Document and Entity Information |
12 Months Ended |
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Jun. 30, 2016
USD ($)
shares
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Document And Entity Information | |
Entity Registrant Name | SCIENTIFIC INDUSTRIES INC |
Entity Central Index Key | 0000087802 |
Document Type | 10-K |
Document Period End Date | Jun. 30, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --06-30 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | shares | 1,489,112 |
Public Float | $ | $ 2,768,300 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2016 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Statement of Financial Position [Abstract] | ||
Allowance doubtful accounts | $ 11,600 | $ 11,600 |
Shareholders' equity: | ||
Common stock,par value | $ 0.05 | $ 0.05 |
Common stock, authorized shares | 7,000,000 | 7,000,000 |
Common stock, issued shares | 1,508,914 | 1,508,914 |
Common stock, outstanding shares | 1,508,914 | 1,508,914 |
Stock held in treasury, shares | 19,802 | 19,802 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) |
12 Months Ended | |
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Jun. 30, 2016 |
Jun. 30, 2015 |
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Condensed Consolidated Statements Of Comprehensive Income Loss | ||
Net income | $ 165,600 | $ 8,700 |
Other comprehensive income (loss): | ||
Unrealized holding gain (loss) arising during period, net of tax | 4,200 | (4,400) |
Comprehensive income | $ 169,800 | $ 4,300 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY - USD ($) |
Common Stock |
Additional Paid-In Capital |
Accumulated Other Comprehensive Income / Loss |
Retained Earnings |
Treasury Stock |
Total |
---|---|---|---|---|---|---|
Balance beginning, Shares at Jun. 30, 2014 | 1,488,914 | 19,802 | ||||
Balance beginning, Amount at Jun. 30, 2014 | $ 74,400 | $ 2,420,700 | $ 1,100 | $ 3,235,300 | $ 52,400 | $ 5,679,100 |
Net income | 0 | 0 | 0 | 8,700 | 0 | 8,700 |
Unrealized holding gain/ (loss) on investment securities,net of tax | $ 0 | 0 | (4,400) | 0 | 0 | (4,400) |
Exercise of stock options, Shares | 20,000 | |||||
Exercise of stock options, Amount | $ 1,000 | 50,200 | 0 | 0 | 0 | 51,200 |
Stock-based compensation | 0 | 10,900 | 0 | 0 | 0 | 10,900 |
Income tax benefit of stock options exercised | $ 0 | 4,900 | 0 | 0 | $ 0 | 4,900 |
Balance ending, Shares at Jun. 30, 2015 | 1,508,914 | 19,802 | ||||
Balance ending, Amount at Jun. 30, 2015 | $ 75,400 | 2,486,700 | (3,300) | 3,244,000 | $ 52,400 | 5,750,400 |
Net income | 165,600 | 165,600 | ||||
Unrealized holding gain/ (loss) on investment securities,net of tax | 4,200 | 4,200 | ||||
Stock-based compensation | 11,800 | 11,800 | ||||
Balance ending, Shares at Jun. 30, 2016 | 1,508,914 | 19,802 | ||||
Balance ending, Amount at Jun. 30, 2016 | $ 75,400 | $ 2,498,500 | $ 900 | $ 3,409,600 | $ 52,400 | $ 5,932,000 |
1. Summary of significant accounting policies |
12 Months Ended | ||||||||||||
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Jun. 30, 2016 | |||||||||||||
Notes to Financial Statements | |||||||||||||
Summary of significant accounting policies | Nature of Operations
Scientific Industries, Inc. and its subsidiaries (the Company) design, manufacture, and market a variety of benchtop laboratory equipment, bioprocessing products and catalyst research instruments. The Company is headquartered in Bohemia, New York where it produces benchtop laboratory equipment for research and has another location in Pittsburgh, Pennsylvania, where it produces a variety of custom-made catalyst research instruments and designs bioprocessing products, and an administrative facility in Oradell, New Jersey related to benchtop laboratory equipment. The equipment sold by the Company includes mixers, shakers, stirrers, refrigerated incubators, pharmacy balances and scales, catalyst characterization instruments, reactor systems and high throughput systems. The Company also sublicenses certain patents and technology under a license with the University of Maryland, Baltimore County, and receives royalty fees from the sublicenses.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc., Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary, Altamira Instruments, Inc. (Altamira), a Delaware corporation and wholly-owned subsidiary, and Scientific Bioprocessing, Inc. (SBI), a Delaware corporation and wholly-owned subsidiary, (all collectively referred to as the Company). All material intercompany balances and transactions have been eliminated.
Revenue Recognition
Revenue from product sales is recognized when all the following criteria are met:
Revenues are net of normal discounts. Shipping and handling fees billed to customers are included in net revenues, while the related costs are included in cost of revenues.
Substantially all orders are F.O.B. shipping point, all sales are final without right of return or payment contingencies, and there are no special sales arrangements or agreements with any customers.
Royalty revenue received under the Companys sublicenses is recorded net of payments due to its licensors.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. As of June 30, 2016 and 2015, $497,200 and $50,000 respectively of cash balances were in excess of such limit.
