10-Q

UNITED STATES SECURITIES & EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended September 30, 2017

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: 0-17449

PROCYON CORPORATION

(Exact Name of Registrant as specified in its charter)

COLORADO	59-3280822
(State of Incorporation)	(I.R.S. Employer Identification Number)

1300 S. Highland Ave. Clearwater, FL 33756

(Address of Principal Executive Offices)

(727) 447-2998

(Registrant’s Telephone Number, Including Area Code)

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 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐	Accelerated filer  ☐
Non-accelerated filer (Do not check if a smaller reporting company)  ☐	Smaller reporting company ☒
Emerging growth company  ☐

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common stock, no par value; 8,077,388 shares outstanding as of November 8, 2017.

PART I. - FINANCIAL INFORMATION
Item	Page
ITEM 1. FINANCIAL STATEMENTS	3
Index to Financial Statements
Financial Statements:
Consolidated Balance Sheets	3
Consolidated Statements of Operations	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 4. CONTROLS AND PROCEDURES	13
PART II. - OTHER INFORMATION
ITEM 6. EXHIBITS	14
SIGNATURES	14

PROCYON CORPORATION & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2017 and June 30, 2017

	(unaudited)			(audited)
	September 30,			June 30,
	2017			2017
ASSETS
CURRENT ASSETS
Cash	$	125,372		$	173,173
Certificates of Deposit, plus accrued interest		102,218			102,141
Accounts Receivable, less allowance for doubtful accounts of $1,001 and $1,001 respectively.		288,929			391,539
Inventories		589,307			506,719
Prepaid Expenses		230,877			175,206
TOTAL CURRENT ASSETS		1,336,703			1,348,778
CERTIFICATES OF DEPOSIT, PLUS ACCRUED INTEREST		50,693			111,669
PROPERTY AND EQUIPMENT, NET		503,095			513,779
OTHER ASSETS
Deposits		4,192			4,192
Inventories		70,655			70,655
Intangible Asset		17,000			17,000
Deferred Tax Asset		656,308			663,738
		748,155			755,585
TOTAL ASSETS	$	2,638,646		$	2,729,811
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable	$	156,451		$	120,584
Capital Lease Liability		3,788			3,788
Accrued Expenses		181,879			315,829
TOTAL CURRENT LIABILITIES		342,118			440,201
CAPITAL LEASE LIABILITY		1,163			2,110
TOTAL LIABILITIES		343,281			442,311
COMMITMENTS AND CONTINGENCIES (NOTE I)		-			-
STOCKHOLDERS' EQUITY
Preferred Stock, 496,000,000 shares authorized, none issued.		-			-
Series A Cumulative Convertible Preferred Stock, no par value; 4,000,000 shares authorized; 177,100 shares issued and outstanding.		136,860			136,860
Common Stock, no par value, 80,000,000 shares authorized; 8,077,388 shares issued and outstanding.		4,434,766			4,434,766
Paid-in Capital		15,885			15,885
Accumulated Deficit		(2,292,146	)		(2,300,011	)
TOTAL STOCKHOLDERS' EQUITY	$	2,295,365			2,287,500
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,638,646		$	2,729,811

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

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PROCYON CORPORATION & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2017 and 2016

	(unaudited)			(unaudited)
	Three Months			Three Months
	Ended			Ended
	Sep. 30, 2017			Sep. 30, 2016
NET SALES	$	831,071		$	879,733
COST OF SALES		222,829			256,792
GROSS PROFIT		608,242			622,941
OPERATING EXPENSES
Salaries and Benefits		331,439			338,264
Selling, General and Administrative		261,777			235,790
		593,216			574,054
INCOME FROM OPERATIONS		15,026			48,887
OTHER INCOME (EXPENSE)
Interest Expense		-			(1,730	)
Interest Income		269			770
		269			(960	)
INCOME BEFORE INCOME TAXES		15,295			47,927
INCOME TAX (EXPENSE)		(7,430	)		(19,044	)
NET INCOME		7,865			28,883
Dividend requirements on preferred stock		(4,428	)		(4,853	)
Basic net income available to common shares	$	3,437		$	24,030
Basic net income per common share	$	0.00		$	0.00
Weighted average number of common shares outstanding		8,077,388			8,060,388
Diluted net income per common share	$	0.00		$	0.00
Weighted average number of common shares outstanding, diluted		8,300,875			8,264,679

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

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PROCYON CORPORATION & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ending September 30, 2017 and 2016

	(unaudited)			(unaudited)
	September 30,			September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	7,865		$	28,883
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		11,744			11,217
Deferred Income Taxes		7,430			19,044
Accrued Interest on Certificates of Deposit		(336	)		(767	)
Decrease (increase) in:
Accounts Receivable		102,610			299,038
Inventory		(82,588	)		(7,087	)
Prepaid Expenses		(55,671	)		(80,671	)
Increase (decrease) in:
Bank Overdraft		-			44,126
Accounts Payable		35,867			(155,340	)
Accrued Expenses		(133,950	)		(131,472	)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(107,029	)		26,971
CASH FLOW FROM INVESTING ACTIVITIES
Redemption of Certificate of Deposit		61,235			-
Purchase of property & equipment		(1,060	)		(1,984	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		60,175			(1,984	)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds on Line of Credit		-			70,000
Payments on Line of Credit		-			(100,000	)
Payments on Capital Lease		(947	)		(947	)
NET CASH (USED IN) FINANCING ACTIVITIES		(947	)		(30,947	)
NET CHANGE IN CASH		(47,801	)		(5,960	)
CASH AT BEGINNING OF PERIOD		173,173			59,173
CASH AT END OF PERIOD	$	125,372		$	53,213
SUPPLEMENTAL DISCLOSURES
Interest Paid	$	-		$	1,730
Taxes Paid	$	-		$	-

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

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Notes to Financial Statements

NOTE A - SUMMARY OF ACCOUNTING POLICIES

The interim consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles ("GAAP") have been condensed or omitted as allowed by such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements dated June 30, 2017. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.

