rate.

2. Revenues

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

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

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

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

9

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

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

The Company does not allocate transaction price as the Company has only one performance obligation and its contracts do not span multiple periods.

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

	Sales by Region
	Three months ended				Nine months ended
	March 31,				March 31,
	2019		2018		2019		2018
Domestic United States	$	6,128,063	$	6,786,536	$	17,819,577	$	19,171,616
Europe		327,357		346,449		707,296		1,094,175
Canada		212,219		191,511		585,542		556,133
Latin America		515,753		350,890		1,642,390		1,393,095
Middle East		236,834		180,111		382,845		724,825
Far East		892,044		608,931		2,534,292		2,138,106
Other International		3,757		2,397		19,980		4,330
	$	8,316,027	$	8,466,825	$	23,691,922	$	25,082,280

	Sales by Product
	Three months ended				Nine months ended
	March 31,				March 31,
	2019		2018		2019		2018
Respiratory care products	$	2,292,547	$	2,225,975	$	6,707,384	$	6,534,769
Medical gas equipment		4,371,944		4,613,990		12,191,622		13,281,247
Emergency medical products		1,651,536		1,626,860		4,792,916		5,266,264
	$	8,316,027	$	8,466,825	$	23,691,922	$	25,082,280

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3. Inventories

Inventories are comprised as follows:

	March 31, 2019			June 30, 2018
Work-in progress	$	519,288		$	388,252
Component parts		7,040,549			6,775,870
Finished goods		1,953,025			2,285,836
Reserve for obsolete and excess
inventories		(1,619,417	)		(1,619,417	)
	$	7,893,445		$	7,830,541

4. Earnings per share

Basic earnings per share are based on the weighted average number of shares of all common stock outstanding during the period. Diluted earnings per share are based on the sum of the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The number of basic and diluted shares outstanding for the three and nine months ended March 31, 2019 and 2018 were 4,013,537.

5. Commitments and Contingencies

Legal Claims

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

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

11

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

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

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

Employment Contract

The Company has entered into an employment contract with its chief executive officer with annual renewals. The contract includes termination without cause and change of control provisions, under which the chief executive officer is entitled to receive specified severance payments generally equal to two times ending annual salary if the Company terminates his employment without cause or he voluntarily terminates his employment with “good reason.” “Good Reason” generally includes changes in the scope of his duties or location of employment but also includes (i) the Company’s written election not to renew the Employment Agreement and (ii) certain voluntary resignations by the chief executive officer following a “Change of Control” as defined in the Agreement.

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6. Financing

The Company is party to a Loan and Security Agreement with Summit Financial Resources, L.P. (“Summit”), dated effective February 27, 2017, as amended April 16, 2018 and April 24, 2019 (as amended, the “Credit Agreement”). Pursuant to the Credit Agreement, the Company obtained a secured revolving credit facility (the “Credit Facility”). The Company’s obligations under the Credit Facility are secured by all of the Company’s personal property, both tangible and intangible, pursuant to the terms and subject to the conditions set forth in the Credit Agreement. Availability of funds under the Credit Agreement is based on the Company’s accounts receivable and inventory but will not exceed $2,000,000. At March 31, 2019 availability under the agreement was $1,502,130.

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

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

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

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

13

At March 31, 2019, the Company had $410,735 of indebtedness, including capital lease obligations, short-term debt and long term debt. The prime rate as reported in the Wall Street Journal was 5.50% on March 31, 2019.

The Company was in compliance with all of the covenants associated with the Credit Facility at March 31, 2019.

7. Income Taxes

The Company accounts for income taxes under ASC Topic 740: “Income Taxes.” Under ASC 740, the deferred tax provision is determined using the liability method, whereby deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and income tax bases of assets and liabilities using presently enacted tax rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Due to the reduction in the cumulative to date loss occurring in the three months ended March 31, 2019, the Company recorded a provision for income taxes of approximately $100,000 along with a reduction in the valuation allowance for a like amount. For the nine months ended March 31, 2019 the Company recorded the tax benefit of cumulative losses incurred to date in the amount of approximately $406,000. As the realization of the tax benefit of the net operating loss incurred to date is not assured an additional valuation allowance of a like amount was recorded.

For the three and nine months ended March 31, 2018 the Company recorded the tax benefit of losses incurred in the amount of approximately $260,000 and $627,000. As the realization of the tax benefit of the net operating loss is not assured an additional valuation allowance of a like amount was recorded. The total valuation allowance recorded by the Company as of March 31, 2019 and 2018 was approximately $2,606,000 and $2,132,000, respectively.