Accounts Receivable
In order to record the Companys accounts receivable at their net realizable value, the Company must assess their collectability. A considerable amount of judgment is required in order to make this assessment, including an analysis of historical bad debts and other adjustments, a review of the aging of the Companys receivables, and the current creditworthiness of the Companys customers. The Company has recorded allowances for receivables which it considered uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices, customer satisfaction claims and pricing discrepancies. However, depending on how such potential issues are resolved, or if the financial condition of any of the Companys customers was to deteriorate and its ability to make required payments became impaired, increases in these allowances may be required. The Company actively manages its accounts receivable to minimize credit risk. The Company does not obtain collateral for its accounts receivable.
Customer Advances
In the ordinary course of business, customers may make advance payments for purchase orders. Such amounts, when received, are categorized as liabilities under the caption customer advances.
Investment Securities
Securities available for sale are carried at fair value with unrealized gains or losses reported in a separate component of shareholders equity. Realized gains or losses are determined based on the specific identification method.
Inventories
Inventories are valued at the lower of cost (determined on a first-in, first-out basis) or market value, and have been reduced by an allowance for excess and obsolete inventories. The estimate is based on managements review of inventories on hand compared to estimated future usage and sales. Cost of work-in-process and finished goods inventories include material, labor and manufacturing overhead.
Property and Equipment
Property and equipment are stated at cost. Depreciation of property and equipment is provided for primarily by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized by the straight-line method over the remaining term of the related lease or the estimated useful lives of the assets, whichever is shorter.
Intangible Assets
Intangible assets consist primarily of acquired technology, customer relationships, non-compete agreements, patents, licenses, websites, intellectual property and research and development (IPR&D), trademarks and trade names. All intangible assets are amortized on a straight-line basis over the estimated useful lives of the respective assets, generally 3 to 10 years. The Company continually evaluates the remaining estimated useful lives of intangible assets that are being amortized to determine whether events or circumstances warrant a revision to the remaining period of amortization.
Goodwill and Long-Lived Assets
Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, Intangibles-Goodwill and Other (ASC No. 350). ASC No. 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The Company tests goodwill and long-lived assets annually as of June 30, the last day of its fiscal year, unless an event occurs that would cause the Company to believe the value is impaired at an interim date. The Company concluded as of June 30, 2016 and 2015 there was no impairment of goodwill.
Impairment of Long-Lived Assets
The Company follows the provisions of ASC No. 360-10, Property, Plant and Equipment - Impairment or Disposal of Long-Lived Assets (ASC No. 360-10). ASC No. 360-10 which requires evaluation of the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation for impairment is required, the estimated future undiscounted cash flows associated with the asset would be compared to the assets carrying amount to determine if a write down to a new depreciable basis is required. If required, an impairment charge is recorded based on an estimate of future discounted cash flows. For the year ended June 30, 2016, the Company determined that the intangible assets of SBI were impaired, and accordingly an impairment charge of $212,700 was recorded.
Income Taxes
The Company and its subsidiaries file a consolidated U.S. federal income tax return. Income taxes are accounted for under the asset and liability method. The Company provides for federal, and state income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributed to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
Advertising
Advertising costs are expensed as incurred. Advertising expense amounted to $79,800 and $79,400 for the years ended June 30, 2016 and 2015, respectively.
Research and Development
Research and development costs consisting of expenses for activities that are useful in developing and testing new products, as well as expenses that may significantly improve existing products, are expensed as incurred.
Stock Compensation Plan
The Company has a ten-year stock option plan (the 2012 Plan) which provides for the grant of options to purchase up to 100,000 shares of the Companys Common Stock, par value $.05 per share (Common Stock), plus 57,000 shares under options previously granted under the 2002 Stock Option Plan of the Company (the Prior Plan). The 2012 Plan provides for the granting of incentive or non-incentive stock options as defined in the 2012 Plan and options under the 2012 Plan may be granted until 2022. Incentive stock options may be granted to employees at an exercise price equal to 100% (or 110% if the optionee owns directly or indirectly more than 10% of the outstanding voting stock) of the fair market value of the shares of Common Stock on the date of the grant. Non-incentive stock options shall be granted at the fair market value of the shares of Common Stock on the date of grant. At June 30, 2016 and 2015, 79,500 and 84,500 shares respectively, of Common Stock were available for grant of options under the 2012 Plan.
Stock-based compensation is accounted for in accordance with ASC No. 718 Compensation-Stock Compensation (ASC No. 718) which requires compensation costs related to stock-based payment transactions to be recognized. With limited exceptions, the amount of compensation cost is measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards are measured at each reporting period. Compensation costs are recognized over the period that an employee provides service in exchange for the award. During the years ended June 30, 2016 and 2015, the Company granted 5,000 and 4,000 options, respectively, to employees that had a fair value of $9,500 and $7,100, respectively. The fair value of the options granted during fiscal year 2016 and 2015 were determined using the Black-Scholes-Merton option-pricing model. The weighted average assumptions used for fiscal 2016 and 2015, was an expected life of 10 years; risk free interest rate of 1.82% and 1.93%; volatility of 51% and 52%, and dividend yield of 0% for both years. The Company did not declare dividends during the years ended June 30, 2016 and 2015. Therefore a zero value for the expected dividend value factor was used to determine the fair value of options granted. The weighted-average value per share of the options granted in 2016 and 2015 was $1.89 and $1.77, and total stock-based compensation costs were $11,800 and $10,900 for the years ended June 30, 2016 and 2015, respectively. Stock-based compensation costs related to nonvested awards expected to be recognized in the future are $1,000 and $3,300 as of June 30, 2016 and 2015, respectively.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, the allowance for doubtful accounts, slow-moving inventory reserves, depreciation and amortization, assumptions made in valuing equity instruments issued for services, and the fair values of intangibles and goodwill. The actual results experienced by the Company may differ materially from managements estimates.
