What changed in this filing

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Item 1. Financial Statements

2022-05-17 compared with 2022-02-09 · 180 added, 161 removed, 571 unchanged (37% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2021

March 31, 2022

June 30, 2021

3 unchanged sentences

Marketable securities

Accounts receivable, net of allowance for doubtful accounts of $ 226 at both December 31, 2021 and June 30, 2021, and other reserves

Accounts receivable, net of allowance for doubtful accounts of $ 226 at both March 31, 2022 and June 30, 2021

Inventories, net

20 unchanged sentences

Common Stock, par value $ 0.01 per share;

100,000,000 shares authorized as of December 31, 2021 (Note 10) and 80,000,000 shares authorized as of June 30, 2021;

100,000,000 shares authorized as of March 31, 2022 (Note 10) and 80,000,000 shares authorized as of June 30, 2021;

39,627,255 and 39,595,883 shares issued;

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Three Months ended December 31,

Three Months ended March 31,

(in thousands, except for share and per share data)

9 unchanged sentences

Operating Income

Other income (expense):

Other (expense) income:

Interest and other income (expense), net

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except for share and per share data)

9 unchanged sentences

Operating Income

Other income (expense):

Other (expense) income:

Interest and other income (expense), net

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (unaudited)

Six months ended December 31, 2021 (in thousands, except for share data)

Nine months ended March 31, 2022 (in thousands, except for share data)

Treasury Stock

Balances at June 30, 2021

( 2,893,715 )

Balances at June 30, 2021, Prior to considering Retrospective effect of Stock Split

Retrospective Effects of 2:1 Stock Split Declared on December 20, 2021

9 unchanged sentences

( 2,893,715 )

Six months ended December 31, 2020 (in thousands, except share data)

Treasury Stock

Balances at June 30, 2020

Stock-based compensation expense

Stock options exercised

Balances at March 31, 2022

( 2,893,715 )

Nine months ended March 31, 2021 (in thousands, except share data)

Treasury Stock

Balances at June 30, 2020, Prior to considering Retrospective effect of Stock Split

Retrospective Effects of 2:1 Stock Split Declared on December 20, 2021

7 unchanged sentences

( 2,893,715 )

Stock-based compensation expense

Stock options exercised

Balances at March 31, 2021

( 2,893,715 )

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months ended December 31,

Nine Months ended March 31,

(in thousands)

2 unchanged sentences

Depreciation and amortization

Loss on marketable securities

Unrealized loss on marketable securities

(Recovery of) provision for doubtful accounts

Change to inventory reserve

Deferred income taxes

23 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

DECEMBER 31, 2021

MARCH 31, 2022

NOTE 1 - Nature of Business and Summary of Significant Accounting Policies

10 unchanged sentences

Deterioration of the current economic conditions may also affect this trend.

Our results for fiscal 2021 and the first two quarters of fiscal 2022 reflected the increase in customer demand after the challenging business environment resulting from the COVID-19 pandemic.

Our results for fiscal 2021 and the first three quarters of fiscal 2022 reflected the increase in customer demand after the challenging business environment resulting from the COVID-19 pandemic.

While the Company believes this recovery will continue, there can be no assurances that it will do so in the event of a return to building and construction restrictions that might result from a return to higher levels of COVID-19 cases.

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The methods and assumptions used to estimate the fair value of the following classes of financial instruments were:

Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, current receivables and payables and certain other short-term financial instruments approximate their fair value as of December 31, 2021 and June 30, 2021 due to their short-term maturities.

Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, current receivables and payables and certain other short-term financial instruments approximate their fair value as of March 31, 2022 and June 30, 2021 due to their short-term maturities.

Long-term debt and lease liabilities reflect fair value based on prevailing market rates.

Cash and Cash Equivalents

Cash and cash equivalents include approximately $ 63,000 of short-term time deposits at both December 31, 2021 and June 30, 2021, respectively.

Cash and cash equivalents include approximately $ 63,000 of short-term time deposits at both March 31, 2022 and June 30, 2021, respectively.

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of December 31, 2021 and June 30, 2021.

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of March 31, 2022 and June 30, 2021.

The Company has not historically experienced any credit losses with balances in excess of FDIC limits.

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The Company would record an impairment charge if the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary.

During the three and six months ended December 31, 2021, the Company did not record an impairment charge regarding its investment in marketable securities because management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary.

During the three and nine months ended March 31, 2022, the Company did not record an impairment charge regarding its investment in marketable securities because management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary.

Accounts Receivable

Accounts receivable is stated net of the reserves for doubtful accounts of $ 226,000 as of December 31, 2021 and June 30, 2021, respectively.

Accounts receivable is stated net of the reserves for doubtful accounts of $ 226,000 as of both March 31, 2022 and June 30, 2021.

Our reserves for doubtful accounts are subjective critical estimates that have a direct impact on reported net earnings.