The Tax Cuts and Jobs Act (“TCJA”) was enacted in the U.S. on December 22, 2017. The TCJA reduced the U.S. federal corporate tax rate from 35% to 21%. As a result of this reduction in rate in the second quarter of the fiscal year ended 2018 the Company recorded a reduction in its recognized deferred tax assets along with a reduction in the valuation allowance. The impact of those adjustments resulted in a net reduction of recognized deferred tax assets and a resultant income tax expense in the amount of $136,386 for the nine-months ended March 31, 2018. To the extent that the Company’s losses continue in future quarters, the tax benefit of those losses will be subject to a valuation allowance.

14

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

Results of Operations

Three months ended March 31, 2019 compared to three months ended March 31, 2018

Allied had net sales of $8.3 million for the three months ended March 31, 2019, down $0.2 million from net sales of $8.5 million in the prior year same quarter. Domestic sales were down 9.7% while international sales, which represented 26.3% of third quarter sales, were up 30.2% from the prior year same quarter.

Orders for the Company’s products for the three months ended March 31, 2019 of $7.9 million were $0.9 million or 10.2% lower than orders for the prior year same quarter of $8.8 million. Domestic orders are down 16.9% over the prior year same quarter, primarily construction products, while international orders, which represented 29.7% of third quarter orders, were 10.8% higher than orders for the prior year same quarter. International sales and orders are subject to fluctuation in international demand. International sales can be impacted by political and economic uncertainty in regions and countries where the Company markets its products.

Gross profit for the three months ended March 31, 2019 was $1.6 million, or 19.3% of net sales, compared to $1.2 million, or 14.1% of net sales, for the three months ended March 31, 2018. The $0.4 million increase in gross profit is partially due to lower fixed manufacturing cost including a $133,000 decrease in fringe benefits, a $35,000 decrease in manufacturing salaries, and a $70,000 decrease in net product warranty and repair cost. In addition, margins improved due to a $26,000 reduction in scrap expense, higher utilization of fixed manufacturing cost and favorable changes in product mix.

Selling, general and administrative expenses for the three months ended March 31, 2019 were $1.9 million compared to $2.1 million for the three months ended March 31, 2018. Personnel cost, primarily salary and fringe benefits, decreased by approximately $74,000. Legal expenses and business taxes are approximately $76,000 lower than in the prior year. Travel expense was $28,000 lower than in the prior year.

Loss from operations was $352,933 for the three months ended March 31, 2019 compared to $887,626 for the three months ended March 31, 2018.

Other income and expenses for the three months ended March 31, 2019 include approximately $750,000 of income realized by the Company as a result of the settlement of litigation with Niagara Mohawk Power Corporation d/b/a National Grid (“Niagara”), which provides electrical power to the Company’s facility in Stuyvesant Falls, New York, and one other party. See Part II, Item 1 – Legal Proceedings, below, for more information concerning litigation. Interest expense for the three months ended March 31, 2019 was approximately $19,000 compared to interest expense of $13,000 for the three months ended March 31, 2018.

15

Allied had income before provision for income taxes in the third quarter of fiscal 2019 of $378,479 compared to loss before benefit from income taxes in the third quarter of fiscal 2018 of $901,037. The Company’s tax provision net of valuation allowance reflects a tax benefit of $0 for the three months ended March 31, 2019 and 2018. Due to the reduction in the cumulative to date loss occurring in the three months ended March 31, 2019, a tax provision in the amount of $100,000 was recorded offset by a reduction in the valuation allowance. In the quarter ended March 31, 2018, the tax benefit of loss incurred in the quarter in the amount of $260,000, was recorded and fully offset by a valuation allowance of equivalent amount. To the extent that the Company’s losses continue in future quarters, the tax benefit of those losses will be fully offset by a valuation allowance.

Net income for the third quarter of fiscal 2019 was $378,479 or $0.09 per basic and diluted share compared to net loss of $901,037 or $0.22 per basic and diluted share for the third quarter of fiscal 2018. The weighted average number of common shares outstanding, used in the calculation of basic and diluted earnings per share for the third quarters of fiscal 2019 and 2018 were 4,013,537.

Nine months ended March 31, 2019 compared to nine months ended March 31, 2018

Allied had net sales of $23.7 million for the nine months ended March 31, 2019, down $1.4 million, or 5.6% from net sales of $25.1 million in the prior year same period resulting from lower order levels and a decrease in customer orders released for shipment. Domestic sales were down 7.1% from the prior year same period while international sales were down 0.6% from the prior year same period. International represented 24.8% of sales for the first nine months of fiscal 2019 business.

Orders for the Company’s products for the nine months ended March 31, 2019 of $23.2 million were $1.3 million or 5.3% lower than orders for the prior year same period of $24.5 million. Domestic orders are down 10.8% from the prior year same period while international orders, which represented 27.8% of orders for the first nine months of fiscal 2019, were 13.7% higher than orders for the prior year same period. The level of domestic orders reflects variability across product lines, however the decrease in orders for the first nine months were concentrated in domestic construction products. The international market and the market in domestic construction products do reflect variability across periods. The Company continues to work to improve the sales effort in construction with increased management reporting on sales activity and effectiveness.