Earnings Per Common Share
Basic earnings per common share is computed by dividing net income by the weighted-average number of shares outstanding. Diluted earnings per common share includes the dilutive effect of stock opF-12
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers amending revenue recognition requirements for multiple-deliverable revenue arrangements. This update provides guidance on how revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. This determination is made in five steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred the effective date to fiscal years beginning after December 15, 2018 and early adoption of the standard is permitted, but not before the original effective date of December 15, 2017. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures.
In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved After the Requisite Service Period. This update affects reporting entities that grant their employees targets that affects vesting could be achieved after the requisite service period. The new standard requires that a performance target that affects vesting and that could be achieved after the requisite services period be treated as a performance condition. The new standard will be effective for the Company beginning July 1, 2016. The Company does not expect the adoption to have a material impact on its financial condition, results of operations or cash flows.
In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory, that requires inventory not measured using either the last in, first out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The new standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and will be applied prospectively. Early adoption is permitted. The Company does not expect the adoption to have a material impact on its financial condition, results of operations or cash flows.
In November 2015, the FASB issued new guidance simplifying the balance sheet classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the new guidance. The guidance is effective for public companies for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company does not expect the adoption to have a material impact on its financial condition, results of operations or cash flows.
In February 2016, the FASB issued authoritative guidance that requires lessees to account for most leases on their balance sheets with the liability being equal to the present value of the lease payments. The right-of-use asset will be based on the lease liability adjusted for certain costs such as direct costs. Lease expense will be recognized similar to current accounting guidance with operating leases resulting in a straight-line expense and financing leases resulting in a front-loaded expense similar to the current accounting for capital leases. This guidance becomes effective for the Company's fiscal 2020 first quarter, with early adoption permitted. This guidance must be adopted using a modified retrospective transition approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and provides for certain practical expedients. The Company is currently evaluating the timing, impact and method of applying this guidance on its consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09). Areas for simplification in this update involve several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016, with early application permitted. The Company is currently evaluating the timing, impact and method of applying this guidance on its consolidated financial statements.
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2. Segment Information and Concentrations |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information and Concentrations | The Company views its operations as three segments: the manufacture and marketing of standard benchtop laboratory equipment for research in university, hospital and industrial laboratories sold primarily through laboratory equipment distributors and laboratory and pharmacy balances and scales (Benchtop Laboratory Equipment Operations), the manufacture and marketing of custom-made catalyst research instruments for universities, government laboratories, and chemical and petrochemical companies sold on a direct basis (Catalyst Research Instruments Operations) and the design and marketing of bioprocessing systems and products and related royalty income (Bioprocessing Systems).
Segment information is reported as follows:
During the year ended June 30, 2016, one customer accounted for approximately 26% of total revenues. |
3. Fair Value of Financial Instruments |
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | The FASB defines the fair value of financial instruments as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements do not include transaction costs.
The accounting guidance also expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are described below:
In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculated the fair value of its Level 1 and 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period. The fair value of the contingent obligations are based on a a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the table below.
The following tables set forth by level within the fair value hierarchy the Companys financial assets that were accounted for at fair value on a recurring basis at June 30, 2016 and 2015 according to the valuation techniques the Company used to determine their fair values:
The following table sets forth an analysis of changes during fiscal years 2016 and 2015 in Level 3 financial liabilities of the Company:
The Companys contingent obligations require cash payments to the sellers of certain acquired operations based on royalty payments received or operating results achieved. These contingent considerations are classified as liabilities and the liabilities are remeasured to an estimated fair value at each reporting date. During the year ended June 30, 2016, the Company recorded an increase in the estimated fair value of contingent liabilities of approximately $110,000 related to its Bioprocessing Systems Operations segment.
Investments in marketable securities classified as available-for-sale by security type at June 30, 2016 and 2015 consisted of the following:
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4. Inventories |
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
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5. Property and Equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. Property and Equipment |
Depreciation expense was $76,300 and $84,200 for the years ended June 30, 2016 and 2015, respectively. |
6. Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. Goodwill and Other Intangible Assets | Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in connection with the Companys acquisitions. Goodwill amounted to $705,300 at June 30, 2016 and 2015, all of which is expected to be deductible for tax purposes.
The components of other intangible assets are as follows:
Total amortization expense was $352,600 and $350,600 in 2016 and 2015, respectively.
