10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

FORM 10-Q/A

(Amendment No. 1)

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2021

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: 001-34269

_______________________

SHARPS COMPLIANCE CORP.

(Exact name of registrant as specified in its charter)

Delaware	74-2657168
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

9220 Kirby Drive, Suite 500, Houston, Texas	77054
(Address of principal executive offices)	(Zip Code)

(713) 432-0300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Shares, $0.01 Par Value	SMED	The NASDAQ Capital Market

Indicate by check mark if 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 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 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, a 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 Securities Exchange Act of 1934.

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

If an emerging growth company, indicate by check mark 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 12(b)-2 of the Exchange Act). Yes ☐ No ☒

As of January 31, 2022, there were 19,247,243 outstanding shares of the Registrant's common stock, par value $0.01 per share.

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
PART I	FINANCIAL INFORMATION	PAGE
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of December 31, 2021 and June 30, 2021	5
	Condensed Consolidated Statements of Operations for the three months ended December 31, 2021 and 2020	6
	Condensed Consolidated Statements of Operations for the six months ended December 31, 2021 and 2020	7
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended December 31, 2021 and 2020	8
	Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2021 and 2020	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 4.	Controls and Procedures	31
Part II	OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	32
Item 6.	Exhibits	33
	SIGNATURES	33

3

EXPLANATORY NOTE

On May 11, 2022, Sharps Compliance Corp. (“Sharps” or the “Company”) filed a Current Report on Form 8-K disclosing that the Audit Committee of the Board of Directors of the Company concluded that the unaudited consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2021 and December 31, 2021, filed with the Securities and Exchange Commission on November 3, 2021 and February 2, 2022, respectively (the “Initial Filings”), should not be relied upon because the Company had under reported freight costs associated with immunization related mailbacks returned for treatment. This occurred primarily as a result of a misunderstanding with the applicable carrier regarding certain charges for services rendered during these periods.

For the convenience of the reader, we have included all items in this Amendment which supersedes in its entirety the Original Form 10-Q. Prior to the filing of this Amendment No. 1, we have filed the amended Quarterly Report on Form 10-Q/A for the period ended September 30, 2021.

The following sections in the Original From 10-Q have been revised in this Amendment No. 1 to reflect the restatement:

•Part I, Item 1, "Financial Statements

•Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations"

•Part I, Item 4, "Controls and Procedures"

•Part II, Item 1A, "Risk Factors"

•the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer certifications in Exhibits 31.1, 31.2, 31.3, and 32

This amendment does not reflect adjustments for events occurring after the filing of the Original Form 10-Q except to the extent that they are otherwise required to be included and discussed herein and did not substantively modify or update the disclosures herein other than as required to reflect the adjustments described above. See Note 2 to the accompanying condensed consolidated financial statements, set forth in Item 1 of this Quarterly Report on Form 10-Q/A, for details of the restatement and its impact on the condensed consolidated financial statements.

See "Item 4 — Controls and Procedures" that discloses a material weakness in the Company's internal controls associated with the restatements.

4

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and par value amounts)

	December 31,		June 30,
	2021		2021
	(As restated)
ASSETS
CURRENT ASSETS
Cash	$	36,001	$	27,767
Accounts receivable, net	13,047		9,738
Inventory	6,821		6,114
Contract asset	18		20
Prepaid and other current assets	1,895		1,459
TOTAL CURRENT ASSETS	57,782		45,098
PROPERTY, PLANT AND EQUIPMENT, net	11,155		10,843
OPERATING LEASE RIGHT OF USE ASSET	9,073		8,353
FINANCING LEASE RIGHT OF USE ASSET, net	980		907
INVENTORY, net of current portion	957		989
OTHER ASSETS	154		110
GOODWILL	7,996		6,735
INTANGIBLE ASSETS, net	2,772		2,239
DEFERRED TAX ASSET, net	403		157
TOTAL ASSETS	$	91,272	$	75,431
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,592	$	2,922
Accrued liabilities	5,108		3,940
Operating lease liability	2,457		2,368
Financing lease liability	189		160
Current maturities of long-term debt	480		735
Contract liability	5,062		7,028
TOTAL CURRENT LIABILITIES	16,888		17,153
CONTRACT LIABILITY, net of current portion	408		1,461
OPERATING LEASE LIABILITY, net of current portion	6,752		6,118
FINANCING LEASE LIABILITY, net of current portion	804		741
OTHER LIABILITIES	23		45
LONG-TERM DEBT, net of current portion	3,172		3,329
TOTAL LIABILITIES	28,047		28,847
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value per share; 40,000,000 shares authorized; 19,542,858 and 17,454,859 shares issued, respectively and 19,247,243 and 17,159,244 shares outstanding, respectively	197		176
Treasury stock, at cost, 295,615 shares repurchased	(1,554)		(1,554)
Additional paid-in capital	51,712		34,333
Retained earnings	12,870		13,629
TOTAL STOCKHOLDERS' EQUITY	63,225		46,584
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	91,272	$	75,431

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

5

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per-share data)

	Three-Months Ended December 31,
	2021		2020
	(As restated)
REVENUES	$	18,878	$	17,011
Cost of revenues	13,449		11,374
GROSS PROFIT	5,429		5,637
Selling, general and administrative	4,388		3,756
Depreciation and amortization	236		205
OPERATING INCOME	805		1,676
OTHER INCOME (EXPENSE)
Interest income	14		—
Interest expense	(58)		(47)
Income associated with derivative instrument	27		10
TOTAL OTHER EXPENSE	(17)		(37)
INCOME BEFORE INCOME TAXES	788		1,639
INCOME TAX EXPENSE
Current	25		64
Deferred	181		347
TOTAL INCOME TAX EXPENSE	206		411
NET INCOME	$	582	$	1,228
NET INCOME PER COMMON SHARE - Basic and Diluted	$	0.03	$	0.07
WEIGHTED AVERAGE SHARES USED IN COMPUTING    NET INCOME PER COMMON SHARE:
Basic	19,245		16,497
Diluted	19,400		16,929

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

6

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per-share data)

	Six-Months Ended December 31,
	2021		2020
	(As restated)
REVENUES	$	32,793	$	30,162
Cost of revenues	24,665		20,902
GROSS PROFIT	8,128		9,260
Selling, general and administrative	8,588		7,544
Depreciation and amortization	454		409
OPERATING INCOME (LOSS)	(914)		1,307
OTHER INCOME (EXPENSE)
Interest income	14		—
Interest expense	(114)		(79)
Income associated with derivative instrument	34		15
TOTAL OTHER EXPENSE	(66)		(64)
INCOME (LOSS) BEFORE INCOME TAXES	(980)		1,243
INCOME TAX EXPENSE (BENEFIT)
Current	25		64
Deferred	(246)		244
TOTAL INCOME TAX EXPENSE (BENEFIT)	(221)		308
NET INCOME (LOSS)	$	(759)	$	935
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted	$	(0.04)	$	0.06
WEIGHTED AVERAGE SHARES USED IN COMPUTING     NET INCOME (LOSS) PER COMMON SHARE:
Basic	18,562		16,444
Diluted	18,562		16,875

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

7

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share data)

	Common Stock				Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares		Amount		Shares	Amount
Balances, September 30, 2021, as restated		19,524,859	$	197	(295,615)	$	(1,554)	$	51,363	$	12,288	$	62,294
Stock-based compensation		—	—		—	—		349		—		349
Issuance of restricted stock		17,999	—		—	—		—		—		—
Net income, as restated		—	—		—	—		—		582		582
Balances, December 31, 2021, as restated		19,542,858	$	197	(295,615)	$	(1,554)	$	51,712	$	12,870	$	63,225
	Common Stock				Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares		Amount		Shares	Amount
Balances, September 30, 2020		16,718,103	$	169	(295,615)	$	(1,554)	$	30,589	$	468	$	29,578
Exercise of stock options		18,000	—		—	—		86		—		86
Stock-based compensation		—	—		—	—		140		—		140
Issuance of restricted stock		63,599	1		—	—		(1)		—		—
Net income		—	—		—	—		—		1,228		1,228
Balances, December 31, 2020		16,799,702	$	170	(295,615)	$	(1,554)	$	30,814	$	1,696	$	31,126
	Common Stock				Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares		Amount		Shares	Amount
Balances, June 30, 2021		17,454,859	$	176	(295,615)	$	(1,554)	$	34,333	$	13,629	$	46,584
Issuance of common stock pursuant to secondary offering, net		2,070,000	21		—	—		16,750		—		16,771
Stock-based compensation		—	—		—	—		629		—		629
Issuance of restricted stock		17,999	—		—	—		—		—		—
Net loss, as restated		—	—		—	—		—		(759)		(759)
Balances, December 31, 2021, as restated		19,542,858	$	197	(295,615)	$	(1,554)	$	51,712	$	12,870	$	63,225
	Common Stock				Treasury Stock			Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares		Amount		Shares	Amount
Balances, June 30, 2020		16,667,572	$	168	(295,615)	$	(1,554)	$	30,203	$	761	$	29,578
Exercise of stock options		68,531	1		—	—		310		—		311
Stock-based compensation		—	—		—	—		302		—		302
Issuance of restricted stock		63,599	1		—	—		(1)		—		—
Net income		—	—		—	—		—		935		935
Balances, December 31, 2020		16,799,702	$	170	(295,615)	$	(1,554)	$	30,814	$	1,696	$	31,126

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

8

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six-Months Ended December 31,
	2021		2020
	(As restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(759)	$	935
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,166		923
Bad debt expense	44		100
Inventory write-off	1		24
Loss on disposal of property, plant and equipment	—		1
Stock-based compensation expense	629		302
Income associated with derivative instrument	(34)		(15)
Deferred tax expense (benefit)	(246)		244
Changes in operating assets and liabilities:
Accounts receivable	(3,288)		(1,597)
Inventory	(676)		355
Prepaid and other assets	(480)		488
Accounts payable and accrued liabilities	1,649		160
Contract asset and contract liability	(3,017)		1,050
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(5,011)		2,970
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(761)		(2,023)
Payments for business acquisition, net of cash acquired	(2,181)		—
Additions to intangible assets	(74)		(62)
NET CASH USED IN INVESTING ACTIVITIES	(3,016)		(2,085)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	—		311
Proceeds from issuance of common stock, net	16,771		—
Proceeds from long-term debt	—		961
Repayments of long-term debt	(412)		(347)
Payments on financing lease liabilities	(98)		—
NET CASH PROVIDED BY FINANCING ACTIVITIES	16,261		925
NET INCREASE IN CASH	8,234		1,810
CASH, beginning of period	27,767		5,416
CASH, end of period	$	36,001	$	7,226
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid, net of refunds	$	177	$	(261)
Interest paid on long-term debt	$	116	$	80
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment financed through accounts payable	$	(143)	$	(263)

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

9

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - ORGANIZATION AND BACKGROUND

Organization: The accompanying unaudited condensed consolidated financial statements include the financial transactions and accounts of Sharps Compliance Corp. and its wholly owned subsidiaries, Sharps Compliance, Inc. of Texas (dba Sharps Compliance, Inc.), Sharps e-Tools.com Inc. (“Sharps e-Tools”), Sharps Manufacturing, Inc., Sharps Environmental Services, Inc. (dba Sharps Environmental Services of Texas, Inc.), Sharps Safety, Inc., Alpha Bio/Med Services LLC, Bio-Team Mobile LLC, Citiwaste, LLC, Sharps Properties, LLC and Affordable Medical Waste LLC (collectively, “Sharps” or the “Company”). All significant intercompany accounts and transactions have been eliminated upon consolidation.

Business: Sharps is a full-service national provider of comprehensive waste management services including medical, pharmaceutical and hazardous for small and medium quantity generators. The Company’s solutions include Sharps Recovery System™ (formerly Sharps Disposal by Mail System®), TakeAway Recovery System, TakeAway Medication Recovery System™, MedSafe®, TakeAway Recycle System™, ComplianceTRACSM, SharpsTracer®, Sharps Secure® Needle Disposal System, Complete Needle™ Collection & Disposal System, TakeAway Environmental Return System™, Pitch-It IV™ Poles, Asset Return System and Spill Kit Recovery System. The Company also offers its route-based pick-up services in a thirty-seven (37) state region of the South, Southeast, Southwest, Midwest and Northeast portions of the United States.

NOTE 2 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and with instructions to Form 10-Q and, accordingly, do not include all information and footnotes required under generally accepted accounting principles in the United States of America ("GAAP") for complete financial statements. Additionally, the preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts. In the opinion of management, these interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of December 31, 2021, the results of its operations for the three and six months ended December 31, 2021 and 2020, cash flows for the six months ended December 31, 2021 and 2020, and stockholders’ equity for the three and six months ended December 31, 2021 and 2020. The results of operations for the three and six months ended December 31, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2021.

Restatement of Previously Reported Condensed Consolidated Financial Statements

Subsequent to the issuance of the condensed consolidated financial statements as of and for the period ended December 31, 2021, the Company identified errors in the accounting for freight costs associated with immunization related mailbacks returned for treatment. The Company's management and the Audit Committee of the Company's Board of Directors concluded that it is appropriate to restate the unaudited condensed consolidated financial statements for the quarterly periods ended September 30, 2021 and December 31, 2021.

10

The following tables reflect the restatement adjustments recorded in connection with the Company's restatement of its condensed consolidated financial statements.

Condensed Consolidated Balance Sheet as of December 31, 2021

	As Previously Reported		Restatement Adjustment		As Restated
ASSETS
CURRENT ASSETS
Cash	$	36,001	$	—	$	36,001
Accounts receivable, net	13,047		—		13,047
Inventory	6,821		—		6,821
Contract asset	18		—		18
Prepaid and other current assets	1,857		38		1,895
TOTAL CURRENT ASSETS	57,744		38		57,782
PROPERTY, PLANT AND EQUIPMENT, net	11,155		—		11,155
OPERATING LEASE RIGHT OF USE ASSET	9,073		—		9,073
FINANCING LEASE RIGHT OF USE ASSET, net	980		—		980
INVENTORY, net of current portion	957		—		957
OTHER ASSETS	154		—		154
GOODWILL	7,996		—		7,996
INTANGIBLE ASSETS, net	2,772		—		2,772
DEFERRED TAX ASSET, net	—		403		403
TOTAL ASSETS	$	90,831	$	441	$	91,272
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,592	$	—	$	3,592
Accrued liabilities	3,208		1,900		5,108
Operating lease liability	2,457		—		2,457
Financing lease liability	189		—		189
Current maturities of long-term debt	480		—		480
Contract liability	5,062		—		5,062
TOTAL CURRENT LIABILITIES	14,988		1,900		16,888
CONTRACT LIABILITY, net of current portion	408		—		408
OPERATING LEASE LIABILITY, net of current portion	6,752		—		6,752
FINANCING LEASE LIABILITY, net of current portion	804		—		804
OTHER LIABILITIES	23		—		23
DEFERRED TAX LIABILITY, net	53		(53)		—
LONG-TERM DEBT, net of current portion	3,172		—		3,172
TOTAL LIABILITIES	26,200		1,847		28,047
COMMITMENTS AND CONTINGENCIES			—
STOCKHOLDERS' EQUITY
Common Stock, $0.01 par value	197		—		197
Treasury stock, at cost, 295,615 shares repurchased	(1,554)		—		(1,554)
Additional paid-in capital	51,712		—		51,712
Retained earnings	14,276		(1,406)		12,870
TOTAL STOCKHOLDERS' EQUITY	64,631		(1,406)		63,225
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	90,831	$	441	$	91,272

11

Condensed Consolidated Statements of Operations for Three Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
REVENUES	$	18,878	$	—	$	18,878
Cost of revenues	12,271		1,178		13,449
GROSS PROFIT	6,607		(1,178)		5,429
Selling, general and administrative	4,388		—		4,388
Depreciation and amortization	236		—		236
OPERATING INCOME (LOSS)	1,983		(1,178)		805
OTHER INCOME (EXPENSE)
Interest income	14		—		14
Interest expense	(58)		—		(58)
Income associated with derivative instrument	27		—		27
TOTAL OTHER EXPENSE	(17)		—		(17)
INCOME (LOSS) BEFORE INCOME TAXES	1,966		(1,178)		788
INCOME TAX EXPENSE (BENEFIT)
Current	63		(38)		25
Deferred	466		(285)		181
TOTAL INCOME TAX EXPENSE (BENEFIT)	529		(323)		206
NET INCOME (LOSS)	$	1,437	$	(855)	$	582
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted	$	0.07	$	(0.04)	$	0.03
WEIGHTED AVERAGE SHARES USED IN COMPUTING    NET INCOME PER COMMON SHARE:
Basic	19,245		—		19,245
Diluted	19,400		—		19,400

12

Condensed Consolidated Statements of Operations for Six Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
REVENUES	$	32,793	$	—	$	32,793
Cost of revenues	22,765		1,900		24,665
GROSS PROFIT	10,028		(1,900)		8,128
Selling, general and administrative	8,588		—		8,588
Depreciation and amortization	454		—		454
OPERATING INCOME (LOSS)	986		(1,900)		(914)
OTHER INCOME (EXPENSE)
Interest income	14		—		14
Interest expense	(114)		—		(114)
Income associated with derivative instrument	34		—		34
TOTAL OTHER EXPENSE	(66)		—		(66)
INCOME (LOSS) BEFORE INCOME TAXES	920		(1,900)		(980)
INCOME TAX EXPENSE (BENEFIT)
Current	63		(38)		25
Deferred	210		(456)		(246)
TOTAL INCOME TAX EXPENSE (BENEFIT)	273		(494)		(221)
NET INCOME (LOSS)	$	647	$	(1,406)	$	(759)
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted	$	0.03	$	(0.07)	$	(0.04)
WEIGHTED AVERAGE SHARES USED IN COMPUTING     NET INCOME (LOSS) PER COMMON SHARE:
Basic	18,562		—		18,562
Diluted	18,656		(94)		18,562

13

Condensed Consolidated Statement of Cash Flows for the Six Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	647	$	(1,406)	$	(759)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,166		—		1,166
Bad debt expense	44		—		44
Inventory write-off	1		—		1
Loss on disposal of property, plant and equipment	—		—		—
Stock-based compensation expense	629		—		629
Income associated with derivative instrument	(34)		—		(34)
Deferred tax expense (benefit)	210		(456)		(246)
Changes in operating assets and liabilities:			—
Accounts receivable	(3,288)		—		(3,288)
Inventory	(676)		—		(676)
Prepaid and other assets	(442)		(38)		(480)
Accounts payable and accrued liabilities	(251)		1,900		1,649
Contract asset and contract liability	(3,017)		—		(3,017)
NET CASH USED IN OPERATING ACTIVITIES	(5,011)		—		(5,011)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(761)		—		(761)
Payments for business acquisition, net of cash acquired	(2,181)		—		(2,181)
Additions to intangible assets	(74)		—		(74)
NET CASH USED IN INVESTING ACTIVITIES	(3,016)		—		(3,016)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	—		—		—
Proceeds from issuance of common stock, net	16,771		—		16,771
Proceeds from long-term debt	—		—		—
Repayments of long-term debt	(412)		—		(412)
Payments on financing lease liabilities	(98)		—		(98)
NET CASH PROVIDED BY FINANCING ACTIVITIES	16,261		—		16,261
NET INCREASE IN CASH	8,234		—		8,234
CASH, beginning of period	27,767		—		27,767
CASH, end of period	$	36,001	—		$	36,001
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid, net of refunds	$	177	—		$	177
Interest paid on long-term debt	$	116	—		$	116
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment financed through accounts payable	$	(143)	—		$	(143)

Previously reported amounts for revenue, total cash flows from operating activities, and net changes in cash and cash equivalents are not affected by the adjustments described above. In addition, the condensed consolidated statements of stockholders' equity for the three-months and six-months ended December 31, 2021 and impacted disclosures have been restated to give effect to the correction.

