☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
74-2657168
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
9220 Kirby Drive, Suite 500, Houston, Texas
|
77054
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
Common Shares, $0.01 Par Value
|
The NASDAQ Capital Market
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
(1)
|
Portions of the Registrant’s Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A for the Annual Meeting of Shareholders to be held on November 16, 2017 are incorporated by reference into Part III.
|
PART I
|
||
Item 1
|
4
|
|
Item 1A
|
13
|
|
Item 1B
|
17
|
|
Item 2
|
17
|
|
Item 3
|
17
|
|
Item 4
|
17
|
|
PART II
|
||
Item 5
|
17
|
|
Item 6
|
18
|
|
Item 7
|
19
|
|
Item 8
|
28
|
|
Item 9
|
28
|
|
Item 9A
|
28
|
|
Item 9B
|
29
|
|
PART III
|
||
Item 10
|
29
|
|
Item 11
|
29
|
|
Item 12
|
29
|
|
Item 13
|
29
|
|
Item 14
|
29
|
|
PART IV
|
||
Item 15
|
30
|
|
Item 16
|
31
|
|
32
|
||
*This Table of Contents is inserted for convenience of reference only and is not a part of this Report as filed.
|
· |
ultimate users, which is designed for use in the long-term care, hospice and consumer markets.
|
· |
DEA registrants, which DEA Reverse Distribution solution is a DEA-compliant collection, return and destruction solution for DEA registrants’ expired or unused controlled substances. The system includes prepaid return transportation, materials to package for return, complete documentation of returned pharmaceuticals and proper disposal with online proof of destruction.
|
· |
A large professional market that consists of dentists, veterinarians, clinics, private practice physicians, urgent care facilities, ambulatory surgical centers 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 addresses this market from two directions: (i) field sales which focus 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 waste management offering and (ii) inside and online sales which focus on the individual or small group professional offices, government agencies, smaller retail pharmacies and clinics and assisted living/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 about 155 million people or 48% of the U.S. population.
|
· |
In July 2015 and December 2015, the Company augmented its network of medical and hazardous waste service providers with acquisitions of route-based pickup services in the Northeast serving Pennsylvania, Maryland, Ohio and other neighboring states. In July 2016, the Company acquired another route-based pickup service which expanded service to New York and New Jersey and 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 twenty-three (23) state region of the South, Southeast and Northeast portions of the United States. The Company directly serves more than 9,500 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.
|
· |
The changing demographics of the U.S. population – according to the U.S. Census Bureau, 2012 Population Estimates and National Projections, one out of five Americans will be 65 years or older by 2030, 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”), 24% of flu shots for adults were administered in a retail clinic. Over the flu seasons from 2011 to 2014, the growth in the Retail flu business for Sharps was between 24% and 36%. Despite the decrease in Retail flu business for fiscal year 2017 (the 2016 flu season) of 15% due to a mild flu season and the loss of one retail pharmacy customer, 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 assisted living 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.
|
· |
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 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).
|
Year Ended June 30,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
BILLINGS BY MARKET:
|
||||||||||||
Professional
|
31
|
%
|
22
|
%
|
20
|
%
|
||||||
Home Health Care
|
21
|
%
|
22
|
%
|
22
|
%
|
||||||
Retail
|
19
|
%
|
26
|
%
|
28
|
%
|
||||||
Pharmaceutical Manufacturer
|
16
|
%
|
17
|
%
|
15
|
%
|
||||||
Assisted Living
|
6
|
%
|
6
|
%
|
6
|
%
|
||||||
Government
|
4
|
%
|
4
|
%
|
5
|
%
|
||||||
Environmental
|
1
|
%
|
1
|
%
|
1
|
%
|
||||||
Other
|
2
|
%
|
2
|
%
|
3
|
%
|
||||||
100
|
%
|
100
|
%
|
100
|
%
|
· |
Web and Inside Sales — Through targeted telemarketing initiatives (inside sales), 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 assisted living/long-term care facilities.
|
· |
Field Sales – The field sales team focuses on larger dollar and nationwide opportunities in most of the markets served. The field sales team is able to address larger opportunities where we can integrate the route-based pickup service along with our mailback solutions to create a comprehensive waste management offering.
|
ITEM 5. |
Common Stock
|
||||||||
High
|
Low
|
|||||||
Fiscal Year Ending June 30, 2016
|
||||||||
First Quarter
|
$
|
9.53
|
$
|
6.10
|
||||
Second Quarter
|
$
|
10.11
|
$
|
7.32
|
||||
Third Quarter
|
$
|
8.57
|
$
|
4.75
|
||||
Fourth Quarter
|
$
|
6.03
|
$
|
4.16
|
||||
Fiscal Year Ending June 30, 2017
|
||||||||
First Quarter
|
$
|
5.84
|
$
|
4.29
|
||||
Second Quarter
|
$
|
4.51
|
$
|
3.40
|
||||
Third Quarter
|
$
|
4.86
|
$
|
4.17
|
||||
Fourth Quarter
|
$
|
4.61
|
$
|
4.00
|
||||
Fiscal Year Ending June 30, 2018
|
||||||||
First Quarter (August 21, 2017)
|
$
|
5.67
|
$
|
4.17
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
Weighted average
exercise price of
outstanding
options, warrants
and rights
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
|
||||||||||
Plan Category
|
(a)
|
(b)
|
(c)
|
|||||||||
2010 Stock Plan as approved by shareholders (1) (2)
|
877,904
|
$
|
4.53
|
1,561,891
|
|
For the Year Ended June 30,
|
|||||||||||||||||||
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
|
||||||||||||||||||||
Revenues
|
$
|
38,188
|
$
|
33,383
|
$
|
30,902
|
$
|
26,570
|
$
|
21,530
|
||||||||||
Operating Income (Loss)
|
$
|
(1,187
|
)
|
$
|
5
|
$
|
1,236
|
$
|
965
|
$
|
(2,709
|
)
|
||||||||
Net Income (Loss)
|
$
|
(1,293
|
)
|
$
|
13
|
$
|
1,160
|
$
|
956
|
$
|
(2,712
|
)
|
||||||||
|
||||||||||||||||||||
Net Income (Loss) per share:
|
||||||||||||||||||||
Basic
|
$
|
(0.08
|
)
|
$
|
0.00
|
$
|
0.08
|
$
|
0.06
|
$
|
(0.18
|
)
|
||||||||
Diluted
|
$
|
(0.08
|
)
|
$
|
0.00
|
$
|
0.07
|
$
|
0.06
|
$
|
(0.18
|
)
|
||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total Assets
|
$
|
34,464
|
$
|
30,147
|
$
|
29,751
|
$
|
26,461
|
$
|
25,532
|
||||||||||
Total Debt
|
$
|
2,603
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Cash and Cash Equivalents
|
$
|
4,675
|
$
|
12,435
|
$
|
15,157
|
$
|
13,717
|
$
|
15,503
|
||||||||||
Working Capital
|
$
|
10,488
|
$
|
17,232
|
$
|
19,623
|
$
|
17,888
|
$
|
16,643
|
||||||||||
Total Stockholders’ Equity
|
$
|
25,287
|
$
|
23,843
|
$
|
23,586
|
$
|
21,904
|
$
|
21,070
|
·
|
2014 Operating income and net income include $1.5 million for a legal settlement received by the Company.
|
·
|
2016 Revenues, operating income and net income include the results of operations for the acquisitions during the year which were not individually or in the aggregate material to the Company’s financial position. Additionally, the acquisitions pro forma results would not have a material impact on the Company’s results had the acquisitions occurred at the beginning of the current year or previous year.
|
·
|
2017 Revenues, operating income and net income include the results of operations for the acquisition during the year. See Note 12 in the notes to the consolidated financial statements for acquisition pro forma results.
|
Year Ended June 30,
|
||||||||||||||||||||||||
2017
|
%
|
2016
|
%
|
2015
|
%
|
|||||||||||||||||||
Revenues
|
$
|
38,188
|
100.0
|
%
|
$
|
33,383
|
100.0
|
%
|
$
|
30,902
|
100.0
|
%
|
||||||||||||
Cost of revenues
|
26,351
|
69.0
|
%
|
22,272
|
66.7
|
%
|
19,907
|
64.4
|
%
|
|||||||||||||||
Gross profit
|
11,837
|
31.0
|
%
|
11,111
|
33.3
|
%
|
10,995
|
35.6
|
%
|
|||||||||||||||
SG&A expense
|
12,223
|
32.0
|
%
|
10,812
|
32.4
|
%
|
9,496
|
30.7
|
%
|
|||||||||||||||
Depreciation and amortization
|
801
|
2.1
|
%
|
294
|
0.9
|
%
|
263
|
0.9
|
%
|
|||||||||||||||
Operating income (loss)
|
(1,187
|
)
|
(3.1
|
%)
|
5
|
0.0
|
%
|
1,236
|
4.0
|
%
|
||||||||||||||
Other income (expense)
|
(102
|
)
|
(0.3
|
%)
|
32
|
0.1
|
%
|
36
|
0.1
|
%
|
||||||||||||||
Income (loss) before income taxes
|
(1,289
|
)
|
37
|
1,272
|
||||||||||||||||||||
Income tax expense
|
4
|
0.0
|
%
|
24
|
0.1
|
%
|
112
|
0.4
|
%
|
|||||||||||||||
Net income (loss)
|
$
|
(1,293
|
)
|
(3.4
|
%)
|
$
|
13
|
0.0
|
%
|
$
|
1,160
|
3.8
|
%
|
Year Ended June 30,
|
||||||||||||
2017
|
2016
|
Variance
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||
BILLINGS BY MARKET:
|
||||||||||||
Professional
|
$
|
11,962
|
$
|
7,571
|
$
|
4,391
|
||||||
Home Health Care
|
7,901
|
7,378
|
523
|
|||||||||
Retail
|
7,010
|
8,798
|
(1,788
|
)
|
||||||||
Pharmaceutical Manufacturer
|
5,961
|
5,708
|
253
|
|||||||||
Assisted Living
|
2,442
|
2,194
|
248
|
|||||||||
Government
|
1,680
|
1,541
|
139
|
|||||||||
Environmental
|
414
|
259
|
155
|
|||||||||
Other
|
763
|
845
|
(82
|
)
|
||||||||
Subtotal
|
38,133
|
34,294
|
3,839
|
|||||||||
GAAP Adjustment *
|
55
|
(911
|
)
|
966
|
||||||||
Revenue Reported
|
$
|
38,188
|
$
|
33,383
|
$
|
4,805
|
Year Ended June 30,
|
||||||||||||||||
2017
|
% Total
|
2016
|
% Total
|
|||||||||||||
REVENUES BY SOLUTION:
|
||||||||||||||||
Mailbacks
|
$
|
24,080
|
63.1
|
%
|
$
|
24,654
|
71.9
|
%
|
||||||||
Route-based pickup services
|
6,348
|
16.6
|
%
|
2,061
|
6.0
|
%
|
||||||||||
Unused medications
|
3,377
|
8.9
|
%
|
3,531
|
10.3
|
%
|
||||||||||
Third party treatment services
|
413
|
1.1
|
%
|
258
|
0.8
|
%
|
||||||||||
Other(1)
|
3,915
|
10.3
|
%
|
3,790
|
11.0
|
%
|
||||||||||
Total billings
|
$
|
38,133
|
100.0
|
%
|
$
|
34,294
|
100.0
|
%
|
||||||||
GAAP adjustment(2)
|
55
|
(911
|
)
|
|||||||||||||
Revenue reported
|
$
|
38,188
|
$
|
33,383
|
(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 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 and (ii) recognition of certain revenue associated with products returned for treatment and destruction. The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as deferred revenue.
|
Year Ended June 30,
|
||||||||||||
2016
|
2015
|
Variance
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||
BILLINGS BY MARKET:
|
||||||||||||
Retail
|
$
|
8,798
|
$
|
8,726
|
$
|
72
|
||||||
Professional
|
7,571
|
6,225
|
1,346
|
|||||||||
Home Health Care
|
7,378
|
6,802
|
576
|
|||||||||
Pharmaceutical Manufacturer
|
5,708
|
4,855
|
853
|
|||||||||
Assisted Living
|
2,194
|
1,879
|
315
|
|||||||||
Government
|
1,541
|
1,756
|
(215
|
)
|
||||||||
Environmental
|
259
|
368
|
(109
|
)
|
||||||||
Other
|
845
|
891
|
(46
|
)
|
||||||||
Subtotal
|
34,294
|
31,502
|
2,792
|
|||||||||
GAAP Adjustment *
|
(911
|
)
|
(600
|
)
|
(311
|
)
|
||||||
Revenue Reported
|
$
|
33,383
|
$
|
30,902
|
$
|
2,481
|
Year Ended June 30,
|
||||||||||||||||
2016
|
% Total
|
2015
|
% Total
|
|||||||||||||
REVENUES BY SOLUTION:
|
||||||||||||||||
Mailbacks
|
$
|
24,654
|
71.9
|
%
|
$
|
23,643
|
75.1
|
%
|
||||||||
Route-based pickup services
|
2,061
|
6.0
|
%
|
862
|
2.7
|
%
|
||||||||||
Unused medications
|
3,531
|
10.3
|
%
|
2,667
|
8.5
|
%
|
||||||||||
Third party treatment services
|
258
|
0.8
|
%
|
367
|
1.2
|
%
|
||||||||||
Other(1)
|
3,790
|
11.0
|
%
|
3,963
|
12.5
|
%
|
||||||||||
Total billings
|
$
|
34,294
|
100.0
|
%
|
$
|
31,502
|
100.0
|
%
|
||||||||
GAAP adjustment(2)
|
(911
|
)
|
(600
|
)
|
||||||||||||
Revenue reported
|
$
|
33,383
|
$
|
30,902
|
(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 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 and (ii) recognition of certain revenue associated with products returned for treatment and destruction. The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as deferred revenue.