Estimated future amortization expense of intangible assets is as follows:
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7. Lines of Credit |
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Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
7. Lines of credit | The Company has two lines of credit with First National Bank of Pennsylvania - an Export-Related Revolving Line of Credit which is guaranteed by the Export-Import Bank of the United States which provided for export-related borrowings of up to $998,500 through June 2016 bearing interest at prime plus 2% and an annual fee of 1.75%. In June 2016, this line was amended to provide for borrowings up to $200,000 through June 2017 bearing interest at prime plus 1% and an annual fee of 1.75%. The Company also has a Demand Line of Credit which provides for borrowings of up to $300,000 for regular working capital needs, bearing interest at prime, currently 3.50% expiring June 2017. Through June 2016, the Company was required to maintain a cash collateral account of $300,000 to support the Demand Line of Credit. The agreement contains a financial covenant requiring the Company to maintain a minimum net worth and advances on both lines are also secured by a pledge of the Companys assets including inventory, accounts, chattel paper, equipment and general intangibles of the Company. As of June 30, 2016 and 2015, there were no borrowings outstanding under either line. |
8. Notes Payable |
12 Months Ended |
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Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
8. Notes Payable | The Company has a $20,000 36-month auto loan through April 2019, with its bank, with monthly payments of $600 bearing interest at 4% for a vehicle used by the Companys sales manager. The outstanding balance remaining on this loan as of June 30, 2016 was $18,900 with principal payments of $6,400, $6,700 and $5,800 due over the next three fiscal years.
In May 2015, the Company borrowed $200,000 under unsecured notes from two shareholders, one of whom is a Director of the Company, which were paid in June 2016, with interest at 5%. |
9. Employee Benefit Plans |
12 Months Ended |
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Jun. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
9. Employee Benefit Plans | The Company has a 401(k) profit sharing plan covering all its employees, which provides for voluntary employee salary contributions not to exceed the statutory limitations provided by the Internal Revenue Code. The plan provides for Company matching contribution equal to 100% of employees deferral up to 3% of pay, plus 50% of employees deferral over 3% of pay up to 5%. Previously, the Company had two separate plans. Total matching contributions amounted to $69,500 and $66,400 for the years ended June 30, 2016 and 2015, respectively.
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10. Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10. Commitments and Contingencies | The Company entered into a lease in August 2014 for its new Bohemia, New York premises through February 2025 which requires minimum annual rental payments plus other expenses, including real estate taxes and insurance. The future minimum annual rental expense, computed on a straight-line basis, is approximately $170,000 under the terms of the lease. Rental expense for the Bohemia facility amounted to approximately $170,000 in 2016 and $199,400 in 2015. Accrued rent, payable in future years, amounted to $48,800 and $46,700 at June 30, 2016 and 2015, respectively.
The Company is also obligated under an operating lease for its facility in Pittsburgh, Pennsylvania, which requires monthly minimum rental payments through November 2017, plus common area expenses. Total rent expense for the Pittsburgh facility was $105,400 and $99,000 for the fiscal years ended June 30, 2016 and 2015, respectively.
In addition, the Company maintained an operating facility in Clifton, New Jersey and as of mid-July 2014 moved to a significantly smaller office facility in Oradell, New Jersey from which it performs its sales and marketing functions. The Company was obligated to pay $24,000 in fiscal 2015 for an early lease termination fee for the Clifton facility. Total rent expense for the New Jersey facilities, was $23,300 and $25,700 for the years ended June 30, 2016 and 2015, respectively.
The Companys approximate future minimum rental payments under all operating leases are as follows:
The Company has employment contracts with its President providing for an annual base salary of $162,000 for the fiscal year ending June 30, 2017 and with its Executive Vice President providing for an annual base salary of $146,000 for the fiscal year ending June 30, 2017. Both contracts also provide for discretionary performance bonuses. No bonuses were awarded for the fiscal years ended June 30, 2016 or 2015 to either executive.
The Company has an employment contract with the President of Altamira through June 30, 2017, which may be extended by mutual consent for an additional year. The contract provides for an annual base salary of $147,000 for the fiscal year ending June 30, 2017 plus discretionary bonuses. No bonuses were awarded for the fiscal years ended June 30, 2016 or 2015.
The Company has an employment agreement dated February 2014 with the President of its Torbal Division which expires in February 2017, which may be extended by mutual consent for an additional two years. The contract provides for an annual base salary of $140,000 subject to increases commencing with the second year based on percentage increases in the Consumer Price Index (CPI) from the end of the immediately preceding years CPI plus discretionary bonuses. No bonuses were awarded during the fiscal years ended June 30, 2016 or 2015, however as part of the employment agreement, he was granted stock option awards representing 5,000 and 4,000 shares during the years ended June 30, 2016 and 2015 valued at $9,500 and $7,100 using the Black-Scholes-Merton option pricing model, respectively. In addition, he is to be granted, subject to his continued employment in February 2017 options for 6,000 shares.
The Company has a consulting agreement which expires on December 31, 2016 with an affiliate of the Chairman of the Board of Directors for marketing consulting services. The agreement provides that the consultant be paid a monthly fee of $3,600 for a certain number of consulting days as defined in the agreement. Consulting expense related to this agreement amounted to $43,200 for both years ended June 30, 2016 and 2015.
The Company has a consulting agreement which expires December 31, 2016 with another member of its Board of Directors for administrative services providing that the consultant be paid at the rate of $85 per hour. Consulting expense related to this agreement amounted to $5,800 and $4,300 for the fiscal years ended June 30, 2016 and 2015, respectively.
