10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒                 Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2022

or

☐                  Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

   for the transition period from _________ to __________         

Commission file number: 1-13738

PSYCHEMEDICS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	58-1701987
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
289 Great Road
Acton, MA	01720
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number including area code: (978) 206-8220

Securities registered pursuant to section 12(b) of the act:

Title of Class	Trading Symbol(s)	Name of each exchange on which registered
Common stock. $0.005 par value	PMD	The Nasdaq Stock Market, LLC.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

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

Large accelerated filer	☐
Accelerated filer	☐
Non–accelerated filer	☒
Smaller reporting company	☒
Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

The number of shares of Common Stock of the Registrant, par value $0.005 per share, outstanding at August 3, 2022 was 5,626,196.

.

PSYCHEMEDICS CORPORATION

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2022

INDEX

		Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Shareholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2 -  Management's Discussion and Analysis of Financial Condition and Results of Operations
	Factors that May Affect Future Results	17
	Overview	18
	Results of Operations	18
	Liquidity and Capital Resources	20
Item 4 - Controls and Procedures		20
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings		21
Item 1A - Risk Factors		21
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 6 - Exhibits		21
Signatures		22

PSYCHEMEDICS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(UNAUDITED)

	June 30,			December 31,
	2022			2021
ASSETS
Current Assets:
Cash	$	1,790		$	1,992
Accounts receivable, net of allowance for doubtful accounts of $118 at June 30, 2022, and $89 at December 31, 2021		4,405			4,116
Prepaid expenses and other current assets		1,722			1,499
Income tax receivable		2,985			2,678
Total Current Assets		10,902			10,285
Fixed assets, net of accumulated amortization and depreciation of $20,867 at June 30, 2022, and $19,659 at December 31, 2021		5,555			6,691
Other assets		851			864
Net deferred tax assets		-			160
Operating lease right-of-use assets		3,142			3,552
Total Assets	$	20,450		$	21,552
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	598		$	994
Accrued expenses		3,264			3,188
Current portion of long-term debt		461			664
Current portion of operating lease liabilities		974			984
Total Current Liabilities		5,297			5,830
Long-term debt		453			599
Long-term deferred tax liabilities		307			-
Long-term portion of operating lease liabilities		2,457			2,880
Total Liabilities		8,514			9,309
Commitments and Contingencies (Note 5)
Shareholders' Equity:
Preferred stock, $0.005 par value, 873 shares authorized, no shares issued or outstanding		-			-
Common stock, $0.005 par value; 50,000 shares authorized, 6,294 shares and 6,257 shares issued at June 30, 2022, and December 31, 2021, respectively, and 5,626 shares outstanding and 5,589 shares outstanding at June 30, 2022, and December 31, 2021, respectively		31			31
Additional paid-in capital		33,863			33,478
Accumulated deficit		(10,242	)		(9,550	)
Less - Treasury stock, at cost, 668 shares		(10,082	)		(10,082	)
Accumulated other comprehensive loss		(1,634	)		(1,634	)
Total Shareholders' Equity		11,936			12,243
Total Liabilities and Shareholders' Equity	$	20,450		$	21,552

See accompanying notes to condensed consolidated financial statements.

3

PSYCHEMEDICS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(UNAUDITED)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022			2021		2022			2021
Revenues	$	6,513		$	6,087	$	13,021		$	11,800
Cost of revenues		4,240			3,651		8,307			6,796
Gross profit		2,273			2,436		4,714			5,004
Operating Expenses:
General & administrative		1,445			1,280		2,772			2,809
Marketing & selling		813			656		1,619			1,298
Research & development		357			293		675			573
Total Operating Expenses		2,615			2,229		5,066			4,680
Operating (loss) income		(342	)		207		(352	)		324
Other (expense) income		(9	)		--		57			(14	)
(Loss) income before (benefit from) provision for income taxes		(351	)		207		(295	)		310
(Benefit from) provision for income taxes		(13	)		73		4			93
Net (loss) income	$	(338	)	$	134	$	(299	)	$	217
Basic net (loss) income per share	$	(0.06	)	$	0.02	$	(0.05	)	$	0.04
Diluted net (loss) income per share	$	(0.06	)	$	0.02	$	(0.05	)	$	0.04
Dividends declared per share	$	0.07		$	-	$	0.07		$	-

See accompanying notes to condensed consolidated financial statements.

4

PSYCHEMEDICS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except per share amounts)

(UNAUDITED)

For the Three Months Ended June 30, 2022
	Common Stock, $0.005 par value					Additional
	Common Shares		Common			Paid-In		Treasury Stock					Accumulated				Accumulated Other
	Outstanding		Stock			Capital		Shares		Cost			Deficit				Comprehensive Loss		Total
BALANCE, March 31, 2022		6,259	$	31	$	33,657			668	$	( 10,082	)	$	( 9,511	)	$	( 1,634	)	$	12,461
Exercise of stock options		1		-		4			-		-			-			-			4
Shares issued – vested		34		-		-			-		-			-			-			-
Tax withholding related to vested shares from employee stock plans		-		-		( 36	)		-		-			-			-			( 36	)
Stock compensation expense		-		-		238			-		-			-			-			238
Cash dividends ($0.07 per share)		-		-		-			-		-			( 393	)		-			( 393	)
Net loss		-		-		-			-		-			( 338	)		-			( 338	)
BALANCE, June 30, 2022		6,294	$	31	$	33,863			668	$	( 10,082	)	$	( 10,242	)	$	( 1,634	)	$	11,936

For the Six Months Ended June 30, 2022
	Common Stock, $0.005 par value					Additional
	Common Shares		Common			Paid-In		Treasury Stock					Accumulated				Accumulated Other
	Outstanding		Stock			Capital		Shares		Cost			Deficit				Comprehensive Loss		Total
BALANCE, December 31, 2021		6,257	$	31	$	33,478			668	$	( 10,082	)	$	( 9,550	)	$	( 1,634	)	$	12,243
Exercise of stock options		1		-		4			-		-			-			-			4
Shares issued – vested		36		-		-			-		-			-			-			-
Tax withholding related to vested shares from employee stock plans		-		-		( 36	)		-		-			-			-			( 36	)
Stock compensation expense		-		-		417			-		-			-			-			417
Cash dividends ($0.07 per share)		-		-		-			-		-			( 393	)		-			( 393	)
Net loss		-		-		-			-		-			( 299	)		-			( 299	)
BALANCE, June 30, 2022		6,294	$	31	$	33,863			668	$	( 10,082	)	$	( 10,242	)	$	( 1,634	)	$	11,936

For the Three Months Ended June 30, 2021
	Common Stock, $0.005 par value					Additional
	Common Shares		Common			Paid-In	Treasury Stock					Accumulated				Accumulated Other
	Outstanding		Stock			Capital	Shares		Cost			Deficit				Comprehensive Loss		Total
BALANCE, March 31, 2021		6,205	$	31	$	33,020		668	$	( 10,082	)	$	( 8,523	)	$	( 1,634	)	$	12,812
Shares issued – vested		4		-		-		-		-			-			-			-
Stock compensation expense		-		-		169		-		-			-			-			169
Net income		-		-		-		-		-			134			-			134
BALANCE, June 30, 2021		6,209	$	31	$	33,189		668	$	( 10,082	)	$	( 8,389	)	$	( 1,634	)	$	13,115

For the Six Months Ended June 30, 2021
	Common Stock, $0.005 par value					Additional
	Common Shares		Common			Paid-In	Treasury Stock					Accumulated				Accumulated Other
	Outstanding		Stock			Capital	Shares		Cost			Deficit				Comprehensive Loss		Total
BALANCE, December 31, 2020		6,205	$	31	$	32,803		668	$	( 10,082	)	$	( 8,606	)	$	( 1,634	)	$	12,512
Shares issued – vested		4		-		-		-		-			-			-			-
Stock compensation expense		-		-		386		-		-			-			-			386
Net income		-		-		-		-		-			217			-			217
BALANCE, June 30, 2021		6,209	$	31	$	33,189		668	$	( 10,082	)	$	( 8,389	)	$	( 1,634	)	$	13,115

See accompanying notes to condensed consolidated financial statements.