14

Effects of COVID-19

A novel strain of coronavirus ("COVID-19") was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in servicing customers. The Company has implemented some and may take additional precautionary measures intended to help ensure the well-being of its employees, facilitate continued uninterrupted servicing of customers and minimize business disruptions. The full extent of the future impacts of COVID-19 on the Company's operations is uncertain. A prolonged outbreak could have a material adverse impact on the financial results and business operations of the Company. To date, the Company has not identified any material adverse impact of COVID-19 on its financial position and results of operations.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition: The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (in thousands):

	Three-Months Ended December 31,
	2021		% Total		2020		% Total
REVENUES BY SOLUTION:
Mailbacks	$	12,070	63.9	%	$	10,452	61.4	%
Route-based pickup services	3,551		18.8	%	3,491		20.5	%
Unused medications	1,865		9.9	%	1,713		10.1	%
Third party treatment services	54		0.3	%	179		1.1	%
Other (1)	1,338		7.1	%	1,176		6.9	%
Total revenues	$	18,878	100.0	%	$	17,011	100.0	%
	Six-Months Ended December 31,
	2021		% Total		2020		% Total
REVENUES BY SOLUTION:
Mailbacks	$	18,818	57.3	%	$	16,614	55.2	%
Route-based pickup services	6,750		20.6	%	6,647		22.0	%
Unused medications	4,494		13.7	%	4,074		13.5	%
Third party treatment services	85		0.3	%	314		1.0	%
Other (1)	2,646		8.1	%	2,513		8.3	%
Total revenues	$	32,793	100.0	%	$	30,162	100.0	%

(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items with single performance obligations.

Vendor Managed Inventory ("VMI") - The VMI program includes terms that meet the “bill and hold” criteria and as such are recognized when the order is placed, title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse for the customer. During the three and six months ended December 31, 2021, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $1.7 million and $1.8 million, respectively. During the three and six months ended December 31, 2020, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $2.5 million and $3.5 million, respectively. As of December 31, 2021 and June 30, 2021, $4.9 million and $3.7 million, respectively, of solutions sold through that date were held in VMI pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program.

The contract asset is related to VMI service agreements within the maibacks contract type category when the revenue recognition exceeds the amount of consideration the Company was entitled to at the point in time of satisfying the performance obligation associated with the sale of the compliance and container system. The contract liability is related to the mailbacks and unused medications contract type categories in which cash consideration exceeds the transaction price allocated to completed performance obligations. The amount recognized during the six months ended December 31, 2021 and 2020 related to contract liabilities recorded as of June 30, 2021 and 2020 were $5.2 million and $2.1 million, respectively.

15

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. No such allowance was deemed necessary based on the Company's assessment of the recoverability of its deferred tax assets.

Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts.

NOTE 4 – RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2020, guidance for applying optional expedients and exceptions to ease the potential burden in accounting for reference rate reform on financial reporting was issued. It is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform on financial reporting. The provisions of the new guidance are effective for interim periods beginning as of March 12, 2020 through December 31, 2022. There has been no material impact on the Company's consolidated financial statements and related disclosures from the modification of its arrangements as of December 31, 2021. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company.

In June 2016, guidance for credit losses of financial instruments was issued, which requires entities to measure credit losses for financial assets measured at amortized cost based on expected losses rather than incurred losses. The provisions of the new guidance are effective for annual periods beginning after December 15, 2022 (effective July 1, 2023 for the Company), including interim periods within the reporting period, and early application is permitted. The Company is in the initial stages of evaluating the impact of the new guidance on its consolidated financial statements and related disclosures as well as evaluating the available transition methods. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company.

NOTE 5 – INCOME TAXES

The Company’s effective tax rate for the six months ended December 31, 2021 and 2020 was 22.6% and 24.8%, respectively. During the six months ended December 31, 2021 and 2020, the effective tax rate is based on the statutory federal tax rate of 21% as well as an approximated state income tax rate net of the federal benefit.

16

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 6 – LEASES

The Company has operating leases for real estate, field equipment, office equipment and vehicles and financing leases for vehicles and office equipment. Operating leases are included in Operating Lease Right of Use ("ROU") Asset and Operating Lease Liability on our Condensed Consolidated Balance Sheets. Financing leases are included in Financing Lease ROU Asset and Financing Lease Liability on the Condensed Consolidated Balance Sheets.

During the three and six months ended December 31, 2021 and 2020, lease cost amounts, which reflect the fixed rent expense associated with operating and financing leases, are as follows (in thousands):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Lease cost (1) - fixed rent expense:
Operating lease cost included in:
Cost of revenues	$	671	$	621	$	1,324	$	1,192
Selling, general and administrative	112		113		222		226
Financing lease cost included in:
Cost of revenues (amortization expense)	24		18		89		36
Interest expense	7		4		15		8
Total	$	814	$	756	$	1,650	$	1,462

(1) Short-term lease cost and variable lease cost were not significant during the period.

During the six months ended December 31, 2021 and 2020, the Company had the following cash and non-cash activities associated with leases (in thousands):

	Six-Months Ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow for operating leases	$	1,553	$	1,357
Non-cash changes to the Operating ROU Asset and Operating Lease Liability
Additions and modifications to ROU asset obtained from new operating lease liabilities	$	2,170	$	1,688
Additions to ROU asset obtained from new financing lease liabilities	$	190	$	—

As of December 31, 2021, the weighted average remaining lease term for all operating and financing leases is 3.93 years and 5.07 years. The weighted average discount rate associated with operating and financing leases as of December 31, 2021 is 4% and 3%, respectively.

17

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The future payments due under operating leases as of December 31, 2021 is as follows (in thousands):

Future payments due in the twelve months ended December 31,	Operating lease		Financing lease
2022	$	2,780	$	217
2023	2,592		215
2024	2,338		215
2025	1,662		204
2026	485		169
Thereafter	92		52
Total undiscounted lease payments	9,949		1,071
Less effects of discounting	(740)		(78)
Lease liability recognized	$	9,209	$	993

Effective January 24, 2022, the Company entered into a lease agreement for 27,318 square feet of additional warehouse space in Houston, Texas. This lease extends through January 23, 2027. The blended base rent for the first year of the Term is $5.76 per square foot with subsequent annual increases of 2.5%. The future minimum lease payments for the extended lease will be an additional $0.1 million, $0.2 million, $0.2 million, $0.2 million, $0.2 million and $0.2 million for the twelve months ended December 31, 2022, 2023, 2024, 2025, 2026, and 2027, respectively.

NOTE 7 - NOTES PAYABLE AND LONG-TERM DEBT

On March 29, 2017, the Company entered into a credit agreement with a commercial bank which was subsequently amended on June 29, 2018 and on December 28, 2020 (“Credit Agreement”). The amended Credit Agreement, which expires on December 28, 2023, provides for a $14.0 million committed credit facility that can be increased to $18 million upon the Company's request. The proceeds of the Credit Agreement may be utilized as follows: (i) $6.0 million for working capital, letters of credit (up to $2.0 million) and general corporate purposes, (ii) $8.0 million for acquisitions and (iii) an additional $4 million for working capital, upon the Company's request. Indebtedness under the Credit Agreement is secured by substantially all of the Company’s assets with advances outstanding under the working capital portion of the credit facility at any time limited to a Borrowing Base (as defined in the Credit Agreement) equal to 80% of eligible accounts receivable plus the lesser of (i) 50% of eligible inventory and (ii) $3.0 million. Advances under the acquisition portion of the credit facility are limited to 75% of the purchase price of an acquired company and convert to a five-year term note at the time of the borrowing. Borrowings bear interest at the greater of (a) one-half percent or (b) the One Month ICE LIBOR plus a LIBOR Margin of 2.5%. The LIBOR Margin may increase to as high as 3.0% depending on the Company’s cash flow leverage ratio.  The interest rate as of December 31, 2021 was approximately 3.0%. The Company pays a fee of 0.25% per annum on the unused amount of the committed credit facility.

On August 21, 2019, certain subsidiaries of the Company entered into a Construction and Term Loan Agreement and a Master Equipment Finance Agreement with its existing commercial bank (collectively, the “Loan Agreement”). The Loan Agreement provides for a five-year, $3.2 million facility, the proceeds of which are to be utilized for expenditures to facilitate future growth at the Company’s treatment facility in Carthage, Texas (the “Texas Treatment Facility”) as follows: (i) $2.0 million for planned improvements and (ii) $1.2 million for equipment. Indebtedness under the Loan Agreement is secured by the Company’s real estate investment and equipment at the Texas Treatment Facility. Advances under the Loan Agreement mature five years from the Closing Date ("August 21, 2019") with monthly payments beginning in the month after the advancing period ends. The advancing period extended through January 15, 2021 and August 2020 for the real estate portion and the equipment portion of the Loan Agreement, respectively. Borrowings during the advancing period for the real estate portion and for the entire term of the equipment portion of the Loan Agreement bear interest computed at the One Month ICE LIBOR, plus two-hundred and fifty (250) basis points which was a rate of 2.73% on December 31, 2021. The Company has entered into a forward rate lock which fixed the rate on the real estate portion of the Loan Agreement at the expiration of the advancing period at 4.15%.

18

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On January 22, 2021, certain wholly owned subsidiaries of the Company entered into a real estate term loan agreement (the "Real Estate Loan Agreement") with its existing commercial bank. The Real Estate Loan Agreement provides for a five-year, $0.9 million facility, the proceeds of which have been utilized to purchase the property in Pennsylvania which had previously been leased by the Company for its operations. The Real Estate Loan Agreement matures five years from January 22, 2021 with monthly payments based on a 20-year amortization and bears interest at 4%.

At December 31, 2021 and June 30, 2021, long-term debt consisted of the following (in thousands):

	December 31, 2021		June 30, 2021
Acquisition loan, monthly payments of $43; maturing March 2022	$	173	$	431
Equipment loan, monthly payments of $17; maturing August 2024, net of debt issuance costs of $34	731		830
Real estate loans, monthly payments of $9; maturing August 2024 and January 2026	2,748		2,803
Total long-term debt	3,652		4,064
Less: current portion	480		735
Long-term debt, net of current portion	$	3,172	$	3,329

The Company has availability under the Credit Agreement of $13.3 million ($5.3 million for the working capital and $8.0 million for acquisitions) as of December 31, 2021 with the option to extend the availability up to $17.3 million. The Company has $0.7 million in letters of credit outstanding as of December 31, 2021.

The Credit and Loan Agreements contain affirmative and negative covenants that, among other things, require the Company to maintain a maximum cash flow leverage ratio of no more than 3.0 to 1.0 and a minimum debt service coverage ratio of not less than 1.15 to 1.00. The Credit and Loan Agreements also contain customary events of default which, if uncured, may terminate the agreements and require immediate repayment of all indebtedness to the lenders. The leverage ratio covenant may limit the amount available under the agreements. The Company was in compliance with all the financial covenants under the Credit and Loan Agreements as of December 31, 2021.

Payments due on long-term debt subsequent to December 31, 2021 are as follows (in thousands):

Twelve Months Ending December 31,
2022	$	480
2023	320
2024	2,169
2025	44
2026	673
	$	3,686

NOTE 8 – STOCK-BASED COMPENSATION

Stock-based compensation cost for options and restricted stock awarded to employees and directors is measured at the grant date based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Contingently issued awards with a requisite service period that precedes the grant date are measured and recognized at the start of the requisite service period and remeasured each reporting period until the grant date. Total stock-based compensation expense for the three and six months ended December 31, 2021 and 2020 is as follows (in thousands):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Stock-based compensation expense included in:
Cost of revenues	$	5	$	—	$	14	$	—
Selling, general and administrative	344		140		615		302
Total	$	349	$	140	$	629	$	302

19

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 9 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares after considering the additional dilution related to common stock options and restricted stock. In computing diluted earnings per share, the outstanding common stock options are considered dilutive using the treasury stock method.

The Company’s restricted stock awards are considered participating securities as the shares have full voting rights and are entitled to participate in dividends declared on common shares, if any, and undistributed earnings. The two-class method presentation of the basic and diluted EPS is not presented as the amount of earnings allocated to the participating securities was not material for the periods presented. Instead, the unvested awards are included in the diluted EPS.

The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share amounts):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
	(As restated)				(As restated)
Net income (loss) as reported	$	582	$	1,228	$	(759)	$	935
Weighted average common shares outstanding	19,245		16,497		18,562		16,444
Effect of dilutive stock options	155		432		—		431
Weighted average diluted common shares outstanding	19,400		16,929		18,562		16,875
Net income (loss) per common share
Basic and Diluted	$	0.03	$	0.07	$	(0.04)	$	0.06
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive	269		—		739		25

NOTE 10 - EQUITY TRANSACTIONS

During the three and six months ended December 31, 2021 and 2020, respectively, stock options to purchase shares of the Company's common stock were exercised as follows:

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Options exercised	—		18,000		—		68,531
Proceeds (in thousands)	$	—	$	86	$	—	$	311
Average exercise price per share	$	—	$	4.79	$	—	$	4.53

As of December 31, 2021, there was $0.8 million and $0.9 million of stock compensation expense related to non-vested options and non-vested restricted stock awards, respectively, which is expected to be recognized over weighted average periods of 2.68 years and 2.41 years, respectively.

On August 30, 2021, the Company closed its previously announced underwritten secondary offering of a total of 2,070,000 shares of its common stock at a public offering price of $8.65 per share, including the exercise in full by the underwriter of its option to purchase an additional 270,000 shares to cover over-allotments in connection with the offering. After the underwriting discount and offering expenses payable by the Company of $1.1 million, the Company received net proceeds of approximately $16.8 million.

20

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 11 – INVENTORY

The components of inventory are as follows (in thousands):

	December 31, 2021		June 30, 2021
Raw materials	$	2,599	$	2,040
Finished goods	5,179		5,063
Total inventory	7,778		7,103
Less: current portion	6,821		6,114
Inventory, net of current portion	$	957	$	989

The current portion of inventory includes amounts which the Company expects to sell in the next twelve month period based on historical sales.

NOTE 12 - ACQUISITIONS

On October 22, 2021, the Company acquired Affordable Medical Waste LLC, a route-based provider of medical waste solutions with over 500 route-based customer locations in the Midwest, primarily in Indiana, for $2.2 million, net of cash acquired of $0.1 million, paid in cash from funds on hand. This tuck-in acquisition enhances the Company's presence in the Midwest and improves route density in the service area.

The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):

Accounts receivable	$	65
Fixed assets	145
Intangibles	771
Goodwill	1,261
Accounts payable and accrued liabilities	(61)
Total purchase price, net of cash acquired	$	2,181

Intangibles is primarily comprised of amounts allocated to customer relationships in the amount of $0.8 million. The fair value of the fixed assets were determined using the market approach (level 2 inputs) whereas the fair value of the customer relationships was determined using the income approach (level 3 inputs).

During the three and six months ended December 31, 2021, the Company incurred $0.2 million of acquisition related expenses for investment banking, legal and accounting fees which are included within selling, general and administrative expenses on our condensed consolidated statements of operations. The results of operations of the acquired business have been included in the condensed consolidated statements of operations from the date of acquisition.

Pro forma results of operations for Affordable Medical Waste are not presented because the pro forma effects were not material to the Company's consolidated results of operations. The goodwill recorded for the acquisition will be deductible for income taxes.

The goodwill recognized for the acquisitions since July 1, 2015 is attributable to expected revenue synergies generated by the integration of our products and services with those acquisitions and cost synergies resulting from the consolidation or elimination of certain functions.

21

ITEM 2.

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

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains certain forward-looking statements and information relating to the Company and its subsidiaries that are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. When used in this report, the words "may,", "could", "position," "plan," "potential," "continue," "anticipate," "believe," "expect," "estimate," "project" and "intend" and words or phrases of similar import, as they relate to the Company or its subsidiaries or Company management, are intended to identify forward-looking statements. Such statements reflect the known and unknown risks, uncertainties and assumptions related to certain factors, including without limitations, competitive factors, general economic conditions, customer relations, relationships with vendors, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein including the impact of the coronavirus COVID-19 (“COVID-19”) pandemic on our operations and financial results. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q or refer to our Annual Report on Form 10-K. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and as such should not consider the preceding list or the risk factors to be a complete list of all potential risks and uncertainties. The Company does not intend to update these forward-looking statements.

GENERAL

Sharps Compliance Corp. is a leading national healthcare waste management provider specializing in regulated waste streams including medical, pharmaceutical and hazardous. Our services facilitate the safe and proper collection, transportation and environmentally-responsible treatment of regulated waste from customers in multiple healthcare-related markets. The markets we manage are small to medium-size healthcare waste generators including professional offices (ambulatory surgical centers, physician groups, dentists and veterinarians), long-term care facilities, government agencies, home health care, retail clinics and immunizing pharmacies. Additionally, our mailback solutions are positioned to manage waste generated in the home setting such as sharps, lancets and ultimate-user medications which generates business relationships with pharmaceutical manufacturers and other markets to provide safe and proper disposal. Lastly, we maintain a strong distribution network for the sale of our solutions within the aforementioned markets.

We assist our customers in determining solutions that best fit their needs for the collection, transportation and treatment of regulated medical, pharmaceutical and hazardous waste. Our differentiated approach provides our customers the flexibility to transport waste via direct route-based services, the United States Postal Service (“USPS”) or common carrier depending upon quantity of waste generated, cost savings and facility needs. Our comprehensive services approach includes a single point of contact, consolidated billing, integrated manifest and proof of destruction repository. Furthermore, we provide comprehensive tracking and reporting tools that enable our customers to meet complex medical, pharmaceutical and hazardous waste disposal and compliance requirements. We believe the fully-integrated nature of our operations is a key factor leading to our success and continued recurring revenue growth.

