|
☒
|
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
ý
|
|
|
|
|
Emerging growth company ☐
|
|
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|
DOCUMENTS INCORPORATED BY REFERENCE:
|
|
(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 15. 2018 are incorporated by reference into Part III.
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PART I
|
||
Item 1
|
||
Item 1A
|
||
Item 1B
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Item 2
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Item 3
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Item 4
|
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PART II
|
||
Item 5
|
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Item 6
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||
Item 7
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||
Item 8
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||
Item 9
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||
Item 9A
|
||
Item 9B
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PART III
|
||
Item 10
|
||
Item 11
|
||
Item 12
|
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Item 13
|
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Item 14
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PART IV
|
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Item 15
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Item 16
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Signatures
|
||
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|
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*This Table of Contents is inserted for convenience of reference only and is not a part of this Report as filed.
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•
|
A large professional market that consists of dentists, veterinarians, clinics, physician groups, 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 over 50% 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
|
•
|
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"), 38.5% of adults received a flu shot and 28.2% of flu shots for adults were administered in a retail clinic. Over the flu seasons from 2011 to 2018, the Company saw growth in five years of 10% to 36% and declines in three years of 13% to 17%. Despite the volatility, Sharps believes the Retail market should continue to contribute to long-term growth for the Company as consumers increasingly use alternative sites, such as retail pharmacies, to obtain flu and other immunizations.
|
•
|
The passage of regulations for ultimate-user medication disposal allows the Company to offer new solutions (MedSafe and TakeAway Medication Recovery System envelopes) that meet the regulations for ultimate-user controlled substances disposal (Schedules II-V) to retail pharmacies. Additionally, with the new regulations, the Company is able to provide the MedSafe and TakeAway Medication Recovery Systems to 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. The federal government, state agencies and non-profits are recognizing the need to fund programs that address prevention as it pertains to the opioid crisis. MedSafe and mailback envelopes for proper medication disposal are being funded for prevention programs.
|
•
|
With an increased number of self-injectable medication treatments and local regulations, the Company believes its flagship product, the Sharps Recovery System, continues to offer the best option for proper sharps disposal at an affordable price. The Company delivers comprehensive services to pharmaceutical manufacturers that sell high-dollar, self-injectable medications, which include data management, compliance reporting, fulfillment, proper containment with disposal, branding and conformity with applicable regulations. In addition, the Company provides 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,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
BILLINGS BY MARKET*
:
|
|
|
|
|
|
|||
Professional
|
33
|
%
|
|
31
|
%
|
|
22
|
%
|
Home Health Care
|
20
|
%
|
|
21
|
%
|
|
22
|
%
|
Retail
|
20
|
%
|
|
19
|
%
|
|
26
|
%
|
Pharmaceutical Manufacturer
|
11
|
%
|
|
16
|
%
|
|
17
|
%
|
Assisted Living
|
7
|
%
|
|
6
|
%
|
|
6
|
%
|
Government
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
Environmental
|
2
|
%
|
|
1
|
%
|
|
1
|
%
|
Other
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
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.
|
|
Common Stock
|
||||||
|
High
|
|
Low
|
||||
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
|
$
|
5.67
|
|
|
$
|
4.17
|
|
Second Quarter
|
$
|
4.94
|
|
|
$
|
3.75
|
|
Third Quarter
|
$
|
5.06
|
|
|
$
|
3.96
|
|
Fourth Quarter
|
$
|
4.75
|
|
|
$
|
3.50
|
|
|
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)
|
933,153
|
|
|
$
|
4.57
|
|
|
1,453,649
|
|
|
For the Year Ended June 30,
|
||||||||||||||
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Revenues
|
$
|
40,141
|
|
$
|
38,188
|
|
$
|
33,383
|
|
$
|
30,902
|
|
$
|
26,570
|
|
Operating Income (Loss)
|
$
|
(577
|
)
|
$
|
(1,187
|
)
|
$
|
5
|
|
$
|
1,236
|
|
$
|
965
|
|
Net Income (Loss)
|
$
|
(672
|
)
|
$
|
(1,293
|
)
|
$
|
13
|
|
$
|
1,160
|
|
$
|
956
|
|
|
|
|
|
|
|
||||||||||
Net Income (Loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
$
|
(0.04
|
)
|
$
|
(0.08
|
)
|
$
|
0.00
|
|
$
|
0.08
|
|
$
|
0.06
|
|
Diluted
|
$
|
(0.04
|
)
|
$
|
(0.08
|
)
|
$
|
0.00
|
|
$
|
0.07
|
|
$
|
0.06
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
||||||||||
Total Assets
|
$
|
33,231
|
|
$
|
34,464
|
|
$
|
30,147
|
|
$
|
29,751
|
|
$
|
26,461
|
|
Total Debt
|
$
|
2,002
|
|
$
|
2,603
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Cash
|
$
|
5,155
|
|
$
|
4,675
|
|
$
|
12,435
|
|
$
|
15,157
|
|
$
|
13,717
|
|
Working Capital
|
$
|
10,258
|
|
$
|
10,488
|
|
$
|
17,232
|
|
$
|
19,623
|
|
$
|
17,888
|
|
Total Stockholders’ Equity
|
$
|
25,174
|
|
$
|
25,287
|
|
$
|
23,843
|
|
$
|
23,586
|
|
$
|
21,904
|
|
•
|
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.