Management of the Company has prepared the accompanying unaudited condensed consolidated financial statements prepared in conformity with generally accepted accounting principles, which require the use of management estimates, contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations and cash flows for the period presented and to make the financial statements not misleading.

STOCK-BASED COMPENSATION

Stock based compensation is accounted for in accordance with Topic 718 - Compensation - Stock Compensation in the Accounting Standards Codification. Pursuant to Topic 718, all share-based payments to employees, including grants of employee stock options, are to be recognized in the statement of operations based upon their fair values. Topic 718 rescinds the acceptance of pro forma disclosure. In December 2009, our shareholders approved the adoption of a new stock option plan, providing the Company a continued means of offering stock-based compensation.

On September 30, 2017, there were 65,000 outstanding options to purchase shares of our common stock.

The fair value of a stock option is determined using the Black-Scholes option-pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the life of the option. There were no options granted during the quarter ended September 30, 2017.

The Black-Scholes option valuation model was developed for estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Our options do not have the characteristics of traded options, therefore, the option valuation models do not necessarily provide a reliable measure of the fair value of our options.

EARNINGS PER SHARE

Basic earnings per share (EPS) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if dilutive securities such as stock options and other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in earnings. We use the treasury stock method to compute potential common shares from stock options and the as-if-converted method to compute potential common shares from Preferred Stock.

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For the three months ended September 30, 2017, the potential dilutive effects of the preferred stock and stock options were included in the weighted-average shares outstanding.

NOTE B - INVENTORIES

Inventories consisted of the following:	September 30, 2017		June 30, 2017
Finished Goods	$	471,550	$	384,350
Raw Materials		188,412		193,024
	$	659,962	$	577,374

At September 30, 2017 and June 30, 2017, $70,655 of our inventory was considered non-current as it will not be used within a one year period.

NOTE C - STOCKHOLDERS' EQUITY

During January 1995, the Company's Board of Directors authorized the issuance of up to 4,000,000 shares of Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"). The preferred stockholders are entitled to receive, as and if declared by the board of directors, quarterly dividends at an annual rate of $.10 per share of Series A Preferred Stock per annum. Dividends will accrue without interest and will be cumulative from the date of issuance of the Series A Preferred Stock and will be payable quarterly in arrears in cash or publicly traded common stock when and if declared by the Board of Directors. As of September 30, 2017, no dividends have been declared. Dividends in arrears on the outstanding preferred shares total $361,854 as of September 30, 2017.

Holders of the Preferred Stock have the right to convert their shares of Preferred Stock into an equal number of shares of Common Stock of the Company. In addition, Preferred Stock holders have the right to vote the number of shares into which their shares are convertible into Common Stock. Such preferred shares will automatically convert into one share of Common Stock at the close of a public offering of Common Stock by the Company provided the Company receives gross proceeds of at least $1,000,000, and the initial offering price of the Common Stock sold in such offering is equal to or in excess of $1 per share. The Company is obligated to reserve an adequate number of shares of its common stock to satisfy the conversion of all the outstanding Series A Preferred Stock. There were no shares converted during the reporting period. So long as any share of Series A Preferred Stock is outstanding, the Company is prohibited from declaring dividends or other distributions related to its Common Stock or purchasing, redeeming or otherwise acquiring any of the Common Stock.

NOTE D - INCOME TAXES AND AVAILABLE CARRYFORWARD

As of September 30, 2017, the Company had consolidated income tax net operating loss ("NOL") carryforwards for federal income tax purposes of approximately $1,690,000. The NOL will expire in various years ending through the year 2035. The utilization of certain loss carryforwards are limited under Section 382 of the Internal Revenue Code.

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The components of the provision for income tax expense attributable to continuing operations are as follows:

	Three Months 9/30/2017			Three Months 9/30/2016
Current
Federal	$	0		$	0
State		0			0
	$	0		$	0
Deferred
Federal	$	(6,713	)	$	(16,260	)
State		(717	)		(2,784	)
	$	(7,430	)	$	(19,044	)
Total Income Tax (Expense)	$	(7,430	)	$	(19,044	)

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

	Non-Current
Deferred tax assets
NOL and contribution carryforwards	$	639,524
Accrued compensated absences		10,319
Accrued bonus		7,490
Allowance for doubtful accounts		377
Total deferred tax assets		657,710
Deferred tax (liabilities)
Excess of tax over book depreciation		(1,402	)
Total deferred tax (liabilities)		(1,402	)
Total deferred tax asset	$	656,308

Management believes it is more likely than not that it will realize the benefit of the NOL carryforward, because of its previous trend of earnings. Therefore, a valuation allowance is not considered necessary at this time. Management will continue to evaluate its operating results each reporting period and assess whether it will be able to utilize all available NOL carryforward before expiration.