In connection with a February 26, 2014 acquisition of a privately owned company, as of June 30, 2016, the Company remains obligated to make additional payments to the seller based on a percentage of net sales of the business acquired equal to 11% for the year ended June 30, 2017. Payments related to this contingent consideration for each period are due in September following the fiscal year. The Company is also required to make payments of 30% of the net royalties received from the license and sublicense acquired in the SBI acquisition in fiscal 2012. Total contingent consideration payments made for all acquisitions amounted to $130,800 and $132,900 for the years ended June 30, 2016 and 2015, respectively.
The fair value of contingent consideration estimate to be paid as of June 30, 2016 are as follows:
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11. Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11. Income Taxes | The reconciliation of the provision for income taxes at the federal statutory rate of 35% to the actual tax expense or benefit for the applicable fiscal year was as follows:
Deferred tax assets and liabilities consist of the following:
The breakdown between current and long-term deferred tax assets and liabilities is as follows:
ASC No. 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC No. 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. As of June 30, 2016 and 2015, the Company did not have any unrecognized tax benefits related to various federal and state income tax matters.
The Companys policy is to recognize interest and penalties on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits. The Company is subject to U.S. federal income tax, as well as various state jurisdictions. The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the years ending June 30, 2013 and after. The Company does not anticipate any material amount of unrecognized tax benefits within the next 12 months.
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12. Stock Options |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12. Stock Options | Option activity is summarized as follows:
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13. Earnings Per Common Share |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | Earnings per common share data was computed as follows:
Approximately 20,000 and 26,000 shares of the Company's common stock issuable upon the exercise of outstanding options were excluded from the calculation of diluted earnings per common share for the years ended June 30, 2016 and 2015, because the effect would be anti-dilutive.
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1. Summary of significant accounting policies (Policies) |
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Notes to Financial Statements | |||||||||||||
Nature of Operations | Scientific Industries, Inc. and its subsidiaries (the Company) design, manufacture, and market a variety of benchtop laboratory equipment, bioprocessing products and catalyst research instruments. The Company is headquartered in Bohemia, New York where it produces benchtop laboratory equipment for research and has another location in Pittsburgh, Pennsylvania, where it produces a variety of custom-made catalyst research instruments and designs bioprocessing products, and an administrative facility in Oradell, New Jersey related to benchtop laboratory equipment. The equipment sold by the Company includes mixers, shakers, stirrers, refrigerated incubators, pharmacy balances and scales, catalyst characterization instruments, reactor systems and high throughput systems. The Company also sublicenses certain patents and technology under a license with the University of Maryland, Baltimore County, and receives royalty fees from the sublicenses. |
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Principles of consolidation | The accompanying consolidated financial statements include the accounts of Scientific Industries, Inc., Scientific Packaging Industries, Inc., an inactive wholly-owned subsidiary, Altamira Instruments, Inc. (Altamira), a Delaware corporation and wholly-owned subsidiary, and Scientific Bioprocessing, Inc. (SBI), a Delaware corporation and wholly-owned subsidiary, (all collectively referred to as the Company). All material intercompany balances and transactions have been eliminated. |
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Revenue Recognition | Revenue from product sales is recognized when all the following criteria are met:
Revenues are net of normal discounts. Shipping and handling fees billed to customers are included in net revenues, while the related costs are included in cost of revenues.
Substantially all orders are F.O.B. shipping point, all sales are final without right of return or payment contingencies, and there are no special sales arrangements or agreements with any customers.
Royalty revenue received under the Companys sublicenses is recorded net of payments due to its licensors.
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Cash and Cash Equivalents | The Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. As of June 30, 2016 and 2015, $497,200 and $50,000 respectively of cash balances were in excess of such limit. |
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Accounts Receivable |
In order to record the Companys accounts receivable at their net realizable value, the Company must assess their collectability. A considerable amount of judgment is required in order to make this assessment, including an analysis of historical bad debts and other adjustments, a review of the aging of the Companys receivables, and the current creditworthiness of the Companys customers. The Company has recorded allowances for receivables which it considered uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices, customer satisfaction claims and pricing discrepancies. However, depending on how such potential issues are resolved, or if the financial condition of any of the Companys customers was to deteriorate and its ability to make required payments became impaired, increases in these allowances may be required. The Company actively manages its accounts receivable to minimize credit risk. The Company does not obtain collateral for its accounts receivable. |
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Customer Advances | In the ordinary course of business, customers may make advance payments for purchase orders. Such amounts, when received, are categorized as liabilities under the caption customer advances. |
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Investment Securities | Securities available for sale are carried at fair value with unrealized gains or losses reported in a separate component of shareholders equity. Realized gains or losses are determined based on the specific identification method. |
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Inventories | Inventories are valued at the lower of cost (determined on a first-in, first-out basis) or market value, and have been reduced by an allowance for excess and obsolete inventories. The estimate is based on managements review of inventories on hand compared to estimated future usage and sales. Cost of work-in-process and finished goods inventories include material, labor and manufacturing overhead. |
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Property and Equipment |
Property and equipment are stated at cost. Depreciation of property and equipment is provided for primarily by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized by the straight-line method over the remaining term of the related lease or the estimated useful lives of the assets, whichever is shorter.