Our flagship products are the Sharps Recovery System™ and MedSafe® Medication Disposal System. These two product offerings account for over 50% of company revenues. The Sharps Recovery System is a comprehensive medical waste management mailback solution used in all markets due to its cost-effective nature and nationwide availability. The MedSafe solution meets the immediate needs of an increasing community risk associated with unused, ultimate-user, medications. Developed in accordance with the Drug Enforcement Administration (“DEA”) implementation of the Secure and Responsible Drug Disposal Act of 2010 (the “Act”), MedSafe is a superior solution used in both private and public sectors to properly remove medications from communities and aid in the prevention of drug misuse.

Over the past few years, the Company has made a series of investments to build a robust direct service, route-based, pickup offering for medical, pharmaceutical and hazardous waste. We have built an infrastructure capable of covering more than 80% of the U.S. population with permitted trucks, transfer stations and treatment facilities. We continue to add routes and the infrastructure required for operational efficiency to reach more customers and prospects directly. Our route-based services, matched with comprehensive mailback solutions, offer us a key differentiator in the market and the ability to capitalize on larger or regional contracts within the healthcare market. With the growth in infrastructure to support the route-based service, we have strategically added new distribution for faster and more cost-effective delivery of products to customers.

We continue to develop new solutions to meet market demands. Over the past five years we have added a robust portfolio of ultimate-user medication disposal solutions for controlled substances, a system for DEA-inventory controlled medication disposal for professionals, the Black Pail Program for disposal of most unused pharmaceuticals, including Resource Conservation and Recovery Act ("RCRA") hazardous medications, and the Inhaler Disposal system. We have also developed route-based services for medical, pharmaceutical and hazardous waste, the TakeAway Recycle System™ for single-use devices ("SUDs") and the Hazardous Drug Spill Control Kit™, a USP <800> (as defined below) compliant spill kit for cleanup of chemotherapy and other hazardous drug spills.

As hospitals and surgery centers increase their sustainability efforts, they are looking for ways to recycle more materials, such as SUDs. SUDs are constructed of materials capable of being recycled, primarily plastics and metals. With a greater emphasis on more sustainable solutions, the TakeAway Recycle System is a much-needed complement to the single-use device market.

Our dually permitted trucks allow our hazardous waste direct pickup service to align with our medical waste so that we can fully service all our customers. Most healthcare professionals have hazardous waste in addition to medical waste. By also transporting hazardous waste, we have a competitive advantage over local haulers while still offering cost-effective pricing.

Restatement of Previously Reported Condensed Consolidated Financial Statements

The accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement adjustments made to the previously reported Condensed Consolidated Financial Statement as of and for the periods ended September 30, 2021 and December 31, 2021. For additional information and a detailed discussion of the restatement, see Note 2, Basis of Presentation - Restatement of Previously Reported Condensed Consolidated Financial Statements.

Significant Developments During the First Quarter of Fiscal Year 2022

Capital Markets Activity:

On August 30, 2021, the Company closed its previously announced underwritten secondary offering of a total of 2,070,000 shares of its common stock at a public offering price of $8.65 per share, including the exercise in full by the underwriter of its option to purchase an additional 270,000 shares to cover over-allotments in connection with the offering. After the underwriting discount and offering expenses payable by the Company, the Company received net proceeds of approximately $16.8 million.

Impact Relating to COVID-19 and the Company’s Continuation of Its Infrastructure Build Out

We are closely monitoring the impact of COVID-19 on all aspects of our business and geographies, including how it will impact our customers, employees, suppliers, vendors, business partners and distribution channels. While we did not incur significant disruptions during the three and six months ended December 31, 2021 from COVID-19, we are unable to predict the impact that COVID-19 will have on our financial position and operating results due to numerous uncertainties. These uncertainties include the severity of the virus, the duration of the outbreak, governmental, business or other actions (which could include limitations on our operations or mandates to provide products or services), impacts on our supply chain, the effect on customer demand or changes to our operations. The health of our workforce, and our ability to meet staffing needs in our route-based, treatment and distribution operations and other critical functions cannot be predicted and is vital to our operations.

The Company has taken precautions to ensure the safety of its employees including remote working options for certain corporate office employees, while at the same time remaining active as a leading national provider of comprehensive medical waste solutions, bringing uninterrupted essential support to its customers and the healthcare industry. For example, the Company increased its route-based drivers, plant and operations personnel by ten percent (10%) in advance of the COVID-19 pandemic to make sure that its operations and servicing of customers would not be adversely affected by the potential absence of employees due to COVID-19. The Company also temporarily increased the pay for its front-line operations personnel and drivers during the pandemic.

Related to customer demand, the Company saw temporary closures of about 1,000 dental, dermatology and physician practices equating to about $0.1 million in lost monthly revenue for the Company from mid-March 2020 through June 2020. Offsetting this through most of fiscal year ended June 30, 2021 was increased volumes of medical waste generated by many of the Company’s long-term care customers who are utilizing the Company’s systems and services to contain and dispose of personal protective equipment (“PPE”) used in their facilities.

The Company is continuing to focus on expanding its infrastructure programs, which began in calendar 2019, to support what it anticipated would be a strong 2021 flu and immunization season as well as medical waste disposal related to the COVID-19 vaccine which became available for administration in the U.S. at the end of calendar year 2020. Additionally, the Company saw some increased medical waste volumes related to COVID-19 such as the long-term care market where PPE in many facilities has been disposed of as medical waste and not as trash which has been the historical practice. Finally, the Company’s route-based footprint now extends to 37 states, or 80% of the population, significantly increasing the pipeline of larger small and medium quantity generator sales opportunities.

To address these opportunities, the Company has:

•Significantly increased its production and inventory of medical waste mailback and shipback solutions to ensure it remains well positioned to meet ongoing customer demand related to immunizations overall and the continued rollout of COVID-19 vaccines and boosters as well as increased COVID-19 testing;

•Increased its medical waste processing capacity from 10 million to 27 million pounds per year through the addition of a larger autoclave at its Texas facility as well as an additional autoclave at its Pennsylvania facility;

•Secured a larger warehouse and distribution facility in Pennsylvania to store and distribute larger volumes of medical waste mailbacks; and

•Expanded its route-based truck fleet and drivers necessary to facilitate the potential increase in volumes from its expanded 37 state route-based footprint and related larger prospect opportunities.

These efforts have contributed to the Company's success in meeting customer needs throughout the pandemic, particularly as the rollout of COVID-19 vaccines has created increased demand for the Company's services.

On a broader note, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending and other unanticipated consequences remain unknown. In addition, we cannot predict the impact that COVID-19 will have on our customers, vendors, suppliers and other business partners. However, any material adverse effect on these parties could adversely impact our results of operations, cash flows and financial conditions. External effects from the COVID-19 pandemic began at the end of the third quarter of 2020 and did not have a material adverse impact on the three and six months ended December 31, 2021 results. The situation surrounding COVID-19 remains fluid, and we are actively managing our response in collaboration with customers, employees and business partners and assessing potential impacts to our financial position and operating results, as well as adverse developments in our business. For further information regarding the impact of COVID-19 on the Company, please see Item 1A, Risk factors in the Company's annual report on form 10-K for the year ended June 30, 2021.

RESULTS OF OPERATIONS

The following analyzes changes in the condensed consolidated operating results and financial condition of the Company during the three and six months ended December 31, 2021 and 2020. The following table sets forth for the periods indicated certain items from the Company's Condensed Consolidated Statements of Operations (dollars in thousands and percentages expressed as a percentage of revenues, unaudited):

	Three-Months Ended December 31,								Six-Months Ended December 31,
	2021		%		2020		%		2021		%		2020		%
	(As restated)								(As restated)
Revenues	$	18,878	100.0	%	$	17,011	100.0	%	$	32,793	100.0	%	$	30,162	100.0	%
Cost of revenues	13,449		71.2	%	11,374		66.9	%	24,665		75.2	%	20,902		69.3	%
Gross profit	5,429		28.8	%	5,637		33.1	%	8,128		24.8	%	9,260		30.7	%
SG&A expense	4,388		23.2	%	3,756		22.1	%	8,588		26.2	%	7,544		25.0	%
Depreciation and amortization	236		1.3	%	205		1.2	%	454		1.4	%	409		1.4	%
Operating Income (Loss)	805		4.3	%	1,676		9.9	%	(914)		(2.8)	%	1,307		4.3	%
Total other expense	(17)		(0.1)	%	(37)		(0.2)	%	(66)		(0.2)	%	(64)		(0.2)	%
Income (loss) before income taxes	788		4.2	%	1,639		9.6	%	(980)		(3.0)	%	1,243		4.1	%
Income tax expense (benefit)	206		1.1	%	411		2.4	%	(221)		(0.7)	%	308		1.0	%
Net Income (Loss)	$	582	3.1	%	$	1,228	7.2	%	$	(759)	(2.3)	%	$	935	3.1	%

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THREE MONTHS ENDED DECEMBER 31, 2021 AS COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2020

Total revenues for the three months ended December 31, 2021 of $18.9 million increased compared to the total revenues for the three months ended December 31, 2020 of $17.0 million. The increase in revenue is mainly due to higher product returns on sales in prior periods net of current year deferred revenue plus increased billings in the Professional and Retail markets. The net increase in revenue is partially offset by decreases in billings in the Pharmaceutical Manufacturer, Home Health Care and Long-Term Care markets. The components of billings by market are as follows (in thousands, unaudited):

	Three-Months Ended December 31,
	2021		2020		Variance
BILLINGS BY MARKET:
Retail	$	6,365	$	6,139	$	226
Professional	5,199		4,538		661
Home Health Care	2,028		2,832		(804)
Pharmaceutical Manufacturer	1,901		3,062		(1,161)
Long-Term Care	752		1,060		(308)
Government	564		497		67
Environmental	54		179		(125)
Other	137		159		(22)
Subtotal	17,000		18,466		(1,466)
GAAP Adjustment *	1,878		(1,455)		3,333
Revenue Reported	$	18,878	$	17,011	$	1,867

*Represents the net impact of the revenue recognition adjustments to arrive at reported generally accepted accounting principles ("GAAP") revenue. Customer billings include all invoiced amounts associated with products shipped or services rendered during the period reported. GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales, (ii) recognition of certain revenue associated with product returned for treatment and destruction and (iii) provisions for certain product returns and discounts to customers which are accounted for as reductions in sales in the same period the related sales are recorded. See Note 3 “Significant Accounting Policies - Revenue Recognition” in “Notes to Condensed Consolidated Financial Statements”.

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The components of billings by solution are as follows (in thousands except for percentages expressed as a percentage of total billings, unaudited):

	Three-Months Ended December 31,
	2021		% Total		2020		% Total
BILLINGS BY SOLUTION:
Mailbacks	$	10,192	60.0	%	$	11,907	64.4	%
Route-based pickup services	3,551		20.9	%	3,491		18.9	%
Unused medications	1,865		11.0	%	1,713		9.3	%
Third party treatment services	54		0.3	%	179		1.0	%
Other (1)	1,338		7.8	%	1,176		6.4	%
Total billings	17,000		100.0	%	18,466		100.0	%
GAAP adjustment (2)	1,878				(1,455)
Revenue reported	$	18,878			$	17,011

(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items.

(2)Represents the net impact of the revenue recognition adjustments required to arrive at reported GAAP revenue.  Customer billings include all invoiced amounts associated with products shipped or services rendered during the period reported. GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales, (ii) recognition of certain revenue associated with products returned for treatment and destruction and (iii) provisions for certain product returns and discounts to customers which are accounted for as reductions in sales in the same period to related sales are recorded.

The net decrease in billings was mainly attributable to increased billings in the Professional ($0.7 million) and Retail ($0.2 million) markets offset by decreased billings in the Pharmaceutical Manufacturer ($1.2 million), Home Health Care ($0.8 million) and Long-Term Care ($0.3 million) markets. Professional market billings increased 15% to $5.2 million for the three months ended December 31, 2021 as compared to $4.5 million for the three months ended December 31, 2020 consistent with a 17% increase in route-based customer locations. Retail market billings grew 4% to $6.4 million in the second quarter of fiscal 2022 as compared to $6.1 million in the same prior year period. Within the retail market, immunization related orders were down slightly at $4.6 million in the second quarter of fiscal 2022 compared to $4.8 million in the prior year. Pharmaceutical Manufacturer market billings decreased by $1.2 million to $1.9 million in the second quarter of fiscal 2022 as compared to $3.1 million in the same prior year period due to the timing of inventory builds for patient support programs, driving over half of the $1.7 million decrease in mailback solution billings. Long-Term Care billings decreased by $0.3 million to $0.8 million in the second quarter of fiscal 2022 compared to $1.1 million in the prior year period, related primarily to heightened volumes of COVID-19 related waste management in the prior year, most of which adversely impacted the route-based business customer billings. Home Health Care market billings decreased $0.8 million to $2.0 million in the second quarter of fiscal 2022 compared to $2.8 million in the second quarter of fiscal 2021 due to the timing of distributor orders, driving some of the $1.7 million decrease in mailback solution billings.

Billings for Mailbacks decreased 14.4% to $10.2 million as compared to $11.9 million in the prior year period and represented 60.0% of total billings. Billings for Unused Medications grew 9% to $1.9 million in the second quarter of fiscal 2022 as compared to $1.7 million in the same prior year period as result of the 25% increase in the number of MedSafe Inner Liners sold.

Cost of revenues for the three months ended December 31, 2021 of $13.4 million was 71.2% of revenues. Cost of revenues for the three months ended December 31, 2020 of $11.4 million was 66.9% of revenues. The gross margin for the three months ended December 31, 2021 of 28.8% decreased compared to the gross margin for the three months ended December 31, 2020 of 33.1%. Gross margin was negatively impacted by the timing of flu and COVID-19 related mailback returns.

Selling, general and administrative (“SG&A”) expenses for the three months ended December 31, 2021 and 2020 were $4.4 million and $3.8 million, respectively. The increase in SG&A is related primarily to $0.2 million in acquisition related costs, a $0.2 million increase in the accrual of management incentive compensation and continued investment in sales and marketing.

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The Company reported operating income and income before income taxes of $0.8 million for the three months ended December 31, 2021 as compared to operating income and income before income taxes of $1.7 million and $1.6 million, respectively, in the prior year period. Operating income and income before income taxes decreased primarily due to lower gross profit (discussed above).

The Company’s effective tax rate for the three months ended December 31, 2021 and 2020 was 26.1% and 25.1%, respectively.

The Company reported net income of $0.6 million for the three months ended December 31, 2021 as compared to a net income of $1.2 million for the prior year period. Net income decreased due to the decrease in the operating income (discussed above).

The Company reported basic and diluted income per share of $0.03 for the three months ended December 31, 2021, and basic and diluted income per share of $0.07 for the prior year period.

SIX MONTHS ENDED DECEMBER 31, 2021 AS COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2020

Total revenues for the six months ended December 31, 2021 of $32.8 million increased by $2.6 million, or 8.7%, over the total revenues for the six months ended December 31, 2020 of $30.2 million. The increase in revenue is mainly due to higher product returns on sales in prior periods net of current year deferred revenue plus increased billings in the Professional and Retail markets. The increase in billings is partially offset by the decrease in billings in the Pharmaceutical Manufacturer, Home Healthcare and Long-Term Care markets. The components of billings by market are as follows (in thousands):

	Six-Months Ended December 31,
	(Unaudited)
	2021		2020		Variance
BILLINGS BY MARKET:
Retail	$	10,232	$	9,786	$	446
Professional	9,716		8,671		1,045
Home Health Care	3,967		5,180		(1,213)
Pharmaceutical Manufacturer	2,397		4,241		(1,844)
Long-Term Care	1,530		2,369		(839)
Government	1,271		1,012		259
Environmental	85		314		(229)
Other	526		321		205
Subtotal	29,724		31,894		(2,170)
GAAP Adjustment *	3,069		(1,732)		4,801
Revenue Reported	$	32,793	$	30,162	$	2,631

*Represents the net impact of the revenue recognition adjustments to arrive at reported GAAP revenue. Customer billings include all invoiced amounts for products shipped or services rendered during the period reported. GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales, (ii) recognition of certain revenue associated with product returned for treatment and destruction and (iii) provisions for certain product returns and discounts to customers which are accounted for as reductions in sales in the same period the related sales are recorded. Most of the difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as Contract Liability. See Note 3 “Significant Accounting Policies - Revenue Recognition” in “Notes to Condensed Consolidated Financial Statements”.

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The components of billings by solution are as follows (in thousands):

	Six-Months Ended December 31,
	2021		% Total		2020		% Total
BILLINGS BY SOLUTION:
Mailbacks	$	15,749	53.0	%	$	18,346	57.5	%
Route-based pickup services	6,750		22.7	%	6,647		20.8	%
Unused medications	4,494		15.1	%	4,074		12.8	%
Third party treatment services	85		0.3	%	314		1.0	%
Other (1)	2,646		8.9	%	2,513		7.9	%
Total billings	29,724		100.0	%	31,894		100.0	%
GAAP adjustment (2)	3,069				(1,732)
Revenue reported	$	32,793			$	30,162

(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items.

(2)Represents the net impact of the revenue recognition adjustment required to arrive at reported GAAP revenue.  Customer billings include all invoiced amounts associated with products shipped or services rendered during the period reported.  GAAP revenue includes customer billings as well as numerous adjustments necessary to reflect, (i) the deferral of a portion of current period sales, (ii) recognition of certain revenue associated with products returned for treatment and destruction and (iii) provisions for certain product returns and discounts to customers which are accounted for as reductions in sales in the same period to related sales are recorded.  The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as Contract Liability.

The decrease in billings was mainly due to increased billings in the Professional ($1.0 million) and Retail ($0.4 million) markets offset by decreased billings in the Pharmaceutical Manufacturer ($1.8 million), Home Health Care ($1.2 million) and Long-Term Care ($0.8 million) markets. Professional market billings increased 12.1% to $9.7 million in the first half of fiscal 2022 as compared to $8.7 million in the same prior year period. Retail market billings increased 5% to $10.2 million as compared to $9.8 million in the first half of fiscal 2021, with billings for flu shot / COVID-19 related orders relatively flat at $6.4 million, and Retail market unused medications billings also relatively flat at $2.2 million. Long-Term Care market billings decreased 35% to $1.5 million as compared to $2.4 million in the prior year period due to heightened volumes of COVID-19 related waste management in the prior year. During the first half of fiscal 2022, Pharmaceutical Manufacturer market billings decreased 44% to $2.4 million as compared to $4.2 million in the first half of fiscal 2021 mainly due to timing of inventory builds. Home Health Care market billings decreased 23% to $4.0 million for the first half of fiscal 2022 compared to $5.2 million in the first half of 2021 due to the timing of distributor orders.

Cost of revenues for the six months ended December 31, 2021 of $24.7 million was 75.2% of revenues. Cost of revenues for the six months ended December 31, 2020 of $20.9 million was 69.3% of revenues. The gross margin for the six months ended December 31, 2021 of 24.8% decreased compared to gross margin for the six months ended December 31, 2020 of 30.7%. Gross margin was negatively impacted by the timing of flu and COVID-19 related mailback returns.

