smed-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022

☐ 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 May 10, 2022, there were 19,430,063 outstanding shares of the Registrant's common stock, par value $0.01 per share.


SHARPS COMPLIANCE CORP. AND SUBSIDIARIES


PART I	FINANCIAL INFORMATION	PAGE

Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets as of March 31, 202 2 and June 30, 2021	4

	Condensed Consolidated Statements of Operations for the three months ended March 31, 202 2 and 20 21	5

	Condensed Consolidated Statements of Operations for the nine months ended Mar ch 31, 202 2 and 202 1	6

	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 202 2 and 202 1	7

	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 202 2 and 202 1	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 4.	Controls and Procedures	28

Part II	OTHER INFORMATION	28

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	29

Item 6.	Exhibits	30

	SIGNATURES	30

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)


	March 31,		June 30,
	2022		2021
ASSETS
CURRENT ASSETS
Cash	$	26,744	$	27,767
Accounts receivable, net	14,790		9,738
Inventory	6,979		6,114
Contract asset	16		20
Prepaid and other current assets	3,446		1,459
TOTAL CURRENT ASSETS	51,975		45,098
PROPERTY, PLANT AND EQUIPMENT, net	11,786		10,843
OPERATING LEASE RIGHT OF USE ASSET	12,424		8,353
FINANCING LEASE RIGHT OF USE ASSET, net	932		907
INVENTORY, net of current portion	987		989
OTHER ASSETS	325		110
GOODWILL	10,216		6,735
INTANGIBLE ASSETS, net	4,541		2,239
DEFERRED TAX ASSET, net	150		157
TOTAL ASSETS	$	93,336	$	75,431
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,090	$	2,922
Accrued liabilities	4,104		3,940
Operating lease liability	2,872		2,368
Financing lease liability	189		160
Current maturities of long-term debt	307		735
Contract liability	4,285		7,028
TOTAL CURRENT LIABILITIES	14,847		17,153
CONTRACT LIABILITY, net of current portion	523		1,461
OPERATING LEASE LIABILITY, net of current portion	9,701		6,118
FINANCING LEASE LIABILITY, net of current portion	756		741
OTHER LIABILITIES	—		45

LONG-TERM DEBT, net of current portion	3,095		3,329
TOTAL LIABILITIES	28,922		28,847
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value per share; 40,000,000 shares authorized; 19,725,678 and 17,454,859 shares issued, respectively and 19,430,063 and 17,159,244 shares outstanding, respectively	199		176
Treasury stock, at cost, 295,615 shares repurchased	(1,554)		(1,554)
Additional paid-in capital	53,186		34,333
Retained earnings	12,583		13,629
TOTAL STOCKHOLDERS' EQUITY	64,414		46,584
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	93,336	$	75,431

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

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per-share data)


	Three-Months Ended March 31,
	2022		2021
REVENUES	$	17,579	$	27,528
Cost of revenues	12,601		14,129
GROSS PROFIT	4,978		13,399
Selling, general and administrative	4,713		4,181
Depreciation and amortization	272		216
OPERATING INCOME (LOSS)	(7)		9,002
OTHER INCOME (EXPENSE)
Interest income	16		—
Interest expense	(53)		(55)
Income associated with derivative instrument	44		26
TOTAL OTHER INCOME (EXPENSE)	7		(29)
INCOME BEFORE INCOME TAXES	—		8,973
INCOME TAX EXPENSE
Current	34		1,083
Deferred	253		1,040
TOTAL INCOME TAX EXPENSE	287		2,123
NET INCOME (LOSS)	$	(287)	$	6,850
NET INCOME (LOSS) PER COMMON SHARE
Basic	$	(0.01)	$	0.41
Diluted	$	(0.01)	$	0.40
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
Basic	19,412		16,556
Diluted	19,412		17,187

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

SHARPS COMPLIANCE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per-share data)


	Nine-Months Ended March 31,
	2022		2021

REVENUES	$	50,372	$	57,690
Cost of revenues	37,266		35,031
GROSS PROFIT	13,106		22,659
Selling, general and administrative	13,301		11,725
Depreciation and amortization	726		625
OPERATING INCOME (LOSS)	(921)		10,309
OTHER INCOME (EXPENSE)
Interest income	30		—
Interest expense	(167)		(134)
Income associated with derivative instrument	78		41
TOTAL OTHER EXPENSE	(59)		(93)
INCOME (LOSS) BEFORE INCOME TAXES	(980)		10,216
INCOME TAX EXPENSE
Current	59		1,147
Deferred	7		1,284
TOTAL INCOME TAX EXPENSE	66		2,431
NET INCOME (LOSS)	$	(1,046)	$	7,785
NET INCOME (LOSS) PER COMMON SHARE
Basic	$	(0.06)	$	0.47
Diluted	$	(0.06)	$	0.46
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
Basic	18,842		16,481
Diluted	18,842		16,978

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

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, December 31, 2021		19,542,858	$	197	(295,615)	$	(1,554)	$	51,712	$	12,870	$	63,225
Issuance of stock, acquisition		164,821	2		—	—		1,086		—

SEC Form 10-Q filed by Sharps Compliance Corp.