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Intangible Assets |
Intangible assets consist primarily of acquired technology, customer relationships, non-compete agreements, patents, licenses, websites, intellectual property and research and development (IPR&D), trademarks and trade names. All intangible assets are amortized on a straight-line basis over the estimated useful lives of the respective assets, generally 3 to 10 years. The Company continually evaluates the remaining estimated useful lives of intangible assets that are being amortized to determine whether events or circumstances warrant a revision to the remaining period of amortization. |
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Goodwill and Long-Lived Assets | Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, Intangibles-Goodwill and Other (ASC No. 350). ASC No. 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The Company tests goodwill and long-lived assets annually as of June 30, the last day of its fiscal year, unless an event occurs that would cause the Company to believe the value is impaired at an interim date. The Company concluded as of June 30, 2016 and 2015 there was no impairment of goodwill. |
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Impairment of Long-Lived Assets | The Company follows the provisions of ASC No. 360-10, Property, Plant and Equipment - Impairment or Disposal of Long-Lived Assets (ASC No. 360-10). ASC No. 360-10 which requires evaluation of the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation for impairment is required, the estimated future undiscounted cash flows associated with the asset would be compared to the assets carrying amount to determine if a write down to a new depreciable basis is required. If required, an impairment charge is recorded based on an estimate of future discounted cash flows. For the year ended June 30, 2016, the Company determined that the intangible assets of SBI were impaired, and accordingly an impairment charge of $212,700 was recorded.
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Income Taxes | The Company and its subsidiaries file a consolidated U.S. federal income tax return. Income taxes are accounted for under the asset and liability method. The Company provides for federal, and state income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributed to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
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Advertising | Advertising costs are expensed as incurred. Advertising expense amounted to $79,800 and $79,400 for the years ended June 30, 2016 and 2015, respectively. |
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Research and Development | Research and development costs consisting of expenses for activities that are useful in developing and testing new products, as well as expenses that may significantly improve existing products, are expensed as incurred. |
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Stock Compensation Plan | The Company has a ten-year stock option plan (the 2012 Plan) which provides for the grant of options to purchase up to 100,000 shares of the Companys Common Stock, par value $.05 per share (Common Stock), plus 57,000 shares under options previously granted under the 2002 Stock Option Plan of the Company (the Prior Plan). The 2012 Plan provides for the granting of incentive or non-incentive stock options as defined in the 2012 Plan and options under the 2012 Plan may be granted until 2022. Incentive stock options may be granted to employees at an exercise price equal to 100% (or 110% if the optionee owns directly or indirectly more than 10% of the outstanding voting stock) of the fair market value of the shares of Common Stock on the date of the grant. Non-incentive stock options shall be granted at the fair market value of the shares of Common Stock on the date of grant. At June 30, 2016 and 2015, 79,500 and 84,500 shares respectively, of Common Stock were available for grant of options under the 2012 Plan.
Stock-based compensation is accounted for in accordance with ASC No. 718 Compensation-Stock Compensation (ASC No. 718) which requires compensation costs related to stock-based payment transactions to be recognized. With limited exceptions, the amount of compensation cost is measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards are measured at each reporting period. Compensation costs are recognized over the period that an employee provides service in exchange for the award. During the years ended June 30, 2016 and 2015, the Company granted 5,000 and 4,000 options, respectively, to employees that had a fair value of $9,500 and $7,100, respectively. The fair value of the options granted during fiscal year 2016 and 2015 were determined using the Black-Scholes-Merton option-pricing model. The weighted average assumptions used for fiscal 2016 and 2015, was an expected life of 10 years; risk free interest rate of 1.82% and 1.93%; volatility of 51% and 52%, and dividend yield of 0% for both years. The Company did not declare dividends during the years ended June 30, 2016 and 2015. Therefore a zero value for the expected dividend value factor was used to determine the fair value of options granted. The weighted-average value per share of the options granted in 2016 and 2015 was $1.89 and $1.77, and total stock-based compensation costs were $11,800 and $10,900 for the years ended June 30, 2016 and 2015, respectively. Stock-based compensation costs related to nonvested awards expected to be recognized in the future are $1,000 and $3,300 as of June 30, 2016 and 2015, respectively. |
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Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, the allowance for doubtful accounts, slow-moving inventory reserves, depreciation and amortization, assumptions made in valuing equity instruments issued for services, and the fair values of intangibles and goodwill. The actual results experienced by the Company may differ materially from managements estimates.
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Earnings Per Common Share | Basic earnings per common share is computed by dividing net income by the weighted-average number of shares outstanding. Diluted earnings per common share includes the dilutive effect of stock options. |
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Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers amending revenue recognition requirements for multiple-deliverable revenue arrangements. This update provides guidance on how revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. This determination is made in five steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB deferred the effective date to fiscal years beginning after December 15, 2018 and early adoption of the standard is permitted, but not before the original effective date of December 15, 2017. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures.
In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved After the Requisite Service Period. This update affects reporting entities that grant their employees targets that affects vesting could be achieved after the requisite service period. The new standard requires that a performance target that affects vesting and that could be achieved after the requisite services period be treated as a performance condition. The new standard will be effective for the Company beginning July 1, 2016. The Company does not expect the adoption to have a material impact on its financial condition, results of operations or cash flows.
In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory, that requires inventory not measured using either the last in, first out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The new standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and will be applied prospectively. Early adoption is permitted. The Company does not expect the adoption to have a material impact on its financial condition, results of operations or cash flows.