5 unchanged sentences

These proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and actual results could differ from those estimates.

In addition, the Company records an inventory obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value, based on various product sales projections.

In addition, the Company records an inventory obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value.

This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, requirements to support forecasted sales, and the ability to find alternate applications of its raw materials and to convert finished product into alternate versions of the same product to better match customer demand.

In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events.

In addition, and as necessary, the Company

may establish specific reserves for future known or anticipated events.

There is inherent professional judgment and subjectivity made by both production and engineering members of management in determining the estimated obsolescence percentage.

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Changes in intangible assets are as follows (in thousands):

December 31, 2021

March 31, 2022

June 30, 2021

Customer relationships

Amortization expense for intangible assets subject to amortization was approximately $ 98,000 and $ 107,000 for the three months ended December 31, 2021 and 2020, respectively.

Amortization expense for intangible assets subject to amortization was approximately $ 196,000 and $ 213,000 for the six months ended December 31, 2021 and 2020, respectively.

Amortization expense for intangible assets subject to amortization was approximately $ 98,000 and $ 106,000 for the three months ended March 31, 2022 and 2021, respectively.

Amortization expense for intangible assets subject to amortization was approximately $ 293,000 and $ 319,000 for the nine months ended March 31, 2022 and 2021, respectively.

Amortization expense for each of the next five fiscal years is estimated to be as follows:

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and 2026 - $ 297,000 .

The weighted average remaining amortization period for intangible assets was 16.5 years and 16.9 years at December 31, 2021 and June 30, 2021, respectively.

The weighted average remaining amortization period for intangible assets was 16.3 years and 16.9 years at March 31, 2022 and June 30, 2021, respectively.

Revenue Recognition

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expenses in the consolidated statements of income and are expensed as incurred.

Advertising expense for the three months ended December 31, 2021 and 2020 was $ 512,000 and $ 347,000 , respectively.

Advertising expense for the six months ended December 31, 2021 and 2020 was $ 1,598,000 and $ 690,000 , respectively

Advertising expense for the three months ended March 31, 2022 and 2021 was $ 655,000 and $ 229,000 , respectively.

Advertising expense for the nine months ended March 31, 2022 and 2021 was $ 2,253,000 and $ 919,000 , respectively

Research and Development Costs

Research and development (“R&D”) costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income.

Company-sponsored R&D expense for the three months ended December 31, 2021 and 2020 was $ 1,978,000 and $ 1,884,000 , respectively.

R&D expense for the six months ended December 31, 2021 and 2020 was $ 3,909,000 and $ 3,773,000 , respectively.

Company-sponsored R&D expense for the three months ended March 31, 2022 and 2021 was $ 2,009,000 and $ 1,902,000 , respectively.

R&D expense for the nine months ended March 31, 2022 and 2021 was $ 5,918,000 and $ 5,675,000 , respectively.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended December 31, 2021 and 2020 (in thousands, except share and per share data):

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended March 31, 2022 and 2021 (in thousands, except share and per share data):

Weighted Average Shares

2 unchanged sentences

Stock Options

Options to purchase 80,435 and 64,000 shares of common stock were excluded for the three months ended December 31, 2021 and 2020, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

Options to purchase 388,000 and 16,000 shares of common stock were excluded for the three months ended March 31, 2022 and 2021, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

These options were still outstanding at the end of the period.

The following provides a reconciliation of information used in calculating the per share amounts for the six months ended December 31, 2021 and 2020 (in thousands, except share and per share data):

The following provides a reconciliation of information used in calculating the per share amounts for the nine months ended March 31, 2022 and 2021 (in thousands, except share and per share data):

Weighted Average

2 unchanged sentences

Stock Options

Options to purchase 40,217 and 72,000 shares of common stock were excluded for the six months ended December 31, 2021 and 2020, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

Options to purchase 156,145 and 53,333 shares of common stock were excluded for the nine months ended March 31, 2022 and 2021, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

These options were still outstanding at the end of the period.

3 unchanged sentences

Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility and forfeiture rates, among other factors.

Stock-based compensation costs of $ 1,255,000 and $ 84,000 were recognized for the three months ended December 31, 2021 and 2020, respectively.

Stock-based compensation costs of $ 1,344,000 and $ 188,000 were recognized for the six months ended December 31, 2021 and 2020, respectively.

Stock-based compensation costs of $ 35,000 and $ 84,000 were recognized for the three months ended March 31, 2022 and 2021, respectively.

Stock-based compensation costs of $ 1,379,000 and $ 272,000 were recognized for the nine months ended March 31, 2022 and 2021, respectively.

Foreign Currency

2 unchanged sentences

The day-to-day operations of all foreign subsidiaries are dependent on the economic environment of the U.S.

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three or six months ended December 31, 2021 or 2020.