SG&A expense for the six months ended December 31, 2021 and 2020 was $8.6 million and $7.5 million, respectively. SG&A expense increased 14% related to $0.2 million in acquisition related costs, a $0.5 million increase in the accrual of management incentive compensation and the Company’s continued investments in sales and marketing.

The Company reported operating loss of $0.9 million for the six months ended December 31, 2021 compared to operating income of $1.3 million for the six months ended December 31, 2020. Operating income decreased due to lower gross profit and higher SG&A expense (discussed above).

The Company reported loss before income taxes of $1.0 million for the six months ended December 31, 2021 versus income before income taxes of $1.2 million for the six months ended December 31, 2020. Income before income taxes decreased due to the decrease in operating income (discussed above).

The Company’s effective tax rate for the six months ended December 31, 2021 and 2020 was 22.6% and 24.8%, respectively.

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The Company reported net loss of $0.8 million for the six months ended December 31, 2021 compared to net income of $0.9 million for the six months ended December 31, 2020. Net income decreased due to the decrease in income before taxes (discussed above).

The Company reported basic and diluted loss per share of $0.04 for the six months ended December 31, 2021 versus basic and diluted income per share of $0.06 for the six months ended December 31, 2020. Basic and diluted income per share decreased due to the decrease in net income (discussed above).

PROSPECTS FOR THE FUTURE

As a result of the COVID-19 outbreak, the Company has implemented some and may take additional precautionary measures intended to help ensure the well-being of its employees, facilitate continued uninterrupted servicing of customers and minimize business disruptions. For example, the following have recently been implemented to address some of the uncertainties related to COVID-19:

•Since January 2020, the Company has increased its headcount for route-based drivers, plant and operations personnel by 10% as a result of COVID-19 to make sure that its operations and servicing of customers would not be adversely affected by the potential absence of employees due to COVID-19. The cost of this increased headcount which is recorded as cost of sales is about $0.1 million per quarter.

•The Company temporarily increased pay to route-based drivers, plant and operations personnel through June 30, 2020 due to the additional potential risks associated with those functions in light of the COVID-19 environment.

•While some areas of the business have seen increased revenue, COVID-19 caused many of the Company’s customers to temporarily close from mid-March 2020 through June 2020. For example, there have been temporary closures of approximately 1,000 customer offices including dental, dermatology and physician practices which equates to almost $0.1 million per month in lost revenue. Most of these offices have now re-opened.

•The Company is considered an essential business and could incur elevated costs to maintain uninterrupted essential support to its customers and the overall healthcare industry.

•Since June 30, 2019, inventory levels have been increased (approximately 71%) which has also precipitated the need for additional warehouse space for the Company's products. The Company is working to ensure it has adequate products and solutions to address the potential additional needs that could reasonably be expected to follow a pandemic of this magnitude. Whether it be supporting an expected significant increase in seasonal flu immunizations, facilitating the proper collection, transportation and treatment of syringes utilized in the administration of the COVID-19 vaccine, or supporting the pick-up and processing of increased volumes of healthcare waste from the long-term care industry, we are well positioned to take advantage of these growth opportunities.

To date, external effects from the COVID-19 pandemic did not have a material adverse impact on the Company's financial position and results of operations for the year ended June 30, 2021 or the three and six month periods ended December 31, 2021. The full extent of the future impacts of COVID-19 on the Company's operations is uncertain. A prolonged outbreak could have a material adverse impact on the financial results and business operations of the Company.

The full extent of the future impacts of COVID-19 on the Company's operations is uncertain. A prolonged outbreak could have a material adverse impact on the financial results and business operations of the Company. To date, the Company has not identified any material adverse impact of COVID-19 on its financial position and results of operations.

The Company continues to focus on core markets and solution offerings that fuel growth. Its key markets include healthcare facilities, pharmaceutical manufacturers, home healthcare providers, long-term care, retail pharmacies and clinics, and the professional market which is comprised of physicians, dentists, surgery centers, veterinary practices and other healthcare facilities. These markets require cost-effective services for managing medical, pharmaceutical and hazardous waste.

The Company believes its growth opportunities are supported by the following:

•A large professional market that consists of dentists, veterinarians, clinics, physician groups, urgent care facilities, ambulatory surgical centers, labs, dialysis and other healthcare facilities. This regulated market consists of small to medium quantity generators of medical, pharmaceutical and hazardous waste where we can offer a lower cost to service with solutions to match individual facility needs. The Company has made ongoing investments in sales and marketing initiative to drive growth. Our sales team focuses on larger-dollar and nationwide opportunities where we can integrate the route-based pickup service along with our mailback solutions to create a comprehensive medical

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waste management offering. Through targeted telemarketing initiatives, e-commerce driven website and web-based promotional activities, we believe we can drive significant additional growth as we increase awareness of the Company's innovative solution offerings with a focus on individual or small group professional offices, government agencies, smaller retail pharmacies and clinics and long-term care facilities. The Company is able to compete more aggressively in the medium quantity generator market with the addition of route-based services where the mailback may not be as cost effective. The Company’s route-based business provides direct service to areas encompassing over 80% of the U.S. population.

•From July 2015 and July 2016, the Company acquired three route-based pickup service companies, which strengthened the Company's position in the Northeast. Through a combination of acquisition and organic growth, the Company now offers route-based pickup services in a thirty-seven (37) state region of the South, Southeast, Southwest, Midwest and Northeast portions of the United States. To facilitate operational efficiencies, the Company has opened transfer stations and offices in strategic locations. The Company directly serves more than 17,360 customer locations with route-based pickup services. With the addition of these route-based pickup regions and the network of medical and hazardous waste service providers servicing the entire U.S., the Company offers customers a blended product portfolio to effectively manage multi-site and multi-sized locations, including those that generate larger quantities of waste. The network has had a significant positive impact on our pipeline of sales opportunities - over 60% of this pipeline is attributable to opportunities providing comprehensive waste management service offerings where both the mailback and pickup service are integrated into the offering. In October 2021, the Company acquired a route-based provider of medical waste solutions with over 500 locations in the Midwest, primarily in Indiana.

•The changing demographics of the U.S. population – according to the U.S. Census Bureau, 2019 Population Estimates and National Projections, the nation's 65-and-older population has grown rapidly since 2010 (34.2% over the past decade), which will increase the need for cost-effective medical waste management solutions, especially in the long-term care and home healthcare markets. With multiple solutions for managing regulated healthcare-related waste, the Company delivers value as a single-source provider with blended mailback and route-based pickup services matched to the waste volumes of each facility.

•The shift of healthcare from traditional settings to the retail pharmacy and clinic markets, where the Company focuses on driving increased promotion of the Sharps Recovery System. According to the Centers for Disease Control ("CDC"), 44.9% of adults received a flu shot and 32.2% of flu shots for adults were administered in a retail clinic in 2018. Over the flu seasons from 2011 to 2020, the Company saw growth in the retail flu shot related orders in seven years of 10% to 36%, including a 25% increase in 2020, and declines in three years of 13% to 17%. Despite the volatility, Sharps believes the Retail market should continue to contribute to long-term growth for the Company as consumers increasingly use alternative sites, such as retail pharmacies, to obtain flu and other immunizations.

•The passage of regulations for ultimate user medication disposal allows the Company to offer new solutions (MedSafe and TakeAway Medication Recovery System envelopes) that meet the regulations for ultimate user controlled substances disposal (Schedules II-V) to retail pharmacies. Additionally, with the new regulations, the Company is able to provide the MedSafe and TakeAway Medication Recovery Systems to long-term care and hospice to address a long standing issue within long-term care.

•Local, state and federal agencies have growing needs for solutions to manage medical and pharmaceutical waste. The Company's Sharps Recovery System is ideal for as-needed disposal of sharps and other small quantities of medical waste generated within government buildings, schools and communities. The Company also provides TakeAway Medication Recovery System envelopes and MedSafe solutions to government agencies in need of proper and regulatory compliant medication disposal. The federal government, state agencies and non-profits are recognizing the need to fund programs that address prevention as it pertains to the opioid crisis. MedSafe and mailback envelopes for proper medication disposal are being funded for prevention programs.

•With an increased number of self-injectable medication treatments and local regulations, the Company believes its flagship product, the Sharps Recovery System, continues to offer the best option for proper sharps disposal at an affordable price. The Company delivers comprehensive services to pharmaceutical manufacturers that sell high-dollar, self-injectable medications, which include data management, compliance reporting, fulfillment, proper containment with disposal, branding and conformity with applicable regulations. In addition, the Company provides

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self-injectors with online and retail purchase options of sharps mailback systems, such as the Sharp Recovery System and Complete Needle Collection & Disposal System, respectively.

•A heightened interest by many commercial companies who are looking to improve workplace safety with proper sharps disposal and unused medication disposal solutions. The Company offers a variety of services to meet these needs, including the Sharps Secure Needle Disposal System, Sharps Recovery System, Spill Kits and TakeAway Medication Recovery System envelopes.

•The Company continually develops new solution offerings such as ultimate user medication disposal (MedSafe and TakeAway Medication Recovery System), mailback services for DEA registrant expired inventory of controlled substances (TakeAway Medication Recovery System DEA Reverse Distribution for Registrants) and shipback services for collection and recycling of single-use medical devices from surgical centers and other healthcare facilities (TakeAway Recycle System).

•COVID-19 prompted healthcare demands and opportunities including the expected significant increase in seasonal flu immunizations, facilitating the proper collection, transportation and treatment of syringes utilized in the administration of the potential COVID-19 vaccine, or supporting the pick-up and processing of the significantly increased volumes of healthcare waste from the long-term care industry.

•The Company’s financial position with a cash balance of $36.0 million (used for working capital needs), debt of $3.7 million and additional availability under the Credit and Loan Agreements as of December 31, 2021 (used to support working capital needs and is constrained due to the impacts additional borrowings might have on our future covenant compliance).

LIQUIDITY AND CAPITAL RESOURCES

Management believes that the Company's current cash resources (cash on hand and cash flows from operations) will be sufficient to fund operations for at least the next twelve months. Operating cash flows and the capacity from the Credit and Loan Agreements are the Company's primary sources of liquidity.

Cash Flow

Cash flow has historically been primarily influenced by demand for products and services, operating margins and related working capital needs as well as more strategic activities including acquisitions, stock repurchases and fixed asset additions. Cash increased by $8.2 million to $36.0 million at December 31, 2021 from $27.8 million at June 30, 2021 due to the following:

Cash Flows from Operating Activities - Cash flow from operating activities was negatively impacted by the decrease in contract liabilities of $3.0 million, an increase in accounts receivable of $3.3 million and by the net loss of $0.8 million.

Cash Flows from Investing Activities - Cash flow from investing activities is for normal permitting and capital expenditures for plant and equipment additions of $0.8 million and a business acquisition of Affordable Medical Waste for $2.2 million in cash.

Cash Flows from Financing Activities - Cash flow from financing activities provided an increase in cash from proceeds from issuance of common stock, net of underwriting fees and commissions of $16.8 million partially offset by the repayment of debt of $0.4 million.

29

Credit Facility

On March 29, 2017, the Company entered into a credit agreement with a commercial bank which was subsequently amended on June 29, 2018 and on December 28, 2020 (“Credit Agreement”). The amended Credit Agreement, which expires on December 28, 2023, provides for a $14.0 million committed credit facility that can be increased to $18 million upon the Company's request. The proceeds of the Credit Agreement may be utilized as follows: (i) $6.0 million for working capital, letters of credit (up to $2.0 million) and general corporate purposes, (ii) $8.0 million for acquisitions and (iii) an additional $4 million for working capital, upon the Company's request. Indebtedness under the Credit Agreement is secured by substantially all of the Company’s assets with advances outstanding under the working capital portion of the credit facility at any time limited to a Borrowing Base (as defined in the Credit Agreement) equal to 80% of eligible accounts receivable plus the lesser of (i) 50% of eligible inventory and (ii) $3.0 million. Advances under the acquisition portion of the credit facility are limited to 75% of the purchase price of an acquired company and convert to a five-year term note at the time of the borrowing. Borrowings bear interest at the greater of (a) one-half percent or (b) the One Month ICE LIBOR plus a LIBOR Margin of 2.5%. The LIBOR Margin may increase to as high as 3.0% depending on the Company’s cash flow leverage ratio.  The interest rate as of December 31, 2021 was approximately 3.0%. The Company pays a fee of 0.25% per annum on the unused amount of the committed credit facility. No amounts were outstanding under the working capital portion of the credit facility at December 31, 2021.

On August 21, 2019, certain subsidiaries of the Company entered into a Construction and Term Loan Agreement and a Master Equipment Finance Agreement with the Company's existing commercial bank (collectively, the “Loan Agreement”). The Loan Agreement provides for a five-year, $3.2 million facility, the proceeds of which are to be utilized for expenditures to facilitate future growth at the Company’s treatment facility in Carthage, Texas (the “Texas Treatment Facility”) as follows: (i) $2.0 million for planned improvements and (ii) $1.2 million for equipment. Indebtedness under the Loan Agreement is secured by the Company’s real estate investment and equipment at the Texas Treatment Facility. Advances under the Loan Agreement mature five years from the Closing Date (August 21, 2019) with monthly payments beginning in the month after the advancing period ends. The advancing period extended through January 15, 2021 and August 2020 for the real estate portion and the equipment portion of the Loan Agreement, respectively. Borrowings during the advancing period for the real estate portion and for the entire term of the equipment portion of the Loan Agreement bear interest computed at the One Month ICE LIBOR, plus two-hundred and fifty (250) basis points which was a rate of 2.73% on December 31, 2021. The Company has entered into a forward rate lock to fix the rate on the real estate portion of the Loan Agreement at the expiration of the advancing period at 4.15%.

On January 22, 2021, certain wholly owned subsidiaries of the Company entered into a real estate term loan agreement (the "Real Estate Loan Agreement") with its existing commercial bank. The Real Estate Loan Agreement provides for a five-year, $0.9 million facility, the proceeds of which have been utilized to purchase the property in Pennsylvania which had previously been leased by the Company for its operations. The Real Estate Loan Agreement matures five years from January 22, 2021 with monthly payments based on a 20-year amortization and bears interest at 4%.

The Company has availability under the Credit Agreement of approximately $13.3 million ($5.3 million for the working capital and $8.0 million for acquisitions) as of December 31, 2021 with the option to extend the availability up to $17.3 million (used to support working capital needs and is constrained due to the impacts additional borrowings might have on our future covenant compliance). The Company also has $0.7 million in letters of credit outstanding as of December 31, 2021.

The Credit and Loan Agreements contain affirmative and negative covenants that, among other things, require the Company to maintain a maximum cash flow leverage ratio of no more than 3.0 to 1.0 and a minimum debt service coverage ratio of not less than 1.15 to 1.00. The Credit and Loan Agreements also contain customary events of default which, if uncured, may terminate the agreements and require immediate repayment of all indebtedness to the lenders. The leverage ratio covenant may limit the amount available under the Credit and Loan Agreements. The Company was in compliance with all the financial covenants under the Credit and Loan Agreements as of December 31, 2021.

The Company utilizes performance bonds to support operations based on certain state requirements. At December 31, 2021, the Company had performance bonds outstanding covering financial assurance up to $1.4 million.

Management believes that the Company’s current cash resources (cash on hand and cash flows from operations) will be sufficient to fund operations for at least the next twelve months.

30

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions. The Company's critical accounting policies are included in the discussion entitled Critical Accounting Policies in Item 7. Management's Discussions and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021, as filed with the SEC. There were no material changes to the critical accounting policies disclosed in the Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures,” (“Disclosure Controls”) as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Chief Accounting Officer (“CAO”), as appropriate, to allow timely decisions regarding required disclosure. The Company conducted an evaluation (the “Evaluation”), under the supervision and with the participation of the CEO, CFO and CAO, of the effectiveness of the design and operation of our Disclosure Controls as of March 31, 2022 pursuant to Rules 13a-15(b) and 15d-15(b) of the Exchange Act. In designing and evaluating the Disclosure Controls, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management was required to apply judgement in evaluating its controls and procedures. Based on this evaluation, the CEO, CFO and CAO concluded that our Disclosure Controls were not effective as of December 31, 2021 as a result of the material weakness described below.

We identified a material weakness in our internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

Subsequent to the issuance of the condensed consolidated financial statements as of and for the period ended December 31, 2021, the Company identified errors in the accounting for freight costs associated with immunization related mailbacks returned for treatment, which resulted in a restatement of the Company's condensed consolidated financial statements for the quarterly periods ended September 30, 2021 and December 31, 2021. As a result of the restatement, we determined that we have a material weakness in our internal control over financial reporting relating to the ineffective operation of management's control over the recording of such costs as services were being rendered.

Until this material weakness is remediated, there is a reasonable possibility it could result in misstatements of accounts or disclosures that would result in a material misstatement of the condensed consolidated financial statements that would not be prevented or detected.

Notwithstanding the conclusion by our management that our disclosure controls and procedures as of December 31, 2021 were not effective, and notwithstanding the material weakness in our internal control over financial reporting, management believes that the condensed consolidated financial statements and related financial information included in this Quarterly Report on Form 10-Q/A fairly present in all material respects our financial position, results of operations and cash flows as of and for the dates presented, and for the periods ended on such dates, in conformity with GAAP.

Changes in Internal Control

During the three months ended December 31, 2021, there were no changes in the Company’s internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act), that have materially affected, or are reasonably likely to materially affect the Company’s internal control system over financial reporting, subject to remediation discussed above.

31

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company is involved in legal proceedings and litigation in the ordinary course of business.  In the opinion of management, the outcome of such matters is not anticipated to have a material adverse effect on the Company’s consolidated financial position or consolidated results of operations.

ITEM 1A. RISK FACTORS

Risks Related to the Restatement of Previously Reported Condensed Consolidated Financial Statements and Material Weakness in our Internal Control

We have restated our condensed consolidated financial statements for several prior periods, which has affected and may continue to affect investor confidence, our stock price, our ability to raise capital in the future, and our reputation with our customers, which may result in stockholder litigation and may reduce customer confidence in our ability to complete new opportunities.

We have restated our Quarterly Report on Form 10-Q as of and for the periods ended September 30, 2021 and December 31, 2021. The restatement of our previously reported condensed consolidated financial statements primarily reflects the correction of certain errors, which resulted from an incorrect application of GAAP. Such restatement may have the effect of eroding investor confidence in the Company and our financial reporting and accounting practices and processes, and may negatively impact the trading price of our common stock, may result in stockholder litigation, may make it more difficult for us to raise capital on acceptable terms, if at all, and may negatively impact our reputation with our customers and cause customers to place new orders with other companies.

We have identified a material weakness in our internal control over financial reporting, which did, and could continue to, if not remediated, adversely effect our ability to report our financial condition and results of operations in a timely and accurate manner.