|
•
|
2017 Revenues, operating income and net income include the results of operations for the acquired business during the year. See Note 12 “Acquisitions” in "Notes to the Consolidated Financial Statements".
|
|
Year Ended June 30,
|
||||||||||||||||
|
2018
|
%
|
|
2017
|
%
|
|
2016
|
%
|
|||||||||
Revenues
|
$
|
40,141
|
|
100.0
|
%
|
|
$
|
38,188
|
|
100.0
|
%
|
|
$
|
33,383
|
|
100.0
|
%
|
Cost of revenues
|
28,739
|
|
71.6
|
%
|
|
26,351
|
|
69.0
|
%
|
|
22,272
|
|
66.7
|
%
|
|||
Gross profit
|
11,402
|
|
28.4
|
%
|
|
11,837
|
|
31.0
|
%
|
|
11,111
|
|
33.3
|
%
|
|||
SG&A expense
|
11,168
|
|
27.8
|
%
|
|
12,223
|
|
32.0
|
%
|
|
10,812
|
|
32.4
|
%
|
|||
Depreciation and amortization
|
811
|
|
2.0
|
%
|
|
801
|
|
2.1
|
%
|
|
294
|
|
0.9
|
%
|
|||
Operating income (loss)
|
(577
|
)
|
(1.4
|
)%
|
|
(1,187
|
)
|
(3.1
|
)%
|
|
5
|
|
0.0
|
%
|
|||
Other income (expense)
|
(74
|
)
|
(0.2
|
)%
|
|
(102
|
)
|
(0.3
|
)%
|
|
32
|
|
0.1
|
%
|
|||
Income (loss) before income taxes
|
(651
|
)
|
(1.6
|
)%
|
|
(1,289
|
)
|
|
|
|
37
|
|
|
|
|||
Income tax expense
|
21
|
|
0.1
|
%
|
|
4
|
|
0.0
|
%
|
|
24
|
|
0.1
|
%
|
|||
Net income (loss)
|
$
|
(672
|
)
|
(1.7
|
)%
|
|
$
|
(1,293
|
)
|
(3.4
|
)%
|
|
$
|
13
|
|
0.0
|
%
|
|
Year Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
Variance
|
||||||
BILLINGS BY MARKET:
|
|
|
|
|
|
||||||
Professional
|
$
|
13,110
|
|
|
$
|
11,962
|
|
|
$
|
1,148
|
|
Home Health Care
|
7,989
|
|
|
7,901
|
|
|
88
|
|
|||
Retail
|
7,885
|
|
|
7,010
|
|
|
875
|
|
|||
Pharmaceutical Manufacturer
|
4,482
|
|
|
5,961
|
|
|
(1,479
|
)
|
|||
Assisted Living
|
2,515
|
|
|
2,442
|
|
|
73
|
|
|||
Government
|
2,074
|
|
|
1,680
|
|
|
394
|
|
|||
Environmental
|
891
|
|
|
414
|
|
|
477
|
|
|||
Other
|
818
|
|
|
763
|
|
|
55
|
|
|||
Subtotal
|
39,764
|
|
|
38,133
|
|
|
1,631
|
|
|||
GAAP Adjustment *
|
377
|
|
|
55
|
|
|
322
|
|
|||
Revenue Reported
|
$
|
40,141
|
|
|
$
|
38,188
|
|
|
$
|
1,953
|
|
|
Year Ended June 30,
|
||||||||||||
|
2018
|
|
% Total
|
|
2017
|
|
% Total
|
||||||
BILLINGS BY SOLUTION:
|
|
|
|
|
|
|
|
|
|
|
|
||
Mailbacks
|
$
|
21,409
|
|
|
53.8
|
%
|
|
$
|
24,080
|
|
|
63.1
|
%
|
Route-based pickup services
|
7,492
|
|
|
18.8
|
%
|
|
6,348
|
|
|
16.6
|
%
|
||
Unused medications
|
5,907
|
|
|
14.9
|
%
|
|
3,377
|
|
|
8.9
|
%
|
||
Third party treatment services
|
891
|
|
|
2.2
|
%
|
|
413
|
|
|
1.1
|
%
|
||
Other
(1)
|
4,065
|
|
|
10.3
|
%
|
|
3,915
|
|
|
10.3
|
%
|
||
Total billings
|
$
|
39,764
|
|
|
100.0
|
%
|
|
$
|
38,133
|
|
|
100.0
|
%
|
GAAP adjustment
(2)
|
377
|
|
|
|
|
|
55
|
|
|
|
|
||
Revenue reported
|
$
|
40,141
|
|
|
|
|
|
$
|
38,188
|
|
|
|
|
(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, (ii) recognition of certain revenue associated with products returned for treatment and destruction and (iii) provisions for certain rebates, product returns and discounts to customers which are accounted for as reductions in sales in the same period the related sales are recorded. The difference between customer billings and GAAP revenue is reflected in the Company’s balance sheet as deferred revenue.