5

PSYCHEMEDICS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(UNAUDITED)

	Six Months Ended
	June 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	( 299	)	$	217
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		1,239			1,353
ROU asset amortization		488			470
Deferred income taxes		467			27
Stock-based compensation		417			386
Changes in operating assets and liabilities:
Accounts receivable		(289	)		(615	)
Prepaid expenses and other current assets		(223	)		(1,661	)
Income tax receivable		(307	)		(44	)
Accounts payable		(396	)		523
Operating lease liabilities		(511	)		(508	)
Accrued expenses		76			89
Net cash provided by operating activities		662			237
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and leasehold improvements		(9	)		(14	)
Cost of internally developed software		(63	)		(70	)
Other assets		(18	)		8
Net cash used in investing activities		(90	)		(76	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock, net of tax withholding		(32	)		-
Payments of equipment financing		(349	)		(343	)
Cash dividends paid		(393	)		-
Net cash (used in) financing activities		(774	)		(343	)
Net decrease in cash		(202	)		(182	)
Cash, beginning of period		1,992			2,833
Cash, end of period	$	1,790		$	2,651
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	19		$	28
Cash paid for operating leases	$	568		$	575
Right-of-use assets acquired through operating leases	$	78		$	193

See accompanying notes to condensed consolidated financial statements.

6

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.    Basis of Presentation

The interim condensed consolidated financial statements of Psychemedics Corporation (the “Company”) presented herein, have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2021, included in the Company's 2021 Annual Report on Form 10-K (“10-K”), as filed with the SEC.

The condensed consolidated balance sheet as of June 30, 2022, the condensed consolidated statements of operations for the three and six months ended June 30, 2022, and 2021, the condensed consolidated statements of shareholders’ equity for the three and six months ended June 30, 2022, and 2021, and the condensed consolidated statements of cash flows for the six months ended June 30, 2022, and 2021 are unaudited but, in the opinion of management, include all adjustments necessary for a fair presentation of results for these interim periods. The condensed consolidated balance sheet as of December 31, 2021, has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm, but does not include all of the information and footnotes required for complete annual financial statements. The Company’s comprehensive income (loss) is equal to its net income (loss) for all periods presented.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. The results of operations for the three and six months ended June 30, 2022, may not be indicative of the results that may be expected for the year ending December 31, 2022, or any other period.

Unless the context requires otherwise, the terms “we”, “us”, “our”, or “the Company” refer to Psychemedics Corporation and its wholly-owned consolidated subsidiaries.

2.    COVID-19 Pandemic

The outbreak of coronavirus (“COVID-19”) which was declared by the World Health Organization to be a pandemic, has impacted, and is expected to continue to impact worldwide economic activity. While our domestic business was deemed an essential business and we have been able to continue to provide services to our customers, COVID-19 has had a significant impact on our entire operations. COVID-19’s effect on the overall economy has had an adverse impact on hiring, which has had a negative impact on both our domestic and international testing volume.

7

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2.   COVID-19 Pandemic (continued)

The Coronavirus Aid, Relieve and Economic Security Act (“CARES”) Act, enacted on March 27, 2020, and the Families First Coronavirus Response Act, in each case modified by the Consolidated Appropriations Act enacted in December 2020, were emergency economic stimulus packages that included spending provisions and tax cuts to strengthen the United States economy and to fund a nationwide effort to curtail the effect of COVID-19. The principal impact of the CARES Act and subsequent legislation was the adoption of the Paycheck Protection Program (“PPP”). The CARES Act, together with subsequent legislation, also provided sweeping tax changes in response to the COVID-19 pandemic, including amendments to certain provisions of the previously enacted Tax Cuts and Jobs Act. The Company recognized a benefit of zero for both the three and six months ended June 30, 2022. The Company recognized a benefit of $0.8 million and $1.6 million for the three and six months ended June 30, 2021, respectively, as a reduction to cost of revenues and operating expenses related to the employee retention credit which was a tax provision in the CARES Act and subsequent legislation. Additionally, the CARES Act allowed the Company to fully carryback the 2020 net operating loss, for a refund of corporate income taxes previously paid.

Liquidity and Management’s Plans

At June 30, 2022, the Company’s principal sources of liquidity included $1.8 million of cash. Management currently believes that such funds, together with future operating profits, should be adequate to fund anticipated working capital requirements, including equipment financing obligations, and capital expenditures for at least the next 12 months. Depending upon the Company’s results of operations, its future capital needs and available marketing opportunities, the Company may use various financing sources to raise additional funds. Such sources could include but are not limited to, issuance of common stock, debt financing, lines of credit, or equipment leasing, although there is no assurance that such financings will be available to the Company on terms it deems acceptable, if at all.

Accounts Receivable

The Company believes its allowance for credit losses related to its accounts receivable remained adequate as of June 30, 2022, due to the essential nature of its customers business, as well as the diversity of its large customer base. While the Company anticipates there could be an increase in the aging of its accounts receivable, the Company does not anticipate a significant increase in default risk.

8

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3.    Stock-Based Compensation

The Company’s 2006 Incentive Plan (“the Plan”) provides for cash-based awards or the grant or issuance of stock-based awards. As of June 30, 2022, 199 thousand shares remained available for future grant under the Plan.

Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). The compensation cost charged against income is included in cost of revenues and operating expenses as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Stock-based compensation related to:
Stock option grants	$	42	$	77	$	95	$	221
Stock unit awards		196		92		322		165
Total stock-based compensation	$	238	$	169	$	417	$	386

There was no income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation arrangements for the three and six months ended June 30, 2022, and 2021.

9

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3.     Stock-Based Compensation (continued)

A summary of the Company’s stock option activity for the six months ended June 30, 2022, is as follows (in thousands except per share amounts and years):

						Weighted Average
				Weighted Average		Remaining		Aggregate
	Number of			Exercise Price		Contractual Life		Intrinsic
	Shares			Per Share		(years)		Value(1)
Outstanding, December 31, 2021		574		$	14.23		6.1	$	100
Granted		-		$	-
Exercised		( 1	)	$	4.07
Forfeited		( 1	)	$	4.07
Outstanding, June 30, 2022		572		$	14.23		5.6	$	70
Exercisable, June 30, 2022		519		$	14.89		5.4	$	25

(1) Intrinsic value is calculated based on the amount by which the closing market value of the Company’s stock exceeded the exercise price of the underlying options, multiplied by the number of shares.

A summary of the Company’s stock unit award (“SUA”) activity for the six months ended June 30, 2022, is as follows (in thousands except per share amounts):

	Number of Shares			Weighted Average Grant-Date Fair Value Per Share
Outstanding & Unvested, December 31, 2022		224		$	5.48
Granted		128		$	6.52
Converted to common stock		(36	)	$	6.45
Cancelled		(6	)	$	6.43
Forfeited		(36	)	$	5.66
Outstanding & Unvested, June 30, 2022		274		$	5.76

As of June 30, 2022, 1,131 thousand shares of common stock were reserved for issuance under the Plan. As of June 30, 2022, the unamortized fair value of awards relating to outstanding SUAs and options was $1.5 million, which is expected to be amortized over a weighted average period of 3.2 years.

10

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4.    Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common and dilutive common equivalent shares outstanding during the period when the effect is dilutive. The number of dilutive common equivalent shares outstanding during the period was determined in accordance with the treasury-stock method. Common equivalent shares consisted of common stock issuable upon the exercise of outstanding options and common stock issuable upon the vesting of outstanding, unvested SUAs. Basic and diluted weighted average common shares outstanding for the three and six months ended June 30, 2022, and 2021 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Weighted average common shares outstanding, basic		5,610		5,539		5,600		5,538
Dilutive common equivalent shares		-		88		-		83
Weighted average common shares outstanding, diluted		5,610		5,627		5,600		5,621

The computation of diluted earnings (loss) per share for the three and six months ended June 30, 2022, and 2021 excludes the effect of the potential exercise of stock awards, including stock options, when the effect is anti-dilutive. For the three and six months ended June 30, 2022, the number of antidilutive stock awards excluded from diluted earnings per share were 733 thousand and 589 thousand, respectively.