Gross profit for the nine months ended March 31, 2019 was $3.6 million, or 15.2% of net sales, compared to $4.5 million, or 17.9% of net sales, for the nine months ended March 31, 2018. The $0.9 million decrease in gross profit is mostly attributable to the $1.4 million decrease in sales. Lower sales and lower production resulted in less utilization of fixed overhead expenses.

Selling, general and administrative expenses for the nine months ended March 31, 2019 were $6.0 million compared to $6.4 million for the nine months ended March 31, 2018. Salaries and benefits are approximately $0.1 million lower than in the prior year, legal expenses were approximately $0.1 million lower and business travel approximately $0.1 million lower.

16

Loss from operations was $2.3 million for the nine months ended March 31, 2019 compared to $1.9 million for the nine months ended March 31, 2018.

Other income and expenses for the nine months ended March 31, 2019 include approximately $750,000 of income realized by the Company as a result of the settlement of litigation with Niagara Mohawk Power Corporation d/b/a National Grid (“Niagara”), which provides electrical power to the Company’s facility in Stuyvesant Falls, New York, and one other party. See Part II, Item 1 – Legal Proceedings, below, for more information concerning litigation. Interest expense for the nine months ended March 31, 2019 was approximately $45,000 compared to interest expense of $13,000 for the nine months ended March 31, 2018.

Allied had a loss before provision for income taxes in the first nine months of fiscal 2019 of $1.6 million compared to loss before provision for income taxes in the third quarter of fiscal 2018 of $1.9 million. The Company’s tax provision net of valuation allowance reflects a tax provision of $0 and $136,386 for the nine months ended March 31, 2019 and 2018. In the nine months ended March 31, 2018, the Company revaluated its deferred tax assets, liabilities and valuation allowance to reflect the changes in tax rate occurring in connection with the TCJA. The impact of the revaluation was a current period provision for income taxes in 2018 in the amount of $136,386. In the nine months ended March 31, 2019 and 2018, the tax benefit of losses in the amount of approximately $406,000 and $627,000, respectively were fully offset by a valuation allowance of an equivalent amount. To the extent that the Company’s losses continue in future quarters, the tax benefit of those losses will be fully offset by a valuation allowance.

Net loss for the nine months ended March 31, 2019 was $1.6 million or $0.41 per basic and diluted share compared to net loss of $2.0 million or $0.51 per basic and diluted share for the first nine months of fiscal 2018. The weighted average number of common shares outstanding, used in the calculation of basic and diluted earnings per share for the first nine months of fiscal 2019 and 2018 was 4,013,537.

Liquidity and Capital Resources

The Company’s primary sources of liquidity are its cash, cash equivalents, other items of working capital and available borrowing under the Credit Facility discussed below.

The Company’s working capital was $7.7 million at March 31, 2019 compared to $8.7 million at June 30, 2018. Accounts Receivable decreased by $0.3 million, Accounts Payable increased by $0.4 million and debt increased $0.4 million. During fiscal 2019, these decreases in working capital were partially offset by a $0.1 million increase in Inventory. Accounts Payable and Other Accrued Liabilities are subject to normal fluctuations in purchasing levels and the timing of payments within the quarter. Accounts Receivable was $3.4 million at March 31, 2019, a decrease from $3.7 million at June 30, 2018. Accounts Receivable as measured in days sales outstanding (“DSO”) was 39 DSO at March 31, 2019; a decrease from 41 DSO at June 30, 2018. The Company does adjust product forecast, order quantities and safety stock based on changes in demand patterns in order to manage inventory levels.

17

As of March 31, 2019, the Company was party to a Loan and Security Agreement with Summit Financial Resources, L.P. (“Summit”), dated effective February 27, 2017, as amended April 16, 2018 and April 24, 2019 (as amended, the “Credit Agreement”). Pursuant to the Credit Agreement, the Company obtained a secured revolving credit facility (the “Credit Facility”). The Company’s obligations under the Credit Facility are secured by all of the Company’s personal property, both tangible and intangible, pursuant to the terms and subject to the conditions set forth in the Credit Agreement. Availability of funds under the Credit Agreement is based on the Company’s accounts receivable and inventory but will not exceed $2,000,000.  At March 31, 2019 availability under the agreement was $1,502,130. The increase in availability during the quarter reflects decreased borrowing due to improved cash flow in the quarter. The Company expects that it will use the Credit Facility to finance the Company’s operations in the short term.

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

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

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

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

18

At March 31, 2019, the Company had $410,735 of indebtedness, including capital lease obligations, short-term debt, and long term debt. The prime rate as reported in the Wall Street Journal was 5.50% on March 31, 2019.

