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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

FORM 10-Q/A

(Amendment No. 1)

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

OR

☐     TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .

Commission File Number: 001-34269

_______________________

SHARPS COMPLIANCE CORP.

(Exact name of registrant as specified in its charter)

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

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

    

(713) 432-0300

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark if the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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

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

3

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EXPLANATORY NOTE

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

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

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

•Part I, Item 1, "Financial Statements

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

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

•Part II, Item 1A, "Risk Factors"

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

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

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

4

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and par value amounts)

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

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

5

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SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per-share data)

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

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

6

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SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per-share data)

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

 

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

7

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SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share data)

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

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

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SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

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

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

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SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - ORGANIZATION AND BACKGROUND

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

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

NOTE 2 - BASIS OF PRESENTATION

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

Restatement of Previously Reported Condensed Consolidated Financial Statements

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

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

Condensed Consolidated Balance Sheet as of December 31, 2021

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

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

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

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

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

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

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

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

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Effects of COVID-19

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

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

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

						Three-Months Ended December 31,
						2021						% Total						2020						% Total
REVENUES BY SOLUTION:
Mailbacks						$	12,070					63.9		%				$	10,452					61.4		%
Route-based pickup services						3,551						18.8		%				3,491						20.5		%
Unused medications						1,865						9.9		%				1,713						10.1		%
Third party treatment services						54						0.3		%				179						1.1		%
Other (1)						1,338						7.1		%				1,176						6.9		%
Total revenues						$	18,878					100.0		%				$	17,011					100.0		%
						Six-Months Ended December 31,
						2021						% Total						2020						% Total
REVENUES BY SOLUTION:
Mailbacks						$	18,818					57.3		%				$	16,614					55.2