What changed in this filing

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Item 1. Financial Statements

2025-01-31 compared with 2024-11-01 · 69 added, 50 removed, 227 unchanged (34% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

September 30, 2024

December 31, 2024

June 30, 2024

2 unchanged sentences

Short term investments

Accounts receivable, less allowance for credit losses of $ 1,922 at September 30, 2024 and June 30, 2024

Accounts receivable, less allowance for credit losses of $ 2,043 and $ 1,922 at December 31, 2024 and June 30, 2024, respectively

Prepaid expenses and other current assets

24 unchanged sentences

Common stock, $ 0.005 par value, authorized 20,000,000 shares;

issued and outstanding 9,350,795 at September 30, 2024 and 9,299,795 at June 30, 2024, respectively

issued and outstanding 9,375,795 at December 31, 2024 and 9,299,795 at June 30, 2024, respectively

Paid in capital

6 unchanged sentences

Three Months Ended

Six Months Ended

Cost of goods sold

2 unchanged sentences

Interest income

Loss before income tax provision

Income (loss) before income tax provision

Income tax provision

Loss per common share:

Net income (loss)

Income (loss) per common share:

Weighted-average number of shares:

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Three Months Ended

Six Months Ended

Operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Recovery of credit losses

Adjustments to reconcile net loss to net cash used in operating activities:

Provision for (recovery of) credit losses

Depreciation of equipment and leasehold improvements

3 unchanged sentences

Change in cash surrender value of life insurance

Provision (benefit) for deferred compensation

Provision for deferred compensation

Net changes in operating assets and liabilities:

7 unchanged sentences

Deferred revenue

Net cash provided by (used in) operating activities

Net cash used in operating activities

Investing activities:

10 unchanged sentences

Net (decrease) in cash and cash equivalents

( 1,106,783 )

Cash and cash equivalents at beginning of period

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

Three Months Ended September 30, 2024

Six Months Ended December 31, 2024

Balance, June 30, 2024

1 unchanged sentence

Stock option exercises

Balance, September 30, 2024

Three Months Ended September 30, 2023

Balance, December 31, 2024

Six Months Ended December 31, 2023

Balance, June 30, 2023

Stock-based compensation expense

Stock option exercises

Balance, December 31, 2023

Three Months Ended December 31, 2024

Balance, September 30, 2024

Stock-based compensation expense

Stock option exercises

Balance, December 31, 2024

Three Months Ended December 31, 2023

Balance, September 30, 2023

Stock-based compensation expense

Stock option exercises

Balance, December 31, 2023

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

December 31, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A) BASIS OF PRESENTATION

The condensed consolidated balance sheets as of September 30, 2024 and June 30, 2024, the condensed consolidated statements of operations for the three months ended September 30, 2024 and 2023, the condensed consolidated statements of cash flows for the three months ended September 30, 2024 and 2023, and the condensed consolidated statements of stockholders' equity for the three months ended September 30, 2024 and 2023, have been prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“U.S.

The condensed consolidated balance sheets as of December 31, 2024 and June 30, 2024, the condensed consolidated statements of operations for the three and six months ended December 31, 2024 and 2023, the condensed consolidated statements of cash flows for the six months ended December 31, 2024 and 2023, and the condensed consolidated statements of stockholders' equity for the three and six months ended December 31, 2024 and 2023, have been prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“U.S.

GAAP”) and have not been audited.

8 unchanged sentences

Actual results could differ from the Company's estimates.

During the quarter ended September 30, 2024, the Company reclassified certain amounts on its June 30, 2024 balance sheet to enhance clarity and consistency in financial statement reporting.

Beginning with the first quarter of fiscal year 2025, the Company reclassified certain amounts on its June 30, 2024 balance sheet to enhance clarity and consistency in financial statement reporting.

Specifically, short-term deferred revenue liabilities related to estimated volume incentive rebates and sales returns were reclassified to accrued liabilities to reflect that revenue was already recognized on the sales related to these liabilities.

21 unchanged sentences

Additionally, discrete items are treated separately from the effective rate analysis and are recorded separately as an income tax provision or benefit at the time they are recognized.

During the quarter ended September 30, 2024, a state income tax provision of $ 2,760 was recorded for the required minimum state tax payments plus estimated tax due on the negligible net taxable income after state net operating loss (NOL) deductions.

A provision of $ 1,879 was recorded for the quarter ended September 30, 2023 for minimum required tax payments only as there was no taxable income after application of available NOLs.

No federal income tax provisions were booked for either of those periods given the availability of federal net operating loss carryforwards to offset taxable income.

For NOLs arising in tax years beginning after December 31, 2017, the Tax Cuts and Jobs Act (“TCJA”) limits the NOL deduction to 80 percent of taxable income.

The future utilization of all federal NOLs available to the Company is limited to 80 percent of the resulting taxable income.