Further reductions in availability, either due to continued losses or changes by Summit to the Company’s borrowing base, could have a material adverse impact on our liquidity and ability to meet our operating requirements. In such a case, the Company would need to access additional sources of liquidity if it does not return to profitability. If the Company were unable to reach such an agreement with Summit to increase availability, the Company could also attempt to negotiate a larger credit facility with another lender, but the Company would be obligated to pay the above described pre-payment penalty to Summit. There is no assurance that the Company could secure either increased availability from Summit or a new credit facility from a new lender, in which case the Company would have to use other assets to obtain liquidity, such as a sale-leaseback of some or all of its real estate.

The Company was in compliance with all of the covenants associated with the Credit Facility at March 31, 2019.

Litigation and Contingencies

The Company becomes, from time to time, a party to personal injury litigation arising out of incidents involving the use of its products. The Company believes that any potential judgments resulting from these claims over its self-insured retention will be covered by the Company’s product liability insurance. See Part II, Item 1 – Legal Proceedings, below, for more information concerning litigation.

Critical Accounting Policies

The impact and any associated risks related to the Company’s critical accounting policies on business operations are discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” where such policies affect the Company’s reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see the Company’s Annual Report on Form 10-K for the year ended June 30, 2018.

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Recently Issued Accounting Guidance

See Note 1 – Summary of Significant Accounting and Reporting Policies for more information on recent accounting pronouncements and their impact, if any, on the Company’s financial statements. Management believes there have been no material changes to our critical accounting policies.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

At March 31, 2019, the Company had $410,735 debt outstanding. The Credit Facility bears interest at a rate using the Prime Rate, as reported in the Wall Street Journal, as the basis, and therefore is subject to additional expense should there be an increase in market interest rates while borrowing on the revolving credit facility.

The Company had no holdings of derivative financial or commodity instruments at March 31, 2019. The Company has international sales; however these sales are denominated in U.S. dollars, mitigating foreign exchange rate fluctuation risk.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon their evaluation of those controls and procedures performed as of March 31, 2019, the Chief Executive Officer and Chief Financial Officer of the Company concluded that its disclosure controls and procedures were effective.

Changes in internal control over financial reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Part II.      OTHER INFORMATION

Item 1. Legal Proceedings 

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

20

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

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

Item 6. Exhibits

(a)     Exhibits:

10.6.2	Second Amendment to Loan and Security Agreement, dated April 24, 2019, by and between the Allied Healthcare Products, Inc. and Summit Financial Resources, L.P. (filed as Exhibit 99.1 to Current Report on Form 8-K filed on April 25, 2019 with event date of April 24, 2019)
31.1	Certification of Chief Executive Officer (filed herewith)
31.2	Certification of Chief Financial Officer (filed herewith)

21

32.1	Sarbanes-Oxley Certification of Chief Executive Officer (furnished herewith)*
32.2	Sarbanes-Oxley Certification of Chief Financial Officer (furnished herewith)*

101.INS XBRL Instance Document**

101.SCH XBRL Taxonomy Extension Schema Document**

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document**

101.DEF XBRL Taxonomy Extension Definition Linkbase Document**

101.LAB XBRL Taxonomy Extension Label Linkbase Document**

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document**

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

**Filed herewith as Exhibit 101 are the following materials formatted in XBRL: (i) Statement of Operations, (ii) Balance Sheet, (iii) Statement of Cash Flows and (iv) Notes to Financial Statements.

SIGNATURE

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.

ALLIED HEALTHCARE PRODUCTS, INC.

/s/ Daniel C. Dunn

Daniel C. Dunn

Chief Financial Officer

Date: May 15, 2019

22

EX-31.1

Exhibit 31.1

CERTIFICATION

I, EARL R. REFSLAND, certify that:

1. I have reviewed this Form 10-Q of ALLIED HEALTHCARE PRODUCTS, INC.;

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

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

4. The registrant's other certifying officer(s) 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(s) 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.

Date: May 15, 2019
	/s/ EARL R. REFSLAND
	Earl. R. Refsland
	President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, DANIEL C. DUNN, certify that:

1. I have reviewed this Form 10-Q of ALLIED HEALTHCARE PRODUCTS, INC.;

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

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

4. The registrant's other certifying officer(s) 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(s) 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.

Date: May 15, 2019
	/s/ DANIEL C. DUNN
	Daniel C. Dunn
	Vice President, Chief Financial Officer & Secretary

EX-32.1

Exhibit 32.1

CERTIFICATION Pursuant to 18 U.S.C. § 1350

The undersigned officer of ALLIED HEALTHCARE PRODUCTS, INC. (the "Company"), hereby certifies, to such officer's knowledge, that the Company's Quarterly Report on Form 10-Q for the Company’s fiscal quarter ended March 31, 2019 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Earl R. Refsland
	Earl R. Refsland
	President & Chief Executive Officer
May 15, 2019