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three or nine months ended March 31, 2022 or 2021.

Comprehensive Income

For the three and six months ended December 31, 2021 and 2020, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income.

For the three and nine months ended March 31, 2022 and 2021, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income.

Accordingly, the Company’s comprehensive income approximates its net income for all periods presented.

5 unchanged sentences

Shipping and Handling Sales and Costs

The Company records the amount billed to customers for shipping and handling in net sales ($ 106,000 and $ 93,000 in the three months ended December 31, 2021 and 2020, respectively and $ 212,000 and $ 199,000 in the six months ended December 31, 2021 and 2020, respectively);

and classifies the costs associated with these sales in cost of sales ($ 361,000 and $ 230,000 in the three months ended December 31, 2021 and 2020, respectively and $ 694,000 and $ 451,000 in the six months ended December 31, 2021 and 2020, respectively).

The Company records the amount billed to customers for shipping and handling in net sales ($ 106,000 and $ 91,000 in the three months ended March 31, 2022 and 2021, respectively and $ 318,000 and $ 290,000 in the nine months ended March 31, 2022 and 2021, respectively);

and classifies the costs associated with these sales in cost of sales ($ 339,000 and $ 281,000 in the three months ended March 31, 2022 and 2021, respectively and $ 1,033,000 and $ 732,000 in the nine months ended March 31, 2022 and 2021, respectively).

Effective July 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date.

3 unchanged sentences

A change in the rate utilized could have a material effect on the amounts reported.

Financial positions for reporting periods beginning on or after July 1, 2019 are presented under new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance.

Financial positions for reporting periods beginning on or after July 1, 2019 are presented under new guidance, while prior period amounts are not adjusted and continue to be reported in accordance

with previous guidance.

See Note 13 – Commitments and Contingencies;

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The guidance will no longer be available to apply after December 31, 2022.

Impact on consolidated financial statements – The Company is currently assessing the impact of applying this guidance on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance.

Impact on consolidated financial statements – The Company’s bank has notified the Company that its LIBOR option will continue to be available to it through June 30, 2023, at which time the option will shift to the Benchmark Replacement as defined in the agreement with the bank (see Note 8).

The Company does not believe that this transition will have a material impact on its financial condition.

NOTE 2 – Revenue Recognition and Contracts with Customers

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The Company also provides wireless communication service for intrusion and fire alarm systems on a monthly basis.

All of these products are used for commercial, residential, institutional, industrial and governmental applications, and are sold primarily to independent distributors, dealers and installers of security equipment.

All of these products and services are used for commercial, residential, institutional, industrial and governmental applications, and are sold primarily to independent distributors, dealers and installers of security equipment.

Sales to unaffiliated customers are primarily shipped from the United States.

As of December 31, 2021 and June 30, 2021, the Company included refund liabilities of approximately $ 4,248,000 and $ 4,277,000 , respectively, in current liabilities.

As of December 31, 2021 and June 30, 2021, the Company included return-related assets of approximately $ 1,019,000 and $ 890,000 , respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 13 %for both the three months ended December 31, 2021 and 2020, respectively.

As a percentage of gross sales, returns, rebates and allowances were 11 % for both the six months ended December 31, 2021 and 2020, respectively.

As of March 31, 2022 and June 30, 2021, the Company included refund liabilities of approximately $ 4,771,000 and $ 4,277,000 , respectively, in current liabilities.

As of March 31, 2022 and June 30, 2021, the Company included return-related assets of approximately $ 961,000 and $ 890,000 , respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 11 % and 10 % for the three months ended March 31, 2022 and 2021, respectively.

As a percentage of gross sales, returns, rebates and allowances were 10 % and 9 % for the nine months ended March 31, 2022 and 2021, respectively.

The Company disaggregates revenue from contracts with customers into major product lines.

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Following is the disaggregation of revenues based on major product lines (in thousands):

Three months ended December 31,

Six months ended December 31,

Three months ended March 31,

Nine months ended March 31,

Major Product Lines:

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Such risks of loss manifest themselves differently, depending on the nature of the concentration, and vary in significance.

The Company had one customer with an accounts receivable balance that comprised 18 % and 12 % of the Company’s accounts receivable at December 31, 2021 and June 30.

2021, respectively.

Sales to this customer did not exceed 10 %of net sales during the three months or six months ended December 31, 2021 and 2020, respectively.

The Company had another customer with an accounts receivable balance that comprised 12 % and 11 % of the Company’s accounts receivable at December 31, 2021 and June 30, 2021, respectively.

Sales to this customer did not exceed 10 % of net sales during the three or six months ended December 31 2021 and 2020, respectively.

The Company had another customer with an accounts receivable balance that comprised 12 % and 19 % of the Company’s accounts receivable at December 31, 2021 and June 30, 2021.