We have concluded that our internal control over financial reporting was not effective as of December 31, 2021 due to the existence of a material weakness in such controls, and we have also concluded that our disclosure controls and procedures were not effective as of December 31, 2021 due to a material weakness in our internal control over financial reporting, all as described in Part I, Item 4, “Controls and Procedures” of this Quarterly Report on Form 10-Q/A.

Although we have initiated remediation measures to address the identified weakness, we cannot provide assurance that our remediation efforts will be adequate to allow us to conclude that such controls will be effective in the future. We also cannot assure you that additional material weaknesses in our internal control over financial reporting will not arise or be identified in the future.

Refer to Item 1A. Risk Factors in the Company’s annual report on Form 10-K for the year ended June 30, 2021 for the Company’s risk factors. During the period ended December 31, 2021, there have been no changes to the Company's risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None

32

ITEM 6. EXHIBITS

(a)	Exhibits:
31.1	Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act (filed herewith)
31.2	Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act (filed herewith)
31.3	Certification of Chief Accounting Officer in accordance with Section 302 of the Sarbanes-Oxley Act (filed herewith)
32	Certification of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer in accordance with Section 906 of the Sarbanes-Oxley Act (filed herewith)
101.INS	XBRL Instance Document (filed herewith)
101.SCH	XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF	XBRL Taxonomy Extension Linkbase Document (filed herewith)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)

ITEMS 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.

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.

	REGISTRANT:
	SHARPS COMPLIANCE CORP.
Dated: May 11, 2022	By: /s/ PAT MULLOY
	Pat Mulloy
	Chief Executive Officer and President
	(Principal Executive Officer)

Dated: May 11, 2022	By: /s/ ERIC T. BAUER
	Eric T. Bauer
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

Dated: May 11, 2022	By: /s/ DIANA P. DIAZ
	Diana P. Diaz
	Senior Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

33

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

IN ACCORDANCE WITH SECTION 302 OF THE SARBANES-OXLEY ACT

I, Pat Mulloy, certify that:

1.I have reviewed this quarterly report on Form 10-Q/A of Sharps Compliance Corp.;

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;

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 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 control over financial reporting (as defined in 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 (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 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 controls over financial reporting.

Date: May 11, 2022	/s/Pat Mulloy
	Chief Executive Officer and President
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

IN ACCORDANCE WITH SECTION 302 OF THE SARBANES-OXLEY ACT

I, Eric T. Bauer, certify that:

1.I have reviewed this quarterly report on Form 10-Q/A of Sharps Compliance Corp.;

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;

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 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 control over financial reporting (as defined in 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 (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 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 controls over financial reporting.

Date: May 11, 2022	/s/Eric T. Bauer
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

EX-31.3

Exhibit 31.3

CERTIFICATION OF CHIEF ACCOUNTING OFFICER

IN ACCORDANCE WITH SECTION 302 OF THE SARBANES-OXLEY ACT

I, Diana P. Diaz, certify that:

1.I have reviewed this quarterly report on Form 10-Q/A of Sharps Compliance Corp.;

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;

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 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 control over financial reporting (as defined in 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 (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 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 controls over financial reporting.

Date: May 11, 2022	/s/Diana P. Diaz
	Senior Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

EX-32.0

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

IN ACCORDANCE WITH SECTION 906 OF THE SARBANES-OXLEY ACT

    In connection with the quarterly report of Sharps Compliance Corp. (the “Company”) on Form 10-Q/A for the period ended December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof, each of the undersigned, in the capacities and on the dates indicated below, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of their knowledge that:

(1)The Form 10-Q/A report for the period ended December 31, 2021, filed with the Securities and Exchange Commission on May 11, 2022 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 Form 10-Q/A report for the period ended December 31, 2021 fairly presents, in all material respects, the financial condition and results of operations of Sharps Compliance Corp.

Date: May 11, 2022	/s/Pat Mulloy
	Chief Executive Officer and President
	(Principal Executive Officer)

Date: May 11, 2022	/s/Eric T. Bauer
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

Date: May 11, 2022	/s/Diana P. Diaz
	Senior Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.  A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

COVER - shares	6 Months Ended
	Dec. 31, 2021	Jan. 31, 2022
Cover [Abstract]
Document Type	10-Q/A
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2021
Document Transition Report	false
Entity File Number	001-34269
Entity Registrant Name	SHARPS COMPLIANCE CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	74-2657168
Entity Address, Address Line One	9220 Kirby Drive
Entity Address, Address Line Two	Suite 500
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77054
City Area Code	713
Local Phone Number	432-0300
Title of 12(b) Security	Common Shares, $0.01 Par Value
Trading Symbol	SMED
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		19,247,243
Entity Central Index Key	0000898770
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	true
Amendment Description	On May 11, 2022, Sharps Compliance Corp. (“Sharps” or the “Company”) filed a Current Report on Form 8-K disclosing that the Audit Committee of the Board of Directors of the Company concluded that the unaudited consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2021 and December 31, 2021, filed with the Securities and Exchange Commission on November 3, 2021 and February 2, 2022, respectively (the “Initial Filings”), should not be relied upon because the Company had under reported freight costs associated with immunization related mailbacks returned for treatment. This occurred primarily as a result of a misunderstanding with the applicable carrier regarding certain charges for services rendered during these periods.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020
CURRENT ASSETS
Cash	$ 36,001		$ 27,767
Accounts receivable, net	13,047		9,738
Inventory	6,821		6,114
Contract asset	18		20
Prepaid and other current assets	1,895		1,459
TOTAL CURRENT ASSETS	57,782		45,098
PROPERTY, PLANT AND EQUIPMENT, net	11,155		10,843
OPERATING LEASE RIGHT OF USE ASSET	9,073		8,353
FINANCING LEASE RIGHT OF USE ASSET, net	980		907
INVENTORY, net of current portion	957		989
OTHER ASSETS	154		110
GOODWILL	7,996		6,735
INTANGIBLE ASSETS, net	2,772		2,239
DEFERRED TAX ASSET, net	403		157
TOTAL ASSETS	91,272		75,431
CURRENT LIABILITIES
Accounts payable	3,592		2,922
Accrued liabilities	5,108		3,940
Operating lease liability	2,457		2,368
Financing lease liability	189		160
Current maturities of long-term debt	480		735
Contract liability	5,062		7,028
TOTAL CURRENT LIABILITIES	16,888		17,153
CONTRACT LIABILITY, net of current portion	408		1,461
OPERATING LEASE LIABILITY, net of current portion	6,752		6,118
FINANCING LEASE LIABILITY, net of current portion	804		741
OTHER LIABILITIES	23		45
LONG-TERM DEBT, net of current portion	3,172		3,329
TOTAL LIABILITIES	28,047		28,847
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value per share; 40,000,000 shares authorized; 19,542,858 and 17,454,859 shares issued, respectively and 19,247,243 and 17,159,244 shares outstanding, respectively	197		176
Treasury stock, at cost, 295,615 shares repurchased	(1,554)		(1,554)
Additional paid-in capital	51,712		34,333
Retained earnings	12,870		13,629
TOTAL STOCKHOLDERS' EQUITY	63,225	$ 62,294	46,584	$ 31,126	$ 29,578	$ 29,578
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 91,272		$ 75,431

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Dec. 31, 2021	Jun. 30, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	19,542,858	17,454,859
Common stock, shares outstanding (in shares)	19,247,243	17,159,244
Treasury stock, shares repurchased (in shares)	295,615	295,615

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
REVENUES	$ 18,878	$ 17,011	$ 32,793	$ 30,162
Cost of revenues	13,449	11,374	24,665	20,902
GROSS PROFIT	5,429	5,637	8,128	9,260
Selling, general and administrative	4,388	3,756	8,588	7,544
Depreciation and amortization	236	205	454	409
OPERATING INCOME (LOSS)	805	1,676	(914)	1,307
OTHER INCOME (EXPENSE)
Interest income	14	0	14	0
Interest expense	(58)	(47)	(114)	(79)
Income associated with derivative instrument	27	10	34	15
TOTAL OTHER EXPENSE	(17)	(37)	(66)	(64)
INCOME (LOSS) BEFORE INCOME TAXES	788	1,639	(980)	1,243
INCOME TAX EXPENSE (BENEFIT)
Current	25	64	25	64
Deferred	181	347	(246)	244
TOTAL INCOME TAX EXPENSE (BENEFIT)	206	411	(221)	308
NET INCOME (LOSS)	$ 582	$ 1,228	$ (759)	$ 935
NET INCOME (LOSS) PER COMMON SHARE - Basic (in dollars per share)	$ 0.03	$ 0.07	$ (0.04)	$ 0.06
NET INCOME (LOSS) PER COMMON SHARE - Diluted (in dollars per share)	$ 0.03	$ 0.07	$ (0.04)	$ 0.06
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
Basic (in shares)	19,245	16,497	18,562	16,444
Diluted (in shares)	19,400	16,929	18,562	16,875

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Retained Earnings
Balance at beginning (in shares) at Jun. 30, 2020		16,667,572	295,615
Balances at beginning at Jun. 30, 2020	$ 29,578	$ 168	$ (1,554)	$ 30,203	$ 761
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	68,531	68,531
Exercise of stock options	$ 311	$ 1		310
Stock-based compensation	302			302
Issuance of restricted stock (in shares)		63,599
Issuance of restricted stock	0	$ 1		(1)
Net income (loss)	935				935
Balance at end (in shares) at Dec. 31, 2020		16,799,702	295,615
Balances at end at Dec. 31, 2020	31,126	$ 170	$ (1,554)	30,814	1,696
Balance at beginning (in shares) at Sep. 30, 2020		16,718,103	295,615
Balances at beginning at Sep. 30, 2020	$ 29,578	$ 169	$ (1,554)	30,589	468
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	18,000	18,000
Exercise of stock options	$ 86			86
Stock-based compensation	140			140
Issuance of restricted stock (in shares)		63,599
Issuance of restricted stock	0	$ 1		(1)
Net income (loss)	1,228				1,228
Balance at end (in shares) at Dec. 31, 2020		16,799,702	295,615
Balances at end at Dec. 31, 2020	31,126	$ 170	$ (1,554)	30,814	1,696
Balance at beginning (in shares) at Jun. 30, 2021		17,454,859	295,615
Balances at beginning at Jun. 30, 2021	$ 46,584	$ 176	$ (1,554)	34,333	13,629
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	0
Exercise of stock options	$ 0
Issuance of common stock pursuant to secondary offering, net (in shares)		2,070,000
Issuance of common stock pursuant to secondary offering, net	16,771	$ 21		16,750
Stock-based compensation	629			629
Issuance of restricted stock (in shares)		17,999
Net income (loss)	(759)				(759)
Balance at end (in shares) at Dec. 31, 2021		19,542,858	295,615
Balances at end at Dec. 31, 2021	63,225	$ 197	$ (1,554)	51,712	12,870
Balance at beginning (in shares) at Sep. 30, 2021		19,524,859	295,615
Balances at beginning at Sep. 30, 2021	$ 62,294	$ 197	$ (1,554)	51,363	12,288
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	0
Exercise of stock options	$ 0
Stock-based compensation	349			349
Issuance of restricted stock (in shares)		17,999
Net income (loss)	582				582
Balance at end (in shares) at Dec. 31, 2021		19,542,858	295,615
Balances at end at Dec. 31, 2021	$ 63,225	$ 197	$ (1,554)	$ 51,712	$ 12,870

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (759)	$ 935
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,166	923
Bad debt expense	44	100
Inventory write-off	1	24
Loss on disposal of property, plant and equipment	0	1
Stock-based compensation expense	629	302
Income associated with derivative instrument	(34)	(15)
Deferred tax expense (benefit)	(246)	244
Changes in operating assets and liabilities:
Accounts receivable	(3,288)	(1,597)
Inventory	(676)	355
Prepaid and other assets	(480)	488
Accounts payable and accrued liabilities	1,649	160
Contract asset and contract liability	(3,017)	1,050
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(5,011)	2,970
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(761)	(2,023)
Payments for business acquisition, net of cash acquired	(2,181)	0
Additions to intangible assets	(74)	(62)
NET CASH USED IN INVESTING ACTIVITIES	(3,016)	(2,085)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	0	311
Proceeds from issuance of common stock, net	16,771	0
Proceeds from long-term debt	0	961
Repayments of long-term debt	(412)	(347)
Payments on financing lease liabilities	(98)	0
NET CASH PROVIDED BY FINANCING ACTIVITIES	16,261	925
NET INCREASE IN CASH	8,234	1,810
CASH, beginning of period	27,767	5,416
CASH, end of period	36,001	7,226
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid, net of refunds	177	(261)
Interest paid on long-term debt	116	80
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment financed through accounts payable	$ (143)	$ (263)

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ORGANIZATION AND BACKGROUND

6 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND BACKGROUND

ORGANIZATION AND BACKGROUND

Organization: The accompanying unaudited condensed consolidated financial statements include the financial transactions and accounts of Sharps Compliance Corp. and its wholly owned subsidiaries, Sharps Compliance, Inc. of Texas (dba Sharps Compliance, Inc.), Sharps e-Tools.com Inc. (“Sharps e-Tools”), Sharps Manufacturing, Inc., Sharps Environmental Services, Inc. (dba Sharps Environmental Services of Texas, Inc.), Sharps Safety, Inc., Alpha Bio/Med Services LLC, Bio-Team Mobile LLC, Citiwaste, LLC, Sharps Properties, LLC and Affordable Medical Waste LLC (collectively, “Sharps” or the “Company”). All significant intercompany accounts and transactions have been eliminated upon consolidation.

Business: Sharps is a full-service national provider of comprehensive waste management services including medical, pharmaceutical and hazardous for small and medium quantity generators. The Company’s solutions include Sharps Recovery System™ (formerly Sharps Disposal by Mail System®), TakeAway Recovery System, TakeAway Medication Recovery System™, MedSafe®, TakeAway Recycle System™, ComplianceTRACSM, SharpsTracer®, Sharps Secure® Needle Disposal System, Complete Needle™ Collection & Disposal System, TakeAway Environmental Return System™, Pitch-It IV™ Poles, Asset Return System and Spill Kit Recovery System. The Company also offers its route-based pick-up services in a thirty-seven (37) state region of the South, Southeast, Southwest, Midwest and Northeast portions of the United States.

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BASIS OF PRESENTATION

6 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and with instructions to Form 10-Q and, accordingly, do not include all information and footnotes required under generally accepted accounting principles in the United States of America ("GAAP") for complete financial statements. Additionally, the preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts. In the opinion of management, these interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of December 31, 2021, the results of its operations for the three and six months ended December 31, 2021 and 2020, cash flows for the six months ended December 31, 2021 and 2020, and stockholders’ equity for the three and six months ended December 31, 2021 and 2020. The results of operations for the three and six months ended December 31, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2021.

Restatement of Previously Reported Condensed Consolidated Financial Statements

Subsequent to the issuance of the condensed consolidated financial statements as of and for the period ended December 31, 2021, the Company identified errors in the accounting for freight costs associated with immunization related mailbacks returned for treatment. The Company's management and the Audit Committee of the Company's Board of Directors concluded that it is appropriate to restate the unaudited condensed consolidated financial statements for the quarterly periods ended September 30, 2021 and December 31, 2021.

The following tables reflect the restatement adjustments recorded in connection with the Company's restatement of its condensed consolidated financial statements.

Condensed Consolidated Balance Sheet as of December 31, 2021

	As Previously Reported		Restatement Adjustment		As Restated
ASSETS
CURRENT ASSETS
Cash	$	36,001	$	—	$	36,001
Accounts receivable, net	13,047		—		13,047
Inventory	6,821		—		6,821
Contract asset	18		—		18
Prepaid and other current assets	1,857		38		1,895
TOTAL CURRENT ASSETS	57,744		38		57,782
PROPERTY, PLANT AND EQUIPMENT, net	11,155		—		11,155
OPERATING LEASE RIGHT OF USE ASSET	9,073		—		9,073
FINANCING LEASE RIGHT OF USE ASSET, net	980		—		980
INVENTORY, net of current portion	957		—		957
OTHER ASSETS	154		—		154
GOODWILL	7,996		—		7,996
INTANGIBLE ASSETS, net	2,772		—		2,772
DEFERRED TAX ASSET, net	—		403		403
TOTAL ASSETS	$	90,831	$	441	$	91,272
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,592	$	—	$	3,592
Accrued liabilities	3,208		1,900		5,108
Operating lease liability	2,457		—		2,457
Financing lease liability	189		—		189
Current maturities of long-term debt	480		—		480
Contract liability	5,062		—		5,062
TOTAL CURRENT LIABILITIES	14,988		1,900		16,888
CONTRACT LIABILITY, net of current portion	408		—		408
OPERATING LEASE LIABILITY, net of current portion	6,752		—		6,752
FINANCING LEASE LIABILITY, net of current portion	804		—		804
OTHER LIABILITIES	23		—		23
DEFERRED TAX LIABILITY, net	53		(53)		—
LONG-TERM DEBT, net of current portion	3,172		—		3,172
TOTAL LIABILITIES	26,200		1,847		28,047
COMMITMENTS AND CONTINGENCIES			—
STOCKHOLDERS' EQUITY
Common Stock, $0.01 par value	197		—		197
Treasury stock, at cost, 295,615 shares repurchased	(1,554)		—		(1,554)
Additional paid-in capital	51,712		—		51,712
Retained earnings	14,276		(1,406)		12,870
TOTAL STOCKHOLDERS' EQUITY	64,631		(1,406)		63,225
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	90,831	$	441	$	91,272

Condensed Consolidated Statements of Operations for Three Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
REVENUES	$	18,878	$	—	$	18,878
Cost of revenues	12,271		1,178		13,449
GROSS PROFIT	6,607		(1,178)		5,429
Selling, general and administrative	4,388		—		4,388
Depreciation and amortization	236		—		236
OPERATING INCOME (LOSS)	1,983		(1,178)		805
OTHER INCOME (EXPENSE)
Interest income	14		—		14
Interest expense	(58)		—		(58)
Income associated with derivative instrument	27		—		27
TOTAL OTHER EXPENSE	(17)		—		(17)
INCOME (LOSS) BEFORE INCOME TAXES	1,966		(1,178)		788
INCOME TAX EXPENSE (BENEFIT)
Current	63		(38)		25
Deferred	466		(285)		181
TOTAL INCOME TAX EXPENSE (BENEFIT)	529		(323)		206
NET INCOME (LOSS)	$	1,437	$	(855)	$	582
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted	$	0.07	$	(0.04)	$	0.03
WEIGHTED AVERAGE SHARES USED IN COMPUTING    NET INCOME PER COMMON SHARE:
Basic	19,245		—		19,245
Diluted	19,400		—		19,400