EX-32.2

Exhibit 32.2

CERTIFICATION Pursuant to 18 U.S.C. § 1350

The undersigned officer of ALLIED HEALTHCARE PRODUCTS, INC. (the "Company"), hereby certifies, to such officer's knowledge, that the Company's Quarterly Report on Form 10-Q for the Company’s fiscal quarter ended March 31, 2019 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Daniel C. Dunn
	Daniel C. Dunn
	Vice President, Chief Financial Officer & Secretary
May 15, 2019

XML

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2019	May 01, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Registrant Name	ALLIED HEALTHCARE PRODUCTS INC
Entity Central Index Key	0000874710
Current Fiscal Year End Date	--06-30
Entity Filer Category	Non-accelerated Filer
Trading Symbol	AHPI
Entity Common Stock, Shares Outstanding		4,013,537
Entity Emerging Growth Company	false
Entity Small Business	true

XML

STATEMENT OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Net sales	$ 8,316,027	$ 8,466,825	$ 23,691,922	$ 25,082,280
Cost of sales	6,765,552	7,234,067	20,057,379	20,583,535
Gross profit	1,550,475	1,232,758	3,634,543	4,498,745
Selling, general and administrative expenses	1,903,408	2,120,384	5,975,580	6,397,903
Loss from operations	(352,933)	(887,626)	(2,341,037)	(1,899,158)
Other (income) expenses:
Interest expense	18,590	13,433	44,548	13,433
Interest income	(47)	(23)	(107)	(249)
Legal settlement	(750,000)	0	(750,000)	0
Other, net	45	1	45	238
Nonoperating Income (Expense)	(731,412)	13,411	(705,514)	13,422
Income (loss) before income taxes	378,479	(901,037)	(1,635,523)	(1,912,580)
Provision for income taxes	0	0	0	136,386
Net income (loss)	$ 378,479	$ (901,037)	$ (1,635,523)	$ (2,048,966)
Basic income (loss) per share	$ 0.09	$ (0.22)	$ (0.41)	$ (0.51)
Diluted income (loss) per share	$ 0.09	$ (0.22)	$ (0.41)	$ (0.51)
Weighted average shares outstanding - basic	4,013,537	4,013,537	4,013,537	4,013,537
Weighted average shares outstanding - diluted	4,013,537	4,013,537	4,013,537	4,013,537

XML

BALANCE SHEET - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Current assets:
Cash and cash equivalents	$ 135,810	$ 136,112
Accounts receivable, net of allowances of $170,000	3,424,371	3,747,993
Inventories, net	7,893,445	7,830,541
Income tax receivable	20,298	12,178
Other current assets	290,271	250,605
Total current assets	11,764,195	11,977,429
Property, plant and equipment, net	4,187,281	4,823,149
Deferred income taxes	520,663	520,663
Total assets	16,472,139	17,321,241
Current liabilities:
Revolving credit facility	410,735	0
Accounts payable	1,833,469	1,473,618
Other accrued liabilities	1,864,213	1,850,683
Total current liabilities	4,108,417	3,324,301
Commitments and contingencies
Stockholders' equity:
Preferred stock	0	0
Common stock; $0.01 par value; 30,000,000 shares authorized; 5,213,902 shares issued at March 31, 2019 and June 30, 2018; 4,013,537 shares outstanding at March 31, 2019 and June 30, 2018	52,139	52,139
Additional paid-in capital	48,490,525	48,488,220
Accumulated deficit	(15,198,154)	(13,562,631)
Less treasury stock, at cost; 1,200,365 shares at March 31, 2019 and June 30, 2018, respectively	(20,980,788)	(20,980,788)
Total stockholders' equity	12,363,722	13,996,940
Total liabilities and stockholders' equity	16,472,139	17,321,241
Series A Preferred Stock [Member]
Stockholders' equity:
Preferred stock	$ 0	$ 0

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BALANCE SHEET [Parenthetical] - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Allowances for accounts receivable (in dollars)	$ 170,000	$ 170,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,500,000	1,500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	5,213,902	5,213,902
Common stock, shares outstanding	4,013,537	4,013,537
Treasury stock, at cost	1,200,365	1,200,365
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

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STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY - USD ($)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Treasury Stock [Member]
Beginning Balance at Jun. 30, 2017	$ 16,186,280	$ 52,139	$ 48,485,390	$ (11,370,461)	$ (20,980,788)
Stock based compensation	2,092	0	2,092	0	0
Net income (loss)	(2,048,966)	0	0	(2,048,966)	0
Ending Balance at Mar. 31, 2018	14,139,406	52,139	48,487,482	(13,419,427)	(20,980,788)
Beginning Balance at Dec. 31, 2017	15,039,704	52,139	48,486,743	(12,518,390)	(20,980,788)
Stock based compensation	739	0	739	0	0
Net income (loss)	(901,037)	0	0	(901,037)	0
Ending Balance at Mar. 31, 2018	14,139,406	52,139	48,487,482	(13,419,427)	(20,980,788)
Beginning Balance at Jun. 30, 2018	13,996,940	52,139	48,488,220	(13,562,631)	(20,980,788)
Stock based compensation	2,305	0	2,305	0	0
Net income (loss)	(1,635,523)	0	0	(1,635,523)	0
Ending Balance at Mar. 31, 2019	12,363,722	52,139	48,490,525	(15,198,154)	(20,980,788)
Beginning Balance at Dec. 31, 2018	11,984,452	52,139	48,489,734	(15,576,633)	(20,980,788)
Stock based compensation	791	0	791	0	0
Net income (loss)	378,479	0	0	378,479	0
Ending Balance at Mar. 31, 2019	$ 12,363,722	$ 52,139	$ 48,490,525	$ (15,198,154)	$ (20,980,788)