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Income taxes for the periods ended September 30, 2017 and 2016 differ from the amounts computed by applying the effective income tax rates of 37.63%, to income taxes as a result of the following:     

	Three Months September 30, 2017			Three Months September 30, 2016
Expected (provision) at US statutory rate	$	(5,200	)	$	(16,295	)
State income tax net of federal (provision)		(556	)		(1,740	)
Nondeductible Expense		(1,674	)		(1,009	)
Income Tax (Expense)	$	(7,430	)	$	(19,044	)

The earliest tax year still subject to examination by a major taxing jurisdiction is fiscal year end June 30, 2014.

The Company performed a review of its uncertain tax positions in accordance with Accounting Standards Codification ASC 740-10 "Uncertainty in Income Taxes". In this regard, an uncertain tax position represents the Company's expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. As a result of this review, the Company concluded that at this time there are no uncertain tax positions, and there has been no cumulative effect on retained earnings.

NOTE E - LINE OF CREDIT

The Company has a $250,000, due-on-demand line of credit with a financial institution, collateralized by the Company's inventory of $659,962 and net accounts receivable assets of $288,929. The line of credit is renewable annually in April. Our Chief Executive Officer personally guaranteed the line of credit to the Company. At September 30, 2017 and June 30, 2017, the Company owed $0, on the line of credit. The line of credit extends terms of cash advances at a variable rate set equal to the prime rate at the time of advance. The interest rate can fluctuate according to the changes in its published prime rate.

NOTE F - RELATED PARTY TRANSACTIONS

Our Chief Executive Officer, Regina W. Anderson, guarantees a $250,000 line of credit for the Company.

NOTE G - SUBSEQUENT EVENTS

We have evaluated subsequent events through November 9, 2017, which is the date the financial statements were available to be issued.

NOTE H - RECENT ACCOUNTING PRONOUNCEMENTS

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period ending June 30, 2019 and interim periods within that annual period. Early adoption is permitted. The Company is currently evaluating the effect that ASU No. 2017-09 will have on its consolidated financial statements and related disclosures.

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In February 2016, the FASB issued ASU No. 2016-02, Leases, related to the recognition of lease assets and lease liabilities. The new guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability, other than leases that meet the definition of a short- term lease, and requires expanded disclosures about leasing arrangements. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from the current guidance. Lessor accounting is similar to the current guidance, but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new guidance is effective for the Company on July 1, 2019, with early adoption permitted. The Company is currently evaluating the impact that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures.

On November 20, 2015, FASB issued Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. Under the ASU, all deferred tax assets and liabilities, as well any valuation allowances, will be netted and presented in a classified balance sheet as one noncurrent amount. ASU No. 2015-17 becomes effective for public entities for annual periods beginning after December 15, 2016, and for interim periods within those annual periods. The Company applied this standard on a retrospective basis and the balance sheet at June 30, 2017, has been adjusted to conform to this new presentation by combining the current deferred tax asset of $242,841 to the non-current deferred tax asset of $420,897, resulting in a non-current deferred asset of $663,738.

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

General

You should read the following discussion and analysis in conjunction with the unaudited Condensed Financial Statements and Notes thereto appearing elsewhere in this report.

This Report on Form 10-Q, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements. When used in this report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," "hope," "believe" and similar expressions, variations of these words or the negative of those words, and, any statement regarding possible or assumed future results of operations of the Company's business, the markets for its products, anticipated expenditures, regulatory developments or competition, or other statements regarding matters that are not historical facts, are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions and financial trends including, without limitation, business conditions in the skin and wound care market and the general economy, competitive factors, changes in product mix, production delays, product recalls, manufacturing capabilities, and other risks or uncertainties detailed in other of the Company's Securities and Exchange Commission filings. Such statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company's actual plan of operations, business strategy, operating results and financial position could differ materially from those expressed in, or implied by, such forward-looking statements.

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Recent Developments

In January 2017, Amerx expanded its product line by introducing wound care kits in various sizes and formats to fit specific needs. The new kits include Helix3 collagen kits, Amerx Brand Calcium Alginate kits, Hydrocolloid kits, Bordered Gauze kits, Foam kits and Hydrogel Kits. All of these new kits are focused on wound care.

In fiscal 2017, Amerx further expanded its product line to include a new segment of the wound care market by introducing the EXTREMIT-EASE® Compression Garment line, a patent-pending product. These new products have demonstrated early success and product expansion has made it possible for Amerx to have success in providing treatments outside its historical niche. Amerx looks to continue this new product trend in fiscal 2018.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's condensed consolidated financial statements have been prepared in accordance with standards of the Public Company Accounting Oversight Board (United States), which require the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. A summary of those significant accounting policies can be found in the Notes to the Consolidated Financial Statements included in the Company's annual report on form 10-K, for the year ended June 30, 2017, which was filed with the Securities and Exchange Commission on October 12, 2017. The estimates used by management are based upon the Company's historical experiences combined with management's understanding of current facts and circumstances. Certain of the Company's accounting policies are considered critical as they are both important to the portrayal of the Company's financial condition and the results of its operations and require significant or complex judgments on the part of management. We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements.

Accounts Receivable Allowance

Accounts receivable allowance reflects a reserve that reduces our customer accounts and receivable to the net amount estimated to be collectible. The valuation of accounts receivable is based upon the credit-worthiness of customers and third-party payers as well as historical collection experience. Allowances for doubtful accounts are recorded as a selling, general and administrative expense for estimated amounts expected to be uncollectible from third-party payers and customers. The Company bases its estimates on its historical collection experience, current trends, credit policy and on the analysis of accounts by aging category. At September 30, 2017, and June 30, 2017, our allowance for doubtful accounts totaled $1,001.