|
· |
A large professional market that consists of dentists, veterinarians, clinics, private practice physicians, urgent care facilities, ambulatory surgical centers 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 addresses this market from two directions: (i) field sales which focus 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 waste management offering and (ii) inside and online sales which focus on the individual or small group professional offices, government agencies, smaller retail pharmacies and clinics and assisted living/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 about 155 million people or 48% of the U.S. population.
|
· |
In July 2015 and December 2015, the Company augmented its network of medical and hazardous waste service providers with acquisitions of route-based pickup services in the Northeast serving Pennsylvania, Maryland, Ohio and other neighboring states. In July 2016, the Company acquired another route-based pickup service which expanded service to New York and New Jersey and 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 twenty-three (23) state region of the South, Southeast and Northeast portions of the United States. The Company directly serves more than 9,500 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.
|
· |
The changing demographics of the U.S. population – according to the U.S. Census Bureau, 2012 Population Estimates and National Projections, one out of five Americans will be 65 years or older by 2030, 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”), 24% of flu shots for adults were administered in a retail clinic. Over the flu seasons from 2011 to 2014, the growth in the Retail flu business for Sharps was between 24% and 36%. Despite the decrease in Retail flu business for fiscal year 2017 (the 2016 flu season) of 15% due to a mild flu season and the loss of one retail pharmacy customer, 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 assisted living 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.
|
· |
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 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).
|
· |
The Company’s strong financial position with a cash balance of $4.7 million, debt of $2.6 million and additional availability under the Credit Agreement.
|
· |
Cash Flows used in Operating Activities - Working capital decreased by $6.7 million to $10.5 million at June 30, 2017 from $17.2 million at June 30, 2016. The decrease is primarily attributed to a decrease in cash and cash equivalents offset by:
|
· |
An increase in accounts receivable of $1.2 million, net of assets acquired, to $7.6 million at June 30, 2017 from $5.8 million at June 30, 2016 due to timing of billings and collections,
|
· |
An increase in inventory of $0.1 million to $4.1 million at June 30, 2017 from $3.9 million at June 30, 2016 due to timing of sales and adjustment of inventory levels to facilitate customer orders and
|
· |
An increase in accounts payable and accrued liabilities of $0.1 million, net of liabilities assumed and unpaid consideration, to $3.5 million at June 30, 2017 from $3.2 million at June 30, 2016 due to the timing of payments.
|
· |
Cash Flows used in Investing Activities - Investing activities include capital expenditures and business acquisitions as follows:
|
· |
Capital expenditures of $2.5 million are attributable primarily to investments in treatment facility improvements.
|
· |
The Company acquired Citiwaste for $9.0 million during the year ended June 30, 2017 of which $1.9 million was for 415,527 shares of common stock of the Company.
|
· |
Cash Flows provided by Financing Activities – Financing activities include $5.6 million of proceeds from long-term debt in connection with the Citiwaste acquisition and the new debt agreement (see Note 5 “Notes Payable and Long-Term Debt”), proceeds from the exercise of stock options of $0.3 million offset in part by repayments of debt of $3.2 million.
|
· |
Level 1 – Quoted prices in active markets for identical assets or liabilities.
|
· |
Level 2 – Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities).
|
· |
Level 3 – Significant unobservable inputs (including our own assumptions in determining fair value).
|
ITEM 12. |
Exhibit
Number
|
Description of Exhibit
|
2.1
|
Agreement for Purchase and Sale of LLC Units dated July 1, 2016 by and between Sharps Compliance, Inc. and Citiwaste, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on July 6, 2016).
|
3.1
|
Amended and Restated Certificate of Incorporation of U.S. Medical Systems, Inc. (incorporated by reference from Exhibit 3.5 to the Registrant’s Transition Report on Form 10KSB40 (File No. 000-22390; Film No. 98716804), filed on September 29, 1998).
|
3.2
|
Certificate of Elimination of the Series A 10% Voting Convertible Preferred Stock of Sharps Compliance Corp. (incorporated by reference from Exhibit 3.6 to Form 10KSB40 (File No. 000-22390; Film No. 98716804), filed September 29, 1998).
|
3.3
|
Amended and Restated Bylaws of Sharps Compliance Corp dated May 23, 1994 (incorporated by reference to Exhibit 3.2 to Form 8-K, filed November 19, 2010).
|
4.1
|
Specimen Stock Certificate (incorporated by reference from Exhibit 4.4 to Form 10KSB40 (File No. 000-22390; Film No. 98716804), filed September 29, 1998).
|
10.1
|
Form of Restricted Stock Award Agreement dated June 9, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 000-22390; Film No. 08888237), filed June 9, 2008).
|
10.2
|
Sharps Compliance Corp. 2010 Stock Plan dated November 22, 2010 (incorporated by reference to Exhibit A of the Registrant’s Proxy Statement on Schedule 14A, filed October 12, 2010).
|
10.3
|
Lease Agreement dated as of July 13, 2006, between Sharps Compliance, Inc. and Warehouse Associates Corporate Centre Kirby II, Ltd. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 000-22390; Film No. 06962703), filed July 14, 2006).
|
10.4
|
Lease Termination Agreement dated as of July 13, 2006, between Sharps Compliance, Inc., Warehouse Associates Corporate Centre Kirby, Ltd. and Warehouse Associates Corporate Centre Kirby II, Ltd. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 000-22390; Film No. 06962703), filed July 14, 2006).
|
10.5
|
Second Amendment to Lease Agreement between Sharps Compliance, Inc. and Warehouse Associates Corporate Centre Kirby II, ltd. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-34269; Film No. 10667451), filed March 9, 2010).
|
10.6
|
Third Amendment to Lease Agreement dated February 6, 2015, between Sharps Compliance, Inc. and Warehouse Associates Corporate Centre Kirby II, Ltd. (incorporated by reference to 10.1 to the Registrant’s Current Report on Form 8-K, filed on February 17, 2015).
|
10.7
|
Fourth Amendment to Lease Agreement dated August 5, 2015, between Sharps Compliance Inc. and Warehouse Associates Corporate Centre Kirby IV, Ltd. (incorporated by reference to Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K, filed on August 26, 2015).
|
10.8
|
Lease Agreement dated as of January 30, 2009, between Sharps Compliance, Inc. and Park 288 Industrial, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 000-22390; Film No. 09565104), filed February 3, 2009).
|
10.9
|
Amended Lease Agreement dated as of May 27, 2009, between Sharps Compliance, Inc. and Park 288 Industrial, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-24269; Film No. 09866215), filed June 2, 2009).
|
10.10
|
Fourth Amendment to Lease Agreement dated June 24, 2014, between Sharps Compliance, Inc. of Texas and Park 288 Industrial, L.L.C. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on June 24, 2014).
|
10.11
|
Lease Agreement dated as of October 7, 2015, between Sharps Compliance, Inc. and Alpha Bio-
Med Services LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 9, 2015).
|
10.12
|
Loan Agreement dated March 29, 2017, by and between Sharps Compliance, Inc. of Texas and a commercial bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on April 3, 2017).
|
10.13
|
Executive Employment Agreement Amendment by and between Sharps Compliance Corp. and David P. Tusa dated June 14, 2010 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-34269; Film No. 10893750), filed June 14, 2010) *
|
10.14
|
Executive Employment Agreement Amendment between Sharps Compliance Corp. and David P. Tusa dated March 6, 2012 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed March 7, 2012).*
|
10.15
|
Executive Employment Agreement Amendment by and between Sharps Compliance Corp. and David P. Tusa dated September 10, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed September 11, 2015).*
|
10.16
|
Employment Agreement by and between Sharps Compliance Corp. and Diana P. Diaz dated June 14, 2010 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K(File No. 001-34269; Film No. 10893750), filed June 14, 2010).*
|
10.17
|
Executive Employment Agreement Amendment between Sharps Compliance Corp. and Diana P. Diaz dated March 6, 2012 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed March 7, 2012).*
|
10.18
|
Executive Employment Agreement Amendment by and between Sharps Compliance Corp. and Diana P. Diaz dated September 10, 2015 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed September 11, 2015).*
|
10.19
|
Letter Agreement by and between Sharps Compliance Corp. and Al Aladwani dated March 24, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 000-22390; Film No. 08706090), filed March 12, 2008).*
|
10.20
|
Employment Agreement by and between Sharps Compliance, Inc. and Gregory C. Davis dated May 18, 2011 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-34269; Film No. 11866772), filed May 24, 2011).*
|
10.21
|
Lease between SIT Realty LLC and Sharps Compliance, Inc., dated as of September 28, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed October 3, 2016).
|
Subsidiaries of Sharps Compliance Corp. (filed herewith).
|
|
Consent of BDO USA, LLP (filed herewith).
|
|
Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act (furnished herewith).
|
|
Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act (furnished herewith).
|
|
Certification of Chief Executive Officer in accordance with Section 906 of the Sarbanes-Oxley Act (furnished herewith).
|
|
Certification of Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act (furnished 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)
|
* |
This exhibit is a management contract or a compensatory plan or arrangement.
|
Dated: August 23, 2017
|
By: /s/ DAVID P. TUSA
|
David P. Tusa
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
Dated: August 23, 2017
|
By: /s/ DAVID P. TUSA
|
David P. Tusa
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
|
Dated: August 23, 2017
|
By: /s/ DIANA P. DIAZ
|
Diana P. Diaz
|
|
Vice President and
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
Dated: August 23, 2017
|
By: /s/ F. GARDNER PARKER
|
F. Gardner Parker
|
|
Director
|
|
Dated: August 23, 2017
|
By: /s/ JOHN W. DALTON
|
John W. Dalton
|
|
Director
|
|
Dated: August 23, 2017
|
By: /s/ PARRIS H. HOLMES
|
Parris H. Holmes
|
|
Director
|
|
Dated: August 23, 2017
|
By: /s/ PHILIP C. ZERRILLO
|
Philip C. Zerrillo
|
|
Chairman of the Board Of Directors
|
CONSOLIDATED FINANCIAL STATEMENTS
|
PAGE
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets as of June 30, 2017 and 2016
|
F-3
|
Consolidated Statements of Operations for the Years Ended June 30, 2017, 2016 and 2015
|
F-4
|