Sales to this customer were 10 % of net sales during each the six months ended December 31, 2021 and 2020.

Sales to this customer did not exceed 10 % for the three months ended December 31, 2021.

Sales to this customer were 14 % of net sales during the three months ended December 31, 2020.

The Company did not have any customers which exceeded 10% of net sales for the three or nine months ended March 31, 2022 and March 31, 2021, respectively.

The Company had three customers with an accounts receivable balance that comprised 13 %, 15 % and 13 % of the Company’s accounts receivable at March 31, 2022.

The same three customers had accounts receivable balances that comprise of 12 %, 19 % and 11 %, of the Company’s accounts receivable at June 30, 2021.

NOTE 4 – Marketable Securities

The Company’s marketable securities include investments in mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds, and are reported at their fair values.

There were no realized or unrealized gains and losses for the three months or six month ended December 31, 2020.

The disaggregated net gains and losses on the marketable securities

recognized within the accompanying condensed consolidated statements of income for the three and six months ended December 31, 2021, are as follows (in thousands):

Three months ended December 31, 2021

Six months ended December 31, 2021

The disaggregated net gains and losses on the marketable securities recognized within the accompanying condensed consolidated statements of income for the three and nine months ended March 31, 2022 and 2021, are as follows (in thousands):

Three months ended March 31,

Nine months ended March 31,

Net gains recognized during the period on marketable securities

8 unchanged sentences

The Company’s marketable securities, which are considered available-for-sale securities, are re-measured to fair value on a recurring basis and are valued using Level 1 inputs using quoted prices (unadjusted) for identical assets in active markets.

The following tables summarize the Company’s investments at December 31, 2021 and June 30, 2021, respectively (in thousands):

December 31, 2021

The following tables summarize the Company’s investments at March 31, 2022 and June 30, 2021, respectively (in thousands):

March 31, 2022

June 30, 2021

11 unchanged sentences

Property, plant and equipment consist of the following (in thousands):

December 31, 2021

March 31, 2022

June 30, 2021

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accumulated depreciation and amortization

Depreciation and amortization expense on property, plant, and equipment was approximately $ 348,000 and $ 319,000 for the three months ended December 31, 2021 and 2020, respectively.

Depreciation and amortization expense on property, plant and equipment was approximately $ 690,000 and $ 637,000 for the six months ended December 31, 2021 and 2020, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 338,000 and $ 302,000 for the three months ended March 31, 2022 and 2021, respectively.

Depreciation and amortization expense on property, plant and equipment was approximately $ 1,028,000 and $ 939,000 for the nine months ended March 31, 2022 and 2021, respectively.

NOTE 7 - Income Taxes

3 unchanged sentences

In addition, changes in judgment from the evaluation of new information resulting in the recognition de-recognition or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change.

For the six months ended December 31, 2021, the Company recognized net income tax expense of $ 639,000 .

During the six months ended December 31, 2021, the Company’s reserve for uncertain income tax positions increased by $ 6,000 .

For the three and nine months ended March 31, 2022, the Company recognized net income tax expense of $ 1,132,000 and $ 1,771,000 , respectively.

During the nine months ended March 31, 2022, the Company’s reserve for uncertain income tax positions increased by $ 6,000 .

The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense and accrued income taxes.

As of December 31, 2021, the Company had accrued interest totaling $ 76,000 , as well as $ 678,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period.

For the six months ended December 31, 2021, additional interest expense was accrued for in the amount of $ 6,000 .

As of March 31, 2022, the Company had accrued interest totaling $ 82,000 , as well as $ 678,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period.

For the nine months

ended March 31, 2022, additional interest expense was accrued for in the amount of $ 6,000 .

The Company claims R&D tax credits on eligible R&D expenditures.

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income tax return and tax returns in certain state and local and foreign jurisdictions.

As of December 31, 2021, we remain subject to examination in all tax jurisdictions for all relevant jurisdictional statutes for fiscal years 2018 and thereafter.

As of March 31, 2022, we remain subject to examination in all tax jurisdictions for all relevant jurisdictional statutes for fiscal years 2018 and thereafter.

The Company was audited by the IRS for fiscal year 2016.

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NOTE 8 - Long-Term Debt

As of December 31, 2021 and June 30, 2021, the Company had a revolving line of credit of $ 11,000,000 (“Revolver Agreement”) which expires in June 2024.

As of March 31, 2022 and June 30, 2021, the Company had a revolving line of credit of $ 11,000,000 (“Revolver Agreement”) which expires in June 2024.

Also, at June 30, 2021, long-term debt consisted of a term loan from the U.S.

Small Business Administration through its Payroll Protection Program.

Outstanding balances and interest rates as of December 31, 2021 and June 30, 2021 are as follows (dollars in thousands):

December 31, 2021

All amounts borrowed under this loan were forgiven in the first quarter of fiscal 2022.