Advertising and Marketing

The Company uses several forms of advertising, including sponsorships to agencies who represent the professionals in their respective fields. The Company expenses these sponsorships over the term of the advertising arrangements on a straight line basis. Other forms of advertising used by the Company include professional journal advertisements, distributor catalogs, website and mailing campaigns. These forms of advertising are expensed when incurred.

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Deferred Income Taxes

Deferred income taxes are recognized for the expected tax consequences in future years for differences between the tax bases of assets and liabilities and their financial reporting amounts, based upon enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. The Company accounts for income taxes under Topic 740 - Income Tax in the Accounting Standards Codification. A valuation allowance is used to reduce deferred tax assets to the net amount expected to be recovered in future periods. The estimates for deferred tax assets and the corresponding valuation allowance require us to exercise complex judgments. We periodically review and adjust those estimates based upon the most current information available. We did not have a valuation allowance as of September 30, 2017. Because the recoverability of deferred tax assets is directly dependent upon future operating results, actual recoverability of deferred tax assets may differ materially from our estimates.

Revenue Recognition

The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue Recognition, corrected copy," which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller's price to the buyer is fixed or determinable; and, (4) collectability is reasonably assured.

Stock Based Compensation

Stock based compensation is accounted for in accordance with Topic 718 - Compensation - Stock Compensation in the Accounting Standards Codification. All share-based payments to employees, including grants of employee stock options, are to be recognized in the statement of operations based upon their fair values. Topic 718 rescinds the acceptance of pro forma disclosure.

FINANCIAL CONDITION

As of September 30, 2017 the Company's principal sources of liquid assets included cash of $125,372, inventories of $659,962, and net accounts receivable of $288,929. The Company also has $152,911 in Certificate of Deposits. The Company had net working capital of $994,585, and long-term debt of $1,163 at September 30, 2017.

During the three months ended September 30, 2017 cash decreased from $173,173 as of June 30, 2017, to $125,372. Operating activities used cash of $107,029 during the period. The change is primarily the result of reduction of accrued expenses.

The Company reflected a non-current deferred tax asset of $656,308, at September 30, 2017. Because the recoverability of deferred tax assets is directly dependent upon future operating results, actual recoverability of deferred tax assets may differ materially from our estimates.

RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2017 and 2016.

Net Sales during the quarter ended September 30, 2017, were $831,071 as compared to the previous year's quarter net sales of $879,733, a decrease of $48,662, or approximately 6%. We believe sales were affected by a shift in distributor purchasing trends, increased competition in the marketplace and the temporary loss of operations at our Company headquarters caused by hurricane Irma as well as interruptions in our customers operations due to hurricanes Harvey and Irma.

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Gross profit during the quarter ended September 30, 2017, was $608,242 as compared to $622,941 during the quarter ended September 30, 2016, a decrease of $14,699 or 2%. As a percentage of net sales, gross profit was approximately 73% in the quarter ended September 30, 2017, and approximately 71% in the corresponding quarter in 2017.

Operating expenses during the quarter ended September 30, 2017 were $593,216, consisting of $331,439 in salaries and benefits and $261,777 in selling, general and administrative expenses. This compares to operating expenses during the quarter ended September 30, 2016 of $574,054, consisting of $338,264 in salaries and benefits; and $235,790 in selling, general and administrative expenses. Expenses for the quarter ended September 30, 2017, increased by $19,162 or approximately 3% compared to the corresponding quarter in 2017.

Operating profit decreased by $33,861 to an operating profit of $15,026 for the quarter ended September 30, 2017, as compared to an operating profit of $48,887 in the comparable quarter of the prior year. The decrease in net income for the three month period, of the comparable quarter of the prior year before income taxes was primarily attributable to the decrease in Net Sales, with a corresponding increase in Operating Expenses.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Management of the Company, with the participation of the Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, management, including the Chief Executive and Chief Financial Officer, has concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were not effective in ensuring that all material information relating to the Company required to be disclosed in this report has been made known to management in a timely manner and ensuring that this information is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and regulations, because of the identification of a material weakness in our internal controls over financial reporting, identified below, which we view as an integral part of our disclosure controls and procedures.

(b) Changes in Internal Controls Over Financial Reporting

As previously reported, our annual assessment of the internal controls over financial reporting as of June 30, 2017 revealed a deficiency that we consider to be a material weakness: inadequate segregation of duties consistent with control objectives.

During fiscal 2018, the Company will continue to address changes needed to improve segregation of duties consistent with control objectives. We have added staff to grow sales. We expect that increased sales will enable us to add support staff, specifically in the accounting and shipping departments. A secondary effect of adding more staff will address needed improvements in segregation of duties consistent with control objectives.

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PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

(A) EXHIBITS

31.1 Certification of Regina W. Anderson pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)

 31.2 Certification of James B. Anderson pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)

 32.1 Certification Pursuant to 18 U.S.C.§1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002

 101.1 * The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (I) the Condensed Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to Condensed Consolidated Financial Statements

*          Furnished, not filed

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	PROCYON CORPORATION
November 14, 2017	By: /s/ REGINA W. ANDERSON
Date	Regina W. Anderson, Chief Executive Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Regina W. Anderson, Chief Executive Officer of Procyon Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Procyon Corporation

2. Based on my knowledge, this 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 report; and

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report.