11

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5.    Commitments and Contingencies

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Although it is difficult to predict the ultimate outcome of these cases, management believes, that any ultimate liability would not have a material adverse effect on the consolidated statements of operations. However, an unforeseen unfavorable development in any of these cases could have a material adverse effect on the statements of operations or cash flows in the period in which it is recorded. Developments in legal proceedings and other matters that could cause changes in the amounts previously accrued are evaluated each reporting period.

Settlements

As previously reported in the 10-K, on December 6, 2021, the Company entered into a binding Memorandum of Understanding (the “MOU”) to settle a purported class action lawsuit against it related to certain California wage and hour laws. The lawsuit, Enma Sagastume v. Psychemedics Corporation, Case No. 2:20-CV-06624-DSF, is pending in the United States District Court for the Central District of California (the “California Lawsuit”) and is similar to numerous lawsuits filed against employers with operations in California.

In the binding MOU, the parties agreed to settle this matter for a payment by the Company of $1.2 million in exchange for the dismissal of the California Lawsuit and a customary release of liability, subject only to final court approval and the process described below. Factoring in that process, the Company estimates that the settlement funds will be dispersed in the second half of 2022, subject to the actual timing of final court approval.

Although the Company believes that the allegations in the California Lawsuit lack merit, it agreed at a mediation to enter into the binding MOU to settle the claims in the California Lawsuit in order to avoid potentially significant legal fees, other expenses, and management time that would have to be devoted to protracted litigation in California regarding its wage and hour laws. The foregoing was also impacted in part by new California case law in February 2021 regarding meal period compliance. The allegations in the California Lawsuit relate to alleged discrepancies in compliance with meal and rest periods required by California law and other alleged compliance discrepancies relating to the California wage and hour laws with respect to non-exempt hourly employees of the Company in California for a period since June 9, 2017. The California Lawsuit sought recovery of wages, penalties, interest, attorneys’ fees and other alleged damages. As part of the settlement, the Company continues to deny any liability or wrongdoing with respect to the claims made in the California Lawsuit.

12

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5.    Commitments and Contingencies (continued)

The MOU assumes class certification for purposes of the settlement only. The settlement amount of $1.2 million, which includes plaintiff attorneys' fees and costs, is subject to potential increase based on any adjustments in the final class size and the exact period to be covered, as determined by the court’s final approval. However, the Company believes that such adjustments, if any, would likely be immaterial. Once court approved, in exchange for the settlement payment, the plaintiff and all class members who do not opt out of the settlement will provide a broad release of any liability relating to the subject matter of the California Lawsuit, including any claims of such persons under California’s Private Attorneys' General Act of 2004. Such release is for the benefit of the Company, its affiliates, and any successor to the Company. The Company has the right to revoke the settlement prior to court approval in the event opt-outs, if any, from the class membership exceed a specified level. While the settlement is subject to final court approval as is customary, the MOU expressly provides that it is binding on and enforceable by each of the parties thereto, including by any successor to the Company. There is a $1.2 million liability reserve as of June 30, 2022 in connection with the California Lawsuit, which is included in accrued expenses on the accompanying consolidated balance sheets.

13

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6.         Operating Leases

The Company has five operating leases for office and laboratory space used to conduct business. The exercise of lease renewal options is at our discretion. There is one lease which contains renewal options to extend the lease terms included in our Right-Of-Use (“ROU”) assets and lease liabilities as they are reasonably certain of exercise. The Company regularly evaluates the renewal options and when they are reasonably certain of exercise. As most of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the lease commencement date in determining the net present value of the lease payments.

As of June 30, 2022, the Company recognized a Right-Of-Use (“ROU”) asset of $3.1 million and an operating lease liability of $3.4 million based on the present value of the minimum rental payments. The weighted average discount rate used for leases as of June 30, 2022, is 3.8%. The weighted average lease term as of June 30, 2022, is 3.9 years. The operating lease expense for the three and six months ended June 30, 2022, was $232 thousand and $501 thousand, respectively.

Maturities and balance sheet presentation of the Company’s lease liabilities for all operating leases as of June 30, 2022, is as follows (in thousands):

July 1, 2022, through December 31, 2022	$	518
2023		1,133
2024		1,061
2025		553
2026		460
Total Lease Payments		3,725
Less: Interest expense		(294	)
Present value of lease liabilities	$	3,431
Current operating lease liabilities	$	974
Long-term operating lease liabilities		2,457
	$	3,431

14

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7.        Debt and Other Financing Arrangements

On March 20, 2014, the Company entered into an equipment financing arrangement (“Loan Agreement”) with Banc of America Leasing & Capital, which it amended on August 8, 2014, September 15, 2015, October 30, 2017, and December 2, 2019. The terms of the arrangement are detailed in the 10-K.

The weighted average interest rate on outstanding debt under the Loan Agreement was 3.6% for the three and six months ended June 30, 2022. The interest expense was $8 thousand and $18 thousand for the three months and six months ended June 30, 2022. As of June 30, 2022, the weighted average interest rate was 3.6% and there was $915 thousand of outstanding debt related under the Loan Agreement. The Company was in compliance with all loan covenants under the Loan Agreement as of June 30, 2022.

The annual principal repayment requirements for debt obligations as of June 30, 2022, were as follows (in thousands):

July 1, 2022, through December 31, 2022	$	316
2023		293
2024		305
Long-term debt from equipment financing		914
Less: current portion of long-term debt from equipment financing		(461	)
Long-term debt from equipment financing, net of current portion	$	453

15

PSYCHEMEDICS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8.        Revenue

The table below disaggregates our external revenue by major source (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Testing	$	5,480	$	5,367	$	11,204	$	10,416
Shipping/Collection (hair)		1,001		680		1,751		1,295
Other		32		40		66		89
Total Revenue	$	6,513	$	6,087	$	13,021	$	11,800

9.        Significant Customers

The Company had no customers that represented over 10% of revenue during either of the six months ended June 30, 2022, or 2021. The Company had one customer that represented 16% and 12% of the total accounts receivable balance as of June 30, 2022, and 2021, respectively.

10.      Subsequent Events

On August 9, 2022, the Company declared a cash dividend of $0.07 per share, which will be paid on September 9, 2022, to shareholders of record on August 24, 2022.

16

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FACTORS THAT MAY AFFECT FUTURE RESULTS

From time to time, information provided by the Company or statements made by its employees may contain forward-looking information that involves risks and uncertainties. In particular, statements contained in this report that are not historical facts (including but not limited to statements concerning earnings, earnings per share, revenues, cash flows, dividends, future business, growth opportunities, profitability, pricing, new accounts, customer base, market share, test volume, sales and marketing strategies, market demand for drug testing services in the U.S. and foreign drug testing laws and regulations, required investments in plant, equipment and people and new test development, the effect of the COVID- 19 pandemic on our business, including its effects on our business and profitability, and on the well-being and availability of our employees, and the continued operation of our testing facilities) may be “forward looking” statements. Actual results may differ from those stated in any forward-looking statements. Factors that may cause such differences include but are not limited to risks associated with the severity of the COVID-19 pandemic, and its impact on the Company’s markets, including its impact on the Company’s customers, suppliers and employees, as well as its risk on the United States and worldwide economies, the timing, scope and effectiveness of further governmental, regulatory, fiscal monetary and public health responses to the COVID-19 pandemic, changes in U.S. and foreign government regulations, including but not limited to FDA regulations, R&D spending, competition (including, without limitation, competition from other companies pursuing the same growth opportunities), the Company’s ability to maintain its reputation and brand image, the ability of the Company to achieve its business plans, cost controls, leveraging of its global operating platform, risks of information technology system failures and data security breaches, the uncertain global economy, the Company’s ability to attract, develop and retain executives and other qualified employees and independent contractors, including distributors, the Company’s ability to obtain and protect intellectual property rights, litigation risks, general economic conditions With respect to the continued payment of cash dividends, factors include, but are not limited to, all of the factors listed above with respect to the impact of the COVID-19 pandemic on the our business generally, plus cash flows, available surplus, capital expenditure reserves required, debt service obligations, regulatory requirements and other factors that the Board of Directors of the Company may take into account.

Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements represent the Company’s estimates and assumptions only as of the filing date of this Report. The Company expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the filing date of this Report, in order to reflect changes in circumstances or expectations, or the occurrence of unanticipated events, except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above and under “Risk Factors” set forth in Part I Item 1A of the 10-K, as well as the risks and uncertainties discussed elsewhere in this Report. The Company qualifies all of its forward-looking statements by these cautionary statements. The Company cautions you that these risks are not exhaustive. The Company operates in a continually changing business environment and new risks emerge from time to time.

17

OVERVIEW

Revenue for the second quarter of 2022 was $6.5 million compared to $6.1 million in the second quarter of 2021, an increase of 7%. The Company reported a net loss of $0.3 million, or ($0.06) per diluted share for the three months ended June 30, 2022, versus net income of $0.1 million, or $0.02 per diluted share for the same period in 2021. Revenue increase for the quarter was attributed primarily to an increase in domestic sales volume. The earnings decrease was primarily attributable to the absence of a refundable retention tax credit for the second quarter of 2022. The refundable retention tax credit program under the CARES Act was terminated at the end of the third calendar quarter of 2021. Accordingly, the Company recorded zero and $0.8 million of employee retention tax credits during the three months ended June 30, 2022, and 2021, respectively, which is included in cost of revenues and operating expenses in the statements of operations. Revenue for the six months ended June 30, 2022, and 2021, was $13.0 million and $11.8 million, respectively, an increase of 10%. The Company had a net loss for the six months ended June 30, 2022, of $0.3 million versus net income for the six months ended June 30, 2021, of $0.2 million. The Company recorded zero and $1.6 million of employee retention tax credits during the six months ended June 30, 2022, and 2021, respectively, which is included in cost of revenues and operating expenses in the statements of operations. The Company paid $0.07 per share of cash dividends to its shareholders in the six months ended June 30, 2022, compared to no cash dividends paid for the same period in 2021.

As the Company disclosed in the 10-K and in its Quarterly Report on Form 10-Q for the first quarter of 2022, the Company’s Board of Directors authorized the Company to explore shareholder enhancement opportunities, including strategic alternatives, such as the potential sale or merger of the Company, capitalization optimization and dividend strategies. The Company continues to explore such opportunities. There can be no assurances that the shareholder enhancement review process will result in a transaction or other strategic change or outcome. The Company has not set a timetable for the conclusion of its review of strategic alternatives, and it does not intend to comment further unless and until the Board has approved a specific course of action or the Company has otherwise determined that further disclosure is appropriate or required by law. The Company’s Board of Directors has designated a subcommittee of the Board to review shareholder enhancement opportunities. The Company has retained investment banking firms and corporate transaction legal advisors in connection with its exploration of shareholder enhancement opportunities.

RESULTS OF OPERATIONS

Revenue increased 7% for the three months ended June 30, 2022, compared to the same period in 2021, primarily due to a 13% increase in domestic revenues, offset by a 65% decrease in international revenues but on a much smaller base. For the same period, domestic revenues increased $0.7 million and international revenues decreased $0.3 million. For the six months ended June 2022, revenue increased 1.2 million or 10%, primarily due to an increase in domestic volume. The Company’s domestic revenues increase was due primarily to the continued recovery from the impact of the COVID-19 pandemic. The international revenue decline was primarily from lower Brazil testing volume.

18

Gross profit: The Company had a $2.2 million gross profit for the three months ended June 30, 2022, compared to a $2.4 million gross profit for the same period in 2021. Cost of revenues increased by $0.6 million or 16% for the three months ended June 30, 2022, compared to the same period in 2021. Gross profit for the six months ended June 30, 2022, was $4.7 million, a decrease of $0.3 million from the comparable period in 2021. Cost of revenues increased by $1.5 million or 22% for the six months ended June 30, 2022, when compared to the same period in 2021. The gross profit margin for the six-month period ended June 30, 2022, was 36% compared to 42% for the comparable period in 2021. The decrease in gross profit was primarily due to absence of the refundable employee retention tax credit present in the first and second quarters of 2021 offset in part by higher total revenues for both the three and six months ended June 30, 2022.

General and administrative (“G&A”) expenses increased 13% or $0.1 million to $1.4 million for the three months ended June 30, 2022, compared to $1.3 million for the same period in 2021. As a percentage of revenue, G&A expenses were 22% and 21% for the three months ended June 30, 2022, and 2021, respectively. The increase in G&A expenses was driven by the absence of the refundable employee retention tax credit in the second quarter of 2022 and higher legal fees incurred related to corporate enhancement activities. G&A expenses were $2.8 million and $2.8 million for the six months ended June 30, 2022, and 2021, respectively. As a percentage of revenue, G&A expenses were 21% and 24% for the six months ended June 30, 2022, and 2021, respectively.

Marketing and selling expenses increased 24% or $0.1 million to $0.8 million for the three months ended June 30, 2022, compared to $0.7 million for the same period in 2021. Total marketing and selling expenses represented 12% and 11% of revenue for the three months ended June 30, 2022, and 2021, respectively. The increase in marketing and selling expenses was primarily driven by higher overall personnel costs and the absence of the refundable employee retention tax credit present in the second quarter of 2021. Marketing and selling expenses were $1.6 million and $1.3 million for the six months ended June 30, 2022, and 2021, respectively. As a percentage of revenue, marketing and selling expenses were 12% and 11% for the six months ended June 30, 2022, and 2021, respectively.

Research and development (“R&D”) expenses for the three months ended June 30, 2022, and 2021 were $0.4 million and $0.3 million, respectively. R&D expenses represented 5% and 5% of revenue for the three months ended June 30, 2022, and 2021, respectively. R&D expenses were $0.7 million and $0.6 million for the six months ended June 30, 2022, and 2021, respectively. R&D expenses represented 5% and 5% of revenue for the six months ended June 30, 2022, and 2021, respectively.

Provision for income taxes: Our provision for income taxes consisted primarily of federal and state income taxes in the United States. We estimate income taxes in each of the jurisdictions in which we operate. During the three months ended June 30, 2022, the Company recorded a tax benefit of $13 thousand (effective tax rate of 4%) and a tax provision of $73 thousand (effective tax rate of 35%) for the comparative period in 2021. During the six months ended June 30, 2022, the Company recorded a tax provision of $4 thousand (effective tax rate of 1%) and a tax provision of $93 thousand (effective tax rate of 30%) or the comparative period in 2021.

19

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2022, the Company had approximately $1.8 million of cash and $5.6 million of working capital. The Company's operating activities generated net cash of $0.7 million for the six months ended June 30, 2022. Investing activities used $0.1 million of net cash while financing activities used $0.8 million of net cash during the six months of 2022.

Cash provided by operating activities of $0.7 million reflected net loss of $0.3 million adjusted for depreciation and amortization of $1.2 million, ROU asset amortization of $0.5 million and stock-based compensation of $0.4 million. This was also affected by an increase in current assets of $0.8 million and a decrease in accounts payable and other current liabilities of $0.8 million.

Cash used in investing activities of $0.1 million was primarily related to internally developed software. We anticipate spending less than $0.5 million in additional capital purchases for the remainder of 2022.

Cash used in financing activities of $0.8 million included cash dividends to shareholders of $0.4 million and $0.3 million from payments on equipment financing.

Contractual obligations and other commercial commitments as of June 30, 2022, include operating lease commitments and outstanding debt, described in Notes 6 and 7, respectively of the Notes to Condensed Consolidated Financial Statements.

While management currently believes that its existing funds and cash flow from operations should be adequate to fund the Company’s business for at least the next 12 months, economic conditions related to COVID-19 are expected to continue to adversely affect the Company’s operating results and cash flows. Depending upon the Company’s results of operations, its future capital needs and available marketing opportunities, the Company may use various financing sources to raise additional funds. Such sources could include but are not limited to, issuance of common stock or debt financing, lines of credit, or equipment leasing, although there is no assurance that such financings will be available to the Company on terms it deems acceptable, if at all.

Item 4. Controls and Procedures

As of the end of the period covered by this report (the “evaluation date”) the Company’s management under the supervision and with the participation of the Company’s Chief Executive Officer and Vice President, Controller, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act. Based upon that evaluation, the Chief Executive Officer and Vice President, Controller concluded as of the evaluation date, that the Company’s disclosure controls and procedures were effective for ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that its disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the Company’s principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

There has been no significant change in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

20

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Information pertaining to legal proceedings can be found in Item 1. Financial Statements and Supplementary Data Note 5 – “Commitments and Contingencies”.

Item 1A. Risk Factors

Item 1A. of the10-K includes a discussion of our risk factors. There have been no material changes in the risk factors described in such report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no purchases of treasury stock in the first six months of 2022.

Item 6. Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

21

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Psychemedics Corporation
Date: August 10, 2022	By: /s/ Raymond C. Kubacki
	Raymond C. Kubacki
	Chairman and Chief Executive Officer
	(principal executive officer)
Date: August 10, 2022	By: /s/ Andrew P. Limbek
	Andrew P. Limbek
	Vice President, Controller
	(principal accounting officer)

22

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Raymond C. Kubacki, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Psychemedics Corporation (“the registrant”);
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal controls over financial reporting (as defined by Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2022	/s/ Raymond C. Kubacki
	Raymond C. Kubacki
	Chairman and Chief Executive Officer
	(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew P. Limbek, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Psychemedics Corporation (“the registrant”);
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal controls over financial reporting (as defined by Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2022	/s/ Andrew P. Limbek
	Andrew P. Limbek
	Vice President, Controller
	(principal accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Raymond C. Kubacki, Chairman and Chief Executive Officer of Psychemedics Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as the principal executive officer of the Company, that:

1. The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on August 10, 2022 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2022	/s/ Raymond C. Kubacki
	Raymond C. Kubacki
	Chairman and Chief Executive Officer
	(principal executive officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew P. Limbek, Vice President, Controller of Psychemedics Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as the principal accounting officer of the Company, that:

1. The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on August 10, 2022 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2022	/s/ Andrew P. Limbek
	Andrew P. Limbek
	Vice President, Controller
	(principal accounting officer)

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Aug. 03, 2022
Document Information [Line Items]
Entity Central Index Key	0000806517
Entity Registrant Name	PSYCHEMEDICS CORP
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	1-13738
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	58-1701987
Entity Address, Address Line One	289 Great Road
Entity Address, City or Town	Acton
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01720
City Area Code	978
Local Phone Number	206-8220
Title of 12(b) Security	Common stock. $0.005 par value
Trading Symbol	PMD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		5,626,196

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current Assets:
Cash	$ 1,790	$ 1,992
Accounts receivable, net of allowance for doubtful accounts of $118 at June 30, 2022, and $89 at December 31, 2021	4,405	4,116
Prepaid expenses and other current assets	1,722	1,499
Income tax receivable	2,985	2,678
Total Current Assets	10,902	10,285
Fixed assets, net of accumulated amortization and depreciation of $20,867 at June 30, 2022, and $19,659 at December 31, 2021	5,555	6,691
Other assets	851	864
Net deferred tax assets	0	160
Operating lease right-of-use assets	3,142	3,552
Total Assets	20,450	21,552
Current Liabilities:
Accounts payable	598	994
Accrued expenses	3,264	3,188
Current portion of long-term debt	461	664
Current portion of operating lease liabilities	974	984
Total Current Liabilities	5,297	5,830
Long-term debt	453	599
Long-term deferred tax liabilities	307	0
Long-term portion of operating lease liabilities	2,457	2,880
Total Liabilities	8,514	9,309
Commitments and Contingencies (Note 5)
Shareholders' Equity:
Preferred stock, $0.005 par value, 873 shares authorized, no shares issued or outstanding	0	0
Common stock, $0.005 par value; 50,000 shares authorized, 6,294 shares and 6,257 shares issued at June 30, 2022, and December 31, 2021, respectively, and 5,626 shares outstanding and 5,589 shares outstanding at June 30, 2022, and December 31, 2021, respectively	31	31
Additional paid-in capital	33,863	33,478
Accumulated deficit	(10,242)	(9,550)
Less - Treasury stock, at cost, 668 shares	(10,082)	(10,082)
Accumulated other comprehensive loss	(1,634)	(1,634)
Total Shareholders' Equity	11,936	12,243
Total Liabilities and Shareholders' Equity	$ 20,450	$ 21,552

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) shares in Thousands, $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Allowance for doubtful accounts	$ 118	$ 89
Accumulated depreciation and amortization	$ 20,867	$ 19,659
Preferred stock, par value (in dollars per share)	$ 0.005	$ 0.005
Preferred stock, shares authorized (in shares)	873	873
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.005	$ 0.005
Common stock, shares authorized (in shares)	50,000	50,000
Common stock, shares issued (in shares)	6,294	6,257
Common stock, shares outstanding (in shares)	5,626	5,589
Treasury stock, shares (in shares)	668	668

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues	$ 6,513	$ 6,087	$ 13,021	$ 11,800
Cost of revenues	4,240	3,651	8,307	6,796
Gross profit	2,273	2,436	4,714	5,004
Operating Expenses:
General & administrative	1,445	1,280	2,772	2,809
Marketing & selling	813	656	1,619	1,298
Research & development	357	293	675	573
Total Operating Expenses	2,615	2,229	5,066	4,680
Operating (loss) income	(342)	207	(352)	324
Other (expense) income	(9)		57	(14)
(Loss) income before (benefit from) provision for income taxes	(351)	207	(295)	310
(Benefit from) provision for income taxes	(13)	73	4	93
Net (loss) income	$ (338)	$ 134	$ (299)	$ 217
Basic net (loss) income per share (in dollars per share)	$ (0.06)	$ 0.02	$ (0.05)	$ 0.04
Diluted net (loss) income per share (in dollars per share)	(0.06)	0.02	(0.05)	0.04
Dividends declared, per share (in dollars per share)	$ 0.07	$ 0	$ 0.07	$ 0

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2020	6,205		668
Balance at Dec. 31, 2020	$ 31	$ 32,803	$ (10,082)	$ (8,606)	$ (1,634)	$ 12,512
Shares issued – vested (in shares)	4		0
Stock compensation expense	$ 0	386	$ 0	0	0	386
Net (loss) income	$ 0	0	$ 0	217	0	217
Balance (in shares) at Jun. 30, 2021	6,209		668
Balance at Jun. 30, 2021	$ 31	33,189	$ (10,082)	(8,389)	(1,634)	13,115
Balance (in shares) at Mar. 31, 2021	6,205		668
Balance at Mar. 31, 2021	$ 31	33,020	$ (10,082)	(8,523)	(1,634)	12,812
Shares issued – vested (in shares)	4		0
Stock compensation expense	$ 0	169	$ 0	0	0	169
Net (loss) income	$ 0	0	$ 0	134	0	134
Balance (in shares) at Jun. 30, 2021	6,209		668
Balance at Jun. 30, 2021	$ 31	33,189	$ (10,082)	(8,389)	(1,634)	13,115
Balance (in shares) at Dec. 31, 2021	6,257		668
Balance at Dec. 31, 2021	$ 31	33,478	$ (10,082)	(9,550)	(1,634)	$ 12,243
Exercise of stock options (in shares)	1		0			1
Exercise of stock options	$ 0	4	$ 0	0	0	$ 4
Shares issued – vested (in shares)	36		0
Tax withholding related to vested shares from employee stock plans	$ 0	(36)	$ 0	0	0	(36)
Stock compensation expense	0	417	0	0	0	417
Cash dividends declared	0	0	0	(393)	0	(393)
Net (loss) income	$ 0	0	$ 0	(299)	0	(299)
Balance (in shares) at Jun. 30, 2022	6,294		668
Balance at Jun. 30, 2022	$ 31	33,863	$ (10,082)	(10,242)	(1,634)	11,936
Balance (in shares) at Mar. 31, 2022	6,259		668
Balance at Mar. 31, 2022	$ 31	33,657	$ (10,082)	(9,511)	(1,634)	12,461
Exercise of stock options (in shares)	1		0
Exercise of stock options	$ 0	4	$ 0	0	0	4
Shares issued – vested (in shares)	34		0
Tax withholding related to vested shares from employee stock plans	$ 0	(36)	$ 0	0	0	(36)
Stock compensation expense	0	238	0	0	0	238
Cash dividends declared	0	0	0	(393)	0	(393)
Net (loss) income	$ 0	0	$ 0	(338)	0	(338)
Balance (in shares) at Jun. 30, 2022	6,294		668
Balance at Jun. 30, 2022	$ 31	$ 33,863	$ (10,082)	$ (10,242)	$ (1,634)	$ 11,936