Outstanding balances and interest rates as of March 31, 2022 and June 30, 2021 are as follows (dollars in thousands):

March 31, 2022

June 30, 2021

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The Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act and governed by the CARES Act, Section 7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the Small Business Association (“SBA”) implementing the PPP and acting as guarantor, or any other applicable loan program requirements, as defined in 13 CFR § 120.10, as amended from time to time.

During the six months ended December 31, 2021, the PPP Loans were forgiven in their entirety, in accordance with guidelines set forth in the PPP.

During the first quarter of fiscal 2022, the PPP Loans were forgiven in their entirety, in accordance with guidelines set forth in the PPP.

The Company recognized a gain on the extinguishment of debt in the first quarter of 2022 in the amount of $ 3,904,000 within the other income (expense) section in the accompanying condensed consolidated statements of income.

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The Company follows ASC 718 (“Share-Based Payment”), which requires that all share-based payments to employees, including stock options, be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period.

For the three months ended December 31, 2021 and 2020, the Company recorded non-cash compensation expense of $ 1,255,000 ($ 0.03 per basic and diluted share) and $ 84,000 ($ 0.00 per basic and diluted share), respectively, relating to stock-based

compensation.

For the six months ended December 31, 2021 and 2020, the Company recorded non-cash compensation expense of $ 1,344,000 ($ 0.04 per basic and diluted share) and $ 188,000 ($ .01 per basic and diluted share).

For the three months ended March 31, 2022 and 2021, the Company recorded non-cash compensation expense of $ 35,000 ($ 0.00 per basic and diluted share) and $ 84,000 ($ 0.00 per basic and diluted share), respectively, relating to stock-based compensation.

For the nine months ended March 31, 2022 and 2021, the Company recorded non-cash compensation expense of $ 1,379,000 ($ 0.04 per basic and diluted share) and $ 272,000 ($ .01 per basic and diluted share).

2012 Employee Stock Option Plan

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An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2021, 524,080 stock options were outstanding, 160,576 stock options were exercisable and 1,138,920 stock options were available for grant under this plan.

At March 31, 2022, 523,080 stock options were outstanding, 164,776 stock options were exercisable and 1,138,920 stock options were available for grant under this plan.

No options may be granted under this plan after December 2022.

338,000 Options were granted during the three and six months ended December 31, 2021.

There were no options granted during the three or six months ended December 31, 2020.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

338,000 Options were granted during the nine months ended March 31, 2022.

There were no options granted during the three months ended March 31, 2022.

There were no options granted during the three or nine months ended March 31, 2021.

The fair value of each

option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rates

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Expected dividend yields

The following table reflects activity under the 2012 Employee Plan for the six months ended December 31:

The following table reflects activity under the 2012 Employee Plan for the nine months ended March 31:

Weighted average

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Total intrinsic value of options exercisable

23,000 and 28,000 stock options were exercised during the three and six months ended December 31, 2021, respectively.

There were no stock options exercised during the three or six ended December 31, 2020.

$ 139,000 and $ 155,000 cash was received from option exercises during the three and six months ended December 31, 2021, respectively.

The actual tax benefit realized for the tax deductions from option exercises during the three and six months ended December 31, 2021 was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at December 31, 2021:

1,000 and 29,000 stock options were exercised during the three and nine months ended March 31, 2022, respectively.

The 1,000 options that were exercised during the three months ended March 31, 2022, were settled by exchanging 153 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

$ 155,000 cash was received from option exercises during the nine months ended March 31, 2022.

The actual tax benefit realized for the tax deductions from option exercises during the three and nine months ended March 31, 2022 was $ 1,000 for both periods.

3,600 stock options were exercised during the three and nine months ended March 31, 2021, which were settled by exchanging 1,350 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

The actual tax benefit realized for the tax deductions from option exercises during the three and nine months ended March 31, 2021 was $ 3,000 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at March 31, 2022:

Options outstanding

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$ 2.19 ‑ $ 24.75

As of December 31, 2021, there was $ 3,541,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan.

338,000 options were granted during the three and six months ended December 31, 2021, respectively.

There were no options granted during each of the three and six months ended December 31, 2020.

85,600 and 90,400 options vested during the three and six months ended December 31, 2021, respectively.

20,800 and 25,600 options vested during the three and six months ended December 31, 2020, respectively.

The total grant date fair value of the options vesting during the three months ended December 31, 2021 and 2020 under this plan was $ 913,000 and $ 106,000 , respectively.

The total grant date fair value of the options vesting during the six months ended December 31, 2021 and 2020 under this plan was $ 942,000 and $ 135,000 , respectively.

As of March 31, 2022, there was $ 2,704,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan.

0 and 338,000 options were granted during the three and nine months ended March 31, 2022, respectively.

There were no options granted during each of the three and nine months ended March 31, 2021.