4. The registrant's other certifying officer(s) 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)) for the registrant issuer 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 (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) 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 (or persons performing the equivalent functions):

(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: November 14, 2017

/s/ REGINA W. ANDERSON

Regina W. Anderson, Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, James B. Anderson, Chief Financial Officer of Procyon Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Procyon Corporation

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to stated 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 report; and

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report.

4. The registrant's other certifying officer(s) 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)) for the registrant issuer 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 (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) 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 (or persons performing the equivalent functions):

(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: November 14, 2017

/s/ JAMES B. ANDERSON

James B. Anderson, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. §1350, AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Procyon Corporation (the "Company") on Form 10-Q for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, the undersigned Chief Executive Officer and Chief Financial Officer of the Company, do each certify, to our knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) 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 result of operations of the Company.

Dated: November 14, 2017

/s/ REGINA W. ANDERSON	/s/ JAMES B. ANDERSON
Regina W. Anderson Chief Executive Officer	James B. Anderson, Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Sep. 30, 2017	Nov. 08, 2017
Document Information [Line Items]
Entity Registrant Name	PROCYON CORP
Entity Central Index Key	0000812306
Trading Symbol	pcyn
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		8,077,388
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
CURRENT ASSETS
Cash	$ 125,372	$ 173,173
Certificates of Deposit, plus accrued interest	102,218	102,141
Accounts Receivable, less allowance for doubtful accounts of $1,001 and $1,001 respectively.	288,929	391,539
Inventories	589,307	506,719
Prepaid Expenses	230,877	175,206
TOTAL CURRENT ASSETS	1,336,703	1,348,778
CERTIFICATES OF DEPOSIT, PLUS ACCRUED INTEREST	50,693	111,669
PROPERTY AND EQUIPMENT, NET	503,095	513,779
OTHER ASSETS
Deposits	4,192	4,192
Inventories	70,655	70,655
Intangible Asset	17,000	17,000
Deferred Tax Asset	656,308	663,738
	748,155	755,585
TOTAL ASSETS	2,638,646	2,729,811
CURRENT LIABILITIES
Accounts Payable	156,451	120,584
Capital Lease Liability	3,788	3,788
Accrued Expenses	181,879	315,829
TOTAL CURRENT LIABILITIES	342,118	440,201
CAPITAL LEASE LIABILITY	1,163	2,110
TOTAL LIABILITIES	343,281	442,311
COMMITMENTS AND CONTINGENCIES (NOTE I)
STOCKHOLDERS' EQUITY
Preferred Stock
Common Stock, no par value, 80,000,000 shares authorized; 8,077,388 shares issued and outstanding.	4,434,766	4,434,766
Paid-in Capital	15,885	15,885
Accumulated Deficit	(2,292,146)	(2,300,011)
TOTAL STOCKHOLDERS' EQUITY	2,295,365	2,287,500
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	2,638,646	2,729,811
Convertible Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred Stock	$ 136,860	$ 136,860

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Accounts Receivable, allowance for doubtful accounts	$ 1,001	$ 1,001
Preferred stock, authorized (in shares)	496,000,000	496,000,000
Preferred stock, issued (in shares)	0	0
Common stock, no par value (in dollars per share)
Common stock, authorized (in shares)	80,000,000	80,000,000
Common stock, issued (in shares)	8,077,388	8,077,388
Common stock, outstanding (in shares)	8,077,388	8,077,388
Convertible Preferred Stock [Member]
Preferred stock, authorized (in shares)	4,000,000	4,000,000
Preferred stock, issued (in shares)	177,100	177,100
Preferred stock, no par value (in dollars per share)
Preferred stock, outstanding (in shares)	177,100	177,100

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
NET SALES	$ 831,071	$ 879,733
COST OF SALES	222,829	256,792
GROSS PROFIT	608,242	622,941
OPERATING EXPENSES
Salaries and Benefits	331,439	338,264
Selling, General and Administrative	261,777	235,790
	593,216	574,054
INCOME FROM OPERATIONS	15,026	48,887
OTHER INCOME (EXPENSE)
Interest Expense		(1,730)
Interest Income	269	770
	269	(960)
INCOME BEFORE INCOME TAXES	15,295	47,927
INCOME TAX (EXPENSE)	(7,430)	(19,044)
NET INCOME	7,865	28,883
Dividend requirements on preferred stock	(4,428)	(4,853)
Basic net income available to common shares	$ 3,437	$ 24,030
Basic net income per common share (in dollars per share)	$ 0	$ 0
Weighted average number of common shares outstanding (in shares)	8,077,388	8,060,388
Diluted net income per common share (in dollars per share)	$ 0	$ 0
Weighted average number of common shares outstanding, diluted (in shares)	8,300,875	8,264,679