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STATEMENT OF CASH FLOWS - USD ($)	9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (1,635,523)	$ (2,048,966)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	635,868	703,685
Stock based compensation	2,305	2,092
Provision for doubtful accounts and sales returns and allowances	20,178	(5,124)
Deferred taxes	0	136,386
Changes in operating assets and liabilities:
Accounts receivable	303,444	(363,509)
Inventories	(62,904)	109,399
Income tax receivable	(8,120)	(9,561)
Other current assets	(39,666)	59,304
Accounts payable	359,851	199,544
Other accrued liabilities	13,530	(195,081)
Net cash used in operating activities	(411,037)	(1,411,831)
Cash flows from financing activities:
Borrowings under revolving credit agreement	24,375,484	7,025,454
Payments under revolving credit agreement	(23,964,749)	(6,342,682)
Net cash provided by financing activities	410,735	682,772
Net increase (decrease) in cash and cash equivalents	(302)	(729,059)
Cash and cash equivalents at beginning of period	136,112	995,704
Cash and cash equivalents at end of period	$ 135,810	$ 266,645

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Summary of Significant Accounting and Reporting Policies

9 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

1. Summary of Significant Accounting and Reporting Policies

Basis of Presentation

The accompanying unaudited financial statements of Allied Healthcare Products, Inc. (the “Company”) have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the financial statements and notes to the financial statements thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018.

Adoption of new revenue recognition standard

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

The results for reporting periods beginning after July 1, 2018, are presented in accordance with the new standard, although comparative information has not been restated and continues to be reported under the accounting standards and policies in effect for those periods. See Note 2, Summary of Significant Accounting Policies, to the financial statements in our Annual Report on Form 10-K for the year ended June 30, 2018.

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

Recently Issued Accounting Guidance

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to recognize assets and liabilities for leases with lease terms of more than 12 months and disclose key information about leasing arrangements. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The update is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is in the process of evaluating the impact of this update on its financial statements.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and the revolving credit facility. The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to the short maturity of these instruments. The carrying amount of the revolving credit facility approximates fair value due to the debt having a variable interest rate.

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Revenues

9 Months Ended

Mar. 31, 2019

Revenue Recognition and Deferred Revenue [Abstract]

Revenue [Text Block]

2. Revenues

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

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

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

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

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

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

The Company does not allocate transaction price as the Company has only one performance obligation and its contracts do not span multiple periods.

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

	Sales by Region
	Three months ended				Nine months ended
	March 31,				March 31,
	2019		2018		2019		2018
Domestic United States	$	6,128,063	$	6,786,536	$	17,819,577	$	19,171,616
Europe		327,357		346,449		707,296		1,094,175
Canada		212,219		191,511		585,542		556,133
Latin America		515,753		350,890		1,642,390		1,393,095
Middle East		236,834		180,111		382,845		724,825
Far East		892,044		608,931		2,534,292		2,138,106
Other International		3,757		2,397		19,980		4,330
	$	8,316,027	$	8,466,825	$	23,691,922	$	25,082,280

	Sales by Product
	Three months ended				Nine months ended
	March 31,				March 31,
	2019		2018		2019		2018
Respiratory care products	$	2,292,547	$	2,225,975	$	6,707,384	$	6,534,769
Medical gas equipment		4,371,944		4,613,990		12,191,622		13,281,247
Emergency medical products		1,651,536		1,626,860		4,792,916		5,266,264
	$	8,316,027	$	8,466,825	$	23,691,922	$	25,082,280

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Inventories

9 Months Ended

Mar. 31, 2019

Inventory, Net [Abstract]

Inventory Disclosure [Text Block]

3. Inventories

Inventories are comprised as follows:

	March 31, 2019			June 30, 2018
Work-in progress	$	519,288		$	388,252
Component parts		7,040,549			6,775,870
Finished goods		1,953,025			2,285,836
Reserve for obsolete and excess
inventories		(1,619,417	)		(1,619,417	)
	$	7,893,445		$	7,830,541

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Earnings per share

9 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

4. Earnings per share

Basic earnings per share are based on the weighted average number of shares of all common stock outstanding during the period. Diluted earnings per share are based on the sum of the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The number of basic and diluted shares outstanding for the three and nine months ended March 31, 2019 and 2018 were 4,013,537.