5,200 and 95,600 options vested during the three and nine months ended March 31, 2022, respectively.

5,200 and 30,800 options vested during the three and nine months ended March 31, 2021, respectively.

The total grant date fair value of the options vesting during the three months ended March 31, 2022 and 2021 under this plan was $ 36,000 and $ 63,000 , respectively.

The total grant date fair value of the options vesting during the nine months ended March 31, 2022 and 2021 under this plan was $ 975,000 and $ 168,000 , respectively.

2012 Non-Employee Stock Option Plan

In December 2012, the stockholders approved the 2012 Non-Employee Stock Option Plan (the 2012 Non-Employee Plan).

This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company’s common stock to be acquired by the holders of such awards.

This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company’s common

stock to be acquired by the holders of such awards.

Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries.

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An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2021, 21,600 stock options were outstanding, 11,760 stock options were exercisable and no further stock options were available for grant under this plan.

9,600 Options were granted during the three and six months ended December 31, 2021.

There were no options granted during the three or six months ended December 31, 2020.

At March 31, 2022, 21,600 stock options were outstanding, 12,480 stock options were exercisable and no further stock options were available for grant under this plan.

9,600 Options were granted during the nine months ended March 31, 2022.

There were no options granted during the three months ended March 31, 2022.

There were no options granted during the three or six months ended March 31, 2021.

No options may be granted under this plan after December 2022.

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Expected dividend yields

The following table reflects activity under the 2012 Non-Employee Plan for the six months ended December 31:

The following table reflects activity under the 2012 Non-Employee Plan for the nine months ended March 31:

Weighted average

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Total intrinsic value of options exercisable

No stock options were exercised during the three or six months ended December 31, 2021 or 2020.

No cash was received from option exercises during either of the three or six months ended December 31, 2021 or 2020 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at December 31, 2021:

No stock options were exercised during the three or nine months ended March 31, 2022 or 2021.

No cash was received from option exercises during either of the three or nine months ended March 31, 2022 or 2021 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

2,400 stock options were exercised during the three and nine months ended March 31, 2021, which were settled by exchanging 913 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

The actual tax benefit realized for the tax deductions from option exercises was $ 6,000 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at March 31, 2022:

Options outstanding

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$ 4.35 - $ 22.93

As of December 31, 2021, there was $ 100,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan.

9,600 options were granted during the three and six months ended December 31, 2021.

No options were granted during the three or six months ended December 31, 2020.

5,520 options vested during each of the three and six months ended December 31, 2021 and 2020.

The total grant date fair value of the options vesting during the three and six months ended December 31, 2021 and 2020 under this plan was $ 34,000 and $ 18,000 , respectively.

As of March 31, 2022, there was $ 76,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan.

0 and 9,600 options were granted during the three and nine months ended March 31, 2022.

No options were granted during the three or nine months ended March 31, 2021.

720 and 6,240 options vested during the three and nine months ended March 31, 2022.

720 and 5,520 options vested during the three and nine months ended March 31, 2021.

The total grant

date fair value of the options vesting during the three months ended March 31, 2022 and 2021 under this plan was $ 5,000 , for each period.

The total grant date fair value of the options vesting during the nine months ended March 31, 2022 and 2021 under this plan was $ 39,000 and $ 18,000 , respectively.

2018 Non-Employee Stock Option Plan

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Under the 2018 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20 % per year beginning on the date of grant.

option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2021, 90,600 stock options were outstanding, 41,260 stock options were exercisable and no further stock options were available for grant under this plan.

23,500 Options were granted during the three and six months ended December 31, 2021.

There were no options granted during the three or six months ended December 31, 2020.

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At March 31, 2022, 89,000 stock options were outstanding, 45,040 stock options were exercisable and no further stock options were available for grant under this plan.

23,500 Options were granted during the nine months ended March 31, 2022.

There were no options granted during the three months ended March 31, 2022.

There were no options granted during the three or nine months ended March 31, 2021.

No options may be granted under this plan after December 2028.

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Expected dividend yields

The following table reflects activity under the 2018 Non-Employee Plan for the three months ended December 31:

The following table reflects activity under the 2018 Non-Employee Plan for the three months ended March 31:

Weighted average

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Total intrinsic value of options exercisable

3,000 options were exercised during the three months and six months ended December 31, 2021, were settled by exchanging 1,412 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

For the three and six months ended December 31, 2021, the actual tax benefit realize for the tax deduction from option exercises was $ 8,000 .

No stock options were exercised during the three months and six months ended December 31, 2020.

No cash was received from option exercises during either of the three and six months ended December 30, 2020 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at December 31, 2021:

1,600 and 4,600 options were exercised during the three months and nine months ended March 31, 2022.

