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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Escalon Medical Corp (QB) | USOTC:ESMC | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.0099 | -5.83% | 0.16 | 0.1307 | 0.1825 | 0.16 | 0.16 | 0.16 | 850 | 21:26:26 |
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Pennsylvania
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33-0272839
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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x
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Smaller reporting company
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x
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Emerging growth company
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o
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Page
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Item 4.
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Item 6.
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Selected Financial Data—omitted pursuant to item 301(c) of Regulation S-K
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk—omitted pursuant to item 305(e) of Regulation S-K
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•
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The timing and expense of new product introductions by the Company or its competitors, although the Company might not successfully develop new products and any such new products may not gain market acceptance;
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•
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The cancellation or delays in the purchase of the Company’s products;
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•
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Fluctuations in customer demand for the Company’s products;
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•
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Changes in domestic and foreign regulations;
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•
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The gain or loss of significant customers;
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Changes in the mix of products sold by the Company;
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•
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Competitive pressures on prices at which the Company can sell its products;
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•
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Announcements of new strategic relationships by the Company or its competitors;
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•
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Litigation costs and settlements; and
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General economic conditions and other external factors such as energy costs.
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The price of the products;
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•
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The continued receipt of regulatory approvals for multiple indications;
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•
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The establishment and demonstration of the clinical safety and efficacy of the Company’s products; and
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•
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The advantages of the Company’s products over those marketed by the Company’s competitors.
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•
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Properly identify customer needs;
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•
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Innovate and develop new technologies, services and applications;
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Establish adequate product distribution coverage;
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Obtain and maintain required regulatory approvals from the FDA and other regulatory agencies;
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Protect the Company’s intellectual property;
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Successfully commercialize new technologies in a timely manner;
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•
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Manufacture and deliver the Company’s products in sufficient volumes on time;
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•
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Differentiate the Company’s offerings from the offerings of the Company’s competitors;
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•
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Price the Company’s products competitively;
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•
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Anticipate competitors’ announcements of new products, services or technological innovations; and
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•
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Anticipate general market and economic conditions.
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•
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Acquisitions, strategic alliances, joint ventures and divestitures that the Company effects, if any;
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•
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Announcements of technological innovations;
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•
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Changes in marketing, product pricing and sales strategies or new products by the Company’s competitors;
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•
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Changes in domestic or foreign governmental regulations or regulatory requirements; and
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•
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Developments or disputes relating to patent or proprietary rights and public concern as to the safety and efficacy of the procedures for which the Company’s products are used.
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•
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sales returns;
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•
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allowances for doubtful accounts;
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•
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inventories
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•
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intangible assets;
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•
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right-of-use assets
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•
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income and other tax accruals;
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•
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deferred tax asset valuation allowances;
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•
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sales discounts;
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•
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warranty obligations; and
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•
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accrued lease termination costs
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•
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contingencies and litigation.
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•
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Consolidated net revenue decreased approximately $227,000 or 2.4%, to $9,400,000 during the year ended June 30, 2020 as compared to the prior fiscal year. The decrease in net revenue is attributed to a decrease of approximately $762,000 in sales of Sonomed's ultrasound products and a decrease of approximately $245,000 in the ophthalmic fundus photography system products. The decrease is offset by an increase in sales of Trek products of $738,000 and an increase in the service plans of $42,000. COVID-19 has negatively impacted the sales of ultrasound. The back orders of Trek contributed to the increase in Trek sales.
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•
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Consolidated cost of goods sold totaled approximately $5,198,000, or 55.3%, of total revenue during the year ended June 30, 2020, as compared to $4,997,000, or 51.9%, of total revenue of the prior fiscal year. The increase of 3.4% in cost of goods sold as a percentage of total revenue is mainly due to decreased sales due to COVD-19 and change of product mix.