|
|
Year Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
Variance
|
||||||
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
|
||||||
BILLINGS 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, (ii) recognition of certain revenue associated with products returned for treatment and destruction and (iii) provisions for certain rebates, product returns and discounts to customers which are accounted for as reductions in sales in the same period the related sales are recorded. 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, physician groups, 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 over 50% 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
10,300
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"), 38.5% of adults received a flu shot and 28.2% of flu shots for adults were administered in a retail clinic. Over the flu seasons from 2011 to 2018, the Company saw growth in five years of 10% to 36% and declines in three years of 13% to 17%. Despite the volatility, Sharps believes the Retail market should continue to contribute to long-term growth for
|
•
|
The 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. The federal government, state agencies and non-profits are recognizing the need to fund programs that address prevention as it pertains to the opioid crisis. MedSafe and mailback envelopes for proper medication disposal are being funded for prevention programs.
|
•
|
With an increased number of self-injectable medication treatments and local regulations, the Company believes its flagship product, the Sharps Recovery System, continues to offer the best option for proper sharps disposal at an affordable price. The Company delivers comprehensive services to pharmaceutical manufacturers that sell high-dollar, self-injectable medications, which include data management, compliance reporting, fulfillment, proper containment with disposal, branding and conformity with applicable regulations. In addition, the Company provides 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
$5.2 million
, debt of
$2.0 million
and additional availability under the Credit Agreement.
|
•
|
Cash Flows used in Operating Activities
- Working capital decreased by
$0.2 million
to
$10.3 million
at June 30,
2018
from
$10.5 million
at June 30,
2017
. The decrease is primarily attributed to an increase in cash offset by:
|
•
|
A decrease in accounts receivable of $1.2 million to $6.4 million at June 30, 2018 from $7.6 million at June 30, 2017 due to timing of billings and collections,
|
•
|
A decrease in current deferred revenue of $0.5 million to $1.9 million at June 30, 2018 from $2.4 million at June 30, 2017 due to a decrease in revenues for mailbacks partially offset by an increase in revenues for unused medications.
|
•
|
Cash Flows used in Investing Activities
- Investing activities include capital expenditures of $1.2 million for normal plant and equipment additions.
|
•
|
Cash Flows provided by Financing Activities
– Financing activities include repayments of debt of $0.6 million.
|
•
|
The transportation and treatment performance obligations related to the mail back and unused medication solutions, which were historically accounted for as separate performance obligations, will be accounted for as a single performance obligation under the amended revenue recognition guidance. The impact of this is not expected to be material.
|
•
|
Certain costs associated with obtaining long-term contracts with customers will be capitalized and amortized over the expected economic life of the contract in future periods. The impact of this is not expected to be material.
|
•
|
The new guidance may change the timing of revenue recognition and related expense on certain of the Company’s vendor managed inventory contracts. We are currently finalizing our analysis but expect the cumulative adjustment to be less than
$0.4 million
.
|
Exhibit
Number
|
Description of Exhibit
|
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).
|
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).
|
*
|
This exhibit is a management contract or a compensatory plan or arrangement.