The effective tax rate was less than 1 % for each of the three months ended September 30, 2024 and 2023.

During the three and six months ended December 31, 2024, state income tax provisions of $ 2,760 and $ 5,520 , respectively, were recorded for the required minimum state tax payments plus estimated tax due on the negligible net taxable income after state net operating loss (NOL) deductions.

State income tax provisions of $ 1,879 and $ 3,758 , respectively, were recorded for the three and six months ended December 31, 2023 for minimum state required tax payments only as there was no taxable income after application of available NOLs.

No federal income tax provisions were booked for either the three month or six-month periods ending December 31, 2024 or 2023 given the availability of federal net operating loss carryforwards to offset minimal to no taxable income.

NOLs arising in tax years beginning after December 31, 2017, are limited to 80 percent of taxable income per the Tax Cuts and Jobs Act (“TCJA”).

As such, the future utilization of all federal NOLs available to the Company is limited to 80 percent of the resulting taxable income.

The effective tax rate was 2.8 % and 1.7 % for the three and six months ended December 31, 2024, respectively.

The effective tax rate was less than 1 % for the three and six months ended December 31, 2023.

It is anticipated that the effective rate in the current year and future years will continue to be reduced by utilization of a portion or all of the federal and state net operating loss carryforwards that existed as of June 30, 2024.

The Company's anticipated use of $ 14,425 of NOLs to mostly offset the taxable income generated during the first three months of fiscal year 2025 decreased the tax loss carryforward as of September 30, 2024 to approximately $ 32,800,000 .

The Company's taxable loss generated during the first six months of fiscal year 2025 increased the tax loss carryforward as of December 31, 2024 to approximately $ 32,900,000 .

Given the cumulative taxable losses for the last three years, excluding one-time items, the expectation for utilization of the estimated tax loss carryforward is not likely, and as such, the future realization of this continues to be uncertain.

3 unchanged sentences

The related expense is calculated using the net present value of the expected payments and is included in selling, general and administrative expenses in the condensed consolidated statements of operations.

The deferred compensation liability recorded at September 30, 2024 and June 30, 2024 is $ 2,290,498 and $ 2,093,124 , respectively.

The increase in the deferred compensation liability for the current officer, and thus the compensation expense recorded during the three months ended September 30, 2024, was due mainly to the annual increase in the future payments earned under the arrangement due to an additional year of service completed.

Compensation expense recorded under this arrangement was $ 197,374 for the three months ended September 30, 2024 compared to compensation income of $ 59,935 for the three months ended September 30, 2023.

The following tables summarize the unrealized positions for the held-to-maturity debt securities as of September 30, 2024 and June 30, 2024:

September 30, 2024

The deferred compensation liability recorded at December 31, 2024 and June 30, 2024 is $ 2,227,789 and $ 2,093,124 , respectively.

Compensation expense of $ 134,665 was recorded during the six months ended December 31, 2024 as a result of the increase in the deferred compensation liability for the current officer, due mainly to the annual increase in the future payments earned under the arrangement due to an additional year of service completed.

The discount factor used to calculate the net present value of the liability was stable at 5.53 % at December 31, 2024 compared to 5.55 % at June 30, 2024.

A compensation benefit of $( 62,710 ) was recorded under this arrangement for the three months ended December 31, 2024 as the discount factor increased from 5.12 % at September 30, 2024 to 5.53 % as of December 31, 2024.

Compensation expense of $ 123,190 and $ 63,255 , respectively, was recorded for the three and six months ended December 31, 2023.

The following tables summarize the unrealized positions for the held-to-maturity debt securities as of December 31, 2024 and June 30, 2024:

December 31, 2024

Amortized cost basis

7 unchanged sentences

US Treasury securities

The following tables summarize the fair value and amortized cost basis of the held-to-maturity debt securities by contractual maturity as of September 30, 2024 and June 30, 2024:

September 30, 2024

The following tables summarize the fair value and amortized cost basis of the held-to-maturity debt securities by contractual maturity as of December 31, 2024 and June 30, 2024:

December 31, 2024

Amortized Cost Basis

6 unchanged sentences

The components of inventories were as follows:

September 30, 2024

December 31, 2024

June 30, 2024

10 unchanged sentences

There are no unused line fees in the credit facility.

On January 28, 2021, the Credit Agreement was amended to extend the expiration to October 31, 2022, and to change the interest rate to Wall Street Journal Prime less 1.50 %.

A Third Amendment to the Credit Agreement effective October 30, 2022 extended the maturity date to October 31, 2024.

A Fourth Amendment to the Credit Agreement effective October 30, 2024, extends the maturity date to October 31, 2026, and removes one of the covenants requiring submission of annual financial performance projections to the Lender.

On January 28, 2021, the Credit Agreement was amended to change the interest rate to Wall Street Journal Prime less 1.50 %.