Consolidated Statements of Stockholders’ Equity for the Years Ended June 30, 2017, 2016 and 2015
|
F-5
|
Consolidated Statements of Cash Flows for the Years Ended June 30, 2017, 2016 and 2015
|
F-6
|
Notes to Consolidated Financial Statements
|
F-7
|
June 30,
|
||||||||
2017
|
2016
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
4,675
|
$
|
12,435
|
||||
Accounts receivable, net
|
7,553
|
5,814
|
||||||
Inventory, net
|
4,098
|
3,919
|
||||||
Prepaids and other current assets
|
694
|
695
|
||||||
TOTAL CURRENT ASSETS
|
17,020
|
22,863
|
||||||
PROPERTY, PLANT AND EQUIPMENT, net
|
6,543
|
5,032
|
||||||
OTHER ASSETS
|
120
|
84
|
||||||
GOODWILL
|
6,735
|
1,039
|
||||||
INTANGIBLE ASSETS, net
|
4,046
|
1,129
|
||||||
TOTAL ASSETS
|
$
|
34,464
|
$
|
30,147
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable
|
$
|
1,710
|
$
|
1,620
|
||||
Accrued liabilities
|
1,800
|
1,534
|
||||||
Current maturities of long-term debt
|
601
|
-
|
||||||
Deferred revenue
|
2,421
|
2,477
|
||||||
TOTAL CURRENT LIABILITIES
|
6,532
|
5,631
|
||||||
LONG-TERM DEFERRED REVENUE, net of current portion
|
478
|
483
|
||||||
OTHER LONG-TERM LIABILITIES
|
165
|
190
|
||||||
LONG-TERM DEBT, net of current portion
|
2,002
|
-
|
||||||
TOTAL LIABILITIES
|
9,177
|
6,304
|
||||||
COMMITMENTS AND CONTINGENCIES (Note 8)
|
||||||||
STOCKHOLDERS’ EQUITY
|
||||||||
Common stock, $0.01 par value per share; 20,000,000 shares authorized; 16,304,027 and 15,740,458 shares issued, respectively and 16,008,412 and 15,444,843 shares outstanding, respectively
|
163
|
158
|
||||||
Treasury stock, at cost, 295,615 shares repurchased
|
(1,554
|
)
|
(1,554
|
)
|
||||
Additional paid-in capital
|
28,063
|
25,331
|
||||||
Accumulated deficit
|
(1,385
|
)
|
(92
|
)
|
||||
TOTAL STOCKHOLDERS’ EQUITY
|
25,287
|
23,843
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
34,464
|
$
|
30,147
|
Year Ended June 30,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
REVENUES
|
$
|
38,188
|
$
|
33,383
|
$
|
30,902
|
||||||
|
||||||||||||
Cost of revenues
|
26,351
|
22,272
|
19,907
|
|||||||||
GROSS PROFIT
|
11,837
|
11,111
|
10,995
|
|||||||||
Selling, general and administrative
|
12,223
|
10,812
|
9,496
|
|||||||||
Depreciation and amortization
|
801
|
294
|
263
|
|||||||||
OPERATING INCOME (LOSS)
|
(1,187
|
)
|
5
|
1,236
|
||||||||
OTHER INCOME (EXPENSE)
|
||||||||||||
Interest income
|
13
|
32
|
36
|
|||||||||
Interest expense
|
(115
|
)
|
-
|
-
|
||||||||
TOTAL OTHER (EXPENSE) INCOME
|
(102
|
)
|
32
|
36
|
||||||||
INCOME (LOSS) BEFORE INCOME TAXES
|
(1,289
|
)
|
37
|
1,272
|
||||||||
INCOME TAX EXPENSE - Current
|
4
|
24
|
112
|
|||||||||
NET INCOME (LOSS)
|
$
|
(1,293
|
)
|
$
|
13
|
$
|
1,160
|
|||||
NET INCOME (LOSS) PER COMMON SHARE
|
||||||||||||
Basic
|
$
|
(0.08
|
)
|
$
|
0.00
|
$
|
0.08
|
|||||
Diluted
|
$
|
(0.08
|
)
|
$
|
0.00
|
$
|
0.07
|
|||||
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
|
||||||||||||
Basic
|
15,949
|
15,448
|
15,327
|
|||||||||
Diluted
|
15,949
|
15,838
|
15,564
|
Common Stock
|
Treasury Stock
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-
in Capital
|
Accumulated
Deficit
|
Total Stockholders’
Equity
|
||||||||||||||||||||||
Balances, June 30, 2014
|
15,460,940
|
$
|
155
|
(161,801
|
)
|
$
|
(681
|
)
|
$
|
23,695
|
$
|
(1,265
|
)
|
$
|
21,904
|
|||||||||||||
Exercise of stock options
|
61,109
|
-
|
-
|
-
|
139
|
-
|
139
|
|||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
511
|
-
|
511
|
|||||||||||||||||||||
Issuance of restricted stock
|
52,992
|
1
|
-
|
-
|
(1
|
)
|
-
|
-
|
||||||||||||||||||||
Shares repurchased
|
-
|
-
|
(29,449
|
)
|
(128
|
)
|
-
|
-
|
(128
|
)
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
1,160
|
1,160
|
|||||||||||||||||||||
Balances, June 30, 2015
|
15,575,041
|
156
|
(191,250
|
)
|
(809
|
)
|
24,344
|
(105
|
)
|
23,586
|
||||||||||||||||||
Exercise of stock options
|
112,425
|
1
|
-
|
-
|
312
|
-
|
313
|
|||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
676
|
-
|
676
|
|||||||||||||||||||||
Issuance of restricted stock
|
52,992
|
1
|
-
|
-
|
(1
|
)
|
-
|
-
|
||||||||||||||||||||
Shares repurchased
|
-
|
-
|
(104,365
|
)
|
(745
|
)
|
-
|
-
|
(745
|
)
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
13
|
13
|
|||||||||||||||||||||
Balances, June 30, 2016
|
15,740,458
|
158
|
(295,615
|
)
|
(1,554
|
)
|
25,331
|
(92
|
)
|
23,843
|
||||||||||||||||||
Exercise of stock options
|
95,050
|
1
|
-
|
-
|
341
|
-
|
342
|
|||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
496
|
-
|
496
|
|||||||||||||||||||||
Issuance of common shares for acquisition
|
415,527
|
4
|
-
|
-
|
1,895
|
-
|
1,899
|
|||||||||||||||||||||
Issuance of restricted stock
|
52,992
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(1,293
|
)
|
(1,293
|
)
|
|||||||||||||||||||
Balances, June 30, 2017
|
16,304,027
|
$
|
163
|
(295,615
|
)
|
$
|
(1,554
|
)
|
$
|
28,063
|
$
|
(1,385
|
)
|
$
|
25,287
|
Year Ended June 30,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net income (loss)
|
$
|
(1,293
|
)
|
$
|
13
|
$
|
1,160
|
|||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||||||
Depreciation and amortization
|
1,485
|
816
|
830
|
|||||||||
Loss on inventory write-down
|
-
|
17
|
-
|
|||||||||
Loss on disposal of property, plant and equipment
|
10
|
-
|
-
|
|||||||||
Stock-based compensation expense
|
496
|
676
|
511
|
|||||||||
Changes in operating assets and liabilities, net of effects of business acquisitions:
|
||||||||||||
Restricted cash
|
-
|
-
|
111
|
|||||||||
Accounts receivable
|
(1,244
|
)
|
926
|
(1,919
|
)
|
|||||||
Legal settlement receivable
|
-
|
-
|
1,538
|
|||||||||
Inventory
|
(61
|
)
|
(1,055
|
)
|
(1,418
|
)
|
||||||
Prepaid and other assets
|
(35
|
)
|
(46
|
)
|
(259
|
)
|
||||||
Accounts payable and accrued liabilities
|
125
|
(759
|
)
|
1,109
|
||||||||
Deferred revenue
|
(61
|
)
|
600
|
499
|
||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(578
|
)
|
1,188
|
2,162
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase of property, plant and equipment
|
(2,486
|
)
|
(1,926
|
)
|
(727
|
)
|
||||||
Cash proceeds from sale of property, plant and equipment
|
23
|
-
|
-
|
|||||||||
Additions to intangible assets
|
(163
|
)
|
-
|
(6
|
)
|
|||||||
Payments for business acquisitions, net of cash acquired
|
(7,314
|
)
|
(1,552
|
)
|
-
|
|||||||
NET CASH USED IN INVESTING ACTIVITIES
|
(9,940
|
)
|
(3,478
|
)
|
(733
|
)
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Proceeds from exercise of stock options
|
342
|
313
|
139
|
|||||||||
Repayments of long-term debt
|
(3,184
|
)
|
-
|
-
|
||||||||
Proceeds from long-term debt
|
5,600
|
-
|
-
|
|||||||||
Shares repurchased
|
-
|
(745
|
)
|
(128
|
)
|
|||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
2,758
|
(432
|
)
|
11
|
||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(7,760
|
)
|
(2,722
|
)
|
1,440
|
|||||||
CASH AND CASH EQUIVALENTS, beginning of year
|
12,435
|
15,157
|
13,717
|
|||||||||
CASH AND CASH EQUIVALENTS, end of year
|
$
|
4,675
|
$
|
12,435
|
$
|
15,157
|
||||||
SUPPLEMENTAL CASH FLOW DISCLOSURES:
|
||||||||||||
Income taxes paid
|
$
|
9
|
$
|
152
|
$
|
58
|
||||||
Interest paid on long-term debt
|
$
|
107
|
$
|
-
|
$
|
-
|
||||||
NON-CASH INVESTING ACTIVITIES:
|
||||||||||||
Issuance of common stock for acquisition
|
$
|
1,899
|
$
|
-
|
$
|
-
|
||||||
Unpaid consideration related to acquisitions
|
$
|
-
|
$
|
181
|
$
|
-
|
||||||
Transfer of equipment to inventory
|
$
|
118
|
$
|
143
|
$
|
-
|
||||||
Property, plant and equipment financed through accounts payable
|
$
|
28
|
$
|
-
|
$
|
-
|
· |
United States – fiscal years ended June 30, 2014 and after
|
· |
State of Texas – fiscal years ended June 30, 2012 and after
|
· |
State of Georgia – fiscal years ended June 30, 2014 and after
|
· |
State of Pennsylvania – fiscal years ended June 30, 2014 and after
|
· |
Other States – fiscal years ended June 30, 2013 and after
|
Allowance for Doubtful
Accounts
|
Balance
Beginning
of Year
|
Charges to
Expense
|
Write-offs
/Payments
|
Balance End
of Year
|
||||||||||||
|
||||||||||||||||
2017
|
$
|
63
|
$
|
20
|
$
|
(5
|
)
|
$
|
78
|
|||||||
2016
|
$
|
34
|
$
|
34
|
$
|
(5
|
)
|
$
|
63
|
|||||||
2015
|
$
|
23
|
$
|
22
|
$
|
(11
|
)
|
$
|
34
|
Year Ended June 30,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Stock-based compensation expense included in:
|
||||||||||||
Cost of revenue
|
$
|
41
|
$
|
31
|
$
|
22
|
||||||
Selling, general and administrative
|
455
|
645
|
489
|
|||||||||
Total
|
$
|
496
|
$
|
676
|
$
|
511
|
Year Ended June 30,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Weighted average risk-free interest rate
|
1.1
|
%
|
1.0
|
%
|
0.4
|
%
|
||||||
Weighted average expected volatility
|
47
|
%
|
45
|
%
|
45
|
%
|
||||||
Weighted average expected life (in years)
|
5.15
|
4.56
|
3.49
|
|||||||||
Dividend yield
|
-
|
-
|
-
|
· |
Level 1 – Quoted prices in active markets for identical assets or liabilities.
|
· |
Level 2 – Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities).
|
· |
Level 3 – Significant unobservable inputs (including our own assumptions in determining fair value).
|
|
June 30,
|
||||||||
Useful Life
|
2017
|
2016
|
|||||||
Furniture and fixtures
|
3 to 5 years
|
$
|
260
|
$
|
247
|
||||
Plant and equipment
|
3 to 17 years
|
7,975
|
6,524
|
||||||
Manufacturing
|
15 years
|
220
|
220
|
||||||
Computers and software
|
3 to 5 years
|
2,246
|
2,009
|
||||||
Leasehold improvements
|
Life of Lease
|
2,681
|
964
|
||||||
Land
|
|
19
|
19
|
||||||
Construction-in-progress
|
|
347
|
1,372
|
||||||
|
13,748
|
11,355
|
|||||||
Less: accumulated depreciation
|
|
7,205
|
6,323
|
||||||
|
|||||||||
Net property, plant and equipment
|
|
$
|
6,543
|
$
|
5,032
|
Year ended June 30,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Current
|
||||||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
29
|
||||||
State
|
4
|
24
|
83
|
|||||||||
$
|
4
|
$
|
24
|
$
|
112
|
Year Ended June 30,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Statutory rate
|
34.0
|
%
|
34.0
|
%
|
34.0
|
%
|
||||||
State income taxes, net
|
(4.5
|
%)
|
(18.6
|
%)
|
5.3
|
%
|
||||||
Meals and entertainment
|
(1.5
|
%)
|
38.7
|
%
|
1.2
|
%
|
||||||
AMT and research and development credits
|
0.0
|
%
|
(218.9
|
%)
|
0.0
|
%
|
||||||
Other
|
0.2
|
%
|
1.5
|
%
|
0.0
|
%
|
||||||
Effective rate before valuation allowance
|
28.2
|
%
|
(163.3
|
%)
|
40.5
|
%
|
||||||
Change in valuation allowance
|
(28.5
|
%)
|
228.2
|
%
|
(31.7
|
%)
|
||||||
Effective tax rate
|
(0.3
|
%)
|
64.9
|
%
|
8.8
|
%
|
June 30,
|
||||||||
2017
|
2016
|
|||||||
Deferred tax assets relating to:
|
||||||||
Stock compensation
|
$
|
398
|
$
|
627
|
||||
AMT and research and development credits
|
523
|
523
|
||||||
Deferred rent
|
77
|
82
|
||||||
Inventory
|
211
|
169
|
||||||
Professional fees
|
155
|
140
|
||||||
Accrued vacation
|
43
|
33
|
||||||
Accounts receivable allowance
|
49
|
24
|
||||||
Contribution carryovers
|
12
|
8
|
||||||
Net operating loss carryforwards
|
1,443
|
1,044
|
||||||
Total deferred tax assets
|
2,911
|
2,650
|
||||||
Deferred tax liablities related to depreciation differences
|
(783
|
)
|
(621
|
)
|
||||
Net deferred tax assets before valuation allowance
|
2,128
|
2,029
|
||||||
Valuation allowance
|
(2,128
|
)
|
(2,029
|
)
|
||||
Net deferred tax assets
|
$
|
-
|
$
|
-
|
Non-interest bearing, unsecured note payable assumed in acquisition (See Note 12), monthly payments of $7; maturing September 2018.
|
$
|
104
|
||
Term loan, bearing interest at 3.63%, monthly payments of $43; maturing March 2022.