|
Dated: August 22, 2018
|
By: /s/ DAVID P. TUSA
|
|
David P. Tusa
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
Dated: August 22, 2018
|
By: /s/ DAVID P. TUSA
|
|
David P. Tusa
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
|
|
Dated: August 22, 2018
|
By: /s/ DIANA P. DIAZ
|
|
Diana P. Diaz
|
|
Vice President and
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
|
Dated: August 22, 2018
|
By: /s/ F. GARDNER PARKER
|
|
F. Gardner Parker
|
|
Director
|
|
|
Dated: August 22, 2018
|
By: /s/ JOHN W. DALTON
|
|
John W. Dalton
|
|
Director
|
|
|
Dated: August 22, 2018
|
By: /s/ PARRIS H. HOLMES
|
|
Parris H. Holmes
|
|
Director
|
|
|
Dated: August 22, 2018
|
By: /s/ PHILIP C. ZERRILLO
|
|
Philip C. Zerrillo
|
|
Chairman of the Board Of Directors
|
CONSOLIDATED FINANCIAL STATEMENTS
|
PAGE
|
|
|
|
Year Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
REVENUES
|
$
|
40,141
|
|
|
$
|
38,188
|
|
|
$
|
33,383
|
|
Cost of revenues
|
28,739
|
|
|
26,351
|
|
|
22,272
|
|
|||
GROSS PROFIT
|
11,402
|
|
|
11,837
|
|
|
11,111
|
|
|||
Selling, general and administrative
|
11,168
|
|
|
12,223
|
|
|
10,812
|
|
|||
Depreciation and amortization
|
811
|
|
|
801
|
|
|
294
|
|
|||
OPERATING INCOME (LOSS)
|
(577
|
)
|
|
(1,187
|
)
|
|
5
|
|
|||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|||
Interest income
|
20
|
|
|
13
|
|
|
32
|
|
|||
Interest expense
|
(94
|
)
|
|
(115
|
)
|
|
—
|
|
|||
TOTAL OTHER INCOME (EXPENSE)
|
(74
|
)
|
|
(102
|
)
|
|
32
|
|
|||
INCOME (LOSS) BEFORE INCOME TAXES
|
(651
|
)
|
|
(1,289
|
)
|
|
37
|
|
|||
INCOME TAX EXPENSE
|
|
|
|
|
|
||||||
Current
|
29
|
|
|
4
|
|
|
24
|
|
|||
Deferred
|
(8
|
)
|
|
—
|
|
|
—
|
|
|||
TOTAL INCOME TAX EXPENSE
|
21
|
|
|
4
|
|
|
24
|
|
|||
NET INCOME (LOSS)
|
$
|
(672
|
)
|
|
$
|
(1,293
|
)
|
|
$
|
13
|
|
NET INCOME (LOSS) PER COMMON SHARE
|
|
|
|
|
|
|
|
|
|||
Basic and Diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.00
|
|
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|||
Basic
|
16,055
|
|
|
15,949
|
|
|
15,448
|
|
|||
Diluted
|
16,055
|
|
|
15,949
|
|
|
15,838
|
|
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
|
||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Additional Paid-
in Capital
|
|
Accumulated
Deficit
|
|
Total Stockholders’
Equity
|
||||||||||||
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
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
476
|
|
|
—
|
|
|
476
|
|
|||||
Issuance of common shares for lease
|
|
20,617
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
83
|
|
|||||
Issuance of restricted stock
|
|
52,992
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(672
|
)
|
|
(672
|
)
|
|||||
Balances, June 30, 2018
|
|
16,377,636
|
|
|
$
|
164
|
|
|
(295,615
|
)
|
|
$
|
(1,554
|
)
|
|
$
|
28,621
|
|
|
$
|
(2,057
|
)
|
|
$
|
25,174
|
|
|
Year Ended June 30,
|
|||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|||||||
Net income (loss)
|
$
|
(672
|
)
|
|
$
|
(1,293
|
)
|
|
$
|
13
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
1,561
|
|
|
1,485
|
|
|
816
|
|
||||
Bad debt expense
|
62
|
|
|
20
|
|
|
34
|
|
||||
Non-cash lease expense
|
37
|
|
|
—
|
|
|
—
|
|
||||
Loss on inventory write-down
|
—
|
|
|
—
|
|
|
17
|
|
||||
Loss on disposal of property, plant and equipment
|
13
|
|
|
10
|
|
|
—
|
|
||||
Stock-based compensation expense
|
476
|
|
|
496
|
|
|
676
|
|
||||
Deferred tax benefit
|
(8
|
)
|
|
—
|
|
|
—
|
|
||||
Changes in operating assets and liabilities, net of effects of business acquisitions:
|
|
|
|
|
|
|
|
|
||||
Accounts receivable
|
1,121
|
|
|
(1,264
|
)
|
|
892
|
|
||||
Inventory
|
305
|
|
|
(61
|
)
|
|
(1,055
|
)
|
||||
Prepaid and other assets
|
(20
|
)
|
|
(35
|
)
|
|
(46
|
)
|
||||
Accounts payable and accrued liabilities
|
29
|
|
|
125
|
|
|
(759
|
)
|
||||
Deferred revenue
|
(535
|
)
|
|
(61