An amendment to the Credit Agreement effective October 30, 2024, extended the maturity date to October 31, 2026, and removed one of the covenants requiring submission of annual financial performance projections to the Lender.

The Company and the Lender also entered into a General Business Security Agreement dated May 14, 2019 under which the Company granted the Lender a security interest in substantially all of the Company’s assets in connection with the Company’s obligations under the Credit Agreement.

1 unchanged sentence

The negative covenants include restrictions on other indebtedness, liens, fundamental changes, certain investments, disposition of assets, mergers and liquidations, among other restrictions.

As of September 30, 2024, the Company was in compliance with all covenants related to the Credit Agreement.

As of September 30, 2024 and June 30, 2024, there were no outstanding borrowings on the facility.

As of December 31, 2024, the Company was in compliance with all covenants related to the Credit Agreement.

As of December 31, 2024 and June 30, 2024, there were no outstanding borrowings on the facility.

REVENUE RECOGNITION

2 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

United States

1 unchanged sentence

These constitute future performance obligations, and the Company defers revenue related to these future performance obligations.

Effective July 1, 2023, the Company increased its deferral rates from 2.4 % to 3 % for domestic sales and decreased its deferral rate from 10 % to 8 % for export sales to reflect recent warranty

In the three months ended September 30, 2024 and 2023, the Company recognized revenue, which was included in the deferred revenue liability at the beginning of those periods of $ 77,103 and $ 107,205 , respectively, for performance obligations related to consumer and customer warranties.

Effective July 1, 2023, the Company increased its deferral rates from 2.4 % to 3 % for domestic sales and decreased its deferral rate from 10 % to 8 % for export sales to reflect recent warranty experience.

In the six months ended December 31, 2024 and 2023, the Company recognized revenue, which was included in the

deferred revenue liability at the beginning of those periods of $ 141,787 and $ 197,718 , respectively, for performance obligations related to consumer and customer warranties.

The Company estimates that the deferred revenue performance obligations are satisfied within one year to three years and therefore uses that same timeframe for recognition of the deferred revenue.

(LOSS) PER COMMON AND COMMON STOCK EQUIVALENT SHARE

Basic loss per common share is computed based on the weighted-average number of common shares outstanding.

Diluted loss per common share is calculated assuming the exercise of stock options except where the result would be anti-dilutive.

The following table reconciles the numerator and denominator used to calculate basic and diluted loss per share:

Three Months Ended September 30,

INCOME (LOSS) PER COMMON AND COMMON STOCK EQUIVALENT SHARE

Basic income (loss) per common share is computed based on the weighted-average number of common shares outstanding.

Diluted income (loss) per common share is calculated assuming the exercise of stock options except where the result would be anti-dilutive.

The following table reconciles the numerator and denominator used to calculate basic and diluted income (loss) per share:

Three Months Ended December 31,

Six Months Ended December 31,

Net income (loss)

Weighted average shares, basic

1 unchanged sentence

Diluted shares

Net loss attributable to common shareholders per share:

(1) Excludes 477,043 and 773,085 weighted average stock options during the three months ended September 30, 2024 and 2023, respectively, as the impact of such awards was anti-dilutive.

Net income (loss) attributable to common shareholders per share:

(1) Excludes 713,846 weighted average stock options during the three months ended December 31, 2023 as the impact of such awards was anti-dilutive.

Weighted average stock options excluded during the six months ended December 31, 2024 and 2023 due to anti-dilution were 425,304 and 743,465 , respectively.

For the three months ended December 31, 2024, no stock options were anti-dilutive.

RELATED PARTY TRANSACTIONS

5 unchanged sentences

ACCOUNTS RECEIVABLE CONCENTRATIONS

As of September 30, 2024, the Company’s top three accounts receivable customers represented approximately 24 %, 22 % and 15 % of trade accounts receivable.

As of December 31, 2024, the Company’s top three accounts receivable customers represented approximately 52 %, 15 % and 9 % of trade accounts receivable.

The top three accounts receivable customers as of June 30, 2024, represented approximately 18 %, 15 % and 12 % of trade accounts receivable.

LEGAL MATTERS

As of September 30, 2024, the Company is involved in the matters described below:

As of December 31, 2024, the Company is involved in the matters described below:

• The Company maintains a program focused on enforcing its intellectual property and, in particular, certain patents in its patent portfolio.

8 unchanged sentences

Depending on the results of the investigation and the defense of these allegations, the ultimate resolution of this matter may have a material effect on the Company's condensed consolidated financial statements.

The Company estimates that this matter will ultimately be resolved at a cost of approximately $ 41,000 and has accrued this amount as of September 30, 2024 and June 30, 2024.

The Company estimates that this matter will ultimately be resolved at a cost of approximately $ 41,000 and has accrued this amount as of December 31, 2024 and June 30, 2024.

The ultimate resolution of these matters is not determinable unless otherwise noted.

30 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements