Note

Summary of Significant Accounting Policies

Principles of Consolidation.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation.

Reclassifications.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are

not

readily apparent from other sources. The most significant estimates include:

● sales returns and allowances;

● allowance for doubtful accounts;

● inventory valuation;

● valuation and recoverability of long-lived assets;

● income taxes and valuation allowance on deferred income taxes, and;

● accruals for, and the probability of, the outcome of any current litigation.

On a continual basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Revenue Recognition.

The Company recognizes product sales revenue, the prices of which are fixed and determinable, when title and risk of loss have transferred to the customer, when estimated provisions for product returns, rebates, charge-backs and other sales allowances are reasonably determinable, and when collectability is reasonably assured. Accruals for these items are presented in the consolidated financial statements as reductions to sales. The Company's net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, rebates, charge-backs and other allowances. Cost of sales includes the cost of raw materials and all labor and overhead associated with the manufacturing and packaging of the products. Gross margins are affected by, among other things, changes in the relative sales mix among our products and valuation and/or charge off of slow moving, expired or obsolete inventories. To perform revenue recognition for arrangements within the scope of ASC

606,

the Company performs the following

five

steps:

●

identification of the promised goods or services in the contract;

●

determination of whether the promised goods or serves are performance obligations including whether they are distinct in the context of the contract;

●

measurement of the transaction price, including the constraint on variable consideration;

●

allocation of the transaction price to the performance obligations based on estimated selling prices; and

●

recognition of revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise to transfer a distinct good or service to the customer and is the unit of account in ASC

606.

Shipping and Handling Costs.

Shipping and handling costs were approximately

$287

and

$205

for the fiscal years ended

June 30, 2020

and

2019,

respectively, and are included in cost of sales in the accompanying Consolidated Statements of Income.

Stock-Based Compensation.

The Company has

two

stock-based compensation plans that have outstanding options issued in accordance with such plans. The Company periodically grants stock options to employees and directors in accordance with the provisions of its stock option plans, with the exercise price of the stock options being set at the closing market price of the common stock on the date of grant. Stock based compensation expense is recognized based on the estimated fair value, utilizing a Black-Scholes option pricing model, of the instrument on the date of grant over the requisite vesting period, which is generally

three

years.

Income Taxes

. The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted 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 on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than

not

that all or a portion of a deferred tax asset will

not

be realized.

The Company files a U.S. federal income tax return as well as returns for various states. The Company's income taxes have

not

been examined by any tax authorities for the periods subject to review by such taxing authorities, except for the State of New Jersey tax filings for MDC which were reviewed by the State of New Jersey for the then open tax periods of

2014

through

2017

and resulted in an adjustment of approximately

$23

for all periods reviewed and included in the income tax provision in the fiscal year ended

June 30, 2019.

Uncertain tax positions, if any, taken on our tax returns are accounted for as liabilities for unrecognized tax benefits. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in general and administrative expenses in the Consolidated Statements of Income. There were

liabilities recorded for uncertain tax positions at

June 30, 2020

2019.

Leases.

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, current portion of long term debt, and long-term debt obligation on our consolidated statement of financial condition.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do

not

provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms

may

include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component.

Earnings Per Share.

Basic earnings per common share amounts are based on weighted average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of all potentially dilutive stock options, subject to anti-dilution limitations using the treasury stock method and if converted method.

Fair Value of Financial Instruments.

Generally accepted accounting principles require disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is

not

necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, it was estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value.

Accounts Receivable and Allowance for Doubtful Accounts.

In the normal course of business, the Company extends credit to customers. Accounts receivable, less the allowance for doubtful accounts, reflect the net realizable value of receivables, and approximate fair value. The Company believes there is

concentration of credit risk with any single customer whose failure or nonperformance would materially affect the Company's results other than as discussed in Note

(c) – Significant Risks and Uncertainties – Major Customers. On a regular basis, the Company evaluates its accounts receivables and establishes an allowance for doubtful accounts based on a combination of specific customer circumstances, credit conditions, and historical write-offs and collections. The allowance for doubtful accounts as of

June 30, 2020

and

2019

was

$99

and

$84,

respectively. Accounts receivable are charged off against the allowance after management determines that the potential for recovery is remote.

Inventories.

Inventories are stated at the lower of cost or net realizable value. Cost is determined using the

first

-in,

first

-out method. Allowances for obsolete and overstock inventories are estimated based on “expiration dating” of inventory and projection of sales.

Property and Equipment.

Property and equipment are recorded at cost and are depreciated using the straight line method over the following estimated useful lives:

Building	15 Years
Leasehold Improvements	Shorter of estimated useful life or term of lease
Machinery and Equipment	7 Years
Transportation Equipment	5 Years

Impairment of Long-Lived Assets.

Long-lived assets are reviewed for impairment when circumstances indicate that the carrying value of an asset

may

not

be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are recorded as held for sale at the lower of carrying value or estimated net realizable value. Tests for impairment or recoverability are performed at least annually and require significant management judgment and the use of estimates which the Company believes are reasonable and appropriate at the time of the impairment test. Future unanticipated events affecting cash flows and changes in market conditions could affect such estimates and result in the need for an impairment charge. The Company also re-evaluates the periods of amortization to determine whether circumstances warrant revised estimates of current useful lives.

impairment losses were identified or recorded in the fiscal years ended

June 30, 2020

and

2019

on the Company's other intangible assets.

Investment in iBio, Inc.

Prior to the adoption of ASU

2016

July 1, 2019,

the Company accounted for its investment in iBio, Inc. (“iBio”) common stock on the cost basis as it retained approximately

of its interest in iBio (the “iBio Stock”) at the time of the spin-off of this subsidiary in

August 2008.

The Company reviewed its investment in iBio for impairment and recorded a loss when there was deemed to be a permanent impairment of the investment. To date, there were cumulative impairment charges of approximately

$2,562.

During the year ended

June 30, 2020,

the Company recognized an unrealized gain of approximately

$103

and realized gains of

$72.

The market value of the iBio Stock as of

June 30, 2020

and

2019,

was approximately

$134

and

$84,

respectively, based on the trade price at the close of trading on

June 30, 2020

and

2019,

respectively. The investment in iBio is included in other current assets in the consolidated balance sheets as of

June 30, 2020

and

2019

at the respective market values.

Accounting Pronouncements

Recently Adopted

October, 2016,

the FASB issued ASU

No.

2016

16,

“Income Taxes (Topic

740

): Intra-Entity Transfers of Assets Other than Inventory,” which eliminates the requirement to defer recognition of income taxes on intra-entity transfers until the asset is sold to an outside party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. The guidance is effective for the Company on

July 1, 2019

and early adoption is permitted. The standard requires a “modified retrospective” adoption, meaning the standard is applied through a cumulative adjustment in retained earnings as of the beginning of the period of adoption. This new guidance did

not

have a material impact on the Company's Consolidated Financial Statements.

July 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2017

11,

"Earnings Per Share (Topic

260

) Distinguishing Liabilities from Equity (Topic

480

) Derivatives and Hedging (Topic

815

)," which addresses the complexity of accounting for certain financial instruments with down round features. The amendments are effective for the Company on

July 1, 2019

for the fiscal year ended

June 30, 2020,

and the interim periods within it. Early adoption was available. The Company is

not

expecting a material impact on the Company's Consolidated Financial Statements.

Accounting Pronouncements

Not

Yet Adopted

August 28, 2018,

the Financial Accounting Standards Board (“FASB”) issued ASU

2018

13,

Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (Topic

820

), which changes the fair value measurement disclosure requirements of ASC

820.

This ASU removes certain disclosure requirements regarding the amounts and reasons for transfers between Level

and Level

of the fair value hierarchy and the policy for timing of transfers between the levels. This ASU also adds disclosure requirements regarding unrealized gains and losses included in Other Comprehensive Income for recurring Level

fair value measurements and the range and weighted average of unobservable inputs used in Level

fair value measurements. ASU

2018

is effective for the fiscal year beginning

July 1, 2020,

including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of ASU

2018

13.

The adoption of this standard is

not

expected to have a material impact on the Company's Consolidated Financial Statements.

June 2016,

the FASB issued ASU

2016

“Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments”. This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance applies to loans, accounts receivable, trade receivables and other financial assets measured at amortized cost, loan commitments, debt securities and beneficial interests in securitized financial assets, but the effect on the Company is projected to be limited to accounts receivable. The guidance will be effective for the fiscal year beginning on

July 1, 2023,

including interim periods within that year. The adoption of this standard is

not

expected to have a material impact on the Company's Consolidated Financial Statements.

May 2019,

the FASB issued ASU

2019

“Financial Instruments-Credit Losses (Topic

326

)” which provides transition relief for companies adopting ASU

2016

13.

This guidance amends ASU

2016

to allow companies to elect, upon adoption of ASU

2016

13,

the fair value option on financial instruments that were previously recorded at amortized cost under certain circumstances. Companies are required to make this election on and instrument by instrument basis. The guidance will be effective for the fiscal year beginning

July 1,

2023,

including interim periods within that year. The adoption of this standard is

not

expected to have a material impact on the Company's Consolidated Financial Statements.

March 2020,

the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)

No.

2020

04,

“Reference Rate Reform (Topic

848

): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides optional expedients and exceptions for applying generally accepted accounting principles (“GAAP”) to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This new guidance was effective upon issuance of this ASU for contract modifications and hedging relationships on a prospective basis and is

not

expected to have a material impact on the Company's Consolidated Financial Statements.