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$ 7,865	$ 28,883
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation	11,744	11,217
Deferred Income Taxes	7,430	19,044
Accrued Interest on Certificates of Deposit	(336)	(767)
Decrease (increase) in:
Accounts Receivable	102,610	299,038
Inventory	(82,588)	(7,087)
Prepaid Expenses	(55,671)	(80,671)
Increase (decrease) in:
Bank Overdraft		44,126
Accounts Payable	35,867	(155,340)
Accrued Expenses	(133,950)	(131,472)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(107,029)	26,971
CASH FLOW FROM INVESTING ACTIVITIES
Redemption of Certificate of Deposit	61,235
Purchase of property & equipment	(1,060)	(1,984)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	60,175	(1,984)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds on Line of Credit		70,000
Payments on Line of Credit		(100,000)
Payments on Capital Lease	(947)	(947)
NET CASH (USED IN) FINANCING ACTIVITIES	(947)	(30,947)
NET CHANGE IN CASH	(47,801)	(5,960)
CASH AT BEGINNING OF PERIOD	173,173	59,173
CASH AT END OF PERIOD	125,372	53,213
SUPPLEMENTAL DISCLOSURES
Interest Paid		1,730
Taxes Paid

XML

Note A - Summary of Accounting Policies

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE A - SUMMARY OF ACCOUNTING POLICIES

The interim consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles ("GAAP") have been condensed or omitted as allowed by such rules and regulations. The Company believes that the disclosures are adequate to make the information presented

not

misleading. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements dated

June 30, 2017.

The results for interim periods are

not

necessarily indicative of results that

may

be expected for any other interim period or for the full year.

Management of the Company has prepared the accompanying unaudited condensed consolidated financial statements prepared in conformity with generally accepted accounting principles, which require the use of management estimates, contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations and cash flows for the period presented and to make the financial statements

not

misleading.

STOCK-BASED COMPENSATION

Stock based compensation is accounted for in accordance with Topic

718

- Compensation - Stock Compensation in the Accounting Standards Codification. Pursuant to Topic

718,

all share-based payments to employees, including grants of employee stock options, are to be recognized in the statement of operations based upon their fair values. Topic

718

rescinds the acceptance of pro forma disclosure. In

December 2009,

our shareholders approved the adoption of a new stock option plan, providing the Company a continued means of offering stock-based compensation.

On

September 30, 2017,

there were

65,000

outstanding options to purchase shares of our common stock.

The fair value of a stock option is determined using the Black-Scholes option-pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the life of the option. There were

no

options granted during the quarter ended

September 30, 2017.

The Black-Scholes option valuation model was developed for estimating the fair value of traded options that have

no

vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Our options do

not

have the characteristics of traded options, therefore, the option valuation models do

not

necessarily provide a reliable measure of the fair value of our options.

EARNINGS PER SHARE

Basic earnings per share (EPS) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if dilutive securities such as stock options and other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in earnings. We use the treasury stock method to compute potential common shares from stock options and the as-if-converted method to compute potential common shares from Preferred Stock.

For the

three

months ended

September 30, 2017,

the potential dilutive effects of the preferred stock and stock options were included in the weighted-average shares outstanding.

XML

Note B - Inventories

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE B - INVENTORIES

Inventories consisted of the following:	September 30, 2017		June 30, 2017
Finished Goods	$	471,550	$	384,350
Raw Materials		188,412		193,024
	$	659,962	$	577,374

At

September 30, 2017

and

June 30, 2017,

$70,655

of our inventory was considered non-current as it will

not

be used within a

one

year period.

XML

Note C - Stockholders' Equity

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE C - STOCKHOLDERS' EQUITY

During

January 1995,

the Company's Board of Directors authorized the issuance of up to

4,000,000

shares of Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"). The preferred stockholders are entitled to receive, as and if declared by the board of directors, quarterly dividends at an annual rate of

$.10

per share of Series A Preferred Stock per annum. Dividends will accrue without interest and will be cumulative from the date of issuance of the Series A Preferred Stock and will be payable quarterly in arrears in cash or publicly traded common stock when and if declared by the Board of Directors. As of

September 30, 2017,

no

dividends have been declared. Dividends in arrears on the outstanding preferred shares total

$361,854

as of

September 30, 2017.

Holders of the Preferred Stock have the right to convert their shares of Preferred Stock into an equal number of shares of Common Stock of the Company. In addition, Preferred Stock holders have the right to vote the number of shares into which their shares are convertible into Common Stock. Such preferred shares will automatically convert into

one

share of Common Stock at the close of a public offering of Common Stock by the Company provided the Company receives gross proceeds of at least

$1,000,000,

and the initial offering price of the Common Stock sold in such offering is equal to or in excess of

$1

per share. The Company is obligated to reserve an adequate number of shares of its common stock to satisfy the conversion of all the outstanding Series A Preferred Stock. There were

no

shares converted during the reporting period. So long as any share of Series A Preferred Stock is outstanding, the Company is prohibited from declaring dividends or other distributions related to its Common Stock or purchasing, redeeming or otherwise acquiring any of the Common Stock.

XML

Note D - Income Taxes and Available Carryforward

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE D - INCOME TAXES AND AVAILABLE CARRYFORWARD

As of

September 30, 2017,

the Company had consolidated income tax net operating loss ("NOL") carryforwards for federal income tax purposes of approximately

$1,690,000.

The NOL will expire in various years ending through the year

2035.

The utilization of certain loss carryforwards are limited under Section

382

of the Internal Revenue Code.