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•
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Consolidated marketing, general and administrative expenses decreased $267,000, or 6.4%, to $3,875,000 during the year ended June 30, 2020, as compared to the prior fiscal year. The decrease is mainly due to decreased payroll expense, executive retirement expense, business tax and meeting and exhibits expense.
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•
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Consolidated research and development expenses increased $382,000 or 51.6%, to $1,122,000 during the year ended June 30, 2020 as compared to the same period of the prior fiscal year. Research and development expenses were primarily expenses associated with the introduction of new or enhanced products. The increase in research and development expense is mainly due to expenses for AXIS software development work and ultrasound certification costs incurred year ended June 30, 2020.
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•
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The increase of operating loss is also due to the loss from an intangible assets impairment of $605,000 during the year ended June 30, 2020 as compared to the prior fiscal year.
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For the Years Ended June 30,
|
||||||||||||
|
|
2020
|
|
% Change
|
|
2019
|
|
%
|
||||||
Cost of Goods Sold:
|
|
|
|
|
|
|
|
|
||||||
|
|
$
|
5,198
|
|
|
55.3
|
%
|
|
$
|
4,997
|
|
|
51.9
|
%
|
Total
|
|
$
|
5,198
|
|
|
55.3
|
%
|
|
$
|
4,997
|
|
|
51.9
|
%
|
|
|
For the Years Ended June 30,
|
|||||||||
|
|
2020
|
|
2019
|
|
% Change
|
|||||
Marketing, General and Administrative:
|
|
|
|
|
|
|
|||||
|
|
$
|
3,875
|
|
|
$
|
4,142
|
|
|
(6.4
|
)%
|
Total
|
|
$
|
3,875
|
|
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$
|
4,142
|
|
|
(6.4
|
)%
|
|
For the Years Ended June 30,
|
|||||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
Research and Development:
|
|
|
|
|
|
|||||
|
$
|
1,122
|
|
|
$
|
740
|
|
|
51.6
|
%
|
Total
|
$
|
1,122
|
|
|
$
|
740
|
|
|
51.6
|
%
|
|
|
June 30,
|
|
June 30,
|
|
|
2020
|
|
2019
|
Current Ratio:
|
|
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|
|
Current assets
|
|
$4,333
|
|
$4,261
|
Less: Current liabilities
|
|
2,865
|
|
2,260
|
Working capital
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|
$1,468
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|
$2,001
|
Current ratio
|
|
1.51 to 1
|
|
1.89 to 1
|
Debt to Total Capital Ratio:
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|
|
|
|
Line of credit, note payable, lease liabilities, PPP loan and EIDL loan
|
|
$2,042
|
|
$220
|
Total debt
|
|
2,042
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|
220
|
Total equity
|
|
1,512
|
|
2,162
|
Total capital
|
|
$3,554
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|
$2,382
|
Total debt to total capital
|
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57.5%
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9.2%
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Page
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/s/ Friedman LLP
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We have served as the Company’s auditor since 2018.