In November 2015, the FASB issued new guidance simplifying the balance sheet classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the new guidance. The guidance is effective for public companies for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company does not expect the adoption to have a material impact on its financial condition, results of operations or cash flows.
In February 2016, the FASB issued authoritative guidance that requires lessees to account for most leases on their balance sheets with the liability being equal to the present value of the lease payments. The right-of-use asset will be based on the lease liability adjusted for certain costs such as direct costs. Lease expense will be recognized similar to current accounting guidance with operating leases resulting in a straight-line expense and financing leases resulting in a front-loaded expense similar to the current accounting for capital leases. This guidance becomes effective for the Company's fiscal 2020 first quarter, with early adoption permitted. This guidance must be adopted using a modified retrospective transition approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and provides for certain practical expedients. The Company is currently evaluating the timing, impact and method of applying this guidance on its consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09). Areas for simplification in this update involve several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016, with early application permitted. The Company is currently evaluating the timing, impact and method of applying this guidance on its consolidated financial statements. |
2. Segment Information and Concentrations (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
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3. Fair Value of Financial Instruments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Inputs |
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Analysis of changes in Level 3 financial liabilities |
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Investments in Marketable Securitites |
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4. Inventories (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
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5. Property and Equipment (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property And Equipment Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment |
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6. Goodwill and Other Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
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Estimated future amortization expense of intangible assets |
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10. Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum rental payments |
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Fair value of contingent consideration |
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11. Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax reconciliation |
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Deferred tax assets and liabilities |
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Schedule of current and long-term deferred tax assets and liabilities |
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12. Stock Options (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option activity |
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Options Outstanding |
|
13. Earnings per common share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per common share |
|
3. Fair Value of Financial Instruments (Details) - USD ($) |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
---|---|---|---|
Assets | |||
Cash and cash equivalents | $ 1,245,000 | $ 482,000 | $ 493,700 |
Restricted cash | 0 | 300,000 | |
Available for sale securities | 290,100 | 281,800 | |
Total | 1,535,100 | 1,063,800 | |
Liabilities: | |||
Contingent consideration | 346,300 | 367,100 | $ 500,000 |
Level 1 | |||
Assets | |||
Cash and cash equivalents | 1,245,000 | 482,000 | |
Restricted cash | 300,000 | ||
Available for sale securities | 290,100 | 281,800 | |
Total | 1,535,100 | 1,063,800 | |
Liabilities: | |||
Contingent consideration | 0 | 0 | |
Level 2 | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash | 0 | ||
Available for sale securities | 0 | 0 | |
Total | 0 | 0 | |
Liabilities: | |||
Contingent consideration | 0 | 0 | |
Level 3 | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash | 0 | ||
Available for sale securities | 0 | 0 | |
Total | 0 | 0 | |
Liabilities: | |||
Contingent consideration | $ 346,300 | $ 367,100 |
3. Fair Value of Financial Instruments (Details 1) - USD ($) |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Fair Value Of Financial Instruments Details 1 | ||
Beginning balance | $ 367,100 | $ 500,000 |
Increase in contingent consideration liability | 110,000 | 0 |
Payments | (130,800) | (132,900) |
Ending balance | $ 346,300 | $ 367,100 |
3. Fair Value of Financial Instruments (Details 2) - USD ($) |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Cost | $ 289,200 | $ 285,100 |
Fair Value | 290,100 | 281,800 |
Unrealized Holding Gain (Loss) | 900 | (3,300) |
Equity Securities | ||
Cost | 29,300 | 29,300 |
Fair Value | 40,700 | 35,800 |
Unrealized Holding Gain (Loss) | 11,400 | 6,500 |
Mutual Funds | ||
Cost | 259,900 | 255,800 |
Fair Value | 249,400 | 246,000 |
Unrealized Holding Gain (Loss) | $ (10,500) | $ (9,800) |
4. Inventories (Details) - USD ($) |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Inventories Details | ||
Raw materials | $ 1,529,800 | $ 1,420,800 |
Work-in-process | 425,300 | 442,900 |
Finished goods | 457,000 | 350,000 |