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Commitments and Contingencies

9 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

5. Commitments and Contingencies

Legal Claims

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

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

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

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

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

Employment Contract

The Company has entered into an employment contract with its chief executive officer with annual renewals. The contract includes termination without cause and change of control provisions, under which the chief executive officer is entitled to receive specified severance payments generally equal to two times ending annual salary if the Company terminates his employment without cause or he voluntarily terminates his employment with “good reason.” “Good Reason” generally includes changes in the scope of his duties or location of employment but also includes (i) the Company’s written election not to renew the Employment Agreement and (ii) certain voluntary resignations by the chief executive officer following a “Change of Control” as defined in the Agreement.

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Financing

9 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

6. Financing

The Company is party to a Loan and Security Agreement with Summit Financial Resources, L.P. (“Summit”), dated effective February 27, 2017, as amended April 16, 2018 and April 24, 2019 (as amended, the “Credit Agreement”). Pursuant to the Credit Agreement, the Company obtained a secured revolving credit facility (the “Credit Facility”). The Company’s obligations under the Credit Facility are secured by all of the Company’s personal property, both tangible and intangible, pursuant to the terms and subject to the conditions set forth in the Credit Agreement. Availability of funds under the Credit Agreement is based on the Company’s accounts receivable and inventory but will not exceed $2,000,000. At March 31, 2019 availability under the agreement was $1,502,130.

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

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

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

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

At March 31, 2019, the Company had $410,735 of indebtedness, including capital lease obligations, short-term debt and long term debt. The prime rate as reported in the Wall Street Journal was 5.50% on March 31, 2019.

The Company was in compliance with all of the covenants associated with the Credit Facility at March 31, 2019.

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Income Taxes

9 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

7. Income Taxes

The Company accounts for income taxes under ASC Topic 740: “Income Taxes.” Under ASC 740, the deferred tax provision is determined using the liability method, whereby deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and income tax bases of assets and liabilities using presently enacted tax rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Due to the reduction in the cumulative to date loss occurring in the three months ended March 31, 2019, the Company recorded a provision for income taxes of approximately $100,000 along with a reduction in the valuation allowance for a like amount. For the nine months ended March 31, 2019 the Company recorded the tax benefit of cumulative losses incurred to date in the amount of approximately $406,000. As the realization of the tax benefit of the net operating loss incurred to date is not assured an additional valuation allowance of a like amount was recorded.

For the three and nine months ended March 31, 2018 the Company recorded the tax benefit of losses incurred in the amount of approximately $260,000 and $627,000. As the realization of the tax benefit of the net operating loss is not assured an additional valuation allowance of a like amount was recorded. The total valuation allowance recorded by the Company as of March 31, 2019 and 2018 was approximately $2,606,000 and $2,132,000, respectively.

The Tax Cuts and Jobs Act (“TCJA”) was enacted in the U.S. on December 22, 2017. The TCJA reduced the U.S. federal corporate tax rate from 35% to 21%. As a result of this reduction in rate in the second quarter of the fiscal year ended 2018 the Company recorded a reduction in its recognized deferred tax assets along with a reduction in the valuation allowance. The impact of those adjustments resulted in a net reduction of recognized deferred tax assets and a resultant income tax expense in the amount of $136,386 for the nine-months ended March 31, 2018. To the extent that the Company’s losses continue in future quarters, the tax benefit of those losses will be subject to a valuation allowance.

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Summary of Significant Accounting and Reporting Policies (Policies)

9 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited financial statements of Allied Healthcare Products, Inc. (the “Company”) have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the financial statements and notes to the financial statements thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018.

Revenue Recognition, Policy [Policy Text Block]

Adoption of new revenue recognition standard

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

The results for reporting periods beginning after July 1, 2018, are presented in accordance with the new standard, although comparative information has not been restated and continues to be reported under the accounting standards and policies in effect for those periods. See Note 2, Summary of Significant Accounting Policies, to the financial statements in our Annual Report on Form 10-K for the year ended June 30, 2018.

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

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Guidance

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to recognize assets and liabilities for leases with lease terms of more than 12 months and disclose key information about leasing arrangements. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The update is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is in the process of evaluating the impact of this update on its financial statements.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and the revolving credit facility. The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to the short maturity of these instruments. The carrying amount of the revolving credit facility approximates fair value due to the debt having a variable interest rate.