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Dividends declared, per share (in dollars per share)	$ 0.07	$ 0	$ 0.07	$ 0

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (299)	$ 217
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	1,239	1,353
ROU asset amortization	488	470
Deferred income taxes	467	27
Stock-based compensation	417	386
Changes in operating assets and liabilities:
Accounts receivable	(289)	(615)
Prepaid expenses and other current assets	(223)	(1,661)
Income tax receivable	(307)	(44)
Accounts payable	(396)	523
Operating lease liabilities	(511)	(508)
Accrued expenses	76	89
Net cash provided by operating activities	662	237
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and leasehold improvements	(9)	(14)
Cost of internally developed software	(63)	(70)
Other assets	(18)	8
Net cash used in investing activities	(90)	(76)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock, net of tax withholding	(32)	0
Payments of equipment financing	(349)	(343)
Cash dividends paid	(393)	0
Net cash (used in) financing activities	(774)	(343)
Net decrease in cash	(202)	(182)
Cash, beginning of period	1,992	2,833
Cash, end of period	1,790	2,651
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	19	28
Cash paid for operating leases	568	575
Right-of-use assets acquired through operating leases	$ 78	$ 193

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Note 1 - Basis of Presentation

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1.    Basis of Presentation

The interim condensed consolidated financial statements of Psychemedics Corporation (the “Company”) presented herein, have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2021, included in the Company's 2021 Annual Report on Form 10-K (“10-K”), as filed with the SEC.

The condensed consolidated balance sheet as of June 30, 2022, the condensed consolidated statements of operations for the three and six months ended June 30, 2022, and 2021, the condensed consolidated statements of shareholders’ equity for the three and six months ended June 30, 2022, and 2021, and the condensed consolidated statements of cash flows for the six months ended June 30, 2022, and 2021 are unaudited but, in the opinion of management, include all adjustments necessary for a fair presentation of results for these interim periods. The condensed consolidated balance sheet as of December 31, 2021, has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm, but does not include all of the information and footnotes required for complete annual financial statements. The Company’s comprehensive income (loss) is equal to its net income (loss) for all periods presented.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. The results of operations for the three and six months ended June 30, 2022, may not be indicative of the results that may be expected for the year ending December 31, 2022, or any other period.

Unless the context requires otherwise, the terms “we”, “us”, “our”, or “the Company” refer to Psychemedics Corporation and its wholly-owned consolidated subsidiaries.

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Note 2 - COVID-19 Pandemic

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Effect of Covid-19 Pandemic [Text Block]

2.    COVID-19 Pandemic

The outbreak of coronavirus (“COVID-19”) which was declared by the World Health Organization to be a pandemic, has impacted, and is expected to continue to impact worldwide economic activity. While our domestic business was deemed an essential business and we have been able to continue to provide services to our customers, COVID-19 has had a significant impact on our entire operations. COVID-19’s effect on the overall economy has had an adverse impact on hiring, which has had a negative impact on both our domestic and international testing volume.

The Coronavirus Aid, Relieve and Economic Security Act (“CARES”) Act, enacted on March 27, 2020, and the Families First Coronavirus Response Act, in each case modified by the Consolidated Appropriations Act enacted in December 2020, were emergency economic stimulus packages that included spending provisions and tax cuts to strengthen the United States economy and to fund a nationwide effort to curtail the effect of COVID-19. The principal impact of the CARES Act and subsequent legislation was the adoption of the Paycheck Protection Program (“PPP”). The CARES Act, together with subsequent legislation, also provided sweeping tax changes in response to the COVID-19 pandemic, including amendments to certain provisions of the previously enacted Tax Cuts and Jobs Act. The Company recognized a benefit of zero for both the three and six months ended June 30, 2022. The Company recognized a benefit of $0.8 million and $1.6 million for the three and six months ended June 30, 2021, respectively, as a reduction to cost of revenues and operating expenses related to the employee retention credit which was a tax provision in the CARES Act and subsequent legislation. Additionally, the CARES Act allowed the Company to fully carryback the 2020 net operating loss, for a refund of corporate income taxes previously paid.

Liquidity and Management’s Plans

At June 30, 2022, the Company’s principal sources of liquidity included $1.8 million of cash. Management currently believes that such funds, together with future operating profits, should be adequate to fund anticipated working capital requirements, including equipment financing obligations, and capital expenditures for at least the next 12 months. Depending upon the Company’s results of operations, its future capital needs and available marketing opportunities, the Company may use various financing sources to raise additional funds. Such sources could include but are not limited to, issuance of common stock, debt financing, lines of credit, or equipment leasing, although there is no assurance that such financings will be available to the Company on terms it deems acceptable, if at all.

Accounts Receivable

The Company believes its allowance for credit losses related to its accounts receivable remained adequate as of June 30, 2022, due to the essential nature of its customers business, as well as the diversity of its large customer base. While the Company anticipates there could be an increase in the aging of its accounts receivable, the Company does not anticipate a significant increase in default risk.

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Note 3 - Stock-based Compensation

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

3.    Stock-Based Compensation

The Company’s 2006 Incentive Plan (“the Plan”) provides for cash-based awards or the grant or issuance of stock-based awards. As of June 30, 2022, 199 thousand shares remained available for future grant under the Plan.

Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). The compensation cost charged against income is included in cost of revenues and operating expenses as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Stock-based compensation related to:
Stock option grants	$	42	$	77	$	95	$	221
Stock unit awards		196		92		322		165
Total stock-based compensation	$	238	$	169	$	417	$	386

There was no income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation arrangements for the three and six months ended June 30, 2022, and 2021.

A summary of the Company’s stock option activity for the six months ended June 30, 2022, is as follows (in thousands except per share amounts and years):

						Weighted Average
				Weighted Average		Remaining		Aggregate
	Number of			Exercise Price		Contractual Life		Intrinsic
	Shares			Per Share		(years)		Value(1)
Outstanding, December 31, 2021		574		$	14.23		6.1	$	100
Granted		-		$	-
Exercised		( 1	)	$	4.07
Forfeited		( 1	)	$	4.07
Outstanding, June 30, 2022		572		$	14.23		5.6	$	70
Exercisable, June 30, 2022		519		$	14.89		5.4	$	25

(1) Intrinsic value is calculated based on the amount by which the closing market value of the Company’s stock exceeded the exercise price of the underlying options, multiplied by the number of shares.

A summary of the Company’s stock unit award (“SUA”) activity for the six months ended June 30, 2022, is as follows (in thousands except per share amounts):

	Number of Shares			Weighted Average Grant-Date Fair Value Per Share
Outstanding & Unvested, December 31, 2022		224		$	5.48
Granted		128		$	6.52
Converted to common stock		(36	)	$	6.45
Cancelled		(6	)	$	6.43
Forfeited		(36	)	$	5.66
Outstanding & Unvested, June 30, 2022		274		$	5.76

As of June 30, 2022, 1,131 thousand shares of common stock were reserved for issuance under the Plan. As of June 30, 2022, the unamortized fair value of awards relating to outstanding SUAs and options was $1.5 million, which is expected to be amortized over a weighted average period of 3.2 years.