Condensed Consolidated Statements of Operations for Six Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
REVENUES	$	32,793	$	—	$	32,793
Cost of revenues	22,765		1,900		24,665
GROSS PROFIT	10,028		(1,900)		8,128
Selling, general and administrative	8,588		—		8,588
Depreciation and amortization	454		—		454
OPERATING INCOME (LOSS)	986		(1,900)		(914)
OTHER INCOME (EXPENSE)
Interest income	14		—		14
Interest expense	(114)		—		(114)
Income associated with derivative instrument	34		—		34
TOTAL OTHER EXPENSE	(66)		—		(66)
INCOME (LOSS) BEFORE INCOME TAXES	920		(1,900)		(980)
INCOME TAX EXPENSE (BENEFIT)
Current	63		(38)		25
Deferred	210		(456)		(246)
TOTAL INCOME TAX EXPENSE (BENEFIT)	273		(494)		(221)
NET INCOME (LOSS)	$	647	$	(1,406)	$	(759)
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted	$	0.03	$	(0.07)	$	(0.04)
WEIGHTED AVERAGE SHARES USED IN COMPUTING     NET INCOME (LOSS) PER COMMON SHARE:
Basic	18,562		—		18,562
Diluted	18,656		(94)		18,562

Condensed Consolidated Statement of Cash Flows for the Six Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	647	$	(1,406)	$	(759)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,166		—		1,166
Bad debt expense	44		—		44
Inventory write-off	1		—		1
Loss on disposal of property, plant and equipment	—		—		—
Stock-based compensation expense	629		—		629
Income associated with derivative instrument	(34)		—		(34)
Deferred tax expense (benefit)	210		(456)		(246)
Changes in operating assets and liabilities:			—
Accounts receivable	(3,288)		—		(3,288)
Inventory	(676)		—		(676)
Prepaid and other assets	(442)		(38)		(480)
Accounts payable and accrued liabilities	(251)		1,900		1,649
Contract asset and contract liability	(3,017)		—		(3,017)
NET CASH USED IN OPERATING ACTIVITIES	(5,011)		—		(5,011)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(761)		—		(761)
Payments for business acquisition, net of cash acquired	(2,181)		—		(2,181)
Additions to intangible assets	(74)		—		(74)
NET CASH USED IN INVESTING ACTIVITIES	(3,016)		—		(3,016)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	—		—		—
Proceeds from issuance of common stock, net	16,771		—		16,771
Proceeds from long-term debt	—		—		—
Repayments of long-term debt	(412)		—		(412)
Payments on financing lease liabilities	(98)		—		(98)
NET CASH PROVIDED BY FINANCING ACTIVITIES	16,261		—		16,261
NET INCREASE IN CASH	8,234		—		8,234
CASH, beginning of period	27,767		—		27,767
CASH, end of period	$	36,001	—		$	36,001
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid, net of refunds	$	177	—		$	177
Interest paid on long-term debt	$	116	—		$	116
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment financed through accounts payable	$	(143)	—		$	(143)

Previously reported amounts for revenue, total cash flows from operating activities, and net changes in cash and cash equivalents are not affected by the adjustments described above. In addition, the condensed consolidated statements of stockholders' equity for the three-months and six-months ended December 31, 2021 and impacted disclosures have been restated to give effect to the correction.

Effects of COVID-19

A novel strain of coronavirus ("COVID-19") was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in servicing customers. The Company has implemented some and may take additional precautionary measures intended to help ensure the well-being of its employees, facilitate continued uninterrupted servicing of customers and minimize business disruptions. The full extent of the future impacts of COVID-19 on the Company's operations is uncertain. A prolonged outbreak could have a material adverse impact on the financial results and business operations of the Company. To date, the Company has not identified any material adverse impact of COVID-19 on its financial position and results of operations.

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SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition: The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (in thousands):

	Three-Months Ended December 31,
	2021		% Total		2020		% Total
REVENUES BY SOLUTION:
Mailbacks	$	12,070	63.9	%	$	10,452	61.4	%
Route-based pickup services	3,551		18.8	%	3,491		20.5	%
Unused medications	1,865		9.9	%	1,713		10.1	%
Third party treatment services	54		0.3	%	179		1.1	%
Other (1)	1,338		7.1	%	1,176		6.9	%
Total revenues	$	18,878	100.0	%	$	17,011	100.0	%
	Six-Months Ended December 31,
	2021		% Total		2020		% Total
REVENUES BY SOLUTION:
Mailbacks	$	18,818	57.3	%	$	16,614	55.2	%
Route-based pickup services	6,750		20.6	%	6,647		22.0	%
Unused medications	4,494		13.7	%	4,074		13.5	%
Third party treatment services	85		0.3	%	314		1.0	%
Other (1)	2,646		8.1	%	2,513		8.3	%
Total revenues	$	32,793	100.0	%	$	30,162	100.0	%

(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items with single performance obligations.

Vendor Managed Inventory ("VMI") - The VMI program includes terms that meet the “bill and hold” criteria and as such are recognized when the order is placed, title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse for the customer. During the three and six months ended December 31, 2021, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $1.7 million and $1.8 million, respectively. During the three and six months ended December 31, 2020, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $2.5 million and $3.5 million, respectively. As of December 31, 2021 and June 30, 2021, $4.9 million and $3.7 million, respectively, of solutions sold through that date were held in VMI pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program.

The contract asset is related to VMI service agreements within the maibacks contract type category when the revenue recognition exceeds the amount of consideration the Company was entitled to at the point in time of satisfying the performance obligation associated with the sale of the compliance and container system. The contract liability is related to the mailbacks and unused medications contract type categories in which cash consideration exceeds the transaction price allocated to completed performance obligations. The amount recognized during the six months ended December 31, 2021 and 2020 related to contract liabilities recorded as of June 30, 2021 and 2020 were $5.2 million and $2.1 million, respectively.

Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. No such allowance was deemed necessary based on the Company's assessment of the recoverability of its deferred tax assets.Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts.

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RECENTLY ISSUED ACCOUNTING STANDARDS

6 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

RECENTLY ISSUED ACCOUNTING STANDARDS

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2020, guidance for applying optional expedients and exceptions to ease the potential burden in accounting for reference rate reform on financial reporting was issued. It is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform on financial reporting. The provisions of the new guidance are effective for interim periods beginning as of March 12, 2020 through December 31, 2022. There has been no material impact on the Company's consolidated financial statements and related disclosures from the modification of its arrangements as of December 31, 2021. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company.

In June 2016, guidance for credit losses of financial instruments was issued, which requires entities to measure credit losses for financial assets measured at amortized cost based on expected losses rather than incurred losses. The provisions of the new guidance are effective for annual periods beginning after December 15, 2022 (effective July 1, 2023 for the Company), including interim periods within the reporting period, and early application is permitted. The Company is in the initial stages of evaluating the impact of the new guidance on its consolidated financial statements and related disclosures as well as evaluating the available transition methods. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company.

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INCOME TAXES	6 Months Ended
	Dec. 31, 2021
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXESThe Company’s effective tax rate for the six months ended December 31, 2021 and 2020 was 22.6% and 24.8%, respectively. During the six months ended December 31, 2021 and 2020, the effective tax rate is based on the statutory federal tax rate of 21% as well as an approximated state income tax rate net of the federal benefit.

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LEASES

6 Months Ended

Dec. 31, 2021

Leases [Abstract]

LEASES

LEASES

The Company has operating leases for real estate, field equipment, office equipment and vehicles and financing leases for vehicles and office equipment. Operating leases are included in Operating Lease Right of Use ("ROU") Asset and Operating Lease Liability on our Condensed Consolidated Balance Sheets. Financing leases are included in Financing Lease ROU Asset and Financing Lease Liability on the Condensed Consolidated Balance Sheets.

During the three and six months ended December 31, 2021 and 2020, lease cost amounts, which reflect the fixed rent expense associated with operating and financing leases, are as follows (in thousands):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Lease cost (1) - fixed rent expense:
Operating lease cost included in:
Cost of revenues	$	671	$	621	$	1,324	$	1,192
Selling, general and administrative	112		113		222		226
Financing lease cost included in:
Cost of revenues (amortization expense)	24		18		89		36
Interest expense	7		4		15		8
Total	$	814	$	756	$	1,650	$	1,462

(1) Short-term lease cost and variable lease cost were not significant during the period.

During the six months ended December 31, 2021 and 2020, the Company had the following cash and non-cash activities associated with leases (in thousands):

	Six-Months Ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow for operating leases	$	1,553	$	1,357
Non-cash changes to the Operating ROU Asset and Operating Lease Liability
Additions and modifications to ROU asset obtained from new operating lease liabilities	$	2,170	$	1,688
Additions to ROU asset obtained from new financing lease liabilities	$	190	$	—

As of December 31, 2021, the weighted average remaining lease term for all operating and financing leases is 3.93 years and 5.07 years. The weighted average discount rate associated with operating and financing leases as of December 31, 2021 is 4% and 3%, respectively.

The future payments due under operating leases as of December 31, 2021 is as follows (in thousands):

Future payments due in the twelve months ended December 31,	Operating lease		Financing lease
2022	$	2,780	$	217
2023	2,592		215
2024	2,338		215
2025	1,662		204
2026	485		169
Thereafter	92		52
Total undiscounted lease payments	9,949		1,071
Less effects of discounting	(740)		(78)
Lease liability recognized	$	9,209	$	993

Effective January 24, 2022, the Company entered into a lease agreement for 27,318 square feet of additional warehouse space in Houston, Texas. This lease extends through January 23, 2027. The blended base rent for the first year of the Term is $5.76 per square foot with subsequent annual increases of 2.5%. The future minimum lease payments for the extended lease will be an additional $0.1 million, $0.2 million, $0.2 million, $0.2 million, $0.2 million and $0.2 million for the twelve months ended December 31, 2022, 2023, 2024, 2025, 2026, and 2027, respectively.

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NOTES PAYABLE AND LONG-TERM DEBT

6 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

NOTES PAYABLE AND LONG-TERM DEBT

NOTES PAYABLE AND LONG-TERM DEBT

On March 29, 2017, the Company entered into a credit agreement with a commercial bank which was subsequently amended on June 29, 2018 and on December 28, 2020 (“Credit Agreement”). The amended Credit Agreement, which expires on December 28, 2023, provides for a $14.0 million committed credit facility that can be increased to $18 million upon the Company's request. The proceeds of the Credit Agreement may be utilized as follows: (i) $6.0 million for working capital, letters of credit (up to $2.0 million) and general corporate purposes, (ii) $8.0 million for acquisitions and (iii) an additional $4 million for working capital, upon the Company's request. Indebtedness under the Credit Agreement is secured by substantially all of the Company’s assets with advances outstanding under the working capital portion of the credit facility at any time limited to a Borrowing Base (as defined in the Credit Agreement) equal to 80% of eligible accounts receivable plus the lesser of (i) 50% of eligible inventory and (ii) $3.0 million. Advances under the acquisition portion of the credit facility are limited to 75% of the purchase price of an acquired company and convert to a five-year term note at the time of the borrowing. Borrowings bear interest at the greater of (a) one-half percent or (b) the One Month ICE LIBOR plus a LIBOR Margin of 2.5%. The LIBOR Margin may increase to as high as 3.0% depending on the Company’s cash flow leverage ratio.  The interest rate as of December 31, 2021 was approximately 3.0%. The Company pays a fee of 0.25% per annum on the unused amount of the committed credit facility.

On August 21, 2019, certain subsidiaries of the Company entered into a Construction and Term Loan Agreement and a Master Equipment Finance Agreement with its existing commercial bank (collectively, the “Loan Agreement”). The Loan Agreement provides for a five-year, $3.2 million facility, the proceeds of which are to be utilized for expenditures to facilitate future growth at the Company’s treatment facility in Carthage, Texas (the “Texas Treatment Facility”) as follows: (i) $2.0 million for planned improvements and (ii) $1.2 million for equipment. Indebtedness under the Loan Agreement is secured by the Company’s real estate investment and equipment at the Texas Treatment Facility. Advances under the Loan Agreement mature five years from the Closing Date ("August 21, 2019") with monthly payments beginning in the month after the advancing period ends. The advancing period extended through January 15, 2021 and August 2020 for the real estate portion and the equipment portion of the Loan Agreement, respectively. Borrowings during the advancing period for the real estate portion and for the entire term of the equipment portion of the Loan Agreement bear interest computed at the One Month ICE LIBOR, plus two-hundred and fifty (250) basis points which was a rate of 2.73% on December 31, 2021. The Company has entered into a forward rate lock which fixed the rate on the real estate portion of the Loan Agreement at the expiration of the advancing period at 4.15%.

On January 22, 2021, certain wholly owned subsidiaries of the Company entered into a real estate term loan agreement (the "Real Estate Loan Agreement") with its existing commercial bank. The Real Estate Loan Agreement provides for a five-year, $0.9 million facility, the proceeds of which have been utilized to purchase the property in Pennsylvania which had previously been leased by the Company for its operations. The Real Estate Loan Agreement matures five years from January 22, 2021 with monthly payments based on a 20-year amortization and bears interest at 4%.

At December 31, 2021 and June 30, 2021, long-term debt consisted of the following (in thousands):

	December 31, 2021		June 30, 2021
Acquisition loan, monthly payments of $43; maturing March 2022	$	173	$	431
Equipment loan, monthly payments of $17; maturing August 2024, net of debt issuance costs of $34	731		830
Real estate loans, monthly payments of $9; maturing August 2024 and January 2026	2,748		2,803
Total long-term debt	3,652		4,064
Less: current portion	480		735
Long-term debt, net of current portion	$	3,172	$	3,329

The Company has availability under the Credit Agreement of $13.3 million ($5.3 million for the working capital and $8.0 million for acquisitions) as of December 31, 2021 with the option to extend the availability up to $17.3 million. The Company has $0.7 million in letters of credit outstanding as of December 31, 2021.

The Credit and Loan Agreements contain affirmative and negative covenants that, among other things, require the Company to maintain a maximum cash flow leverage ratio of no more than 3.0 to 1.0 and a minimum debt service coverage ratio of not less than 1.15 to 1.00. The Credit and Loan Agreements also contain customary events of default which, if uncured, may terminate the agreements and require immediate repayment of all indebtedness to the lenders. The leverage ratio covenant may limit the amount available under the agreements. The Company was in compliance with all the financial covenants under the Credit and Loan Agreements as of December 31, 2021.

Payments due on long-term debt subsequent to December 31, 2021 are as follows (in thousands):

Twelve Months Ending December 31,
2022	$	480
2023	320
2024	2,169
2025	44
2026	673
	$	3,686

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STOCK-BASED COMPENSATION

6 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Stock-based compensation cost for options and restricted stock awarded to employees and directors is measured at the grant date based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Contingently issued awards with a requisite service period that precedes the grant date are measured and recognized at the start of the requisite service period and remeasured each reporting period until the grant date. Total stock-based compensation expense for the three and six months ended December 31, 2021 and 2020 is as follows (in thousands):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Stock-based compensation expense included in:
Cost of revenues	$	5	$	—	$	14	$	—
Selling, general and administrative	344		140		615		302
Total	$	349	$	140	$	629	$	302

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EARNINGS PER SHARE

6 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares after considering the additional dilution related to common stock options and restricted stock. In computing diluted earnings per share, the outstanding common stock options are considered dilutive using the treasury stock method.

The Company’s restricted stock awards are considered participating securities as the shares have full voting rights and are entitled to participate in dividends declared on common shares, if any, and undistributed earnings. The two-class method presentation of the basic and diluted EPS is not presented as the amount of earnings allocated to the participating securities was not material for the periods presented. Instead, the unvested awards are included in the diluted EPS.

The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share amounts):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
	(As restated)				(As restated)
Net income (loss) as reported	$	582	$	1,228	$	(759)	$	935
Weighted average common shares outstanding	19,245		16,497		18,562		16,444
Effect of dilutive stock options	155		432		—		431
Weighted average diluted common shares outstanding	19,400		16,929		18,562		16,875
Net income (loss) per common share
Basic and Diluted	$	0.03	$	0.07	$	(0.04)	$	0.06
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive	269		—		739		25

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EQUITY TRANSACTIONS

6 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

EQUITY TRANSACTIONS

EQUITY TRANSACTIONS

During the three and six months ended December 31, 2021 and 2020, respectively, stock options to purchase shares of the Company's common stock were exercised as follows:

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Options exercised	—		18,000		—		68,531
Proceeds (in thousands)	$	—	$	86	$	—	$	311
Average exercise price per share	$	—	$	4.79	$	—	$	4.53

As of December 31, 2021, there was $0.8 million and $0.9 million of stock compensation expense related to non-vested options and non-vested restricted stock awards, respectively, which is expected to be recognized over weighted average periods of 2.68 years and 2.41 years, respectively.

On August 30, 2021, the Company closed its previously announced underwritten secondary offering of a total of 2,070,000 shares of its common stock at a public offering price of $8.65 per share, including the exercise in full by the underwriter of its option to purchase an additional 270,000 shares to cover over-allotments in connection with the offering. After the underwriting discount and offering expenses payable by the Company of $1.1 million, the Company received net proceeds of approximately $16.8 million.

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INVENTORY

6 Months Ended

Dec. 31, 2021

Inventory Disclosure [Abstract]

INVENTORY

INVENTORY

The components of inventory are as follows (in thousands):

	December 31, 2021		June 30, 2021
Raw materials	$	2,599	$	2,040
Finished goods	5,179		5,063
Total inventory	7,778		7,103
Less: current portion	6,821		6,114
Inventory, net of current portion	$	957	$	989

The current portion of inventory includes amounts which the Company expects to sell in the next twelve month period based on historical sales.

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ACQUISITIONS

6 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS

ACQUISITIONS

On October 22, 2021, the Company acquired Affordable Medical Waste LLC, a route-based provider of medical waste solutions with over 500 route-based customer locations in the Midwest, primarily in Indiana, for $2.2 million, net of cash acquired of $0.1 million, paid in cash from funds on hand. This tuck-in acquisition enhances the Company's presence in the Midwest and improves route density in the service area.

The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):

Accounts receivable	$	65
Fixed assets	145
Intangibles	771
Goodwill	1,261
Accounts payable and accrued liabilities	(61)
Total purchase price, net of cash acquired	$	2,181

Intangibles is primarily comprised of amounts allocated to customer relationships in the amount of $0.8 million. The fair value of the fixed assets were determined using the market approach (level 2 inputs) whereas the fair value of the customer relationships was determined using the income approach (level 3 inputs).

During the three and six months ended December 31, 2021, the Company incurred $0.2 million of acquisition related expenses for investment banking, legal and accounting fees which are included within selling, general and administrative expenses on our condensed consolidated statements of operations. The results of operations of the acquired business have been included in the condensed consolidated statements of operations from the date of acquisition.

Pro forma results of operations for Affordable Medical Waste are not presented because the pro forma effects were not material to the Company's consolidated results of operations. The goodwill recorded for the acquisition will be deductible for income taxes.