The 1,600 options that were exercised during the three months ended March 31, 2022, were settled by exchanging 663 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

The 4,600 options that were exercised during the nine months ended March 31, 2022, were settled by exchanging 2,075 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

No cash was received from option exercises during either of the three or nine months ended March 31, 2022 and the actual tax benefit realized for the tax deductions from option exercises was $ 4,000 and $ 12,000 , respectively.

3,200 stock options were exercised during the three and nine months ended March 31, 2021, were settled by exchanging 1,217 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

No cash was received from option exercises during either of the three and nine months ended March 31, 2021 and the actual tax benefit realized for the tax deductions from option exercises was $ 6,000 for both periods.

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at March 31, 2022:

Options outstanding

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$ 8.10 - $ 22.93

As of December 31, 2021, there was $ 383,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan.

23,500 options were granted during the three and six months ended December 31, 2021.

No options were granted during the three or six months ended December 31, 2020.

14,300 and 12,800 options vested during the three and six months ended December 31, 2021 and 2020, respectively.

The total grant date fair value of the options vesting during the three and six months ended December 31, 2021 and 2020 under this plan was $ 125,000 and $ 88,000 , respectively.

As of March 31, 2022, there was $ 302,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan.

0 and 23,500 options were granted during the three and nine months ended March 31, 2022.

No options were granted during the three or nine months ended March 31, 2021.

5,380 and 19,680 options vested during the three and nine months ended March 31, 2022.

6,880 and 19,680 options vested during the three and nine months ended March 31, 2021.

The total grant date fair value of the options vesting during the three months ended March 31, 2022 and 2021 under this plan was $ 35,000 and $ 45,000 , respectively.

The total grant date fair value of the options vesting during the nine months ended March 31, 2022 and 2021 under this plan was $ 160,000 and $ 133,000 , respectively.

2020 Non-Employee Stock Option Plan

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An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2021, 26,900 stock options were outstanding, 7,380 stock options were exercisable and 73,100 stock options were available for grant under this plan.

16,900 Options were granted during the three and six months ended December 31, 2021.

There were 0 and 10,000 options granted during the three and six months ended December 31, 2020, respectively.

At March 31, 2022, 26,900 stock options were outstanding, 7,380 stock options were exercisable and 73,100 stock options were available for grant under this plan.

16,900 and 10,000 Options were granted during the nine months ended March 31, 2022 and 2021, respectively.

There were no options granted during the three months ended March 31, 2022 and 2021, respectively.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

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Expected dividend yields

The following table reflects activity under the 2020 Non-Employee Plan for the three months ended December 31:

The following table reflects activity under the 2020 Non-Employee Plan for the three months ended March 31:

Weighted average

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Total intrinsic value of options exercisable

No stock options were exercised during the three or six months ended December 31, 2021 or 2020.

The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at December 31, 2021:

No stock options were exercised during the three or nine months ended March 31, 2022 or 2021.

The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at March 31, 2022:

Options outstanding

8 unchanged sentences

$ 11.40 - $ 22.93

As of December 31, 2021, there was $ 190,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan.

16,900 options were granted during the three and six months ended December 31, 2021.There were 0 and 10,000 options granted during the three months and six months ended December 31, 2020, respectively.

3,380 and 5,380 options vested during the three and six months ended December 31, 2021, respectively.

0 and 2,000 options vested during the three and six months ended December 31, 2020, respectively.

The total grant date fair value of the options vesting during the three and six months ended December 31, 2021 under this plan was $ 43,000 and $ 55,000 , respectively.

The total grant date fair value of the options vesting during the three and six months ended December 31, 2020 under this plan was $ 0 and $ 12,000 , respectively.

As of March 31, 2022, there was $ 147,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan.

16,900 and 10,000 options were granted during the nine months ended March 31, 2022 and 2021, respectively.

There were 0 options granted during the three months ended March 31, 2022 and 2021, respectively.

0 and 5,380 options vested during the three and nine months ended March 31, 2022, respectively.

0 and 2,000 options vested during the three and nine months ended March 31, 2021, respectively.

The total grant date fair value of the options vesting during the three and nine months ended March 31, 2022 under this plan was $ 0 and $ 55,000 , respectively.

The total grant date fair value of the options vesting during the three and nine months ended March 31, 2021 under this plan was $ 0 and $ 12,000 , respectively.

NOTE 10 – Stockholders’ Equity Transactions

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Relative to the loan agreement described in Note 8, the Company’s lender gave its consent to this stock repurchase plan.

During the three and six months ended December 31, 2021, and the fiscal year ended June 30, 2021, the Company did no t repurchase any shares of its outstanding common stock.

Pursuant to the PPP described in Note 8, the Company may not repurchase any of its shares of common stock until 12 months after the termination of the term loans described therein.

During the three months ended December 31, 2021, certain employees and Directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plan totaling 26,000 shares.

3,000 of these exercises was completed as a cashless exercise as allowed for under the Plan, where the exercise shares are issued by the Company in exchange for shares of the Company’s common stock that are owned by the optionees.