|
)
|
|
600
|
|
||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
2,369
|
|
|
(578
|
)
|
|
1,188
|
|
||||
|
|
|
|
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
||||
Purchase of property, plant and equipment
|
(1,212
|
)
|
|
(2,486
|
)
|
|
(1,926
|
)
|
||||
Cash proceeds from sale of property, plant and equipment
|
10
|
|
|
23
|
|
|
—
|
|
||||
Additions to intangible assets
|
(86
|
)
|
|
(163
|
)
|
|
—
|
|
||||
Payments for business acquisitions, net of cash acquired
|
—
|
|
|
(7,314
|
)
|
|
(1,552
|
)
|
||||
NET CASH USED IN INVESTING ACTIVITIES
|
(1,288
|
)
|
|
(9,940
|
)
|
|
(3,478
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
||||
Proceeds from exercise of stock options
|
—
|
|
|
342
|
|
|
313
|
|
||||
Repayments of long-term debt
|
(601
|
)
|
|
(3,184
|
)
|
|
—
|
|
||||
Proceeds from long-term debt
|
—
|
|
|
5,600
|
|
|
—
|
|
||||
Shares repurchased
|
—
|
|
|
—
|
|
|
(745
|
)
|
||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
(601
|
)
|
|
2,758
|
|
|
(432
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||
NET INCREASE (DECREASE) IN CASH
|
480
|
|
|
(7,760
|
)
|
|
(2,722
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||
CASH, beginning of year
|
4,675
|
|
|
12,435
|
|
|
15,157
|
|
||||
|
|
|
|
|
|
|
|
|
||||
CASH, end of year
|
$
|
5,155
|
|
|
$
|
4,675
|
|
|
$
|
12,435
|
|
|
|
|
|
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW DISCLOSURES:
|
|
|
|
|
|
|
|
|
||||
Income taxes paid
|
$
|
3
|
|
|
$
|
9
|
|
|
$
|
152
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest paid on long-term debt
|
$
|
87
|
|
|
$
|
107
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||
NON-CASH INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
||||
Issuance of common stock for acquisition
|
$
|
—
|
|
|
$
|
1,899
|
|
|
$
|
—
|
|
|
Issuance of common stock for lease
|
$
|
83
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Unpaid consideration related to acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
181
|
|
|
Transfer of equipment to inventory
|
$
|
193
|
|
|
$
|
118
|
|
|
$
|
143
|
|
|
Property, plant and equipment financed through accounts payable
|
$
|
(13
|
)
|
|
$
|
28
|
|
|
$
|
—
|
|
•
|
United States – fiscal years ended June 30,
2015
and after
|
•
|
State of Texas – fiscal years ended June 30,
2013
and after
|
•
|
State of Georgia – fiscal years ended June 30,
2015
and after
|
•
|
State of Pennsylvania – fiscal years ended June 30,
2015
and after
|
•
|
Other States – fiscal years ended June 30,
2014
and after
|
Allowance for Doubtful
Accounts
|
|
Balance
Beginning
of Year
|
|
Charges to
Expense
|
|
Write-offs
/Recoveries
|
|
Balance End
of Year
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
$
|
78
|
|
|
$
|
62
|
|
|
$
|
(38
|
)
|
|
$
|
102
|
|
2017
|
|
$
|
63
|
|
|
$
|
20
|
|
|
$
|
(5
|
)
|
|
$
|
78
|
|
2016
|
|
$
|
34
|
|
|
$
|
34
|
|
|
$
|
(5
|
)
|
|
$
|
63
|
|
|
Year Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Stock-based compensation expense included in:
|
|
|
|
|
|
||||||
Cost of revenue
|
$
|
43
|
|
|
$
|
41
|
|
|
$
|
31
|
|
Selling, general and administrative
|
433
|
|
|
455
|
|
|
645
|
|
|||
Total
|
$
|
476
|
|
|
$
|
496
|
|
|
$
|
676
|
|
|
Year Ended June 30,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Weighted average risk-free interest rate
|
1.2
|
%
|
|
1.1
|
%
|
|
1.0
|
%
|
Weighted average expected volatility
|
48
|
%
|
|
47
|
%
|
|
45
|
%
|
Weighted average expected life (in years)
|
3.03
|
|
|
5.15
|
|
|
4.56
|
|
Dividend yield
|
—
|
|
|
—
|
|
|
—
|
|
|
As of June 30,
|
||||||
|
2018
|
|
2017
|
||||
Accrued payroll
|
$
|
389
|
|
|
$
|
322
|
|
Customer-related payables
|
334
|
|
|
226
|
|
||
Accrued rebates
|
327
|
|
|
297
|
|
||
Other
|
1,011
|
|
|
955
|
|
||
Total
|
$
|
2,061
|
|
|
$
|
1,800
|
|
•
|
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).