The goodwill recognized for the acquisitions since July 1, 2015 is attributable to expected revenue synergies generated by the integration of our products and services with those acquisitions and cost synergies resulting from the consolidation or elimination of certain functions.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Income Taxes

Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. No such allowance was deemed necessary based on the Company's assessment of the recoverability of its deferred tax assets.

Accounts Receivable

Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts.

Recently Issued Accounting Standards

In March 2020, guidance for applying optional expedients and exceptions to ease the potential burden in accounting for reference rate reform on financial reporting was issued. It is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform on financial reporting. The provisions of the new guidance are effective for interim periods beginning as of March 12, 2020 through December 31, 2022. There has been no material impact on the Company's consolidated financial statements and related disclosures from the modification of its arrangements as of December 31, 2021. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company.

In June 2016, guidance for credit losses of financial instruments was issued, which requires entities to measure credit losses for financial assets measured at amortized cost based on expected losses rather than incurred losses. The provisions of the new guidance are effective for annual periods beginning after December 15, 2022 (effective July 1, 2023 for the Company), including interim periods within the reporting period, and early application is permitted. The Company is in the initial stages of evaluating the impact of the new guidance on its consolidated financial statements and related disclosures as well as evaluating the available transition methods. The Company will continue to evaluate the standard as well as additional changes, modifications or interpretations which may impact the Company.

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BASIS OF PRESENTATION (Tables)

6 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

The following tables reflect the restatement adjustments recorded in connection with the Company's restatement of its condensed consolidated financial statements.

Condensed Consolidated Balance Sheet as of December 31, 2021

	As Previously Reported		Restatement Adjustment		As Restated
ASSETS
CURRENT ASSETS
Cash	$	36,001	$	—	$	36,001
Accounts receivable, net	13,047		—		13,047
Inventory	6,821		—		6,821
Contract asset	18		—		18
Prepaid and other current assets	1,857		38		1,895
TOTAL CURRENT ASSETS	57,744		38		57,782
PROPERTY, PLANT AND EQUIPMENT, net	11,155		—		11,155
OPERATING LEASE RIGHT OF USE ASSET	9,073		—		9,073
FINANCING LEASE RIGHT OF USE ASSET, net	980		—		980
INVENTORY, net of current portion	957		—		957
OTHER ASSETS	154		—		154
GOODWILL	7,996		—		7,996
INTANGIBLE ASSETS, net	2,772		—		2,772
DEFERRED TAX ASSET, net	—		403		403
TOTAL ASSETS	$	90,831	$	441	$	91,272
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,592	$	—	$	3,592
Accrued liabilities	3,208		1,900		5,108
Operating lease liability	2,457		—		2,457
Financing lease liability	189		—		189
Current maturities of long-term debt	480		—		480
Contract liability	5,062		—		5,062
TOTAL CURRENT LIABILITIES	14,988		1,900		16,888
CONTRACT LIABILITY, net of current portion	408		—		408
OPERATING LEASE LIABILITY, net of current portion	6,752		—		6,752
FINANCING LEASE LIABILITY, net of current portion	804		—		804
OTHER LIABILITIES	23		—		23
DEFERRED TAX LIABILITY, net	53		(53)		—
LONG-TERM DEBT, net of current portion	3,172		—		3,172
TOTAL LIABILITIES	26,200		1,847		28,047
COMMITMENTS AND CONTINGENCIES			—
STOCKHOLDERS' EQUITY
Common Stock, $0.01 par value	197		—		197
Treasury stock, at cost, 295,615 shares repurchased	(1,554)		—		(1,554)
Additional paid-in capital	51,712		—		51,712
Retained earnings	14,276		(1,406)		12,870
TOTAL STOCKHOLDERS' EQUITY	64,631		(1,406)		63,225
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	90,831	$	441	$	91,272

Condensed Consolidated Statements of Operations for Three Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
REVENUES	$	18,878	$	—	$	18,878
Cost of revenues	12,271		1,178		13,449
GROSS PROFIT	6,607		(1,178)		5,429
Selling, general and administrative	4,388		—		4,388
Depreciation and amortization	236		—		236
OPERATING INCOME (LOSS)	1,983		(1,178)		805
OTHER INCOME (EXPENSE)
Interest income	14		—		14
Interest expense	(58)		—		(58)
Income associated with derivative instrument	27		—		27
TOTAL OTHER EXPENSE	(17)		—		(17)
INCOME (LOSS) BEFORE INCOME TAXES	1,966		(1,178)		788
INCOME TAX EXPENSE (BENEFIT)
Current	63		(38)		25
Deferred	466		(285)		181
TOTAL INCOME TAX EXPENSE (BENEFIT)	529		(323)		206
NET INCOME (LOSS)	$	1,437	$	(855)	$	582
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted	$	0.07	$	(0.04)	$	0.03
WEIGHTED AVERAGE SHARES USED IN COMPUTING    NET INCOME PER COMMON SHARE:
Basic	19,245		—		19,245
Diluted	19,400		—		19,400

Condensed Consolidated Statements of Operations for Six Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
REVENUES	$	32,793	$	—	$	32,793
Cost of revenues	22,765		1,900		24,665
GROSS PROFIT	10,028		(1,900)		8,128
Selling, general and administrative	8,588		—		8,588
Depreciation and amortization	454		—		454
OPERATING INCOME (LOSS)	986		(1,900)		(914)
OTHER INCOME (EXPENSE)
Interest income	14		—		14
Interest expense	(114)		—		(114)
Income associated with derivative instrument	34		—		34
TOTAL OTHER EXPENSE	(66)		—		(66)
INCOME (LOSS) BEFORE INCOME TAXES	920		(1,900)		(980)
INCOME TAX EXPENSE (BENEFIT)
Current	63		(38)		25
Deferred	210		(456)		(246)
TOTAL INCOME TAX EXPENSE (BENEFIT)	273		(494)		(221)
NET INCOME (LOSS)	$	647	$	(1,406)	$	(759)
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted	$	0.03	$	(0.07)	$	(0.04)
WEIGHTED AVERAGE SHARES USED IN COMPUTING     NET INCOME (LOSS) PER COMMON SHARE:
Basic	18,562		—		18,562
Diluted	18,656		(94)		18,562

Condensed Consolidated Statement of Cash Flows for the Six Months Ended December 31, 2021

	As Previously Reported		Restatement Adjustments		As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	647	$	(1,406)	$	(759)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,166		—		1,166
Bad debt expense	44		—		44
Inventory write-off	1		—		1
Loss on disposal of property, plant and equipment	—		—		—
Stock-based compensation expense	629		—		629
Income associated with derivative instrument	(34)		—		(34)
Deferred tax expense (benefit)	210		(456)		(246)
Changes in operating assets and liabilities:			—
Accounts receivable	(3,288)		—		(3,288)
Inventory	(676)		—		(676)
Prepaid and other assets	(442)		(38)		(480)
Accounts payable and accrued liabilities	(251)		1,900		1,649
Contract asset and contract liability	(3,017)		—		(3,017)
NET CASH USED IN OPERATING ACTIVITIES	(5,011)		—		(5,011)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(761)		—		(761)
Payments for business acquisition, net of cash acquired	(2,181)		—		(2,181)
Additions to intangible assets	(74)		—		(74)
NET CASH USED IN INVESTING ACTIVITIES	(3,016)		—		(3,016)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	—		—		—
Proceeds from issuance of common stock, net	16,771		—		16,771
Proceeds from long-term debt	—		—		—
Repayments of long-term debt	(412)		—		(412)
Payments on financing lease liabilities	(98)		—		(98)
NET CASH PROVIDED BY FINANCING ACTIVITIES	16,261		—		16,261
NET INCREASE IN CASH	8,234		—		8,234
CASH, beginning of period	27,767		—		27,767
CASH, end of period	$	36,001	—		$	36,001
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid, net of refunds	$	177	—		$	177
Interest paid on long-term debt	$	116	—		$	116
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment financed through accounts payable	$	(143)	—		$	(143)

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Summary of revenue by solution

The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (in thousands):

	Three-Months Ended December 31,
	2021		% Total		2020		% Total
REVENUES BY SOLUTION:
Mailbacks	$	12,070	63.9	%	$	10,452	61.4	%
Route-based pickup services	3,551		18.8	%	3,491		20.5	%
Unused medications	1,865		9.9	%	1,713		10.1	%
Third party treatment services	54		0.3	%	179		1.1	%
Other (1)	1,338		7.1	%	1,176		6.9	%
Total revenues	$	18,878	100.0	%	$	17,011	100.0	%
	Six-Months Ended December 31,
	2021		% Total		2020		% Total
REVENUES BY SOLUTION:
Mailbacks	$	18,818	57.3	%	$	16,614	55.2	%
Route-based pickup services	6,750		20.6	%	6,647		22.0	%
Unused medications	4,494		13.7	%	4,074		13.5	%
Third party treatment services	85		0.3	%	314		1.0	%
Other (1)	2,646		8.1	%	2,513		8.3	%
Total revenues	$	32,793	100.0	%	$	30,162	100.0	%

(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items with single performance obligations.

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LEASES (Tables)

6 Months Ended

Dec. 31, 2021

Leases [Abstract]

Summary of lease components and other information

During the three and six months ended December 31, 2021 and 2020, lease cost amounts, which reflect the fixed rent expense associated with operating and financing leases, are as follows (in thousands):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Lease cost (1) - fixed rent expense:
Operating lease cost included in:
Cost of revenues	$	671	$	621	$	1,324	$	1,192
Selling, general and administrative	112		113		222		226
Financing lease cost included in:
Cost of revenues (amortization expense)	24		18		89		36
Interest expense	7		4		15		8
Total	$	814	$	756	$	1,650	$	1,462

(1) Short-term lease cost and variable lease cost were not significant during the period.

During the six months ended December 31, 2021 and 2020, the Company had the following cash and non-cash activities associated with leases (in thousands):

	Six-Months Ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow for operating leases	$	1,553	$	1,357
Non-cash changes to the Operating ROU Asset and Operating Lease Liability
Additions and modifications to ROU asset obtained from new operating lease liabilities	$	2,170	$	1,688
Additions to ROU asset obtained from new financing lease liabilities	$	190	$	—

Schedule of maturities of operating lease liabilities

The future payments due under operating leases as of December 31, 2021 is as follows (in thousands):

Future payments due in the twelve months ended December 31,	Operating lease		Financing lease
2022	$	2,780	$	217
2023	2,592		215
2024	2,338		215
2025	1,662		204
2026	485		169
Thereafter	92		52
Total undiscounted lease payments	9,949		1,071
Less effects of discounting	(740)		(78)
Lease liability recognized	$	9,209	$	993

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NOTES PAYABLE AND LONG-TERM DEBT (Tables)

6 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Schedule of long-term debt

At December 31, 2021 and June 30, 2021, long-term debt consisted of the following (in thousands):

	December 31, 2021		June 30, 2021
Acquisition loan, monthly payments of $43; maturing March 2022	$	173	$	431
Equipment loan, monthly payments of $17; maturing August 2024, net of debt issuance costs of $34	731		830
Real estate loans, monthly payments of $9; maturing August 2024 and January 2026	2,748		2,803
Total long-term debt	3,652		4,064
Less: current portion	480		735
Long-term debt, net of current portion	$	3,172	$	3,329

Schedule of payments due on long-term debt

Payments due on long-term debt subsequent to December 31, 2021 are as follows (in thousands):

Twelve Months Ending December 31,
2022	$	480
2023	320
2024	2,169
2025	44
2026	673
	$	3,686

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Schedule of stock-based compensation

Total stock-based compensation expense for the three and six months ended December 31, 2021 and 2020 is as follows (in thousands):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Stock-based compensation expense included in:
Cost of revenues	$	5	$	—	$	14	$	—
Selling, general and administrative	344		140		615		302
Total	$	349	$	140	$	629	$	302

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EARNINGS PER SHARE (Tables)

6 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Schedule of earnings per share

The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per-share amounts):

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
	(As restated)				(As restated)
Net income (loss) as reported	$	582	$	1,228	$	(759)	$	935
Weighted average common shares outstanding	19,245		16,497		18,562		16,444
Effect of dilutive stock options	155		432		—		431
Weighted average diluted common shares outstanding	19,400		16,929		18,562		16,875
Net income (loss) per common share
Basic and Diluted	$	0.03	$	0.07	$	(0.04)	$	0.06
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive	269		—		739		25

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EQUITY TRANSACTIONS (Tables)

6 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

Schedule of stock option activity

During the three and six months ended December 31, 2021 and 2020, respectively, stock options to purchase shares of the Company's common stock were exercised as follows:

	Three-Months Ended December 31,				Six-Months Ended December 31,
	2021		2020		2021		2020
Options exercised	—		18,000		—		68,531
Proceeds (in thousands)	$	—	$	86	$	—	$	311
Average exercise price per share	$	—	$	4.79	$	—	$	4.53

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INVENTORY (Tables)

6 Months Ended

Dec. 31, 2021

Inventory Disclosure [Abstract]

Schedule of inventory

The components of inventory are as follows (in thousands):

	December 31, 2021		June 30, 2021
Raw materials	$	2,599	$	2,040
Finished goods	5,179		5,063
Total inventory	7,778		7,103
Less: current portion	6,821		6,114
Inventory, net of current portion	$	957	$	989

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ACQUISITIONS (Tables)

6 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Schedule of assets acquired and liabilities assumed

The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):

Accounts receivable	$	65
Fixed assets	145
Intangibles	771
Goodwill	1,261
Accounts payable and accrued liabilities	(61)
Total purchase price, net of cash acquired	$	2,181

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ORGANIZATION AND BACKGROUND (Details)	6 Months Ended
	Dec. 31, 2021 stateRegion
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of route-based pick-up services in state region	37

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BASIS OF PRESENTATION - Condensed Consolidated Balance Sheet (Details) - USD ($) $ / shares in Units, $ in Thousands	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020
CURRENT ASSETS
Cash	$ 36,001		$ 27,767
Accounts receivable, net	13,047		9,738
Inventory	6,821		6,114
Contract asset	18		20
Prepaid and other current assets	1,895		1,459
TOTAL CURRENT ASSETS	57,782		45,098
PROPERTY, PLANT AND EQUIPMENT, net	11,155		10,843
OPERATING LEASE RIGHT OF USE ASSET	9,073		8,353
FINANCING LEASE RIGHT OF USE ASSET, net	980		907
INVENTORY, net of current portion	957		989
OTHER ASSETS	154		110
GOODWILL	7,996		6,735
INTANGIBLE ASSETS, net	2,772		2,239
DEFERRED TAX ASSET, net	403		157
TOTAL ASSETS	91,272		75,431
CURRENT LIABILITIES
Accounts payable	3,592		2,922
Accrued liabilities	5,108		3,940
Operating lease liability	2,457		2,368
Financing lease liability	189		160
Current maturities of long-term debt	480		735
Contract liability	5,062		7,028
TOTAL CURRENT LIABILITIES	16,888		17,153
CONTRACT LIABILITY, net of current portion	408		1,461
OPERATING LEASE LIABILITY, net of current portion	6,752		6,118
FINANCING LEASE LIABILITY, net of current portion	804		741
OTHER LIABILITIES	23		45
DEFERRED TAX LIABILITY, net	0
LONG-TERM DEBT, net of current portion	3,172		3,329
TOTAL LIABILITIES	28,047		28,847
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, $0.01 par value	197		176
Treasury stock, at cost, 295,615 shares repurchased	(1,554)		(1,554)
Additional paid-in capital	51,712		34,333
Retained earnings	12,870		13,629
TOTAL STOCKHOLDERS' EQUITY	63,225	$ 62,294	46,584	$ 31,126	$ 29,578	$ 29,578
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 91,272		$ 75,431
Common stock, par value (in dollars per share)	$ 0.01		$ 0.01
Treasury stock, shares repurchased (in shares)	295,615		295,615
As Previously Reported
CURRENT ASSETS
Cash	$ 36,001
Accounts receivable, net	13,047
Inventory	6,821
Contract asset	18
Prepaid and other current assets	1,857
TOTAL CURRENT ASSETS	57,744
PROPERTY, PLANT AND EQUIPMENT, net	11,155
OPERATING LEASE RIGHT OF USE ASSET	9,073
FINANCING LEASE RIGHT OF USE ASSET, net	980
INVENTORY, net of current portion	957
OTHER ASSETS	154
GOODWILL	7,996
INTANGIBLE ASSETS, net	2,772
DEFERRED TAX ASSET, net	0
TOTAL ASSETS	90,831
CURRENT LIABILITIES
Accounts payable	3,592
Accrued liabilities	3,208
Operating lease liability	2,457
Financing lease liability	189
Current maturities of long-term debt	480
Contract liability	5,062
TOTAL CURRENT LIABILITIES	14,988
CONTRACT LIABILITY, net of current portion	408
OPERATING LEASE LIABILITY, net of current portion	6,752
FINANCING LEASE LIABILITY, net of current portion	804
OTHER LIABILITIES	23
DEFERRED TAX LIABILITY, net	53
LONG-TERM DEBT, net of current portion	3,172
TOTAL LIABILITIES	26,200
STOCKHOLDERS' EQUITY
Common Stock, $0.01 par value	197
Treasury stock, at cost, 295,615 shares repurchased	(1,554)
Additional paid-in capital	51,712
Retained earnings	14,276
TOTAL STOCKHOLDERS' EQUITY	64,631
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	90,831
Restatement Adjustment
CURRENT ASSETS
Cash	0
Accounts receivable, net	0
Inventory	0
Contract asset	0
Prepaid and other current assets	38
TOTAL CURRENT ASSETS	38
PROPERTY, PLANT AND EQUIPMENT, net	0
OPERATING LEASE RIGHT OF USE ASSET	0
FINANCING LEASE RIGHT OF USE ASSET, net	0
INVENTORY, net of current portion	0
OTHER ASSETS	0
GOODWILL	0
INTANGIBLE ASSETS, net	0
DEFERRED TAX ASSET, net	403
TOTAL ASSETS	441
CURRENT LIABILITIES
Accounts payable	0
Accrued liabilities	1,900
Operating lease liability	0
Financing lease liability	0
Current maturities of long-term debt	0
Contract liability	0
TOTAL CURRENT LIABILITIES	1,900
CONTRACT LIABILITY, net of current portion	0
OPERATING LEASE LIABILITY, net of current portion	0
FINANCING LEASE LIABILITY, net of current portion	0
OTHER LIABILITIES	0
DEFERRED TAX LIABILITY, net	(53)
LONG-TERM DEBT, net of current portion	0
TOTAL LIABILITIES	1,847
STOCKHOLDERS' EQUITY
Common Stock, $0.01 par value	0
Treasury stock, at cost, 295,615 shares repurchased	0
Additional paid-in capital	0
Retained earnings	(1,406)
TOTAL STOCKHOLDERS' EQUITY	(1,406)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 441