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Marlton, New Jersey
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September 28, 2020
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|
|
ESCALON MEDICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|||||||
|
June 30,
2020 |
|
June 30,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
825,958
|
|
|
$
|
409,743
|
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Restricted cash
|
255,281
|
|
|
253,135
|
|
||
Accounts receivable, net
|
1,312,935
|
|
|
1,496,105
|
|
||
Inventories
|
1,785,030
|
|
|
1,878,860
|
|
||
Other current assets
|
154,193
|
|
|
223,078
|
|
||
Total current assets
|
4,333,397
|
|
|
4,260,921
|
|
||
Property and equipment, net
|
97,214
|
|
|
67,896
|
|
||
Right-of-use assets
|
1,107,127
|
|
|
—
|
|
||
Trademarks and trade names
|
—
|
|
|
605,006
|
|
||
License, net
|
122,050
|
|
|
141,700
|
|
||
Other long term assets
|
62,789
|
|
|
51,915
|
|
||
Total assets
|
$
|
5,722,577
|
|
|
$
|
5,127,438
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Line of credit
|
$
|
201,575
|
|
|
$
|
201,575
|
|
Current portion of note payable
|
3,401
|
|
|
3,401
|
|
||
Current portion of PPP loan
|
221,297
|
|
|
—
|
|
||
Accounts payable
|
760,621
|
|
|
666,510
|
|
||
Accrued expenses
|
681,047
|
|
|
656,707
|
|
||
Related party accrued interest
|
112,389
|
|
|
112,389
|
|
||
Current portion of post-retirement benefits (related party)
|
—
|
|
|
101,891
|
|
||
Current portion of operating lease liabilities
|
278,634
|
|
|
—
|
|
||
Deferred revenue
|
516,053
|
|
|
426,803
|
|
||
Liabilities of discontinued operations
|
89,990
|
|
|
90,933
|
|
||
Total current liabilities
|
2,865,007
|
|
|
2,260,209
|
|
||
Note payable, net of current portion
|
11,503
|
|
|
14,896
|
|
||
PPP loan, net of current portion
|
278,703
|
|
|
—
|
|
||
Operating lease liabilities, net of current portion
|
896,533
|
|
|
—
|
|
||
EIDL loan
|
150,000
|
|
|
—
|
|
||
Accrued post-retirement benefits, net of current portion (related party)
|
—
|
|
|
690,094
|
|
||
Other long-term liabilities
|
8,872
|
|
|
—
|
|
||
Total long-term liabilities
|
1,345,611
|
|
|
704,990
|
|
||
Total liabilities
|
4,210,618
|
|
|
2,965,199
|
|
||
Shareholders' equity:
|
|
|
|
||||
Series A convertible preferred stock, $0.001 par value; 2,000,000 shares authorized; 2,000,000 shares issued and outstanding (liquidation value of $767,709 and $715,968)
|
645,000
|
|
|
645,000
|
|
||
Common stock, $0.001 par value; 35,000,000 shares authorized; 7,415,329 shares issued and outstanding
|
7,415
|
|
|
7,415
|
|
||
Additional paid-in capital
|
69,702,043
|
|
|
69,702,043
|
|
||
Accumulated deficit
|
(68,842,499
|
)
|
|
(68,192,219
|
)
|
||
Total shareholders’ equity
|
1,511,959
|
|
|
2,162,239
|
|
||
Total liabilities and shareholders’ equity
|
$
|
5,722,577
|
|
|
$
|
5,127,438
|
|
ESCALON MEDICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
|
|
For the Years Ended June 30,
|
||||||
|
|
2020
|
|
2019
|
||||
Net revenues:
|
|
|
|
|
||||
Products
|
|
$
|
8,437,672
|
|
|
$
|
8,707,154
|
|
Service plans
|
|
962,359
|
|
|
919,509
|
|
||
Revenues, net
|
|
9,400,031
|
|
|
9,626,663
|
|
||
Costs and expenses:
|
|
|
|
|
||||
Cost of goods sold
|
|
5,197,866
|
|
|
4,997,461
|
|
||
Marketing, general and administrative
|
|
3,874,498
|
|
|
4,142,392
|
|
||
Research and development
|
|