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Note 4 - Basic and Diluted Net Income (Loss) Per Share

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Earnings Per Share [Text Block]

4.    Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common and dilutive common equivalent shares outstanding during the period when the effect is dilutive. The number of dilutive common equivalent shares outstanding during the period was determined in accordance with the treasury-stock method. Common equivalent shares consisted of common stock issuable upon the exercise of outstanding options and common stock issuable upon the vesting of outstanding, unvested SUAs. Basic and diluted weighted average common shares outstanding for the three and six months ended June 30, 2022, and 2021 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Weighted average common shares outstanding, basic		5,610		5,539		5,600		5,538
Dilutive common equivalent shares		-		88		-		83
Weighted average common shares outstanding, diluted		5,610		5,627		5,600		5,621

The computation of diluted earnings (loss) per share for the three and six months ended June 30, 2022, and 2021 excludes the effect of the potential exercise of stock awards, including stock options, when the effect is anti-dilutive. For the three and six months ended June 30, 2022, the number of antidilutive stock awards excluded from diluted earnings per share were 733 thousand and 589 thousand, respectively.

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Note 5 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

5.    Commitments and Contingencies

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Although it is difficult to predict the ultimate outcome of these cases, management believes, that any ultimate liability would not have a material adverse effect on the consolidated statements of operations. However, an unforeseen unfavorable development in any of these cases could have a material adverse effect on the statements of operations or cash flows in the period in which it is recorded. Developments in legal proceedings and other matters that could cause changes in the amounts previously accrued are evaluated each reporting period.

Settlements

As previously reported in the 10-K, on December 6, 2021, the Company entered into a binding Memorandum of Understanding (the “MOU”) to settle a purported class action lawsuit against it related to certain California wage and hour laws. The lawsuit, Enma Sagastume v. Psychemedics Corporation, Case No. 2:20-CV-06624-DSF, is pending in the United States District Court for the Central District of California (the “California Lawsuit”) and is similar to numerous lawsuits filed against employers with operations in California.

In the binding MOU, the parties agreed to settle this matter for a payment by the Company of $1.2 million in exchange for the dismissal of the California Lawsuit and a customary release of liability, subject only to final court approval and the process described below. Factoring in that process, the Company estimates that the settlement funds will be dispersed in the second half of 2022, subject to the actual timing of final court approval.

Although the Company believes that the allegations in the California Lawsuit lack merit, it agreed at a mediation to enter into the binding MOU to settle the claims in the California Lawsuit in order to avoid potentially significant legal fees, other expenses, and management time that would have to be devoted to protracted litigation in California regarding its wage and hour laws. The foregoing was also impacted in part by new California case law in February 2021 regarding meal period compliance. The allegations in the California Lawsuit relate to alleged discrepancies in compliance with meal and rest periods required by California law and other alleged compliance discrepancies relating to the California wage and hour laws with respect to non-exempt hourly employees of the Company in California for a period since June 9, 2017. The California Lawsuit sought recovery of wages, penalties, interest, attorneys’ fees and other alleged damages. As part of the settlement, the Company continues to deny any liability or wrongdoing with respect to the claims made in the California Lawsuit.

The MOU assumes class certification for purposes of the settlement only. The settlement amount of $1.2 million, which includes plaintiff attorneys' fees and costs, is subject to potential increase based on any adjustments in the final class size and the exact period to be covered, as determined by the court’s final approval. However, the Company believes that such adjustments, if any, would likely be immaterial. Once court approved, in exchange for the settlement payment, the plaintiff and all class members who do not opt out of the settlement will provide a broad release of any liability relating to the subject matter of the California Lawsuit, including any claims of such persons under California’s Private Attorneys' General Act of 2004. Such release is for the benefit of the Company, its affiliates, and any successor to the Company. The Company has the right to revoke the settlement prior to court approval in the event opt-outs, if any, from the class membership exceed a specified level. While the settlement is subject to final court approval as is customary, the MOU expressly provides that it is binding on and enforceable by each of the parties thereto, including by any successor to the Company. There is a $1.2 million liability reserve as of June 30, 2022 in connection with the California Lawsuit, which is included in accrued expenses on the accompanying consolidated balance sheets.

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Note 6 - Operating Leases

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

6.         Operating Leases

The Company has five operating leases for office and laboratory space used to conduct business. The exercise of lease renewal options is at our discretion. There is one lease which contains renewal options to extend the lease terms included in our Right-Of-Use (“ROU”) assets and lease liabilities as they are reasonably certain of exercise. The Company regularly evaluates the renewal options and when they are reasonably certain of exercise. As most of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the lease commencement date in determining the net present value of the lease payments.

As of June 30, 2022, the Company recognized a Right-Of-Use (“ROU”) asset of $3.1 million and an operating lease liability of $3.4 million based on the present value of the minimum rental payments. The weighted average discount rate used for leases as of June 30, 2022, is 3.8%. The weighted average lease term as of June 30, 2022, is 3.9 years. The operating lease expense for the three and six months ended June 30, 2022, was $232 thousand and $501 thousand, respectively.

Maturities and balance sheet presentation of the Company’s lease liabilities for all operating leases as of June 30, 2022, is as follows (in thousands):

July 1, 2022, through December 31, 2022	$	518
2023		1,133
2024		1,061
2025		553
2026		460
Total Lease Payments		3,725
Less: Interest expense		(294	)
Present value of lease liabilities	$	3,431
Current operating lease liabilities	$	974
Long-term operating lease liabilities		2,457
	$	3,431

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Note 7 - Debt and Other Financing Arrangements

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

7.        Debt and Other Financing Arrangements

On March 20, 2014, the Company entered into an equipment financing arrangement (“Loan Agreement”) with Banc of America Leasing & Capital, which it amended on August 8, 2014, September 15, 2015, October 30, 2017, and December 2, 2019. The terms of the arrangement are detailed in the 10-K.

The weighted average interest rate on outstanding debt under the Loan Agreement was 3.6% for the three and six months ended June 30, 2022. The interest expense was $8 thousand and $18 thousand for the three months and six months ended June 30, 2022. As of June 30, 2022, the weighted average interest rate was 3.6% and there was $915 thousand of outstanding debt related under the Loan Agreement. The Company was in compliance with all loan covenants under the Loan Agreement as of June 30, 2022.

The annual principal repayment requirements for debt obligations as of June 30, 2022, were as follows (in thousands):

July 1, 2022, through December 31, 2022	$	316
2023		293
2024		305
Long-term debt from equipment financing		914
Less: current portion of long-term debt from equipment financing		(461	)
Long-term debt from equipment financing, net of current portion	$	453

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Note 8 - Revenue

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

8.        Revenue

The table below disaggregates our external revenue by major source (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Testing	$	5,480	$	5,367	$	11,204	$	10,416
Shipping/Collection (hair)		1,001		680		1,751		1,295
Other		32		40		66		89
Total Revenue	$	6,513	$	6,087	$	13,021	$	11,800

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Note 9 - Significant Customers

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

9.        Significant Customers

The Company had no customers that represented over 10% of revenue during either of the six months ended June 30, 2022, or 2021. The Company had one customer that represented 16% and 12% of the total accounts receivable balance as of June 30, 2022, and 2021, respectively.

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Note 10 - Subsequent Events

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Subsequent Events [Text Block]

10.      Subsequent Events

On August 9, 2022, the Company declared a cash dividend of $0.07 per share, which will be paid on September 9, 2022, to shareholders of record on August 24, 2022.