|
2,499
|
|||
Total long-term debt
|
2,603
|
|||
Less: current portion
|
601
|
|||
Long-term debt, net of current portion
|
$
|
2,002
|
Twelve Months Ending June 30,
|
||||
2018
|
$
|
601
|
||
2019
|
537
|
|||
2020
|
517
|
|||
2021
|
517
|
|||
2022
|
431
|
|||
|
$
|
2,603
|
Year Ended June 30,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Shares repurchased
|
-
|
104,365
|
29,449
|
|||||||||
Cash paid for shares repurchased (in thousands)
|
$
|
-
|
$
|
745
|
$
|
128
|
||||||
Average price paid per share
|
$
|
-
|
$
|
7.14
|
$
|
4.35
|
|
Year Ended June 30,
|
|||||||||||
|
2017
|
2016
|
2015
|
|||||||||
|
||||||||||||
Unvested at beginning of the year
|
13
|
13
|
15
|
|||||||||
Granted
|
53
|
53
|
53
|
|||||||||
Vested
|
(53
|
)
|
(53
|
)
|
(55
|
)
|
||||||
Unvested at end of the year
|
13
|
13
|
13
|
Options
Outstanding
|
Weighted
Average
Exercise
Price
|
|||||||
Options Outstanding at June 30, 2014
|
950
|
$
|
4.27
|
|||||
Granted
|
516
|
$
|
4.63
|
|||||
Exercised
|
(61
|
)
|
$
|
2.30
|
||||
Forfeited or canceled
|
(30
|
)
|
$
|
4.68
|
||||
Options Outstanding at June 30, 2015
|
1,375
|
$
|
4.49
|
|||||
Granted
|
45
|
$
|
6.62
|
|||||
Exercised
|
(112
|
)
|
$
|
2.77
|
||||
Forfeited or canceled
|
(18
|
)
|
$
|
5.99
|
||||
Options Outstanding at June 30, 2016
|
1,290
|
$
|
4.69
|
|||||
Granted
|
38
|
$
|
4.55
|
|||||
Exercised
|
(95
|
)
|
$
|
3.60
|
||||
Forfeited or canceled
|
(368
|
)
|
$
|
5.32
|
||||
Options Outstanding at June 30, 2017
|
865
|
$
|
4.53
|
|||||
Options Exercisable at June 30, 2017
|
561
|
$
|
4.39
|
Options Outstanding
|
|||||||||||||||
Range of Exercise
Price
|
Outstanding as
of
June 30, 2017 |
Weighted
Average
Remaining
Life
(in Years) |
Weighted
Average
Exercise
Price
|
||||||||||||
$
|
2.51 - $3.50
|
41
|
2.49
|
$
|
2.95
|
||||||||||
$
|
3.51 - $5.50
|
692
|
3.27
|
$
|
4.35
|
||||||||||
$
|
5.51 - $7.50
|
132
|
4.82
|
$
|
5.97
|
||||||||||
865
|
$
|
4.53
|
Options Exercisable
|
||||||||||||||
Range of Exercise
Price
|
Exercisable as
of
June 30, 2017 |
Weighted
Average
Remaining
Life
(in Years) |
Weighted
Average
Exercise
Price
|
|||||||||||
$
|
2.51 - $3.50
|
39
|
2.46
|
$
|
2.96
|
|||||||||
$
|
3.51 - $5.50
|
464
|
2.66
|
$
|
4.32
|
|||||||||
$
|
5.51 - $7.50
|
58
|
4.78
|
$
|
5.87
|
|||||||||
561
|
$
|
4.39
|
|
Year Ended June 30,
|
|||||||||||||||||||||||
|
2018
|
2019
|
2020
|
2021
|
2022
|
Thereafter
|
||||||||||||||||||
Operating lease obligations
|
$
|
1,812
|
$
|
1,827
|
$
|
1,725
|
$
|
943
|
$
|
274
|
$
|
5
|
Year Ended June 30, | ||||||||||||
2017
|
2016
|
2015
|
||||||||||
Net income (loss), as reported
|
$
|
(1,293
|
)
|
$
|
13
|
$
|
1,160
|
|||||
Weighted average common shares outstanding
|
15,949
|
15,448
|
15,327
|
|||||||||
Effect of dilutive stock options
|
-
|
390
|
237
|
|||||||||
Weighted average diluted common shares outstanding
|
15,949
|
15,838
|
15,564
|
|||||||||
Net income (loss) per common share
|
||||||||||||
Basic
|
$
|
(0.08
|
)
|
$
|
0.00
|
$
|
0.08
|
|||||
Diluted
|
$
|
(0.08
|
)
|
$
|
0.00
|
$
|
0.07
|
|||||
Employee stock options excluded from computation of diluted income per share amounts because their effect would be anti-dilutive
|
304
|
137
|
210
|
|
June 30,
|
||||||||||||||||||||||||
|
2017
|
2016
|
|||||||||||||||||||||||
Estimated
Useful Lives
|
Original
Amount
|
Accumulated
Amortization
|
Net
Amount
|
Original
Amount
|
Accumulated
Amortization
|
Net
Amount
|
|||||||||||||||||||
|
|||||||||||||||||||||||||
Customer relationships
|
7 years
|
$
|
3,007
|
$
|
(490
|
)
|
$
|
2,517
|
$
|
580
|
$
|
(60
|
)
|
$
|
520
|
||||||||||
Permits
|
6 - 15 years
|
1,373
|
(288
|
)
|
1,085
|
668
|
(191
|
)
|
477
|
||||||||||||||||
Patents
|
5 - 17 years
|
383
|
(264
|
)
|
119
|
383
|
(251
|
)
|
132
|
||||||||||||||||
Tradename
|
7 years
|
270
|
(39
|
)
|
231
|
-
|
-
|
-
|
|||||||||||||||||
Non-compete
|
5 years
|
117
|
(23
|
)
|
94
|
-
|
-
|
-
|
|||||||||||||||||
Total intangible assets, net
|
|
$
|
5,150
|
$
|
(1,104
|
)
|
$
|
4,046
|
$
|
1,631
|
$
|
(502
|
)
|
$
|
1,129
|
Year Ended June 30,
|
||||||||
2017
|
2016
|
|||||||
Beginning Balance
|
$
|
1,039
|
$
|
-
|
||||
Goodwill Acquired
|
5,696
|
1,039
|
||||||
Ending Balance
|
$
|
6,735
|
$
|
1,039
|
Year Ending June 30,
|
||||
2018
|
$
|
616
|
||
2019
|
616
|
|||
2020
|
616
|
|||
2021
|
615
|
|||
2022
|
590
|
|||
Thereafter
|
993
|
|||
|
$
|
4,046
|
Year Ended June 30,
|
||||||||||||||||||||||||
2017
|
% Total
|
2016
|
% Total
|
2015
|
% Total
|
|||||||||||||||||||
REVENUES BY SOLUTION:
|
||||||||||||||||||||||||
Mailbacks
|
$
|
24,135
|
63.2
|
%
|
$
|
23,743
|
71.1
|
%
|
$
|
23,043
|
74.6
|
%
|
||||||||||||
Route-based pickup services
|
6,348
|
16.6
|
%
|
2,061
|
6.2
|
%
|
862
|
2.8
|
%
|
|||||||||||||||
Unused medications
|
3,377
|
8.8
|
%
|
3,531
|
10.6
|
%
|
2,667
|
8.6
|
%
|
|||||||||||||||
Third party treatment services
|
413
|
1.1
|
%
|
258
|
0.8
|
%
|
367
|
1.2
|
%
|
|||||||||||||||
Other(1)
|
3,915
|
10.3
|
%
|
3,790
|
11.3
|
%
|
3,963
|
12.8
|
%
|
|||||||||||||||
Total revenues
|
$
|
38,188
|
100.0
|
%
|
$
|
33,383
|
100.0
|
%
|
$
|
30,902
|
100.0
|
%
|
(1)
|
The Company’s other products include non-mailback products such as IV poles, accessories, containers, asset return boxes and other miscellaneous items.
|
Accounts receivable
|
$
|
51
|
||
Fixed assets
|
70
|
|||
Intangibles
|
267
|
|||
Goodwill
|
413
|
|||
Accounts payable and accrued liabilities
|
(101
|
)
|
||
Total purchase price
|
$
|
700
|
Accounts receivable
|
$
|
42
|
||
Fixed assets
|
68
|
|||
Intangibles
|
313
|
|||
Goodwill
|
626
|
|||
Accounts payable and accrued liabilities
|
(16
|
)
|
||
Total purchase price
|
$
|
1,033
|
Cash
|
$
|
5
|
||
Accounts receivable
|
495
|
|||
Fixed assets
|
30
|
|||
Intangibles
|
3,357
|
|||
Goodwill
|
5,696
|
|||
Accounts payable and accrued liabilities
|
(356
|
)
|
||
Debt assumed
|
(187
|
)
|
||
Total purchase price
|
$
|
9,040
|
|
Twelve-Months Ended
June 30,
|
|||||||||||
|
2017
|
2016
|
2015
|
|||||||||
|
||||||||||||
Acquisition-related expenses
|
$
|
702
|
$
|
190
|
$
|
-
|
Twelve-Months Ended
June 30,
|
||||
2016 | ||||
Revenues
|
$
|
36,306
|
||
Net loss
|
$
|
(159
|
)
|
|
Weighted average common shares outstanding
|
15,861
|
|||
Net loss per common share basic and diluted
|
$
|
(0.01
|
)
|
Quarter Ended
|
||||||||||||||||
September 30,
2016
|
December 31,
2016
|
March 31,
2017
|
June 30,
2017
|
|||||||||||||
Total revenues
|
$
|
9,531
|
$
|
9,707
|
$
|
8,588
|
$
|
10,362
|
||||||||
Gross profit
|
$
|
2,959
|
$
|
2,895
|
$
|
2,352
|
$
|
3,631
|
||||||||
Operating income (loss)
|
$
|
(940
|
)
|
$
|
(204
|
)
|
$
|
(638
|
)
|
$
|
595
|
|||||
Net income (loss)
|
$
|
(967
|
)
|
$
|
(227
|
)
|
$
|
(668
|
)
|
$
|
569
|
|||||
Net income (loss) per share - basic and diluted
|
$
|
(0.06
|
)
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
$
|
0.04
|
|||||
Weighted average shares-diluted
|
15,868
|
15,929
|
15,994
|
16,029
|
Quarter Ended
|
||||||||||||||||
September 30,
2015
|
December 31,
2015
|
March 31,
2016
|
June 30,
2016
|
|||||||||||||
Total revenues
|
$
|
7,869
|
$
|
9,992
|
$
|
6,652
|
$
|
8,870
|
||||||||
Gross profit
|
$
|
2,879
|
$
|
3,319
|
$
|
1,693
|
$
|
3,220
|
||||||||
Operating income (loss)
|
$
|
231
|
$
|
664
|
$
|
(1,104
|
)
|
$
|
214
|
|||||||
Net income (loss)
|
$
|
220
|
$
|
615
|
$
|
(1,042
|
)
|
$
|
220
|
|||||||
Net income (loss) per share - basic and diluted
|
$
|
0.01
|
$
|
0.04
|
$
|
(0.07
|
)
|
$
|
0.01
|
|||||||
Weighted average shares-diluted
|
15,926
|
16,062
|
15,462
|
15,575
|
Name
|
Jurisdiction of Incorporation
|
Sharps Compliance, Inc. of Texas (dba Sharps Compliance, Inc.)
|
Texas
|
Sharps e-Tools.com Inc.
|
Delaware
|
Sharps Safety, Inc.
|
Texas
|
Sharps Manufacturing, Inc.
|
Delaware
|
Sharps Environmental Services, Inc. (dba Sharps Environmental Services of Texas, Inc.)
|
Delaware
|
Alpha Bio/Med Services LLC
|
Pennsylvania
|
Bio-Team Mobile LLC
|
Pennsylvania
|
Citiwaste, LLC
|
New York
|
1. |
I have reviewed this annual report on Form 10-K of Sharps Compliance Corp;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of 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 control over financial reporting.
|
Date: August 23, 2017
|
By: /s/ DAVID P. TUSA
|
David P. Tusa
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
1. |
I have reviewed this annual report on Form 10-K of Sharps Compliance Corp;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of 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 control over financial reporting.
|
Date: August 23, 2017
|
By: /s/ DIANA P. DIAZ
|
Diana P. Diaz
|
|
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
(1) |
The Form 10-K report for the year ended June 30, 2017, filed with the Securities and Exchange Commission on August 23, 2017 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-K report for the year ended June 30, 2017 fairly presents, in all material respects, the financial condition and results of operations of Sharps Compliance Corp.
|
Date: August 23, 2017
|
By: /s/ DAVID P. TUSA
|
David P. Tusa
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
(1) |
The Form 10-K report for the year ended June 30, 2017, filed with the Securities and Exchange Commission on August 23, 2017, 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-K report for the year ended June 30, 2017 fairly presents, in all material respects, the financial condition and results of operations of Sharps Compliance Corp.
|
Date: August 23, 2017
|
By: /s/ DIANA P. DIAZ
|
Diana P. Diaz
|
|
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Aug. 21, 2017 |
Dec. 31, 2016 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | SHARPS COMPLIANCE CORP | ||
Entity Central Index Key | 0000898770 | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 48.8 | ||
Entity Common Stock, Shares Outstanding | 16,008,412 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Jun. 30, 2017 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|
STOCKHOLDERS' EQUITY | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 16,304,027 | 15,740,458 |
Common stock, shares outstanding (in shares) | 16,008,412 | 15,444,843 |
Treasury stock, shares repurchased (in shares) | 295,615 | 295,615 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | |||
REVENUES | $ 38,188 | $ 33,383 | $ 30,902 |
Cost of revenues | 26,351 | 22,272 | 19,907 |
GROSS PROFIT | 11,837 | 11,111 | 10,995 |
Selling, general and administrative | 12,223 | 10,812 | 9,496 |
Depreciation and amortization | 801 | 294 | 263 |
OPERATING INCOME (LOSS) | (1,187) | 5 | 1,236 |
OTHER INCOME (EXPENSE) | |||
Interest income | 13 | 32 | 36 |
Interest expense | (115) | 0 | 0 |
TOTAL OTHER (EXPENSE) INCOME | (102) | 32 | 36 |
INCOME (LOSS) BEFORE INCOME TAXES | (1,289) | 37 | 1,272 |
INCOME TAX EXPENSE - Current | 4 | 24 | 112 |
NET INCOME (LOSS) | $ (1,293) | $ 13 | $ 1,160 |
NET INCOME (LOSS) PER COMMON SHARE | |||
Basic (in dollars per share) | $ (0.08) | $ 0 | $ 0.08 |
Diluted (in dollars per share) | $ (0.08) | $ 0 | $ 0.07 |
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE: | |||
Basic (in shares) | 15,949 | 15,448 | 15,327 |
Diluted (in shares) | 15,949 | 15,838 | 15,564 |
ORGANIZATION AND BACKGROUND |
12 Months Ended |
---|---|
Jun. 30, 2017 | |
ORGANIZATION AND BACKGROUND [Abstract] | |
ORGANIZATION AND BACKGROUND | NOTE 1 - ORGANIZATION AND BACKGROUND Organization: The accompanying 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 and Citiwaste, LLC (collectively, “Sharps” or the “Company”). All significant intercompany accounts and transactions have been eliminated upon consolidation. Business: Sharps is a leading full-service national provider of comprehensive waste management services including medial, pharmaceutical and hazardous for small and medium quantity generators. The Company’s solutions include Sharps Recovery System™ (formerly Sharps Disposal by Mail 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 and Recovery System. The Company also offers route-based pickup services in a twenty-three (23) state region of the South, Southeast and Northeast portions of the United States. Concentration of Customers and Service Providers: There is an inherent concentration of credit risk associated with accounts receivable arising from sales to major customers. For the fiscal year ended June 30, 2017, one customer represented approximately 17% of revenues. This customer also represented approximately 10%, or $0.8 million, of the total accounts receivable balance as of June 30, 2017. For the fiscal year ended June 30, 2016, one customer represented approximately 17% of revenues and 17%, or $1.0 million, of the total accounts receivable balance as of June 30, 2016. For the fiscal year ended June 30, 2015, one customer represented approximately 17% of revenues. The Company may be adversely affected by its dependence on a limited number of high volume customers. Currently, the majority of Sharps transportation is sourced with the United States Postal Service (“USPS”), which consists of delivering the Sharps Recovery System from the end user to the Company’s facilities. The Company also has an arrangement with United Parcel Service Inc. (“UPS”) whereby UPS transports certain of the Company’s products from the end user to the Company’s facilities. Sharps maintains relationships with multiple raw materials suppliers and vendors in order to meet customer demands and assure availability of our products and solutions. With respect to the Sharps Recovery System solutions, the Company owns proprietary molds and dies and utilizes several contract manufacturers for the production of the primary raw materials. Sharps believes that alternative suitable contract manufacturers are readily available to meet the production specifications of our products and solutions. The Company utilizes national suppliers for the majority of the raw materials used in our other products and solutions and international suppliers for Pitch-It IV Poles. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition: The Company recognizes revenue when services are provided and from product sales when (i) goods are shipped or delivered, and title and risk of loss pass to the customer, (ii) the price is substantially fixed or determinable and (iii) collectability is reasonably assured except for those sales via multiple-deliverable revenue arrangements. Provisions for certain rebates, product returns and discounts to customers are accounted for as reductions in sales in the same period the related sales are recorded. Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market conditions, including prices charged by competitors. Rebates are estimated based on contractual terms, historical experience, trend analysis and projected market conditions in the various markets served. Service agreements which include a vendor managed inventory program include terms that meet the “bill and hold” criteria and as such are recognized when the order is completed, at which point title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse. During the fiscal years ended June 30, 2017, 2016 and 2015, the Company recorded revenue from inventory builds that are held in vendor managed inventory under these service agreements of $3.4 million, $3.2 million and $2.6 million, respectively. As of June 30, 2017 and 2016, $2.7 million and $2.1 million, respectively, of solutions sold through that date were held in vendor managed inventory pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program. Certain products offered by the Company have revenue producing components that are recognized over multiple delivery points (Sharps Recovery System and various other solutions like the TakeAway Medication Recovery Systems referred to as “Mailbacks” and Sharps Pump and Asset Return Systems, referred to as “Pump Returns”) and can consist of up to three separate elements, or units of measure, as follows: (1) the sale of the compliance and container system, (2) return transportation and (3) treatment service. In accordance with the relative selling price methodology, an estimated selling price is determined for all deliverables that qualify for separate units of accounting. The actual consideration received in a multiple-deliverable arrangement is then allocated to the units based on their relative sales price. The selling price for the transportation revenue and the treatment revenue utilizes third party evidence. The Company estimates the selling price of the compliance and container system based on the product and services provided, including compliance with local, state and federal laws, adherence to stringent manufacturing and testing requirements, safety to the patient and the community as well as storage and containment capabilities. Revenue for the sale of the compliance and container is recognized upon delivery to the customer, at which time the customer takes title and assumes risk of ownership. Transportation revenue is recognized when the customer returns the compliance and container system and the container has been received at the Company’s owned or contracted facilities. The compliance and container system is mailed or delivered by an alternative logistics provider to the Company’s owned or contracted facilities. Treatment revenue is recognized upon the destruction or conversion and proof of receipt and treatment having been performed on the container. Since the transportation element and the treatment elements are undelivered services at the point of initial sale of the compliance and container, transportation and treatment revenue is deferred until the services are performed. The current and long-term portions of deferred revenues are determined through regression analysis and historical trends. Furthermore, through regression analysis of historical data, the Company has determined that a certain percentage of all compliance and container systems sold may not be returned. Accordingly, a portion of the transportation and treatment elements are recognized at the point of sale. Business Combinations: The Company includes the results of operations of the businesses that are acquired as of the respective dates of acquisition. The Company allocates the fair value of the purchase price of acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The Company estimates and records the fair value of purchased intangible assets, which primarily consists of customer relationships, trade-names, and non-competes. The excess of the fair value of the purchase price over the fair values of these identifiable assets, both tangible and intangible, and liabilities is recorded as goodwill. 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 a valuation allowance 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. Under generally accepted accounting principles, the valuation allowance has been recorded to reduce the Company’s deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The income tax provision reflects the full benefit of all positions that have been taken in the Company’s income tax returns, except to the extent that such positions are uncertain and fall below the recognition requirements. In the event that the Company determines that a tax position meets the uncertainty criteria, an additional liability or benefit will result. The amount of unrecognized tax benefit requires management to make significant assumptions about the expected outcomes of certain tax positions included in filed or yet to be filed tax returns. At June 30, 2017 and 2016, the Company did not have any uncertain tax positions. The Company is subject to income taxes in the United States and in numerous state tax jurisdictions. Tax return filings which are subject to review by federal and state tax authorities by jurisdiction are as follows:
None of the Company’s federal or state tax returns are currently under examination. The Company records income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. However, there were no such amounts recognized in the consolidated statements of operations in 2017, 2016 and 2015. 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. See rollforward of allowance activity below:
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 employee’s requisite service period (generally the vesting period of the equity grant). Total stock-based compensation expense for the fiscal years ended June 30, 2017, 2016 and 2015 are as follows:
The Company estimates the fair value of restricted stock awards based on the closing price of the Company’s common stock on the date of the grant. The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk free interest rate over the option’s expected term and the Company’s expected annual dividend yield. The risk free interest rate is derived using the U.S. Treasury yield curve in effect at date of grant. Volatility, expected life and dividend yield are based on historical experience and activity. The fair value of the Company’s stock options was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:
The Company considers an estimated forfeiture rate for stock options based on historical experience and the anticipated forfeiture rates during the future contract life. Cash and Cash Equivalents: The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Company maintains funds in bank accounts that, at times, may exceed the limit insured by the Federal Deposit Insurance Corporation (“FDIC”). The risk of loss attributable to these uninsured balances is mitigated by depositing funds only in high credit quality financial institutions. The Company has not experienced any losses in such accounts. Inventory: Inventory consists primarily of raw materials and finished goods held for sale and are stated at the lower of cost or market using the average cost method. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of physical deterioration, obsolescence, changes in price levels and other causes. At June 30, 2017, total inventory was $4.1 million of which $2.8 million was finished goods, and $1.3 million was raw materials. At June 30, 2016, total inventory was $3.9 million of which $2.5 million was finished goods, and $1.4 million was raw materials. There were no write-downs of inventory for the fiscal years ended June 30, 2017 and 2015. Total write-downs for the fiscal year ended June 30, 2016 were $17,000 and were included in cost of goods sold. Property, Plant and Equipment: Property, plant and equipment, including third party software and implementation costs, is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets. Additions, improvements and renewals significantly adding to the asset value or extending the life of the asset are capitalized. Ordinary maintenance and repairs, which do not extend the physical or economic life of the property or equipment, are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the results of operations for the period. Computer and software development costs, which include costs of computer software developed or obtained for internal use, all programming, implementation and costs incurred with developing internal-use software, are capitalized during the development project stage. External direct costs of materials and services consumed in developing or obtaining internal-use computer software are capitalized. The Company expenses costs associated with developing or obtaining internal-use software during the preliminary project stage. Training and maintenance costs associated with system changes or internal-use software are expensed as incurred. Additionally, the costs of data cleansing, reconciliation, balancing of old data to the new system, creation of new/additional data and data conversion costs are expensed as incurred. Goodwill and Other Identifiable Intangible Assets: Finite-lived intangible assets are amortized over their respective estimated useful lives and evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Goodwill is assessed for impairment at least annually. The Company generally performs its annual goodwill impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of our single reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit’s goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill present in our single reporting unit. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each fiscal year. The Company determined that there was no impairment during the years ended June 30, 2017, 2016 and 2015. Intangible Assets: Intangible assets consist of (i) acquired customer relationships, (ii) permit costs related to the Company’s treatment facilities and transfer stations, and (iii) eleven patents (two acquired in June 1998, one in November 2003, one in January 2012, two in April 2012, one in August 2012, one in September 2012, one in December 2012, one in November 2013 and one in January 2014), and (iv) defense costs related to certain existing patents. Shipping and Handling Fees and Costs: The Company records amounts billed to customers for shipping and handling as revenue. Costs incurred by the Company for shipping and handling have been classified as cost of revenues. Additional Product Related Costs: The Company records inbound shipping, purchasing and receiving costs, inspection costs, warehousing costs and other product related costs as cost of revenues. Advertising Costs: Advertising costs are charged to expenses when incurred and totaled $0.8 million, $0.6 million and $0.6 million for the fiscal years ended June 30, 2017, 2016 and 2015, respectively. Research and Development Costs: Research and development costs are charged to expense when incurred. Research activities represent an important part of the Company’s business and include both internal labor costs and payments to third parties related to the processes of discovering, testing and developing new products, improving existing products, as well as demonstrating product efficacy and regulatory compliance prior to launch of new products and services. Research and development expenses paid to third parties totaled less than $0.1 million for each of the fiscal years ended June 30, 2017, 2016 and 2015. Realization of Long-lived Assets: The Company evaluates the recoverability of property, plant and equipment and intangible or other assets if facts and circumstances indicate that any of those assets might be impaired. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying amount to determine if a write-down to fair value is necessary. No impairment loss was recognized during the years ended June 30, 2017, 2016 and 2015. Employee Benefit Plans: In addition to group health-related benefits, the Company maintains a 401(k) employee savings plan available to all full-time employees. The Company matches a portion of employee contributions with cash (25% of employee contribution up to 6%). Company contributions to the 401(k) plan were less than $0.1 million in each of the fiscal years ended June 30, 2017, 2016 and 2015, respectively and are included in selling, general and administrative expenses. For purposes of the group health benefit plan and beginning February 1, 2016, the Company self-insures an amount equal to the excess of the employees’ deductible (range from $2,500 for each individual and family member covered) up to the amount by which the third-party insurance coverage begins (ranges from $2,500 for individual up to $10,000 for family coverage). The amount of liability at June 30, 2017 and 2016 was less than $0.1 million and is included in accrued liabilities. The Company has an incentive plan for executives of the Company, which provides for cash and stock-based compensation awards. The aggregate expense recognized during the year ended June 30, 2017, 2016 and 2015 for the cash awards pursuant to the plan was $0, $0 and $0.3 million, respectively. Net Income (Loss) Per Share: Basic earnings per share excludes dilution and is determined by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities and other contracts to issue common stock were exercised or converted into common stock. Fair Value of Financial Instruments: The Company considers the fair value of all financial instruments, including cash and cash equivalents, accounts receivable and accounts payable to approximate their carrying values at year-end due to their short-term nature. The carrying value of the Company’s debt approximates fair value due to the market rates of interest. Fair Value Measurements: The Company employs a hierarchy which prioritizes the inputs used to measure recurring fair value into three distinct categories based on the lowest level of input that is significant to the fair value measurement. Our methodology for categorizing assets and liabilities that are measured at fair value pursuant to this hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest levels to unobservable inputs, summarized as follows:
We use the cost, income or market valuation approaches to estimate the fair value of our assets and liabilities when insufficient market-observable data is available to support our valuation assumptions. The purchase price allocations relating to the acquisitions completed during the years ended June 30, 2017 and 2016 utilized level 3 inputs. Segment Reporting: The Company operates in a single segment, focusing on developing cost-effective management solutions for medical waste and unused dispensed medications generated by small and medium quantity generators. Use of Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. The Company uses estimates to determine many reported amounts, including but not limited to allowance for doubtful accounts, recoverability of long-lived assets and intangibles, useful lives used in depreciation and amortization, income taxes and valuation allowances, stock-based compensation, fair values of assets and liabilities acquired in business combinations, selling price used in multiple-deliverable arrangements and return rates used to estimate the percentage of container systems sold that will not be returned. Actual results could differ from these estimates. Recently Issued Accounting Standards: In May 2014, guidance for revenue recognition was issued which supersedes the revenue recognition requirements currently followed by the Company. The new guidance provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. In March 2016, guidance for revenue from contracts with customers regarding principal versus agent considerations was issued which modified examples to assist in the application of the guidance. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. The guidance is effective for annual reporting periods beginning after December 15, 2017 (effective July 1, 2018 for the Company). The Company is in the initial stages of evaluating the impact that the new accounting guidance will have 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. In July 2015, guidance for inventory measurement was issued, which supersedes the policy currently followed by the Company. The new guidance requires the Company to measure inventory at the lower of cost and net realizable value. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016 (effective July 1, 2017 for the Company) including interim periods within that reporting period. The Company adopted this guidance on July 1, 2017 and it did not have a material effect on the Company’s consolidated financial statements and related disclosures. In February 2016, guidance for leases was issued, which requires balance sheet recognition for rights and obligations of all leases with terms in excess of twelve months. The new guidance also requires additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. The provisions of the new guidance are effective for annual periods beginning after December 15, 2018 (effective July 1, 2019 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. In March 2016, new guidance for stock-based compensation was issued, which simplifies the accounting for stock-based compensation related to income taxes and balance sheet and cash flow classifications. In addition, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016 (effective July 1, 2017 for the Company) including interim periods within the reporting period. The Company adopted this guidance on July 1, 2017 and it did not have a material effect on the Company’s consolidated financial statements and related disclosures. In January 2017, guidance for goodwill was issued which simplifies the test for goodwill impairment. The new guidance eliminates Step 2 of the goodwill impairment test and requires a goodwill impairment to be measured as the amount by which the Company’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2019 (effective July 1, 2020 for the Company) including interim periods within the reporting period. The Company adopted this guidance on July 1, 2017 and it did not have a material effect on the Company’s consolidated financial statements and related disclosures; however, it may impact the impairment recognized in future periods. In September 2015, guidance for business combinations was issued, which simplifies the accounting for measurement-period adjustments. The new guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination and requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The provisions of the new guidance were effective for annual reporting periods beginning after December 15, 2015 (effective July 1, 2016 for the Company) including interim periods within the reporting period. The Company adopted this guidance on July 1, 2016 and it did not have a material effect on the Company’s consolidated financial statements and related disclosures; however, it may impact the reporting of future acquisitions if and when they occur. |
PROPERTY, PLANT AND EQUIPMENT |
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PROPERTY, PLANT AND EQUIPMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT | NOTE 3 – PROPERTY, PLANT AND EQUIPMENT At June 30, 2017 and 2016, property, plant and equipment consisted of the following (in thousands):
Total depreciation and amortization expense in the fiscal years ended June 30, 2017, 2016 and 2015 was $0.9 million, $0.7 million and $0.8 million, respectively. Depreciation expense included in cost of revenues in the fiscal years ended 2017, 2016 and 2015 was $0.7 million, $0.5 million and $0.6 million, respectively. |
INCOME TAXES |
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INCOME TAXES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | NOTE 4 – INCOME TAXES The components of income tax expense are as follows (in thousands):
The reconciliation of the statutory income tax rate to the Company’s effective income tax rate for the fiscal years ended June 30, 2017, 2016 and 2015 is as follows:
A valuation allowance has been recorded to reduce the Company’s net deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The establishment of valuation allowances and development of projected annual effective tax rates 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. At June 30, 2017 and 2016, the significant components of deferred tax assets and liabilities are approximated as follows (in thousands):
At June 30, 2017, the Company had net operating loss carryforwards of $4.8 million which will expire, if unused, between June 30, 2032 and June 30, 2037. At June 30, 2017, the Company had various tax credit carryforwards of $0.5 million, of which $0.3 million will expire beginning on June 30, 2030 and $0.2 million which may be carried forward indefinitely. As of June 30, 2017, the Company’s estimated net operating losses for tax return filing purposes exceeds the gross amount for financial reporting purposes by $0.6 million related to excess income tax benefits on stock-based compensation. The tax effect of this excess tax expense will be offset by the valuation allowance and have no net effect. |
NOTES PAYABLE AND LONG-TERM DEBT |
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NOTES PAYABLE AND LONG-TERM DEBT | NOTE 5 - NOTES PAYABLE AND LONG-TERM DEBT On March 29, 2017, the Company entered into to a credit agreement with a commercial bank (the “Credit Agreement”). The Credit Agreement, which replaced the Company’s prior credit agreement, provides for a $14.0 million credit facility, the proceeds of which may be utilized as follows: (i) $6.0 million for working capital, letters of credit (up to $2.0 million) and general corporate purposes and (ii) $8.0 million for acquisitions. Indebtedness under the Credit Agreement is secured by substantially all of the borrower’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 lessor of 50% of eligible inventory and $3 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) zero 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% after September 30, 2017 depending on the Company’s cash flow leverage ratio. The interest rate as of June 30, 2017 was approximately 3.63%. The Company pays a fee of 0.25% per annum on the unused amount of the credit facility. At June 30, 2017, long-term debt consisted of the following (in thousands):
The Company has availability under the Credit Agreement of $11.5 million ($6.0 million for the working capital and $5.5 million for the acquisitions) as of June 30, 2017 which may be limited by its leverage covenant. The Company also has $10,000 in letters of credit outstanding as of June 30, 2017. The Credit Agreement contains affirmative and negative covenants that, among other things, require the Company to maintain, beginning with the twelve-month period ending September 30, 2017, a maximum cash flow leverage ratio of no more than 3.5 to 1.0 and a minimum debt service coverage ratio of not less than 1.15 to 1.00. The maximum cash flow leverage ratio decreases to 3.25 to 1.0 on December 31, 2017 and to 3.0 to 1.0 on March 31, 2018. The Credit Agreement, which expires on March 29, 2019, also contains customary events of default which, if uncured, may terminate the Credit Agreement and require immediate repayment of all indebtedness to the lenders. Payments due on long-term debt during each of the five years subsequent to June 30, 2017 are as follows (in thousands):
The prior credit agreement, which was effective through March 29, 2017, provided for a $9.0 million line of credit facility with a maturity date of April 9, 2018. No amounts related to the prior credit agreement were outstanding as of June 30, 2017. |
EQUITY TRANSACTIONS |
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EQUITY TRANSACTIONS | NOTE 6 - EQUITY TRANSACTIONS On January 7, 2013, the Company announced that its Board of Directors approved a stock repurchase program effective January 3, 2013, authorizing the Company to repurchase in the aggregate up to $3 million of its outstanding common stock over a two-year period. On March 5, 2015, the Board approved a two-year extension of the stock repurchase program through January 1, 2017. The program has not been extended.During the years ended June 30, 2017, 2016 and 2015, shares were repurchased as follows:
Total shares repurchased under the program are 295,615 shares at a cost of $1.6 million. |
STOCK BASED COMPENSATION |
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STOCK BASED COMPENSATION | NOTE 7 - STOCK BASED COMPENSATION The Company sponsors the Sharps Compliance Corp. 2010 Stock Plan (the “2010 Plan”) covering employees, consultants and non-employee directors. The 2010 Stock Plan replaced the Sharps Compliance Corp. 1993 Stock Plan (the “1993 Plan”). The 2010 Plan provides for the granting of stock-based compensation (stock options or restricted stock) of up to 3,000,000 shares of the Company’s common stock of which 877,904 options and restricted shares are outstanding as of June 30, 2017. Options granted generally vest over a period of three to four years and expire seven years after the date of grant. Restricted stock generally vests over one year. There are no remaining options outstanding under the 1993 Plan. As of June 30, 2017, there were 1,561,891 options available for grant under the 2010 Plan. The summary of activity for all restricted stock during the fiscal years ended June 30, 2017, 2016 and 2015 is presented in the table below (in thousands):
The weighted average fair value per share of restricted stock granted during the fiscal years ended June 30, 2017, 2016 and 2015 was $4.38, $8.00 and $4.28, respectively. The weighted average fair value per share of restricted stock which vested during the fiscal years ended June 30, 2017, 2016 and 2015 was $5.29, $7.07 and $4.44, respectively. The summary of activity for all stock options during the fiscal years ended June 30, 2017, 2016 and 2015 is presented in the table below (in thousands except per share amounts):
The following table summarizes information about stock options outstanding as of June 30, 2017 (in thousands except per share amounts):
The following table summarizes information about stock options exercisable as of June 30, 2017 (in thousands except per share amounts):
As of June 30, 2017, there was $0.2 million of stock option and restricted stock compensation expense related to non-vested awards. This expense is expected to be recognized over a weighted average period of 1.6 years. |
COMMITMENTS AND CONTINGENCIES |
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COMMITMENTS AND CONTINGENCIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | NOTE 8 - COMMITMENTS AND CONTINGENCIES Operating Leases: The Company operates in a number of locations across the U.S. including space for corporate offices in Houston, Texas. Sharps has manufacturing, assembly, storage, distribution and warehousing operations as well as two (2) fully-permitted facilities that house our processing and treatment operations. The Company owns one processing and treatment facility and leases all other spaces. The leases expire between 2020 to 2023 with options to renew ranging from 3 years to 10 years. Rent expense for the fiscal years ended June 30, 2017, 2016 and 2015 was $2.3 million, $1.5 million and $1.3 million, respectively. Future minimum lease payments under non-cancelable operating leases as of June 30, 2017 are as follows (in thousands):
Performance Bonds: The Company also utilizes performance bonds to support operations based on certain state requirements. At June 30, 2017, the Company had performance bonds outstanding covering financial assurance up to $0.6 million. Other: 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 will not have a material adverse effect on the Company’s consolidated financial position or consolidated results of operations. |
EARNINGS PER SHARE |
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EARNINGS PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | NOTE 9 - EARNINGS PER SHARE Basic earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) 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 treated as outstanding for earnings per share calculations since these shares have full voting rights and are entitled to participate in dividends declared on common shares, if any, and undistributed earnings. As participating securities, the shares of restricted stock are included in the calculation of basic EPS using the two-class method. For the periods presented, the amount of earnings allocated to the participating securities was not material. The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per share amounts):
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GOODWILL AND INTANGIBLE ASSETS |
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GOODWILL AND INTANGIBLE ASSETS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | NOTE 10 – GOODWILL AND INTANGIBLE ASSETS At June 30, 2017 and June 30, 2016, intangible assets consisted of the following (in thousands):
During the years ended June 30, 2017, 2016 and 2015 amortization expense was $0.6 million, $0.1 million and $0.1 million, respectively. The changes in the carrying amount of goodwill since June 30, 2015 was as follows (in thousands):
As of June 30, 2017, future amortization of intangible assets is as follows (in thousands):
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REVENUES BY SOLUTION |
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REVENUES BY SOLUTION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES BY SOLUTION | NOTE 11 – REVENUES BY SOLUTION The components of revenues by solution are as follows (dollars in thousands):
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ACQUISITIONS |
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ACQUISITIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | NOTE 12 – ACQUISITIONS Effective on July 17, 2015, the Company acquired Alpha Bio/Med Services LLC, a route-based pickup service located in Pennsylvania for total cash consideration of $0.7 million of which $0.1 million was withheld for payment of adjusted escrow amounts which settled in July 2016. The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
Effective on December 14, 2015, the Company acquired Bio-Team Mobile LLC, a route-based pickup service located in Pennsylvania for total cash consideration of $1.0 million of which $0.1 million was withheld for payment of adjusted escrow amounts which settled in January 2017. The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
Effective July 1, 2016, the Company acquired Citiwaste, LLC (“Citiwaste”), a route-based pickup service located in New York, which is in the business of medical, pharmaceutical and hazardous waste management primarily in the healthcare industry. The purchase price consisted of $7.0 million in cash ($3.0 million of which was borrowed under the acquisition portion of its Credit Agreement), 415,527 shares of common stock of the Company (the “Common Stock Consideration”) valued at $1.9 million, and a lease obligation paid to the seller for $0.1 million for a total consideration of $9.0 million. The issuance of the Common Stock Consideration was not registered under the Securities Act of 1933, as amended, and was issued pursuant to an exemption from the registration requirements thereunder. The Company held shares of the Common Stock Consideration in escrow for the one-year period to cover indemnification obligations of the sellers under the purchase agreement which were released on June 30, 2017. For the year ended June 30, 2017, the Company recognized approximately $3.6 million in revenues related to the operations of Citiwaste. The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
The Company incurred acquisition related expenses for investment banking, legal and accounting fees which are included within selling, general and administrative expenses in the consolidated statements of operations as follows (in thousands):
The results of operations of the acquired business have been included in the consolidated statements of operations from the date of acquisition. Pro forma results of operations for Alpha Bio/Med Services and Bio-Team Mobile are not presented because the pro forma effects, individually or in the aggregate, were not material to the Company’s consolidated results of operations. The goodwill recorded for the Alpha Bio/Med Services, Bio-Team Mobile, and Citiwaste acquisitions 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, cost synergies resulting from the consolidation or elimination of certain functions, and intangible assets that do not qualify for separate recognition such as the assembled workforce of each acquisition. Supplemental Pro Forma Data (Unaudited) Citiwaste’s financial results since the date of the acquisition have been included in our consolidated financial results for the year ended June 30, 2017. The following table presents summarized unaudited pro forma financial information as if the Citiwaste acquisition occurred on July 1, 2015 (in thousands, except per-share data):
The pro forma financial information for the period presented includes the estimated business combination accounting effects resulting from the acquisition, including primarily amortization expense of $0.5 million from the acquired intangible assets as well as interest expense as a result of debt financing used to fund the acquisition and tax effects from the pro forma adjustments. |
SELECTED QUARTERLY FINANCIAL DATA |
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SELECTED QUARTERLY FINANCIAL DATA [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SELECTED QUARTERLY FINANCIAL DATA | NOTE 13 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following tables show quarterly financial information for the years ended June 30, 2017 and 2016. The Company believes that all necessary adjustments have been included in the amounts below to present fairly the results of such periods (in thousands expect per share amounts).
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Revenue Recognition | Revenue Recognition: The Company recognizes revenue when services are provided and from product sales when (i) goods are shipped or delivered, and title and risk of loss pass to the customer, (ii) the price is substantially fixed or determinable and (iii) collectability is reasonably assured except for those sales via multiple-deliverable revenue arrangements. Provisions for certain rebates, product returns and discounts to customers are accounted for as reductions in sales in the same period the related sales are recorded. Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market conditions, including prices charged by competitors. Rebates are estimated based on contractual terms, historical experience, trend analysis and projected market conditions in the various markets served. Service agreements which include a vendor managed inventory program include terms that meet the “bill and hold” criteria and as such are recognized when the order is completed, at which point title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse. During the fiscal years ended June 30, 2017, 2016 and 2015, the Company recorded revenue from inventory builds that are held in vendor managed inventory under these service agreements of $3.4 million, $3.2 million and $2.6 million, respectively. As of June 30, 2017 and 2016, $2.7 million and $2.1 million, respectively, of solutions sold through that date were held in vendor managed inventory pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program. Certain products offered by the Company have revenue producing components that are recognized over multiple delivery points (Sharps Recovery System and various other solutions like the TakeAway Medication Recovery Systems referred to as “Mailbacks” and Sharps Pump and Asset Return Systems, referred to as “Pump Returns”) and can consist of up to three separate elements, or units of measure, as follows: (1) the sale of the compliance and container system, (2) return transportation and (3) treatment service. In accordance with the relative selling price methodology, an estimated selling price is determined for all deliverables that qualify for separate units of accounting. The actual consideration received in a multiple-deliverable arrangement is then allocated to the units based on their relative sales price. The selling price for the transportation revenue and the treatment revenue utilizes third party evidence. The Company estimates the selling price of the compliance and container system based on the product and services provided, including compliance with local, state and federal laws, adherence to stringent manufacturing and testing requirements, safety to the patient and the community as well as storage and containment capabilities. Revenue for the sale of the compliance and container is recognized upon delivery to the customer, at which time the customer takes title and assumes risk of ownership. Transportation revenue is recognized when the customer returns the compliance and container system and the container has been received at the Company’s owned or contracted facilities. The compliance and container system is mailed or delivered by an alternative logistics provider to the Company’s owned or contracted facilities. Treatment revenue is recognized upon the destruction or conversion and proof of receipt and treatment having been performed on the container. Since the transportation element and the treatment elements are undelivered services at the point of initial sale of the compliance and container, transportation and treatment revenue is deferred until the services are performed. The current and long-term portions of deferred revenues are determined through regression analysis and historical trends. Furthermore, through regression analysis of historical data, the Company has determined that a certain percentage of all compliance and container systems sold may not be returned. Accordingly, a portion of the transportation and treatment elements are recognized at the point of sale. |
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Business Combinations | Business Combinations: The Company includes the results of operations of the businesses that are acquired as of the respective dates of acquisition. The Company allocates the fair value of the purchase price of acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The Company estimates and records the fair value of purchased intangible assets, which primarily consists of customer relationships, trade-names, and non-competes. The excess of the fair value of the purchase price over the fair values of these identifiable assets, both tangible and intangible, and liabilities is recorded as goodwill. |
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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 a valuation allowance 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. Under generally accepted accounting principles, the valuation allowance has been recorded to reduce the Company’s deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The income tax provision reflects the full benefit of all positions that have been taken in the Company’s income tax returns, except to the extent that such positions are uncertain and fall below the recognition requirements. In the event that the Company determines that a tax position meets the uncertainty criteria, an additional liability or benefit will result. The amount of unrecognized tax benefit requires management to make significant assumptions about the expected outcomes of certain tax positions included in filed or yet to be filed tax returns. At June 30, 2017 and 2016, the Company did not have any uncertain tax positions. The Company is subject to income taxes in the United States and in numerous state tax jurisdictions. Tax return filings which are subject to review by federal and state tax authorities by jurisdiction are as follows:
None of the Company’s federal or state tax returns are currently under examination. The Company records income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. However, there were no such amounts recognized in the consolidated statements of operations in 2017, 2016 and 2015. |
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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. See rollforward of allowance activity below:
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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 employee’s requisite service period (generally the vesting period of the equity grant). Total stock-based compensation expense for the fiscal years ended June 30, 2017, 2016 and 2015 are as follows:
The Company estimates the fair value of restricted stock awards based on the closing price of the Company’s common stock on the date of the grant. The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk free interest rate over the option’s expected term and the Company’s expected annual dividend yield. The risk free interest rate is derived using the U.S. Treasury yield curve in effect at date of grant. Volatility, expected life and dividend yield are based on historical experience and activity. The fair value of the Company’s stock options was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:
The Company considers an estimated forfeiture rate for stock options based on historical experience and the anticipated forfeiture rates during the future contract life. |
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Cash and Cash Equivalents | Cash and Cash Equivalents: The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Company maintains funds in bank accounts that, at times, may exceed the limit insured by the Federal Deposit Insurance Corporation (“FDIC”). The risk of loss attributable to these uninsured balances is mitigated by depositing funds only in high credit quality financial institutions. The Company has not experienced any losses in such accounts. |
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Inventory | Inventory: Inventory consists primarily of raw materials and finished goods held for sale and are stated at the lower of cost or market using the average cost method. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of physical deterioration, obsolescence, changes in price levels and other causes. At June 30, 2017, total inventory was $4.1 million of which $2.8 million was finished goods, and $1.3 million was raw materials. At June 30, 2016, total inventory was $3.9 million of which $2.5 million was finished goods, and $1.4 million was raw materials. There were no write-downs of inventory for the fiscal years ended June 30, 2017 and 2015. Total write-downs for the fiscal year ended June 30, 2016 were $17,000 and were included in cost of goods sold. |
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Property, Plant and Equipment | Property, Plant and Equipment: Property, plant and equipment, including third party software and implementation costs, is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets. Additions, improvements and renewals significantly adding to the asset value or extending the life of the asset are capitalized. Ordinary maintenance and repairs, which do not extend the physical or economic life of the property or equipment, are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the results of operations for the period. Computer and software development costs, which include costs of computer software developed or obtained for internal use, all programming, implementation and costs incurred with developing internal-use software, are capitalized during the development project stage. External direct costs of materials and services consumed in developing or obtaining internal-use computer software are capitalized. The Company expenses costs associated with developing or obtaining internal-use software during the preliminary project stage. Training and maintenance costs associated with system changes or internal-use software are expensed as incurred. Additionally, the costs of data cleansing, reconciliation, balancing of old data to the new system, creation of new/additional data and data conversion costs are expensed as incurred. |
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Goodwill and Other Identifiable Intangible Assets | Goodwill and Other Identifiable Intangible Assets: Finite-lived intangible assets are amortized over their respective estimated useful lives and evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Goodwill is assessed for impairment at least annually. The Company generally performs its annual goodwill impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of our single reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit’s goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill present in our single reporting unit. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each fiscal year. The Company determined that there was no impairment during the years ended June 30, 2017, 2016 and 2015. |
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Intangible Assets | Intangible Assets: Intangible assets consist of (i) acquired customer relationships, (ii) permit costs related to the Company’s treatment facilities and transfer stations, and (iii) eleven patents (two acquired in June 1998, one in November 2003, one in January 2012, two in April 2012, one in August 2012, one in September 2012, one in December 2012, one in November 2013 and one in January 2014), and (iv) defense costs related to certain existing patents. |
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Shipping and Handling Fees and Costs | Shipping and Handling Fees and Costs: The Company records amounts billed to customers for shipping and handling as revenue. Costs incurred by the Company for shipping and handling have been classified as cost of revenues. |
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Additional Product Related Costs | Additional Product Related Costs: The Company records inbound shipping, purchasing and receiving costs, inspection costs, warehousing costs and other product related costs as cost of revenues. |
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Advertising Costs | Advertising Costs: Advertising costs are charged to expenses when incurred and totaled $0.8 million, $0.6 million and $0.6 million for the fiscal years ended June 30, 2017, 2016 and 2015, respectively. |
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Research and Development Costs | Research and Development Costs: Research and development costs are charged to expense when incurred. Research activities represent an important part of the Company’s business and include both internal labor costs and payments to third parties related to the processes of discovering, testing and developing new products, improving existing products, as well as demonstrating product efficacy and regulatory compliance prior to launch of new products and services. Research and development expenses paid to third parties totaled less than $0.1 million for each of the fiscal years ended June 30, 2017, 2016 and 2015. |
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Realization of Long-lived Assets | Realization of Long-lived Assets: The Company evaluates the recoverability of property, plant and equipment and intangible or other assets if facts and circumstances indicate that any of those assets might be impaired. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying amount to determine if a write-down to fair value is necessary. No impairment loss was recognized during the years ended June 30, 2017, 2016 and 2015. |
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Employee Benefit Plans | Employee Benefit Plans: In addition to group health-related benefits, the Company maintains a 401(k) employee savings plan available to all full-time employees. The Company matches a portion of employee contributions with cash (25% of employee contribution up to 6%). Company contributions to the 401(k) plan were less than $0.1 million in each of the fiscal years ended June 30, 2017, 2016 and 2015, respectively and are included in selling, general and administrative expenses. For purposes of the group health benefit plan and beginning February 1, 2016, the Company self-insures an amount equal to the excess of the employees’ deductible (range from $2,500 for each individual and family member covered) up to the amount by which the third-party insurance coverage begins (ranges from $2,500 for individual up to $10,000 for family coverage). The amount of liability at June 30, 2017 and 2016 was less than $0.1 million and is included in accrued liabilities. The Company has an incentive plan for executives of the Company, which provides for cash and stock-based compensation awards. The aggregate expense recognized during the year ended June 30, 2017, 2016 and 2015 for the cash awards pursuant to the plan was $0, $0 and $0.3 million, respectively. |
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Net Income (Loss) Per Share | Net Income (Loss) Per Share: Basic earnings per share excludes dilution and is determined by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities and other contracts to issue common stock were exercised or converted into common stock. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments: The Company considers the fair value of all financial instruments, including cash and cash equivalents, accounts receivable and accounts payable to approximate their carrying values at year-end due to their short-term nature. The carrying value of the Company’s debt approximates fair value due to the market rates of interest. |
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Fair Value Measurements | Fair Value Measurements: The Company employs a hierarchy which prioritizes the inputs used to measure recurring fair value into three distinct categories based on the lowest level of input that is significant to the fair value measurement. Our methodology for categorizing assets and liabilities that are measured at fair value pursuant to this hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest levels to unobservable inputs, summarized as follows:
We use the cost, income or market valuation approaches to estimate the fair value of our assets and liabilities when insufficient market-observable data is available to support our valuation assumptions. The purchase price allocations relating to the acquisitions completed during the years ended June 30, 2017 and 2016 utilized level 3 inputs. |
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Segment Reporting | Segment Reporting: The Company operates in a single segment, focusing on developing cost-effective management solutions for medical waste and unused dispensed medications generated by small and medium quantity generators. |
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Use of Estimates | Use of Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. The Company uses estimates to determine many reported amounts, including but not limited to allowance for doubtful accounts, recoverability of long-lived assets and intangibles, useful lives used in depreciation and amortization, income taxes and valuation allowances, stock-based compensation, fair values of assets and liabilities acquired in business combinations, selling price used in multiple-deliverable arrangements and return rates used to estimate the percentage of container systems sold that will not be returned. Actual results could differ from these estimates. |
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Recently Issued Accounting Standards | Recently Issued Accounting Standards: In May 2014, guidance for revenue recognition was issued which supersedes the revenue recognition requirements currently followed by the Company. The new guidance provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. In March 2016, guidance for revenue from contracts with customers regarding principal versus agent considerations was issued which modified examples to assist in the application of the guidance. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. The guidance is effective for annual reporting periods beginning after December 15, 2017 (effective July 1, 2018 for the Company). The Company is in the initial stages of evaluating the impact that the new accounting guidance will have 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. In July 2015, guidance for inventory measurement was issued, which supersedes the policy currently followed by the Company. The new guidance requires the Company to measure inventory at the lower of cost and net realizable value. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016 (effective July 1, 2017 for the Company) including interim periods within that reporting period. The Company adopted this guidance on July 1, 2017 and it did not have a material effect on the Company’s consolidated financial statements and related disclosures. In February 2016, guidance for leases was issued, which requires balance sheet recognition for rights and obligations of all leases with terms in excess of twelve months. The new guidance also requires additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. The provisions of the new guidance are effective for annual periods beginning after December 15, 2018 (effective July 1, 2019 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. In March 2016, new guidance for stock-based compensation was issued, which simplifies the accounting for stock-based compensation related to income taxes and balance sheet and cash flow classifications. In addition, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016 (effective July 1, 2017 for the Company) including interim periods within the reporting period. The Company adopted this guidance on July 1, 2017 and it did not have a material effect on the Company’s consolidated financial statements and related disclosures. In January 2017, guidance for goodwill was issued which simplifies the test for goodwill impairment. The new guidance eliminates Step 2 of the goodwill impairment test and requires a goodwill impairment to be measured as the amount by which the Company’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2019 (effective July 1, 2020 for the Company) including interim periods within the reporting period. The Company adopted this guidance on July 1, 2017 and it did not have a material effect on the Company’s consolidated financial statements and related disclosures; however, it may impact the impairment recognized in future periods. In September 2015, guidance for business combinations was issued, which simplifies the accounting for measurement-period adjustments. The new guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination and requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The provisions of the new guidance were effective for annual reporting periods beginning after December 15, 2015 (effective July 1, 2016 for the Company) including interim periods within the reporting period. The Company adopted this guidance on July 1, 2016 and it did not have a material effect on the Company’s consolidated financial statements and related disclosures; however, it may impact the reporting of future acquisitions if and when they occur. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for doubtful accounts | The Company has a history of minimal uncollectible accounts. See rollforward of allowance activity below:
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Schedule of stock-based compensation expense | Total stock-based compensation expense for the fiscal years ended June 30, 2017, 2016 and 2015 are as follows:
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Schedule of stock option valuation assumptions | The fair value of the Company’s stock options was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:
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PROPERTY, PLANT AND EQUIPMENT (Tables) |
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PROPERTY, PLANT AND EQUIPMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment | At June 30, 2017 and 2016, property, plant and equipment consisted of the following (in thousands):
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INCOME TAXES (Tables) |
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INCOME TAXES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of income tax expense | The components of income tax expense are as follows (in thousands):
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Effective income tax rate reconciliation | The reconciliation of the statutory income tax rate to the Company’s effective income tax rate for the fiscal years ended June 30, 2017, 2016 and 2015 is as follows:
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Components of deferred tax assets and liabilities | At June 30, 2017 and 2016, the significant components of deferred tax assets and liabilities are approximated as follows (in thousands):
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NOTES PAYABLE AND LONG-TERM DEBT (Tables) |
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NOTES PAYABLE AND LONG-TERM DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | At June 30, 2017, long-term debt consisted of the following (in thousands):
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Schedule of payments due on long-term debt | Payments due on long-term debt during each of the five years subsequent to June 30, 2017 are as follows (in thousands):
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EQUITY TRANSACTIONS (Tables) |
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EQUITY TRANSACTIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share repurchases | The program has not been extended.During the years ended June 30, 2017, 2016 and 2015, shares were repurchased as follows:
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STOCK BASED COMPENSATION (Tables) |
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STOCK BASED COMPENSATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of activity for all restricted stock | The summary of activity for all restricted stock during the fiscal years ended June 30, 2017, 2016 and 2015 is presented in the table below (in thousands):
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Schedule of activity for all stock options | The summary of activity for all stock options during the fiscal years ended June 30, 2017, 2016 and 2015 is presented in the table below (in thousands except per share amounts):
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Schedule of information about stock options outstanding | The following table summarizes information about stock options outstanding as of June 30, 2017 (in thousands except per share amounts):
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Schedule of information about stock options exercisable | The following table summarizes information about stock options exercisable as of June 30, 2017 (in thousands except per share amounts):
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COMMITMENTS AND CONTINGENCIES (Tables) |
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COMMITMENTS AND CONTINGENCIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating lease obligations | Future minimum lease payments under non-cancelable operating leases as of June 30, 2017 are as follows (in thousands):
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EARNINGS PER SHARE (Tables) |
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EARNINGS PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | The following information is necessary to calculate earnings per share for the periods presented (in thousands, except per share amounts):
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets | At June 30, 2017 and June 30, 2016, intangible assets consisted of the following (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | The changes in the carrying amount of goodwill since June 30, 2015 was as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future amortization of intangible assets | As of June 30, 2017, future amortization of intangible assets is as follows (in thousands):
|
REVENUES BY SOLUTION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES BY SOLUTION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of billings by solution | The components of revenues by solution are as follows (dollars in thousands):
|
ACQUISITIONS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of acquisition related costs | The Company incurred acquisition related expenses for investment banking, legal and accounting fees which are included within selling, general and administrative expenses in the consolidated statements of operations as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of unaudited pro forma financial information | The following table presents summarized unaudited pro forma financial information as if the Citiwaste acquisition occurred on July 1, 2015 (in thousands, except per-share data):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Alpha Bio/Med Services LLC [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Preliminary purchase price allocation | The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Bio-Team Mobile LLC [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Preliminary purchase price allocation | The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Citiwaste LLC [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Preliminary purchase price allocation | The following amounts represent the fair value of the assets acquired and liabilities assumed (in thousands):
|
SELECTED QUARTERLY FINANCIAL DATA (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SELECTED QUARTERLY FINANCIAL DATA [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information | The following tables show quarterly financial information for the years ended June 30, 2017 and 2016. The Company believes that all necessary adjustments have been included in the amounts below to present fairly the results of such periods (in thousands expect per share amounts).