Inventory | $ 2,412,100 | $ 2,213,700 |
5. Property and Equipment (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Property And Equipment Details Narrative | ||
Depreciation expense | $ 76,300 | $ 84,200 |
6. Goodwill and Other Intangible Assets (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Cost | $ 2,395,700 | $ 2,885,800 |
Accumulated Amortization | 1,498,100 | 1,433,900 |
Net | 897,600 | 1,451,900 |
Technology, trademarks | ||
Cost | 722,800 | 1,226,800 |
Accumulated Amortization | 468,800 | 624,200 |
Net | $ 254,000 | $ 602,600 |
Useful life | 10 years | 5 years |
Trade names [Member] | ||
Cost | $ 140,000 | $ 140,000 |
Accumulated Amortization | 54,400 | 31,100 |
Net | $ 85,600 | $ 108,900 |
Useful life | 6 years | 6 years |
Websites [Member] | ||
Cost | $ 210,000 | $ 210,000 |
Accumulated Amortization | 98,000 | 56,000 |
Net | $ 112,000 | $ 154,000 |
Useful life | 5 years | 5 years |
Customer relationships | ||
Cost | $ 357,000 | $ 357,000 |
Accumulated Amortization | 261,600 | 236,200 |
Net | $ 95,400 | $ 120,800 |
Useful life | 10 years | 9 years |
Sublicense agreements | ||
Cost | $ 294,000 | $ 294,000 |
Accumulated Amortization | 136,000 | 106,600 |
Net | $ 158,000 | $ 187,400 |
Useful life | 10 years | 10 years |
Non-compete agreements | ||
Cost | $ 384,000 | $ 384,000 |
Accumulated Amortization | 239,100 | 182,700 |
Net | $ 144,900 | $ 201,300 |
Useful life | 5 years | 5 years |
IPR and D | ||
Cost | $ 110,000 | $ 110,000 |
Accumulated Amortization | 85,500 | 48,900 |
Net | $ 24,500 | $ 61,100 |
Useful life | 3 years | 3 years |
Other intangible assets | ||
Cost | $ 177,900 | $ 164,000 |
Accumulated Amortization | 154,700 | 148,200 |
Net | $ 23,200 | $ 15,800 |
Useful life | 5 years | 5 years |
6. Goodwill and Other Intangible Assets (Details Narrative) - USD ($) |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Goodwill And Other Intangible Assets Details Narrative | ||
Estimated future amortization expense 2017 | $ 297,300 | |
Estimated future amortization expense 2018 | 288,500 | |
Estimated future amortization expense 2019 | 210,600 | |
Estimated future amortization expense 2020 | 45,100 | |
Estimated future amortization expense 2021 | 43,500 | |
Estimated future amortization expense thereafter | 12,600 | |
Total | $ 897,600 | $ 1,451,900 |
10. Commitments and Contingencies (Details) |
Jun. 30, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2017 | $ 260,200 |
2018 | 268,800 |
2019 | 205,000 |
2020 | 174,000 |
2021 | 179,300 |
Thereafter | 841,600 |
Total | $ 1,928,900 |
10. Commitments and Contingencies (Details 1) |
Jun. 30, 2016
USD ($)
|
---|---|
Commitments And Contingencies Details 1 | |
2017 | $ 136,500 |
2018 | 158,800 |
2019 | 16,000 |
2020 | 13,000 |
2021 | 10,000 |
Thereafter | 12,000 |
Total | $ 346,300 |
11. Income Taxes (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Taxes Details | ||
Computed "expected" income tax | $ 76,600 | $ (2,600) |
Research and development credits | (15,700) | (11,200) |
Other, net | (7,600) | (2,200) |
Income tax expense (benefit) | $ 53,300 | $ (16,000) |
Computed "expected" income tax, percent | 35.00% | (35.00%) |
Research and development credits, percent | (7.20%) | (153.40%) |
Other, net, percent | (3.50%) | (30.70%) |
Income tax expense (benefit), percent | 24.30% | (219.10%) |
11. Income Taxes (Details 1) - USD ($) |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Deferred tax assets: | ||
Amortization of intangibles | $ 287,000 | $ 183,000 |
Research and development credits | 0 | 24,800 |
Various accruals | 132,800 | 60,800 |
Other | 48,900 | 46,100 |
Gross | 468,700 | 314,700 |
Deferred tax liability: | ||
Depreciation of property and amortization of goodwill | (52,200) | (46,000) |
Net deferred tax assets | $ 416,500 | $ 268,700 |
11. Income Taxes (Details 2) - USD ($) |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Income Taxes Details 2 | ||
Current deferred tax assets | $ 140,600 | $ 114,200 |
Long-term deferred tax assets | 328,100 | 200,500 |
Long-term deferred tax liabilities | (52,200) | (46,000) |
Net long-term deferred tax asset | 275,900 | 154,500 |
Net deferred tax assets | $ 416,500 | $ 268,700 |
12. Stock Options (Details) - $ / shares |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Stock Options Details | ||
Number of Options Outstanding, Beginning | 38,500 | 61,000 |
Number of Options Granted | 5,000 | 4,000 |
Number of Options Exercised | 0 | (20,000) |
Number of Options Forfeited | 0 | (6,500) |
Number of Options Outstanding, Ending | 43,500 | 38,500 |
Number of Options Exercisable | 32,200 | 27,200 |
Weighted Average Exercise Price Outstanding, Beginning | $ 3.37 | $ 3.11 |
Weighted Average Exercise Price Granted | 3.05 | 2.80 |
Weighted Average Exercise Price Exercised | 2.56 | |
Weighted Average Exercise Price Forfeited | 3.07 | |
Weighted Average Exercise Price Outstanding, Ending | 3.33 | 3.37 |
Weighted average fair value per share of options granted | $ 3.05 | $ 2.80 |
13. Earnings per common share (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Earnings Per Common Share Details | ||
Net income | $ 165,600 | $ 8,700 |
Weighted average common shares outstanding | 1,489,112 | 1,478,126 |
Effect of dilutive securities | 275 | 1,756 |
Weighted average dilutive common shares outstanding | 1,489,387 | 1,479,882 |
Basic earnings per common share | $ 0.11 | $ 0.01 |
Diluted earnings per common share | $ 0.11 | $ 0.01 |
13. Earnings per common share (Details Narrative) - shares |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Equity [Abstract] | ||
Common stock issuable upon the exercise of outstanding options | 20,000 | 26,000 |
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