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Revenues (Tables)

9 Months Ended

Mar. 31, 2019

Revenue Recognition and Deferred Revenue [Abstract]

Revenue from External Customers by Geographic Areas [Table Text Block]

The Company does not have any one single customer that represents more than 10 percent of total sales. Sales by region, and by product, are as follows:

	Sales by Region
	Three months ended				Nine months ended
	March 31,				March 31,
	2019		2018		2019		2018
Domestic United States	$	6,128,063	$	6,786,536	$	17,819,577	$	19,171,616
Europe		327,357		346,449		707,296		1,094,175
Canada		212,219		191,511		585,542		556,133
Latin America		515,753		350,890		1,642,390		1,393,095
Middle East		236,834		180,111		382,845		724,825
Far East		892,044		608,931		2,534,292		2,138,106
Other International		3,757		2,397		19,980		4,330
	$	8,316,027	$	8,466,825	$	23,691,922	$	25,082,280

Revenue from External Customers by Products and Services [Table Text Block]

	Sales by Product
	Three months ended				Nine months ended
	March 31,				March 31,
	2019		2018		2019		2018
Respiratory care products	$	2,292,547	$	2,225,975	$	6,707,384	$	6,534,769
Medical gas equipment		4,371,944		4,613,990		12,191,622		13,281,247
Emergency medical products		1,651,536		1,626,860		4,792,916		5,266,264
	$	8,316,027	$	8,466,825	$	23,691,922	$	25,082,280

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Inventories (Tables)

9 Months Ended

Mar. 31, 2019

Inventory, Net [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories are comprised as follows:

	March 31, 2019			June 30, 2018
Work-in progress	$	519,288		$	388,252
Component parts		7,040,549			6,775,870
Finished goods		1,953,025			2,285,836
Reserve for obsolete and excess
inventories		(1,619,417	)		(1,619,417	)
	$	7,893,445		$	7,830,541

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Revenues (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Revenues	$ 8,316,027	$ 8,466,825	$ 23,691,922	$ 25,082,280
Domestic United States
Revenues	6,128,063	6,786,536	17,819,577	19,171,616
Europe
Revenues	327,357	346,449	707,296	1,094,175
Canada
Revenues	212,219	191,511	585,542	556,133
Latin America
Revenues	515,753	350,890	1,642,390	1,393,095
Middle East
Revenues	236,834	180,111	382,845	724,825
Far East
Revenues	892,044	608,931	2,534,292	2,138,106
Other International
Revenues	$ 3,757	$ 2,397	$ 19,980	$ 4,330

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Revenues (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Revenues	$ 8,316,027	$ 8,466,825	$ 23,691,922	$ 25,082,280
Respiratory care products
Revenues	2,292,547	2,225,975	6,707,384	6,534,769
Medical gas equipment
Revenues	4,371,944	4,613,990	12,191,622	13,281,247
Emergency medical products
Revenues	$ 1,651,536	$ 1,626,860	$ 4,792,916	$ 5,266,264

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Inventories (Details) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Inventory [Line Items]
Work-in progress	$ 519,288	$ 388,252
Component parts	7,040,549	6,775,870
Finished goods	1,953,025	2,285,836
Reserve for obsolete and excess	(1,619,417)	(1,619,417)
inventories	$ 7,893,445	$ 7,830,541

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Earnings per share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Line Items]
Weighted Average Number of Shares Outstanding, Basic and Diluted	4,013,537	4,013,537	4,013,537	4,013,537

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Commitments and Contingencies (Details Textual) - USD ($)				3 Months Ended		9 Months Ended
	Mar. 07, 2019	Mar. 14, 2014	Feb. 06, 2012	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2015
Commitments and Contingencies [Line Items]
Loss Contingency, Damages Sought, Value		$ 492,000	$ 469,000					$ 696,000
Gain (Loss) Related to Litigation Settlement	$ 750,000			$ 750,000	$ 0	$ 750,000	$ 0

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Financing (Details Textual) - USD ($)	1 Months Ended	9 Months Ended
	Feb. 27, 2017	Mar. 31, 2019	Jun. 30, 2018
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		20.00%
Line of Credit Facility, Expiration Date	Feb. 27, 2021
Line of Credit Facility, Frequency of Payment and Payment Terms		the Company will pay a minimum amount of .25% (25 basis points) per month on the maximum availability ($5,000 per month).
Line of Credit, Current		$ 410,735	$ 0
Summit Financial Resources Lp [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line Of Credit Facility, Maximum Borrowing Capacity	$ 2,000,000
Debt Instrument, Basis Spread on Variable Rate	2.00%
Line of Credit Facility, Remaining Borrowing Capacity		$ 1,502,130
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.47%
Summit Financial Resources Lp [Member] | Revolving Credit Facility [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage		5.50%

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Income Taxes (Details Textual) - USD ($)	3 Months Ended			9 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Schedule Of Income Tax Disclosure [Line Items]
Deferred Other Tax Expense (Benefit)	$ 100,000		$ (260,000)	$ (406,000)	$ (627,000)
Deferred Tax Assets, Valuation Allowance	$ 2,606,000		$ 2,132,000	$ 2,606,000	$ 2,132,000
Increase Or Decrease In Deferred Tax Assets Income Tax Expense		$ 136,386