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BASIS OF PRESENTATION - Condensed Consolidated Statements of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Error Corrections and Prior Period Adjustments Restatement [Line Items]
REVENUES	$ 18,878	$ 17,011	$ 32,793	$ 30,162
Cost of revenues	13,449	11,374	24,665	20,902
GROSS PROFIT	5,429	5,637	8,128	9,260
Selling, general and administrative	4,388	3,756	8,588	7,544
Depreciation and amortization	236	205	454	409
OPERATING INCOME (LOSS)	805	1,676	(914)	1,307
OTHER INCOME (EXPENSE)
Interest income	14	0	14	0
Interest expense	(58)	(47)	(114)	(79)
Income associated with derivative instrument	27	10	34	15
TOTAL OTHER EXPENSE	(17)	(37)	(66)	(64)
INCOME (LOSS) BEFORE INCOME TAXES	788	1,639	(980)	1,243
Current	25	64	25	64
Deferred	181	347	(246)	244
TOTAL INCOME TAX EXPENSE	206	411	(221)	308
NET INCOME (LOSS)	$ 582	$ 1,228	$ (759)	$ 935
NET INCOME (LOSS) PER COMMON SHARE - Basic (in dollars per share)	$ 0.03	$ 0.07	$ (0.04)	$ 0.06
NET INCOME (LOSS) PER COMMON SHARE - Diluted (in dollars per share)	$ 0.03	$ 0.07	$ (0.04)	$ 0.06
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
Basic (in shares)	19,245	16,497	18,562	16,444
Diluted (in shares)	19,400	16,929	18,562	16,875
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
REVENUES	$ 18,878		$ 32,793
Cost of revenues	12,271		22,765
GROSS PROFIT	6,607		10,028
Selling, general and administrative	4,388		8,588
Depreciation and amortization	236		454
OPERATING INCOME (LOSS)	1,983		986
OTHER INCOME (EXPENSE)
Interest income	14		14
Interest expense	(58)		(114)
Income associated with derivative instrument	27		34
TOTAL OTHER EXPENSE	(17)		(66)
INCOME (LOSS) BEFORE INCOME TAXES	1,966		920
Current	63		63
Deferred	466		210
TOTAL INCOME TAX EXPENSE	529		273
NET INCOME (LOSS)	$ 1,437		$ 647
NET INCOME (LOSS) PER COMMON SHARE - Basic (in dollars per share)	$ 0.07		$ 0.03
NET INCOME (LOSS) PER COMMON SHARE - Diluted (in dollars per share)	$ 0.07		$ 0.03
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
Basic (in shares)	19,245		18,562
Diluted (in shares)	19,400		18,656
Restatement Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
REVENUES	$ 0		$ 0
Cost of revenues	1,178		1,900
GROSS PROFIT	(1,178)		(1,900)
Selling, general and administrative	0		0
Depreciation and amortization	0		0
OPERATING INCOME (LOSS)	(1,178)		(1,900)
OTHER INCOME (EXPENSE)
Interest income	0		0
Interest expense	0		0
Income associated with derivative instrument	0		0
TOTAL OTHER EXPENSE	0		0
INCOME (LOSS) BEFORE INCOME TAXES	(1,178)		(1,900)
Current	(38)		(38)
Deferred	(285)		(456)
TOTAL INCOME TAX EXPENSE	(323)		(494)
NET INCOME (LOSS)	$ (855)		$ (1,406)
NET INCOME (LOSS) PER COMMON SHARE - Basic (in dollars per share)	$ (0.04)		$ (0.07)
NET INCOME (LOSS) PER COMMON SHARE - Diluted (in dollars per share)	$ (0.04)		$ (0.07)
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
Basic (in shares)	0		0
Diluted (in shares)	0		(94)

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BASIS OF PRESENTATION - Condensed Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Aug. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$ 582	$ 1,228	$ (759)	$ 935
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization				1,166	923
Bad debt expense				44	100
Inventory write-off				1	24
Loss on disposal of property, plant and equipment				0	1
Stock-based compensation expense				629	302
Income associated with derivative instrument				(34)	(15)
Deferred tax expense (benefit)				(246)	244
Changes in operating assets and liabilities:
Accounts receivable				(3,288)	(1,597)
Inventory				(676)	355
Prepaid and other assets				(480)	488
Accounts payable and accrued liabilities				1,649	160
Contract asset and contract liability				(3,017)	1,050
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES				(5,011)	2,970
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment				(761)	(2,023)
Payments for business acquisition, net of cash acquired				(2,181)	0
Additions to intangible assets				(74)	(62)
NET CASH USED IN INVESTING ACTIVITIES				(3,016)	(2,085)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options				0	311
Proceeds from issuance of common stock, net	$ 16,800			16,771	0
Proceeds from long-term debt				0	961
Repayments of long-term debt				(412)	(347)
Payments on financing lease liabilities				(98)	0
NET CASH PROVIDED BY FINANCING ACTIVITIES				16,261	925
NET INCREASE IN CASH				8,234	1,810
CASH, beginning of period				27,767	5,416
CASH, end of period		36,001	$ 7,226	36,001	7,226
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid, net of refunds				177	(261)
Interest paid on long-term debt				116	80
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment financed through accounts payable				(143)	$ (263)
As Previously Reported
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		1,437		647
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization				1,166
Bad debt expense				44
Inventory write-off				1
Loss on disposal of property, plant and equipment				0
Stock-based compensation expense				629
Income associated with derivative instrument				(34)
Deferred tax expense (benefit)				210
Changes in operating assets and liabilities:
Accounts receivable				(3,288)
Inventory				(676)
Prepaid and other assets				(442)
Accounts payable and accrued liabilities				(251)
Contract asset and contract liability				(3,017)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES				(5,011)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment				(761)
Payments for business acquisition, net of cash acquired				(2,181)
Additions to intangible assets				(74)
NET CASH USED IN INVESTING ACTIVITIES				(3,016)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options				0
Proceeds from issuance of common stock, net				16,771
Proceeds from long-term debt				0
Repayments of long-term debt				(412)
Payments on financing lease liabilities				(98)
NET CASH PROVIDED BY FINANCING ACTIVITIES				16,261
NET INCREASE IN CASH				8,234
CASH, beginning of period				27,767
CASH, end of period		36,001		36,001
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid, net of refunds				177
Interest paid on long-term debt				116
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment financed through accounts payable				(143)
Restatement Adjustment
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		(855)		(1,406)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization				0
Bad debt expense				0
Inventory write-off				0
Loss on disposal of property, plant and equipment				0
Stock-based compensation expense				0
Income associated with derivative instrument				0
Deferred tax expense (benefit)				(456)
Changes in operating assets and liabilities:
Accounts receivable				0
Inventory				0
Prepaid and other assets				(38)
Accounts payable and accrued liabilities				1,900
Contract asset and contract liability				0
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES				0
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment				0
Payments for business acquisition, net of cash acquired				0
Additions to intangible assets				0
NET CASH USED IN INVESTING ACTIVITIES				0
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options				0
Proceeds from issuance of common stock, net				0
Proceeds from long-term debt				0
Repayments of long-term debt				0
Payments on financing lease liabilities				0
NET CASH PROVIDED BY FINANCING ACTIVITIES				0
NET INCREASE IN CASH				0
CASH, beginning of period				0
CASH, end of period		$ 0		0
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid, net of refunds				0
Interest paid on long-term debt				0
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment financed through accounts payable				$ 0

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SIGNIFICANT ACCOUNTING POLICIES - Summary of Revenue by Solution (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Total revenues	$ 18,878	$ 17,011	$ 32,793	$ 30,162
Revenue benchmark | Product concentration risk
Disaggregation of Revenue [Line Items]
Revenue percentage	100.00%	100.00%	100.00%	100.00%
Mailbacks
Disaggregation of Revenue [Line Items]
Total revenues	$ 12,070	$ 10,452	$ 18,818	$ 16,614
Mailbacks | Revenue benchmark | Product concentration risk
Disaggregation of Revenue [Line Items]
Revenue percentage	63.90%	61.40%	57.30%	55.20%
Route-based pickup services
Disaggregation of Revenue [Line Items]
Total revenues	$ 3,551	$ 3,491	$ 6,750	$ 6,647
Route-based pickup services | Revenue benchmark | Product concentration risk
Disaggregation of Revenue [Line Items]
Revenue percentage	18.80%	20.50%	20.60%	22.00%
Unused medications
Disaggregation of Revenue [Line Items]
Total revenues	$ 1,865	$ 1,713	$ 4,494	$ 4,074
Unused medications | Revenue benchmark | Product concentration risk
Disaggregation of Revenue [Line Items]
Revenue percentage	9.90%	10.10%	13.70%	13.50%
Third party treatment services
Disaggregation of Revenue [Line Items]
Total revenues	$ 54	$ 179	$ 85	$ 314
Third party treatment services | Revenue benchmark | Product concentration risk
Disaggregation of Revenue [Line Items]
Revenue percentage	0.30%	1.10%	0.30%	1.00%
Other
Disaggregation of Revenue [Line Items]
Total revenues	$ 1,338	$ 1,176	$ 2,646	$ 2,513
Other | Revenue benchmark | Product concentration risk
Disaggregation of Revenue [Line Items]
Revenue percentage	7.10%	6.90%	8.10%	8.30%

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SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2021	Dec. 31, 2020	Jun. 30, 2021
Accounting Policies [Abstract]
Billings recorded from inventory builds	$ 1.7		$ 2.5		$ 1.8	$ 3.5
Solutions sold that were held in vendor managed inventory	$ 4.9				$ 4.9		$ 3.7
Contract with customer, liability, revenue recognized		$ 5.2		$ 2.1

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INCOME TAXES (Details)	6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Effective income tax rate	22.60%	24.80%

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LEASES - Components of Net Lease (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Cost of revenues (amortization expense)	$ 24	$ 18	$ 89	$ 36
Interest expense	7	4	15	8
Total	$ 814	756	1,650	1,462
Operating cash outflow for operating leases			1,553	1,357
Additions and modifications to ROU asset obtained from new operating lease liabilities			2,170	1,688
Additions to ROU asset obtained from new financing lease liabilities			$ 190	0
Weighted average remaining lease term, operating leases	3 years 11 months 4 days		3 years 11 months 4 days
Weighted average remaining lease term, financing leases	5 years 25 days		5 years 25 days
Weighted average discount rate, operating leases	4.00%		4.00%
Weighted average discount rate, financing leases	3.00%		3.00%
Cost of revenues
Lessee, Lease, Description [Line Items]
Operating lease cost	$ 671	621	$ 1,324	1,192
Selling, general and administrative
Lessee, Lease, Description [Line Items]
Operating lease cost	$ 112	$ 113	$ 222	$ 226

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LEASES - Maturities of Leases (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Operating lease
2022	$ 2,780
2023	2,592
2024	2,338
2025	1,662
2026	485
Thereafter	92
Total undiscounted lease payments	9,949
Less effects of discounting	(740)
Lease liability recognized	9,209
Financing lease
2022	217
2023	215
2024	215
2025	204
2026	169
Thereafter	52
Total undiscounted lease payments	1,071
Less effects of discounting	(78)
Lease liability recognized	$ 993

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LEASES - Narrative (Details) $ in Thousands	Jan. 24, 2022 USD ($) ft² $ / ft²	Dec. 31, 2021 USD ($)
Lessee, Lease, Description [Line Items]
2022		$ 2,780
2023		2,592
2024		2,338
2025		1,662
2026		$ 485
Houston, Texas | Subsequent Event
Lessee, Lease, Description [Line Items]
Square foot of real estate property leased | ft²	27,318
Blended base rent per square foot | $ / ft²	5.76
Annual rent increase, percentage	2.50%
2022	$ 100
2023	200
2024	200
2025	200
2026	200
2027	$ 200

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NOTES PAYABLE AND LONG-TERM DEBT - Narrative (Details) - USD ($)				6 Months Ended
	Jan. 21, 2021	Aug. 21, 2019	Jun. 29, 2018	Dec. 31, 2021	Jan. 22, 2021	Dec. 28, 2020
Letter of Credit
Line of Credit Facility [Line Items]
Amount outstanding				$ 700,000
Credit Agreement
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 14,000,000
Percentage of eligible accounts receivable considered for borrowing base			80.00%
Percentage of eligible inventory considered for borrowing base			50.00%
Borrowing base, monetary benchmark			$ 3,000,000
Basis spread of variable rate			50.00%
Interest rate				3.00%
Unused capacity, commitment fee percentage				0.25%
Remaining borrowing capacity				$ 13,300,000
Maximum borrowing capacity, option				17,300,000
Credit Agreement | Working Capital
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 6,000,000
Remaining borrowing capacity				5,300,000
Credit Agreement | Business Acquisitions
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 8,000,000
Percentage of portion allocated to acquisition purchase price			75.00%
Remaining borrowing capacity				$ 8,000,000
Credit Agreement | Additional Working Capital
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 4,000,000
Credit Agreement | Maximum
Line of Credit Facility [Line Items]
Debt cash flow leverage ratio				3.0
Credit Agreement | Minimum
Line of Credit Facility [Line Items]
Debt service coverage ratio				1.15
Credit Agreement | Term Loan
Line of Credit Facility [Line Items]
Maturity period			5 years
Credit Agreement | Letter of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 2,000,000
Credit Agreement | LIBOR
Line of Credit Facility [Line Items]
Basis spread of variable rate			2.50%
Debt instrument, term of variable rate			1 month
Credit Agreement | LIBOR | Maximum
Line of Credit Facility [Line Items]
Basis spread of variable rate			3.00%
Credit Agreement Amendment
Line of Credit Facility [Line Items]
Maximum borrowing capacity						$ 18,000,000
Loan Agreement
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 3,200,000
Interest rate				2.73%
Interest rate at expiration of advancing period				4.15%
Loan Agreement | Real Estate
Line of Credit Facility [Line Items]
Remaining borrowing capacity		2,000,000
Loan Agreement | Equipment
Line of Credit Facility [Line Items]
Remaining borrowing capacity		$ 1,200,000
Loan Agreement | Term Loan
Line of Credit Facility [Line Items]
Maturity period		5 years
Loan Agreement | LIBOR
Line of Credit Facility [Line Items]
Basis spread of variable rate			2.50%
Debt instrument, term of variable rate			1 month
Real Estate Loan Agreement
Line of Credit Facility [Line Items]
Maximum borrowing capacity					$ 900,000
Maturity period	5 years
Amortization period	20 years
Interest rate					4.00%

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NOTES PAYABLE AND LONG-TERM DEBT - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2021	Jun. 30, 2021
Debt Instrument [Line Items]
Total long-term debt	$ 3,652	$ 4,064
Less: current portion	480	735
Long-term debt, net of current portion	3,172	3,329
Acquisition loan | Term Loan
Debt Instrument [Line Items]
Monthly payments	43
Total long-term debt	173	431
Equipment loan | Term Loan
Debt Instrument [Line Items]
Monthly payments	17
Debt issuance costs, net	34
Total long-term debt	731	830
Real estate loan | Term Loan
Debt Instrument [Line Items]
Monthly payments	9
Total long-term debt	$ 2,748	$ 2,803

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NOTES PAYABLE AND LONG-TERM DEBT - Schedule of Payments Due on Long-term Debt (Details) - Term Loan $ in Thousands	Dec. 31, 2021 USD ($)
Long-term Debt, Fiscal Year Maturity [Abstract]
2022	$ 480
2023	320
2024	2,169
2025	44
2026	673
Total long-term debt	$ 3,686

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STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation	$ 349	$ 140	$ 629	$ 302
Cost of revenues
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation	5	0	14	0
Selling, general and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation	$ 344	$ 140	$ 615	$ 302

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Earnings Per Share [Abstract]
Net income (loss) as reported	$ 582	$ 1,228	$ (759)	$ 935
Net income (loss) as reported	$ 582	$ 1,228	$ (759)	$ 935
Weighted average common shares outstanding (in shares)	19,245	16,497	18,562	16,444
Effect of dilutive stock options (in shares)	155	432	0	431
Weighted average diluted common shares outstanding (in shares)	19,400	16,929	18,562	16,875
Net income (loss) per common share
Basic (in dollars per share)	$ 0.03	$ 0.07	$ (0.04)	$ 0.06
Diluted (in dollars per share)	$ 0.03	$ 0.07	$ (0.04)	$ 0.06
Employee stock options excluded from computation of dilutive income per share amounts because their effect would be anti-dilutive (in shares)	269	0	739	25

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EQUITY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
	Aug. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Stockholders' Equity Note [Abstract]
Options exercised (in shares)		0	18,000	0	68,531
Proceeds		$ 0	$ 86	$ 0	$ 311
Average exercise price per share (in dollars per share)		$ 0	$ 4.79	$ 0	$ 4.53
Class of Stock [Line Items]
Issuance of common stock (in shares)	2,070,000
Shares price (in dollars per share)	$ 8.65
Underwriting discount and offering expenses	$ 1,100
Proceeds from issuance of common stock, net	$ 16,800			$ 16,771	$ 0
Over-Allotment Option
Class of Stock [Line Items]
Issuance of common stock (in shares)	270,000
Non-vested options
Class of Stock [Line Items]
Compensation expense related to non-vested awards		$ 800		$ 800
Weighted average period				2 years 8 months 4 days
Non-vested restricted stock awards
Class of Stock [Line Items]
Compensation expense related to non-vested awards		$ 900		$ 900
Weighted average period				2 years 4 months 28 days

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INVENTORY (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Jun. 30, 2021
Components of inventory [Abstract]
Raw materials	$ 2,599	$ 2,040
Finished goods	5,179	5,063
Total inventory	7,778	7,103
Less: current portion	6,821	6,114
Inventory, net of current portion	$ 957	$ 989

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ACQUISITIONS - Narrative (Details) $ in Thousands		3 Months Ended	6 Months Ended
	Oct. 22, 2021 USD ($) location	Dec. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)
Business Acquisition [Line Items]
Acquisition related expenses		$ 200
Affordable Medical Waste LLC
Business Acquisition [Line Items]
Business combination, consideration transferred	$ 2,200
Cash acquired from acquisition	100
Intangibles	771
Acquisition related expenses			$ 200
Affordable Medical Waste LLC | Customer relationships
Business Acquisition [Line Items]
Intangibles	$ 800
Minimum | Affordable Medical Waste LLC
Business Acquisition [Line Items]
Number of locations | location	500

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ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Oct. 22, 2021	Jun. 30, 2021
Business Acquisition [Line Items]
Goodwill	$ 7,996		$ 6,735
Affordable Medical Waste LLC
Business Acquisition [Line Items]
Accounts receivable		$ 65
Fixed assets		145
Intangibles		771
Goodwill		1,261
Accounts payable and accrued liabilities		(61)
Total purchase price, net of cash acquired		2,181
Affordable Medical Waste LLC | Customer relationships
Business Acquisition [Line Items]
Intangibles		$ 800