|
•
|
The transportation and treatment performance obligations related to the mail back and unused medication solutions, which were historically accounted for as separate performance obligations, will be accounted for as a single performance obligation under the amended revenue recognition guidance. The impact of this is not expected to be material.
|
•
|
Certain costs associated with obtaining long-term contracts with customers will be capitalized and amortized over the expected economic life of the contract in future period. The impact of this is not expected to be material.
|
•
|
The new guidance may change the timing of revenue recognition and related expense on certain of the Company’s vendor managed inventory contracts. We are currently finalizing our analysis but expect the cumulative adjustment to be less than
$0.4 million
.
|
|
|
|
|
June 30,
|
||||||
|
|
Useful Life
|
|
2018
|
|
2017
|
||||
Furniture and fixtures
|
|
3 to 5 years
|
|
$
|
245
|
|
|
$
|
260
|
|
Plant and equipment
|
|
3 to 17 years
|
|
8,241
|
|
|
7,975
|
|
||
Manufacturing
|
|
15 years
|
|
169
|
|
|
220
|
|
||
Computers and software
|
|
3 to 5 years
|
|
2,064
|
|
|
2,246
|
|
||
Leasehold improvements
|
|
Life of Lease
|
|
2,729
|
|
|
2,681
|
|
||
Land
|
|
|
|
19
|
|
|
19
|
|
||
Construction-in-progress
|
|
|
|
716
|
|
|
347
|
|
||
|
|
|
|
14,183
|
|
|
13,748
|
|
||
Less: accumulated depreciation
|
|
|
|
7,611
|
|
|
7,205
|
|
||
Net property, plant and equipment
|
|
|
|
$
|
6,572
|
|
|
$
|
6,543
|
|
|
Year ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
29
|
|
|
4
|
|
|
24
|
|
|||
Total Current
|
$
|
29
|
|
|
$
|
4
|
|
|
$
|
24
|
|
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Deferred
|
(8
|
)
|
|
—
|
|
|
—
|
|
|||
Net Income Tax Expense
|
$
|
21
|
|
|
$
|
4
|
|
|
$
|
24
|
|
|
Year Ended June 30,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Statutory rate
|
27.6
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
State income taxes, net
|
(3.7
|
)%
|
|
(4.5
|
)%
|
|
(18.6
|
)%
|
Impact of 2017 tax reform
|
(107.0
|
)%
|
|
—
|
%
|
|
—
|
%
|
Meals and entertainment
|
(1.8
|
)%
|
|
(1.5
|
)%
|
|
38.7
|
%
|
Stock-based compensation
|
22.6
|
%
|
|
—
|
%
|
|
—
|
%
|
AMT and research and development credits
|
22.4
|
%
|
|
—
|
%
|
|
(218.9
|
)%
|
Other
|
(2.0
|
)%
|
|
0.2
|
%
|
|
1.5
|
%
|
Effective rate before valuation allowance
|
(41.9
|
)%
|
|
28.2
|
%
|
|
(163.3
|
)%
|
Change in valuation allowance
|
38.7
|
%
|
|
(28.5
|
)%
|
|
228.2
|
%
|
Effective tax rate
|
(3.2
|
)%
|
|
(0.3
|
)%
|
|
64.9
|
%
|
|
June 30,
|
||||||
|
2018
|
|
2017
|
||||
Deferred tax assets relating to:
|
|
||||||
Stock-based compensation
|
$
|
283
|
|
|
$
|
398
|
|
AMT and research and development credits
|
668
|
|
|
523
|
|
||
Deferred rent
|
58
|
|
|
77
|
|
||
Inventory
|
147
|
|
|
211
|
|
||
Professional fees
|
91
|
|
|
155
|
|
||
Accrued vacation
|
31
|
|
|
43
|
|
||
Accounts receivable allowance
|
26
|
|
|
49
|
|
||
Contribution carryovers
|
13
|
|
|
12
|
|
||
Net operating loss carryforwards
|
1,153
|
|
|
1,443
|
|
||
Total deferred tax assets
|
2,470
|
|
|
2,911
|
|
||
Deferred tax liabilities related to depreciable and amortizable assets
