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Fair Value of Financial Instruments

9 Months Ended

12 Months Ended

Mar. 31, 2021

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

The FASB defines the fair value of financial instruments as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements do not include transaction costs.

The accounting guidance also expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are described below:

Level 1 - Inputs that are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 - Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3 - Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable.

In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculated the fair value of its Level 1 and 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.

The fair values of the contingent consideration obligations are based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the following tables.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis at March 31, 2021 and June 30, 2020 according to the valuation techniques the Company used to determine their fair values:

						Fair Value Measurements Using Inputs Considered as
		Fair Value at March 31, 2021				Level 1				Level 2				Level 3
Assets:
Cash and cash equivalents		$	627,500			$	627,500			$	-			$	-
Investment securities			5,325,700				5,325,700				-				-

Total		$	5,953,200			$	5,953,200				-			$	-

Liabilities:

Contingent consideration		$	226,100			$	-			$	-			$	226,100

						Fair Value Measurements Using Inputs Considered as
		Fair Value at June 30, 2020				Level 1				Level 2				Level 3
Assets:
Cash and cash equivalents		$	7,559,700			$	7,559,700			$	-			$	-
Investment securities			331,800				331,800				-				-

Total		$	7,891,500			$	7,891,500			$	-			$	-

Liabilities:

Contingent consideration		$	358,000			$	-			$	-			$	358,000

Investments in marketable securities at March 31, 2021 and June 30, 2020 consisted of the following:

		Cost				Fair Value				Unrealized Holding Gain (Loss)
At March 31, 2021:
Equity securities		$	102,200			$	148,100			$	45,900
Mutual and bond funds			5,169,700				5,177,600				7,900

		$	5,271,900			$	5,325,700			$	53,800

		Cost				Fair Value				Unrealized Holding Gain (Loss)
At June 30, 2020:
Equity securities		$	77,600			$	101,900			$	24,300
Mutual and bond funds			250,300				229,900				(20,400	)

		$	327,900			$	331,800			$	3,900

The FASB defines the fair value of financial instruments as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements do not include transaction costs.

The accounting guidance also expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are described below:

Level 1

Inputs that are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2

Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3

Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable.

In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculated the fair value of its Level 1 and 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.

The fair value of the contingent consideration obligations is based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the following table.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis at June 30, 2020 and 2019 according to the valuation techniques the Company used to determine their fair values:

						Fair Value Measurements Using Inputs Considered as
		Fair Value at June 30, 2020				Level 1				Level 2				Level 3
Assets:
Cash and cash equivalents		$	7,559,700			$	7,559,700			$	-			$	-
Investment securities			331,800				331,800				-				-

Total		$	7,891,500			$	7,891,500			$	-			$	-

Liabilities:
Contingent consideration		$	358,000			$	-			$	-			$	358,000

						Fair Value Measurements Using Inputs Considered as
		Fair Value at June 30, 2019				Level 1				Level 2				Level 3
Assets:
Cash and cash equivalents		$	1,602,500			$	1,602,500			$	-			$	-
Investment securities			330,900				330,900				-				-

Total		$	1,933,400			$	1,933,400			$	-			$	-

Liabilities:
Contingent consideration		$	618,000			$	-			$	-			$	618,000

The following table sets forth an analysis of changes during the years ended June 30, 2020 and 2019, respectively, in Level 3 financial liabilities of the Company:

		2020				2019

Beginning balance		$	618,000			$	408,000
Increase in contingent consideration liability			112,600				521,200
Payments and accruals			(372,600	)			(311,200	)

Ending balance		$	358,000			$	618,000

The Company’s contingent obligations require cash payments to the sellers of certain acquired operations based on royalty payments received or operating results achieved. These contingent considerations are classified as liabilities and the liabilities are remeasured to an estimated fair value at each reporting date. During the years ended June 30, 2020 and 2019, the Company recorded an increase in the estimated fair value of contingent liabilities of approximately $112,600 and $521,200, respectively related to its Bioprocessing Systems Operations segment.

Investments in marketable securities classified as available-for-sale by security type at June 30, 2020 and 2019 consisted of the following:

		Cost				Fair Value				Unrealized Holding Gain (Loss)
At June 30, 2020:

Equity securities		$	77,600			$	101,900			$	24,300
Mutual funds			250,300				229,900				(20,400	)

		$	327,900			$	331,800			$	3,900

		Cost				Fair Value				Unrealized Holding Gain (Loss)
At June 30, 2019:

Equity securities		$	47,100			$	72,000			$	24,900
Mutual funds			292,300				258,900				(33,400	)

		$	339,400			$	330,900			$	(8,500	)

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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