1,122,324
|
|
|
739,765
|
|
||
Intangible assets impairment
|
|
605,006
|
|
|
—
|
|
||
Total costs and expenses
|
|
10,799,694
|
|
|
9,879,618
|
|
||
Loss from operations
|
|
(1,399,663
|
)
|
|
(252,955
|
)
|
||
Other income (expense)
|
|
|
|
|
||||
Other income
|
|
759,371
|
|
|
11,122
|
|
||
Interest income
|
|
3,592
|
|
|
9,170
|
|
||
Interest expense
|
|
(13,580
|
)
|
|
(17,353
|
)
|
||
Total other income, net
|
|
749,383
|
|
|
2,939
|
|
||
Net loss
|
|
(650,280
|
)
|
|
(250,016
|
)
|
||
Undeclared dividends on preferred stocks
|
|
51,741
|
|
|
51,600
|
|
||
Net loss applicable to common shareholders
|
|
$
|
(702,021
|
)
|
|
$
|
(301,616
|
)
|
Net loss per share
|
|
|
|
|
||||
Basic loss per share
|
|
$
|
(0.09
|
)
|
|
$
|
(0.04
|
)
|
Diluted loss per share
|
|
$
|
(0.09
|
)
|
|
$
|
(0.04
|
)
|
Weighted average shares—basic
|
|
7,415,329
|
|
|
7,415,329
|
|
||
Weighted average shares—diluted
|
|
7,415,329
|
|
|
7,415,329
|
|
ESCALON MEDICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2020 AND 2019
|
||||||||||||||||||||||||||
|
|
Series A Convertible Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total
Shareholders’
Equity
|
||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
||||||||||||
Balance at June 30, 2019
|
|
2,000,000
|
|
|
$
|
645,000
|
|
|
7,415,329
|
|
|
$
|
7,415
|
|
|
$
|
69,702,043
|
|
|
$
|
(68,192,219
|
)
|
|
$
|
2,162,239
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(650,280
|
)
|
|
(650,280
|
)
|
|||||
Balance at June 30, 2020
|
|
2,000,000
|
|
|
$
|
645,000
|
|
|
7,415,329
|
|
|
$
|
7,415
|
|
|
$
|
69,702,043
|
|
|
$
|
(68,842,499
|
)
|
|
$
|
1,511,959
|
|
|
|
Series A Convertible Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated Deficit
|
|
Total
Shareholders’
Equity
|
||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
||||||||||||
Balance at June 30, 2018
|
|
2,000,000
|
|
|
$
|
645,000
|
|
|
7,415,329
|
|
|
$
|
7,415
|
|
|
$
|
69,702,043
|
|
|
$
|
(67,942,203
|
)
|
|
$
|
2,412,255
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(250,016
|
)
|
|
(250,016
|
)
|
|||||
Balance at June 30, 2019
|
|
2,000,000
|
|
|
$
|
645,000
|
|
|
7,415,329
|
|
|
$
|
7,415
|
|
|
$
|
69,702,043
|
|
|
$
|
(68,192,219
|
)
|
|
$
|
2,162,239
|
|
ESCALON MEDICAL CORP. AND SUBSIDIARIES
|
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
|
|||||||
|
For the Years Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net loss
|
$
|
(650,280
|
)
|
|
$
|
(250,016
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Recovery of allowance of doubtful accounts
|
—
|
|
|
(5,450
|
)
|
||
Increase in accounts receivable allowance
|
12,008
|
|
|
—
|
|
||
Depreciation and amortization
|
50,084
|
|
|
50,139
|
|
||
Non cash lease expense
|
342,058
|
|
|
—
|
|
||
Intangible assets impairment
|
605,006
|
|
|
—
|
|
||
Non cash post-retirement benefits adjustment
|
(758,021
|
)
|
|
—
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
171,162
|
|
|
(103,522
|
)
|
||
Inventories
|
93,830
|
|
|
(55,446
|
)
|
||
Other current assets
|
68,885
|
|
|
(25,373
|
)
|
||
Other long-term assets
|
(10,874
|
)
|
|
—
|
|
||
Accounts payable
|
94,111
|
|
|
137,666
|
|
||
Accrued expenses
|
94,929
|
|
|
(105,325
|
)
|
||
Accrued post-retirement benefits (related party)
|
(33,964
|
)
|
|
(59,386
|
)
|
||
Change in operating lease liability
|
(344,608
|
)
|
|
—
|
|
||
Deferred revenue
|