|
(587
|
)
|
|
(783
|
)
|
||
Net deferred tax assets before valuation allowance
|
1,883
|
|
|
2,128
|
|
||
Valuation allowance
|
(1,875
|
)
|
|
(2,128
|
)
|
||
Net deferred tax assets
|
$
|
8
|
|
|
$
|
—
|
|
Twelve Months Ending June 30,
|
|
||
2019
|
$
|
537
|
|
2020
|
517
|
|
|
2021
|
517
|
|
|
2022
|
431
|
|
|
|
$
|
2,002
|
|
|
Year ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
Shares repurchased
|
—
|
|
|
—
|
|
|
104,365
|
|
|||
Cash paid for shares repurchased (in thousands)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
745
|
|
Average price paid per share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7.14
|
|
|
Year ended June 30,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
|
|
|
|
|
|
|||
Unvested at beginning of the year
|
13
|
|
|
13
|
|
|
13
|
|
Granted
|
53
|
|
|
53
|
|
|
53
|
|
Vested
|
(53
|
)
|
|
(53
|
)
|
|
(53
|
)
|
Unvested at end of the year
|
13
|
|
|
13
|
|
|
13
|
|
|
Options
Outstanding
|
|
Weighted
Average
Exercise
Price
|
|||
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
|
|
Granted
|
137
|
|
|
$
|
4.79
|
|
Forfeited or canceled
|
(82
|
)
|
|
$
|
4.50
|
|
|
|
|
|
|||
Options Outstanding at June 30, 2018
|
920
|
|
|
$
|
4.57
|
|
|
|
|
|
|||
Options Exercisable at June 30, 2018
|
634
|
|
|
$
|
4.46
|
|
|
|
Options Outstanding
|
|||||||
Range of Exercise
Price |
|
Outstanding as of June 30, 2018
|
|
Weighted
Average
Remaining
Life
(in Years)
|
|
Weighted
Average
Exercise
Price
|
|||
|
|
|
|
|
|
|
|||
2.51 - $3.50
|
|
41
|
|
|
1.49
|
|
$
|
2.95
|
|
3.51 - $5.50
|
|
748
|
|
|
3.27
|
|
$
|
4.42
|
|
5.51 - $7.50
|
|
131
|
|
|
3.82
|
|
$
|
5.97
|
|
|
|
920
|
|
|
|
|
$
|
4.57
|
|
|
|
Options Exercisable
|
|||||||
Range of Exercise
Price
|
|
Exercisable as of June 30, 2018
|
|
Weighted
Average
Remaining
Life
(in Years)
|
|
Weighted
Average
Exercise
Price
|
|||
|
|
|
|
|
|
|
|||
2.51 - $3.50
|
|
41
|
|
|
1.49
|
|
$
|
2.95
|
|
3.51 - $5.50
|
|
502
|
|
|
2.35
|
|
$
|
4.32
|
|
5.51 - $7.50
|
|
91
|
|
|
3.79
|
|
$
|
5.90
|
|
|
|
634
|
|
|
|
|
$
|
4.46
|
|
|
Year Ended June 30,
|
||||||||||||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||
Operating lease obligations
|
$
|
2,166
|
|
|
$
|
1,903
|
|
|
$
|
1,165
|
|
|
$
|
414
|
|
|
$
|
71
|
|
|
$
|
17
|
|
|
Year ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
Net income (loss), as reported
|
$
|
(672
|
)
|
|
$
|
(1,293
|
)
|
|
$
|
13
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
16,055
|
|
|
15,949
|
|
|
15,448
|
|
|||
Effect of dilutive stock options
|
—
|
|
|
—
|
|
|
390
|
|
|||
Weighted average diluted common shares outstanding
|
16,055
|
|
|
15,949
|
|
|
15,838
|
|
|||
|
|
|
|
|
|
||||||
Net income (loss) per common share
|
|
|
|
|
|
|
|
|
|||
Basic and diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
||||||
Employee stock options excluded from computation of diluted income per share amounts because their effect would be anti-dilutive
|
402
|
|
|
304
|
|
|
137
|
|
|
|
June 30,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
Estimated
Useful Lives
|
Original
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
|
Original
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
7 years
|
$
|
3,007
|
|
|
$
|
(919
|
)
|
|
$
|
2,088
|
|
|
$
|
3,007
|
|
|
$
|
(490
|
)
|
|
$
|
2,517
|
|
Permits
|
6 - 15 years
|
1,459
|
|
|
(390
|
)
|
|
1,069
|
|
|
1,373
|
|
|
(288
|
)
|
|
1,085
|
|
||||||
Patents
|
5 - 17 years
|
383
|
|
|
(278
|
)
|
|
105
|
|
|
383
|
|
|
(264
|
)
|
|
119
|
|
||||||
Tradename
|
7 years
|
270
|
|
|
(77
|
)
|
|
193
|
|
|
270
|
|
|
(39
|
)
|
|
231
|
|
||||||
Non-compete
|
5 years
|
117
|
|
|
(47
|
)
|
|
70
|
|
|
117
|
|
|
(23
|
)
|
|
94
|
|
||||||
Total intangible assets, net
|
|
$
|
5,236
|
|
|
$
|
(1,711
|
)
|
|
$
|
3,525
|
|
|
$
|
5,150
|
|
|
$
|
(1,104
|
)
|
|
$
|
4,046
|
|
|
Year Ended June 30,
|
|||||||||||||||||||
|
2018
|
|
% Total
|
|
2017
|
|
% Total
|
|
2016
|
|
% Total
|
|||||||||
REVENUES BY SOLUTION:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Mailbacks
|
$
|
21,786
|
|
|
54.3
|
%
|
|
$
|
24,135
|
|
|
63.2
|
%
|
|
$
|
23,743
|
|
|
71.1
|
%
|
Route-based pickup services
|
7,492
|
|
|
18.7
|
%
|
|
6,348
|
|
|
16.6
|
%
|
|
2,061
|
|
|
6.2
|
%
|
|||
Unused medications
|
5,907
|
|
|
14.7
|
%
|
|
3,377
|
|
|
8.8
|
%
|
|
3,531
|
|
|
10.6
|
%
|
|||
Third party treatment services
|
891
|
|
|
2.2
|
%
|
|
413
|
|
|
1.1
|
%
|
|
258
|
|
|
0.8
|
%
|
|||
Other
(1)
|
4,065
|
|
|
10.1
|
%
|
|
3,915
|
|
|
10.3
|
%
|
|
3,790
|
|
|
11.3
|
%
|
|||
Total revenues
|
$
|
40,141
|
|
|
100.0
|
%
|
|
$
|
38,188
|
|
|
100.0
|
%
|
|
$
|
33,383
|
|
|
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,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
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,
2017 |
|
December 31,
2017 |
|
March 31,
2018 |
|
June 30,
2018 |
||||||||
Total revenues
|
$
|
9,683
|
|
|
$
|
11,119
|
|
|
$
|
9,427
|
|
|
$
|
9,912
|
|
Gross profit
|
$
|
3,028
|
|
|
$
|
3,131
|
|
|
$
|
2,296
|
|
|
$
|
2,947
|
|
Operating income (loss)
|
$
|
101
|
|
|
$
|
107
|
|
|
$
|
(707
|
)
|
|
$
|
(78
|
)
|
Net income (loss)
|
$
|
75
|
|
|
$
|
156
|
|
|
$
|
(757
|
)
|
|
$
|
(146
|
)
|
Net income (loss) per share - basic and diluted
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.01
|
)
|
Weighted average shares - diluted
|
16,093
|
|
|
16,068
|
|
|
16,082
|
|
|
16,082
|
|
|
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
|
|
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 22, 2018
|
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 22, 2018
|
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, 2018
, filed with the Securities and Exchange Commission on
August 22, 2018
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, 2018
fairly presents, in all material respects, the financial condition and results of operations of Sharps Compliance Corp.
|
Date: August 22, 2018
|
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, 2018
, filed with the Securities and Exchange Commission on
August 22, 2018
, 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, 2018
fairly presents, in all material respects, the financial condition and results of operations of Sharps Compliance Corp.
|
Date: August 22, 2018
|
By:
/s/ DIANA P. DIAZ
|
|
Diana P. Diaz
|
|
Vice President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|