The components of the provision for income tax expense attributable to continuing operations are as follows:

	Three Months 9/30/2017			Three Months 9/30/2016
Current
Federal	$	0		$	0
State		0			0
	$	0		$	0
Deferred
Federal	$	(6,713	)	$	(16,260	)
State		(717	)		(2,784	)
	$	(7,430	)	$	(19,044	)
Total Income Tax (Expense)	$	(7,430	)	$	(19,044	)

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

	Non-Current
Deferred tax assets
NOL and contribution carryforwards	$	639,524
Accrued compensated absences		10,319
Accrued bonus		7,490
Allowance for doubtful accounts		377
Total deferred tax assets		657,710
Deferred tax (liabilities)
Excess of tax over book depreciation		(1,402	)
Total deferred tax (liabilities)		(1,402	)
Total deferred tax asset	$	656,308

Management believes it is more likely than

not

that it will realize the benefit of the NOL carryforward, because of its previous trend of earnings. Therefore, a valuation allowance is

not

considered necessary at this time. Management will continue to evaluate its operating results each reporting period and assess whether it will be able to utilize all available NOL carryforward before expiration.

Income taxes for the periods ended

September 30, 2017

and

2016

differ from the amounts computed by applying the effective income tax rates of

37.63%,

to income taxes as a result of the following:     

	Three Months September 30, 2017			Three Months September 30, 2016
Expected (provision) at US statutory rate	$	(5,200	)	$	(16,295	)
State income tax net of federal (provision)		(556	)		(1,740	)
Nondeductible Expense		(1,674	)		(1,009	)
Income Tax (Expense)	$	(7,430	)	$	(19,044	)

The earliest tax year still subject to examination by a major taxing jurisdiction is fiscal year end

June 30, 2014.

The Company performed a review of its uncertain tax positions in accordance with Accounting Standards Codification ASC

740

-

10

"Uncertainty in Income Taxes". In this regard, an uncertain tax position represents the Company's expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has

not

been reflected in measuring income tax expense for financial reporting purposes. As a result of this review, the Company concluded that at this time there are

no

uncertain tax positions, and there has been

no

cumulative effect on retained earnings.

XML

Note E - Line of Credit

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE E - LINE OF CREDIT

The Company has a

$250,000,

due-on-demand line of credit with a financial institution, collateralized by the Company's inventory of

$659,962

and net accounts receivable assets of

$288,929.

The line of credit is renewable annually in

April.

Our Chief Executive Officer personally guaranteed the line of credit to the Company. At

September 30, 2017

and

June 30, 2017,

the Company owed

$0

,

on the line of credit. The line of credit extends terms of cash advances at a variable rate set equal to the prime rate at the time of advance. The interest rate can fluctuate according to the changes in its published prime rate.

XML

Note F - Related Party Transactions

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE F - RELATED PARTY TRANSACTIONS

Our Chief Executive Officer, Regina W. Anderson, guarantees a

$250,000

line of credit for the Company.

XML

Note G - Subsequent Events

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE G - SUBSEQUENT EVENTS

We have evaluated subsequent events through

November 9, 2017,

which is the date the financial statements were available to be issued.

XML

Note H - Recent Accounting Pronouncements

3 Months Ended

Sep. 30, 2017

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE H - RECENT ACCOUNTING PRONOUNCEMENTS

In

May 2017,

the FASB issued ASU

No.

2017

-

09,

Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period ending

June 30, 2019

and interim periods within that annual period. Early adoption is permitted. The Company is currently evaluating the effect that ASU

No.

2017

-

09

will have on its consolidated financial statements and related disclosures.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

Leases, related to the recognition of lease assets and lease liabilities. The new guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability, other than leases that meet the definition of a short- term lease, and requires expanded disclosures about leasing arrangements. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have

not

significantly changed from the current guidance. Lessor accounting is similar to the current guidance, but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new guidance is effective for the Company on

July 1, 2019,

with early adoption permitted. The Company is currently evaluating the impact that ASU

No.

2016

-

02

will have on its consolidated financial statements and related disclosures.

On

November 20, 2015,

FASB issued Accounting Standards Update (ASU)

No.

2015

-

17,

Income Taxes (Topic

740

): Balance Sheet Classification of Deferred Taxes. Under the ASU, all deferred tax assets and liabilities, as well any valuation allowances, will be netted and presented in a classified balance sheet as

one

noncurrent amount. ASU

No.

2015

-

17

becomes effective for public entities for annual periods beginning after

December 15, 2016,

and for interim periods within those annual periods. The Company applied this standard on a retrospective basis and the balance sheet at

June 30, 2017,

has been adjusted to conform to this new presentation by combining the current deferred tax asset of

$242,841

to the non-current deferred tax asset of

$420,897,

resulting in a non-current deferred asset of

$663,738.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

STOCK-BASED COMPENSATION

Stock based compensation is accounted for in accordance with Topic

718

- Compensation - Stock Compensation in the Accounting Standards Codification. Pursuant to Topic

718,

all share-based payments to employees, including grants of employee stock options, are to be recognized in the statement of operations based upon their fair values. Topic

718

rescinds the acceptance of pro forma disclosure. In

December 2009,

our shareholders approved the adoption of a new stock option plan, providing the Company a continued means of offering stock-based compensation.

On

September 30, 2017,

there were

65,000

outstanding options to purchase shares of our common stock.

The fair value of a stock option is determined using the Black-Scholes option-pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the life of the option. There were

no

options granted during the quarter ended

September 30, 2017.

The Black-Scholes option valuation model was developed for estimating the fair value of traded options that have

no

vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Our options do

not

have the characteristics of traded options, therefore, the option valuation models do

not

necessarily provide a reliable measure of the fair value of our options.

Earnings Per Share, Policy [Policy Text Block]

EARNINGS PER SHARE

Basic earnings per share (EPS) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if dilutive securities such as stock options and other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in earnings. We use the treasury stock method to compute potential common shares from stock options and the as-if-converted method to compute potential common shares from Preferred Stock.