During the three and nine months ended March 31, 2022, and the fiscal year ended June 30, 2021, the Company did no t repurchase any shares of its outstanding common stock.

Pursuant to the PPP described in Note 8, the Company may not repurchase any of its shares of common stock until 12 months after the termination of the term loans described therein which occurred between August, 2021 and September, 2021.

During the three months ended March 31, 2022, certain employees and Directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plan totaling 2,600 shares.

All of these exercises were completed as cashless exercises as allowed for under the Plan, where the exercise shares are issued by the Company in exchange for shares of the Company’s common stock that are owned by the optionees.

The number of shares surrendered by the optionees was 816 and was based upon the per share price on the effective date of the option exercise.

$ 139,000 was received in exchange for the remaining 23,000 shares of the Company’s stock.

During the six months ended December 31, 2021, certain employees and Directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plan totaling 31,000 shares.

During the nine months ended March 31, 2022, certain employees and Directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plan totaling 33,600 shares.

5,600 of these exercises were completed as cashless exercises as allowed for under the Plan, where the exercise shares are issued by the Company in exchange for shares of the Company’s common stock that are owned by the optionees.

The number of shares surrendered by the optionees was 2,228 and was based upon the per share price on the effective date of the option exercise.

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non-union employees with one or more years of service and is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code.

Company contributions to this plan are discretionary and totaled $ 37,000 and $ 36,000 for the three months ended December 31, 2021 and 2020, respectively.

Company contributions to this plan are discretionary and totaled $ 73,000 and $ 68,000 for the six months ended December 31, 2021 and 2020, respectively.

Company contributions to this plan are discretionary and totaled $ 59,000 and $ 32,000 for the three months ended March 31, 2022 and 2021, respectively.

Company contributions to this plan are discretionary and totaled $ 132,000 and $ 100,000 for the nine months ended March 31, 2022 and 2021, respectively.

NOTE 13 - Commitments and Contingencies

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Operating leases are included in operating lease right-of-use assets, accrued expenses and operating lease liabilities, non-current on our condensed consolidated balance sheets.

For the three and six months ended December 31, 2021 and 2020 cash payments against operating lease liabilities totaled $ 72,000 and $ 144,000 respectively.

For the three and nine months ended March 31, 2022 and 2021 cash payments against operating lease liabilities totaled $ 72,000 and $ 216,000 respectively.

Supplemental balance sheet information related to operating leases was as follows:

1 unchanged sentence

Weighted-average discount rate

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2021 (in thousands):

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2022 (in thousands):

Year Ending June 30,

Operating lease expense totaled approximately $ 79,000 , for each of the three months ended December 31, 2021 and 2020, respectively.

Operating lease expense totaled approximately $ 158,000 , for each of the six months ended December 31, 2021 and 2020, respectively.

Operating lease expense totaled approximately $ 80,000 and $ 78,000 for the three months ended March 31, 2022 and 2021, respectively.

Operating lease expense totaled approximately $ 239,000 and $ 236,000 for the nine months ended March 31, 2022 and 2021, respectively.

In the normal course of business, the Company is a party to claims and/or litigation.

1 unchanged sentence

Employment Agreements

As of December 31, 2021, the Company was obligated under two employment agreements and one severance agreement.

The employment agreements are with the Company’s CEO and the Senior Vice President of Engineering (“the SVP of Engineering”).

As of March 31, 2022, the Company was obligated under three employment agreements and one severance agreement.

The employment agreements are with the Company’s CEO, CFO and the Senior Vice President of Engineering (“the SVP of Engineering”).

The employment agreement with the CEO provides for an annual salary of $ 872,000 , as adjusted for inflation;

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Financial Information Relating to Domestic and Foreign Operations (in thousands):

Three months ended December 31,

Six months ended December 31,

Three months ended March 31,

Nine months ended March 31,

Sales to external customers (1):

Total Net Sales

December 31, 2021

March 31, 2022

June 30, 2021

5 unchanged sentences

There were no sales into any one foreign country in excess of 10% of total Net Sales.

(2) Consists primarily of inventories (December 31, 2021 = $ 25,677 ;

June 30, 2021 = $ 21,020 ), operating lease assets (December 31, 2021 = $ 7,362 ;

June 30, 2021 = $ 7,373 ) and fixed assets (December 31, 2021 = $ 3,249 ;

(2) Consists primarily of inventories (March 31, 2022 = $ 31,847 ;

June 30, 2021 = $ 20,712 ), operating lease assets (March 31, 2022 = $ 7,356 ;

June 30, 2021 = $ 7,373 ) and fixed assets (March 31, 2022 = $ 3,297 ;

June 30, 2021 = $ 3,208 ) located at the Company’s principal manufacturing facility in the Dominican Republic.

2 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