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Note 3 - Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Share-Based Payment Arrangement, Cost by Plan [Table Text Block]

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Stock-based compensation related to:
Stock option grants	$	42	$	77	$	95	$	221
Stock unit awards		196		92		322		165
Total stock-based compensation	$	238	$	169	$	417	$	386

Share-Based Payment Arrangement, Option, Activity [Table Text Block]

						Weighted Average
				Weighted Average		Remaining		Aggregate
	Number of			Exercise Price		Contractual Life		Intrinsic
	Shares			Per Share		(years)		Value(1)
Outstanding, December 31, 2021		574		$	14.23		6.1	$	100
Granted		-		$	-
Exercised		( 1	)	$	4.07
Forfeited		( 1	)	$	4.07
Outstanding, June 30, 2022		572		$	14.23		5.6	$	70
Exercisable, June 30, 2022		519		$	14.89		5.4	$	25

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

	Number of Shares			Weighted Average Grant-Date Fair Value Per Share
Outstanding & Unvested, December 31, 2022		224		$	5.48
Granted		128		$	6.52
Converted to common stock		(36	)	$	6.45
Cancelled		(6	)	$	6.43
Forfeited		(36	)	$	5.66
Outstanding & Unvested, June 30, 2022		274		$	5.76

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Note 4 - Basic and Diluted Net Income (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Weighted average common shares outstanding, basic		5,610		5,539		5,600		5,538
Dilutive common equivalent shares		-		88		-		83
Weighted average common shares outstanding, diluted		5,610		5,627		5,600		5,621

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Note 6 - Operating Leases (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

July 1, 2022, through December 31, 2022	$	518
2023		1,133
2024		1,061
2025		553
2026		460
Total Lease Payments		3,725
Less: Interest expense		(294	)
Present value of lease liabilities	$	3,431
Current operating lease liabilities	$	974
Long-term operating lease liabilities		2,457
	$	3,431

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Note 7 - Debt and Other Financing Arrangements (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Long-Term Debt Instruments [Table Text Block]

July 1, 2022, through December 31, 2022	$	316
2023		293
2024		305
Long-term debt from equipment financing		914
Less: current portion of long-term debt from equipment financing		(461	)
Long-term debt from equipment financing, net of current portion	$	453

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Note 8 - Revenue (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Testing	$	5,480	$	5,367	$	11,204	$	10,416
Shipping/Collection (hair)		1,001		680		1,751		1,295
Other		32		40		66		89
Total Revenue	$	6,513	$	6,087	$	13,021	$	11,800

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Note 2 - COVID-19 Pandemic (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Income Tax Benefit CARES Act	$ 0	$ 800	$ 0	$ 1,600
Cash and Cash Equivalents, at Carrying Value, Total	$ 1,790		$ 1,790		$ 1,992

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Note 3 - Stock-based Compensation (Details Textual) - Incentive Plan 2006 [Member] shares in Thousands, $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($) shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)	199
Common Stock, Capital Shares Reserved for Future Issuance (in shares)	1,131
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $	$ 1.5
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)	3 years 2 months 12 days

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Note 3 - Share-based Compensation - Compensation Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based compensation	$ 238	$ 169	$ 417	$ 386
Share-Based Payment Arrangement, Option [Member]
Share-based compensation	42	77	95	221
Stock Unit Awards [Member]
Share-based compensation	$ 196	$ 92	$ 322	$ 165

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Note 3 - Stock-based Compensation - Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2022 USD ($) $ / shares shares		Dec. 31, 2021 USD ($) $ / shares shares
Outstanding (in shares) | shares	574
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 14.23
Outstanding, weighted average remaining contractual life (Year)	5 years 7 months 6 days		6 years 1 month 6 days
Outstanding, aggregate intrinsic value | $	$ 70	[1]	$ 100	[1]
Granted (in shares) | shares	0
Granted, weighted average exercise price (in dollars per share) | $ / shares	$ 0
Exercised (in shares) | shares	(1)
Exercised, weighted average exercise price (in dollars per share) | $ / shares	$ 4.07
Forfeited (in shares) | shares	(1)
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	$ 4.07
Outstanding (in shares) | shares	572		574
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 14.23		$ 14.23
Exercisable (in shares) | shares	519
Exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 14.89
Exercisable, weighted average remaining contractual life (Year)	5 years 4 months 24 days
Exercisable, aggregate intrinsic value | $	$ 25	[1]

[1] Intrinsic value is calculated based on the amount by which the closing market value of the Company’s stock exceeded the exercise price of the underlying options, multiplied by the number of shares.

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Note 3 - Stock-based Compensation - Nonvested Award Activity (Details) - Stock Unit Award [Member] shares in Thousands	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Outstanding & Unvested at beginning of period (in shares) | shares	224
Outstanding & Unvested, beginning of period, weighted average price per share (in dollars per share) | $ / shares	$ 5.48
Granted (in shares) | shares	128
Granted, weighted average price per share (in dollars per share) | $ / shares	$ 6.52
Converted to common stock (in shares) | shares	(36)
Converted to common stock, weighted average price per share (in dollars per share) | $ / shares	$ 6.45
Cancelled (in shares) | shares	(6)
Cancelled, weighted average price per share (in dollars per share) | $ / shares	$ 6.43
Forfeited (in shares) | shares	(36)
Forfeited, weighted average price per share (in dollars per share) | $ / shares	$ 5.66
Outstanding & Unvested at end of period (in shares) | shares	274
Outstanding & Unvested, end of period, weighted average price per share (in dollars per share) | $ / shares	$ 5.76

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Note 4 - Basic and Diluted Net Income (Loss) Per Share (Details Textual) - shares shares in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	733	589

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Note 4 - Basic and Diluted Net Income (Loss) Per Share - Basic and Diluted Weighted Average Common Shares Outstanding (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Weighted average common shares outstanding, basic (in shares)	5,610	5,539	5,600	5,538
Dilutive common equivalent shares (in shares)	0	88	0	83
Weighted average common shares outstanding, diluted (in shares)	5,610	5,627	5,600	5,621

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Note 5 - Commitments and Contingencies (Details Textual) - Enma Sagastume v. Psychemedics Corporation [Member] - USD ($) $ in Millions	Dec. 06, 2021	Jun. 30, 2022
Litigation Settlement, Amount Awarded to Other Party	$ 1.2
Loss Contingency Accrual, Ending Balance		$ 1.2

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Note 6 - Operating Leases (Details Textual) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Operating Lease, Right-of-Use Asset	$ 3,142	$ 3,142	$ 3,552
Operating Lease, Liability, Total	$ 3,431	$ 3,431
Operating Lease, Weighted Average Discount Rate, Percent	3.80%	3.80%
Operating Lease, Weighted Average Remaining Lease Term (Year)	3 years 10 months 24 days	3 years 10 months 24 days
Operating Lease, Expense	$ 232	$ 501

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Note 6 - Operating Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
July 1, 2022, through December 31, 2022	$ 518
2023	1,133
2024	1,061
2025	553
2026	460
Total Lease Payments	3,725
Less: Interest expense	(294)
Present value of lease liabilities	3,431
Current operating lease liabilities	974	$ 984
Long-term operating lease liabilities	$ 2,457	$ 2,880

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Note 7 - Debt and Other Financing Arrangements (Details Textual) - Line of Credit [Member] - Equipment Loan Arrangement [Member] - Banc of America Leasing and Capital [Member] $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)
Long-Term Debt, Weighted Average Interest Rate, over Time	3.60%	3.60%
Interest Expense, Total	$ 8	$ 18
Long-Term Debt, Total	$ 915	$ 915

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Note 7 - Debt and Other Financing Arrangements - Schedule of Debt Repayments (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Less: current portion of long-term debt from equipment financing	$ (461)	$ (664)
Long-term debt from equipment financing, net of current portion	453	$ 599
Equipment Loan Arrangement [Member]
July 1, 2022, through December 31, 2022	316
2023	293
2024	305
Long-term debt from equipment financing	914
Less: current portion of long-term debt from equipment financing	(461)
Long-term debt from equipment financing, net of current portion	$ 453

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Note 8 - Revenue - Revenue by Major Source (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues	$ 6,513	$ 6,087	$ 13,021	$ 11,800
Testing [Member]
Revenues	5,480	5,367	11,204	10,416
Shipping/Collection (Hair) [Member]
Revenues	1,001	680	1,751	1,295
Other Revenue [Member]
Revenues	$ 32	$ 40	$ 66	$ 89

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Note 9 - Significant Customers (Details Textual) - Customer Concentration Risk [Member]	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Revenue Benchmark [Member]
Number of Major Customers	0	0
Accounts Receivable [Member]
Number of Major Customers	1	1
Accounts Receivable [Member] | Customer One [Member]
Concentration Risk, Percentage	16.00%	12.00%

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Note 10 - Subsequent Events (Details Textual) - $ / shares		3 Months Ended		6 Months Ended
	Aug. 09, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Common Stock, Dividends, Per Share, Declared (in dollars per share)		$ 0.07	$ 0	$ 0.07	$ 0
Subsequent Event [Member]
Common Stock, Dividends, Per Share, Declared (in dollars per share)	$ 0.07