For the

three

months ended

September 30, 2017,

the potential dilutive effects of the preferred stock and stock options were included in the weighted-average shares outstanding.

XML

Note B - Inventories (Tables)

3 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Inventory, Current and Noncorrent [Table Text Block]

Inventories consisted of the following:	September 30, 2017		June 30, 2017
Finished Goods	$	471,550	$	384,350
Raw Materials		188,412		193,024
	$	659,962	$	577,374

XML

Note D - Income Taxes and Available Carryforward (Tables)

3 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	Three Months 9/30/2017			Three Months 9/30/2016
Current
Federal	$	0		$	0
State		0			0
	$	0		$	0
Deferred
Federal	$	(6,713	)	$	(16,260	)
State		(717	)		(2,784	)
	$	(7,430	)	$	(19,044	)
Total Income Tax (Expense)	$	(7,430	)	$	(19,044	)

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	Non-Current
Deferred tax assets
NOL and contribution carryforwards	$	639,524
Accrued compensated absences		10,319
Accrued bonus		7,490
Allowance for doubtful accounts		377
Total deferred tax assets		657,710
Deferred tax (liabilities)
Excess of tax over book depreciation		(1,402	)
Total deferred tax (liabilities)		(1,402	)
Total deferred tax asset	$	656,308

Comprehensive Income (Loss) [Table Text Block]

	Three Months September 30, 2017			Three Months September 30, 2016
Expected (provision) at US statutory rate	$	(5,200	)	$	(16,295	)
State income tax net of federal (provision)		(556	)		(1,740	)
Nondeductible Expense		(1,674	)		(1,009	)
Income Tax (Expense)	$	(7,430	)	$	(19,044	)

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Note A - Summary of Accounting Policies (Details Textual)	3 Months Ended
	Sep. 30, 2017 shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	65,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0

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Note B - Inventories (Details Textual) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Inventory, Noncurrent	$ 70,655	$ 70,655

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Note B - Inventories - Inventories (Details) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Finished Goods	$ 471,550	$ 384,350
Raw Materials	188,412	193,024
	$ 659,962	$ 577,374

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Note C - Stockholders' Equity (Details Textual) - USD ($)	1 Months Ended	3 Months Ended
	Jan. 31, 1995	Sep. 30, 2017	Jun. 30, 2017
Preferred Stock, Shares Authorized		496,000,000	496,000,000
Minimum [Member]
Proceeds From Public Offering Required for Mandatory Conversion		$ 1,000,000
Share Price		$ 1
Convertible Preferred Stock [Member]
Preferred Stock, Shares Authorized	4,000,000	4,000,000	4,000,000
Preferred Stock, Dividend Rate, Per-Dollar-Amount	$ 0.10
Dividends, Preferred Stock		$ 0
Preferred Stock, Amount of Preferred Dividends in Arrears		$ 361,854
Convertible Preferred Stock, Shares Issued upon Conversion		1

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Note D - Income Taxes and Available Carryforward (Details Textual)	3 Months Ended
	Sep. 30, 2017 USD ($)
Operating Loss Carryforwards	$ 1,690,000
Operating Loss Carryforwards, Expiration Date	Dec. 31, 2035
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	37.63%
Unrecognized Tax Benefits	$ 0

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Note D - Income Taxes and Available Carryforward - Provision for Income Tax Expense (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Current
Federal	$ 0	$ 0
State	0	0
	0	0
Deferred
Federal	6,713	16,260
State	717	2,784
	(7,430)	(19,044)
Total Income Tax (Expense)	$ (7,430)	$ (19,044)

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Note D - Income Taxes and Available Carryforward - Deferred Tax Assets and Liabilities (Details)	Sep. 30, 2017 USD ($)
Deferred tax assets
NOL and contribution carryforwards	$ 639,524
Accrued compensated absences	10,319
Accrued bonus	7,490
Allowance for doubtful accounts	377
Total deferred tax assets	657,710
Deferred tax (liabilities)
Excess of tax over book depreciation	(1,402)
Total deferred tax (liabilities)	(1,402)
Total deferred tax asset	$ 656,308

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Note D - Income Taxes and Available Carryforward - Income Taxes Reconciliation (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Expected (provision) at US statutory rate	$ (5,200)	$ (16,295)
State income tax net of federal (provision)	(556)	(1,740)
Nondeductible Expense	(1,674)	(1,009)
Total Income Tax (Expense)	$ (7,430)	$ (19,044)

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Note E - Line of Credit (Details Textual) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000
Long-term Line of Credit	0	$ 0
Inventory [Member]
Debt Instrument, Collateral Amount	659,962
Net Accounts Receivable Assets [Member]
Debt Instrument, Collateral Amount	$ 288,929

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Note F - Related Party Transactions (Details Textual)	Sep. 30, 2017 USD ($)
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000
Chief Executive Officer [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000

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Note H - Recent Accounting Pronouncements (Details Textual) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Deferred Tax Assets, Net, Noncurrent	$ 656,308	$ 663,738
Accounting Standards Update 2015-07 [Member]
Deferred Tax Assets, Net, Noncurrent		663,738
Scenario, Previously Reported [Member] | Accounting Standards Update 2015-07 [Member]
Deferred Tax Assets, Net, Current		242,841
Deferred Tax Assets, Net, Noncurrent		$ 420,897