|
ORGANIZATION AND BACKGROUND (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017
USD ($)
StateRegion
Customer
|
Jun. 30, 2016
USD ($)
Customer
|
Jun. 30, 2015
Customer
|
|
Concentration Risk [Line Items] | |||
Number of route-based pick-up service in state region | StateRegion | 23 | ||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% |
Accounts receivable | $ | $ 7,553 | $ 5,814 | |
Customer Concentration Risk [Member] | Sales Revenue, Services, Net [Member] | |||
Concentration Risk [Line Items] | |||
Number of customers | Customer | 1 | 1 | 1 |
Concentration risk, percentage | 17.00% | 17.00% | 17.00% |
Credit Concentration Risk [Member] | Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Number of customers | Customer | 1 | 1 | |
Concentration risk, percentage | 10.00% | 17.00% | |
Accounts receivable | $ | $ 800 | $ 1,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revenue Recognition [Abstract] | |||
Revenue recorded from bill and hold inventory | $ 3.4 | $ 3.2 | $ 2.6 |
Bill and hold inventory | $ 2.7 | $ 2.1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Taxes [Abstract] | ||
Liability for uncertain tax positions | $ 0 | $ 0 |
Internal Revenue Service (IRS) [Member] | Minimum [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | 2014 | |
State of Texas [Member] | Minimum [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | 2012 | |
State of Georgia [Member] | Minimum [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | 2014 | |
States of Pennsylvania [Member] | Minimum [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | 2014 | |
Other States [Member] | Minimum [Member] | ||
Income Tax Contingency [Line Items] | ||
Open tax years | 2013 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Accounts Receivable (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Allowance for Doubtful Accounts [Roll Forward] | |||
Balance beginning of year | $ 63 | $ 34 | $ 23 |
Charges to expense | 20 | 34 | 22 |
Write-offs /payments | (5) | (5) | (11) |
Balance end of year | $ 78 | $ 63 | $ 34 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Stock-Based Compensation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 496 | $ 676 | $ 511 |
Valuation assumptions [Abstract] | |||
Weighted average risk-free interest rate | 1.10% | 1.00% | 0.40% |
Weighted average expected volatility | 47.00% | 45.00% | 45.00% |
Weighted average expected life | 5 years 1 month 24 days | 4 years 6 months 22 days | 3 years 5 months 26 days |
Dividend yield | 0.00% | 0.00% | 0.00% |
Cost of Revenue [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 41 | $ 31 | $ 22 |
Selling, General and Administrative [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 455 | $ 645 | $ 489 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Cash and Cash Equivalents and Inventory (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Inventory [Abstract] | |||
Total inventory | $ 4,098 | $ 3,919 | |
Finished goods | 2,800 | 2,500 | |
Raw materials | 1,300 | 1,400 | |
Loss on inventory write-down | 0 | 17 | $ 0 |
Goodwill and Other Identifiable Intangible Assets | |||
Goodwill impairment loss | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Intangible Assets (Details) - Patent |
1 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jan. 30, 2014 |
Nov. 30, 2013 |
Dec. 31, 2012 |
Sep. 30, 2012 |
Aug. 31, 2012 |
Apr. 30, 2012 |
Jan. 31, 2012 |
Nov. 30, 2003 |
Jun. 30, 1998 |
Jun. 30, 2017 |
|
Intangible Assets [Abstract] | ||||||||||
Intangible assets description | Intangible assets consist of (i) acquired customer relationships, (ii) permit costs related to the Company’s treatment facility in Carthage, Texas, and (iii) eleven patents (two acquired in June 1998, one in November 2003, one in January 2012, two in April 2012, one in August 2012, one in September 2012, one in December 2012, one in November 2013 and one in January 2014), and (iv) defense costs related to certain existing patents. | |||||||||
Number of patents acquired | 1 | 1 | 1 | 1 | 1 | 2 | 1 | 1 | 2 | 11 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Advertising Costs, Research, Development Costs and Realization of Long-lived Assets (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Advertising Costs [Abstract] | |||
Advertising costs | $ 0.8 | $ 0.6 | $ 0.6 |
Realization of Long-lived Assets [Abstract] | |||
Impairment losses recognized | 0.0 | 0.0 | 0.0 |
Maximum [Member] | |||
Research and Development Expenses [Line Items] | |||
Research and development expenses | $ 0.1 | $ 0.1 | $ 0.1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Employee Benefit Plans (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Defined Contribution Plan Disclosure [Line Items] | |||
Employers match percentage | 25.00% | ||
Maximum annual percentage contribution per employee | 6.00% | ||
Prior group health benefit plan, individual deductible | $ 2,500 | ||
Group health benefit plan, family deductible | 2,500 | ||
Group health benefit plan, third party insurance company coverage beginning amount, individual | 2,500 | ||
Group health benefit plan, third party insurance company coverage beginning amount, family | 10,000 | ||
Maximum [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Company contributions to the 401(k) plan | 100,000 | $ 100,000 | $ 100,000 |
Self-insured liability, health insurance | 100,000 | 100,000 | |
Executives [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Aggregate stock-based compensation expense | $ 0 | $ 0 | $ 300,000 |
NOTES PAYABLE AND LONG-TERM DEBT, Payments Due on Long-term Debt (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Payments due on long-term debt [Abstract] | |
2018 | $ 601 |
2019 | 537 |
2020 | 517 |
2021 | 517 |
2022 | 431 |
Total long-term debt | $ 2,603 |
EQUITY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jan. 07, 2013 |
|
EQUITY TRANSACTIONS [Abstract] | ||||
Stock repurchase program, authorized amount | $ 3,000 | |||
Stock repurchase program, period | 2 years | |||
Stock repurchase program term extension | 2 years | |||
Shares repurchased [Abstract] | ||||
Shares repurchased (in shares) | 0 | 104,365 | 29,449 | |
Cash paid for shares repurchased | $ 0 | $ 745 | $ 128 | |
Average price paid per share (in dollars per share) | $ 0 | $ 7.14 | $ 4.35 | |
Total shares repurchased under the program (in shares) | 295,615 | 295,615 | ||
Total shares repurchased under the program, at cost | $ 1,554 | $ 1,554 |
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017
USD ($)
Facility
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2015
USD ($)
|
|
Operating Leases [Line Items] | |||
Number of fully-permitted facility | Facility | 2 | ||
Rent expense | $ 2,300 | $ 1,500 | $ 1,300 |
Future minimum lease payments [Abstract] | |||
2018 | 1,812 | ||
2019 | 1,827 | ||
2020 | 1,725 | ||
2021 | 943 | ||
2022 | 274 | ||
Thereafter | 5 | ||
Maximum [Member] | |||
Future minimum lease payments [Abstract] | |||
Performance bonds outstanding covering financial assurance | $ 600 | ||
U.S [Member] | Minimum [Member] | |||
Operating Leases [Line Items] | |||
Option to renew lease, term | 3 years | ||
U.S [Member] | Maximum [Member] | |||
Operating Leases [Line Items] | |||
Option to renew lease, term | 10 years |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
EARNINGS PER SHARE [Abstract] | |||||||||||
Net (income) loss, as reported | $ 569 | $ (668) | $ (227) | $ (967) | $ 220 | $ (1,042) | $ 615 | $ 220 | $ (1,293) | $ 13 | $ 1,160 |
Weighted average common shares outstanding (in shares) | 15,949 | 15,448 | 15,327 | ||||||||
Effect of dilutive stock options (in shares) | 0 | 390 | 237 | ||||||||
Weighted average diluted common shares outstanding (in shares) | 16,029 | 15,994 | 15,929 | 15,868 | 15,575 | 15,462 | 16,062 | 15,926 | 15,949 | 15,838 | 15,564 |
Net income (loss) per common share [Abstract] | |||||||||||
Basic (in dollars per share) | $ (0.08) | $ 0 | $ 0.08 | ||||||||
Diluted (in dollars per share) | $ (0.08) | $ 0 | $ 0.07 | ||||||||
Employee stock options excluded from computation of diluted income per share amounts because their effect would be anti-dilutive (in shares) | 304 | 137 | 210 |
REVENUES BY SOLUTION (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | $ 10,362 | $ 8,588 | $ 9,707 | $ 9,531 | $ 8,870 | $ 6,652 | $ 9,992 | $ 7,869 | $ 38,188 | $ 33,383 | $ 30,902 | |||
Revenue percentage | 100.00% | 100.00% | 100.00% | |||||||||||
Mailbacks [Member] | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | $ 24,135 | $ 23,743 | $ 23,043 | |||||||||||
Revenue percentage | 63.20% | 71.10% | 74.60% | |||||||||||
Route-based Pickup Services [Member] | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | $ 6,348 | $ 2,061 | $ 862 | |||||||||||
Revenue percentage | 16.60% | 6.20% | 2.80% | |||||||||||
Unused Medications [Member] | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | $ 3,377 | $ 3,531 | $ 2,667 | |||||||||||
Revenue percentage | 8.80% | 10.60% | 8.60% | |||||||||||
Third Party Treatment Services [Member] | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | $ 413 | $ 258 | $ 367 | |||||||||||
Revenue percentage | 1.10% | 0.80% | 1.20% | |||||||||||
Other [Member] | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | [1] | $ 3,915 | $ 3,790 | $ 3,963 | ||||||||||
Revenue percentage | [1] | 10.30% | 11.30% | 12.80% | ||||||||||
|
SELECTED QUARTERLY FINANCIAL DATA (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
SELECTED QUARTERLY FINANCIAL DATA [Abstract] | |||||||||||
Total revenues | $ 10,362 | $ 8,588 | $ 9,707 | $ 9,531 | $ 8,870 | $ 6,652 | $ 9,992 | $ 7,869 | $ 38,188 | $ 33,383 | $ 30,902 |
Gross profit | 3,631 | 2,352 | 2,895 | 2,959 | 3,220 | 1,693 | 3,319 | 2,879 | 11,837 | 11,111 | 10,995 |
Operating income (loss) | 595 | (638) | (204) | (940) | 214 | (1,104) | 664 | 231 | (1,187) | 5 | 1,236 |
Net income (loss) | $ 569 | $ (668) | $ (227) | $ (967) | $ 220 | $ (1,042) | $ 615 | $ 220 | $ (1,293) | $ 13 | $ 1,160 |
Net income (loss) per share - basic and diluted (in dollars per share) | $ 0.04 | $ (0.04) | $ (0.01) | $ (0.06) | $ 0.01 | $ (0.07) | $ 0.04 | $ 0.01 | |||
Weighted average shares-diluted (in shares) | 16,029 | 15,994 | 15,929 | 15,868 | 15,575 | 15,462 | 16,062 | 15,926 | 15,949 | 15,838 | 15,564 |
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