89,250
|
|
|
(54,377
|
)
|
||
Liabilities of discontinued operations
|
(943
|
)
|
|
(1,599
|
)
|
||
Other long-term liabilities
|
8,872
|
|
|
—
|
|
||
Net cash used in operating activities
|
(168,495
|
)
|
|
(472,689
|
)
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Purchase of equipment
|
(59,751
|
)
|
|
(22,117
|
)
|
||
Net cash used in investing activities
|
(59,751
|
)
|
|
(22,117
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from PPP loan
|
500,000
|
|
|
—
|
|
||
Proceeds from EIDL loan
|
150,000
|
|
|
—
|
|
||
Repayment of note payable
|
(3,393
|
)
|
|
(2,893
|
)
|
||
Proceeds from line of credit
|
—
|
|
|
36,575
|
|
||
Net cash provided by financing activities
|
646,607
|
|
|
33,682
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
418,361
|
|
|
(461,124
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of year
|
662,878
|
|
|
1,124,002
|
|
||
Cash, cash equivalents and restricted cash, end of year
|
$
|
1,081,239
|
|
|
$
|
662,878
|
|
|
|
|
|
||||
Cash, cash equivalents and restricted cash consist of the following:
|
|
|
|
||||
End of year
|
|
|
|
||||
Cash and cash equivalents
|
$
|
825,958
|
|
|
$
|
409,743
|
|
Restricted cash
|
255,281
|
|
|
253,135
|
|
||
|
$
|
1,081,239
|
|
|
$
|
662,878
|
|
Beginning of year
|
|
|
|
||||
Cash and cash equivalents
|
$
|
409,743
|
|
|
$
|
874,002
|
|
Restricted cash
|
253,135
|
|
|
250,000
|
|
||
|
$
|
662,878
|
|
|
$
|
1,124,002
|
|
|
|
|
|
||||
Supplemental Schedule of Cash Flow Information:
|
|
|
|
||||
Interest paid
|
$
|
15,387
|
|
|
$
|
44,315
|
|
Non Cash Finance Activities
|
|
|
|
||||
Record right-of-use assets per ASC 842, net of deferred rent reclassification
|
$
|
1,449,184
|
|
|
$
|
—
|
|
Record lease liability per ASC 842
|
$
|
1,519,744
|
|
|
$
|
—
|
|
|
|
|
|
||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Balance, July 1
|
$
|
110,507
|
|
|
$
|
118,930
|
|
Increase in allowance
|
12,008
|
|
|
—
|
|
||
Recovery in bad debts
|
—
|
|
|
(5,450
|
)
|
||
Write-offs
|
—
|
|
|
(2,973
|
)
|
||
Balance, June 30
|
$
|
122,515
|
|
|
$
|
110,507
|
|
|
|
|
|
||||
|
For the years ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Raw materials
|
$
|
612,721
|
|
|
$
|
874,985
|
|
Work in process
|
322,856
|
|
|
225,254
|
|
||
Finished goods
|
849,453
|
|
|
778,621
|
|
||
Total inventories
|
$
|
1,785,030
|
|
|
$
|
1,878,860
|
|
|
|||||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Equipment
|
$
|
739,335
|
|
|
$
|
717,460
|
|
Furniture and fixtures
|
150,871
|
|
|
149,835
|
|
||
Leasehold improvements
|
39,048
|
|
|
28,549
|
|
||
|
929,254
|
|
|
895,844
|
|
||
Less: Accumulated depreciation and amortization
|
(832,040
|
)
|
|
(827,948
|
)
|
||
|
$
|
97,214
|
|
|
$
|
67,896
|
|
•
|
Unsatisfied Performance Obligations - all performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in ASC 606 and therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.
|
•
|
Contract Costs - all incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration.
|
•
|
Significant Financing Component - the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.
|
•
|
Sales Tax Exclusion from the Transaction Price - the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer.
|
•
|
Shipping and Handling Activities - the Company elected to account for shipping and handling activities as a fulfillment cost rather than as a separate performance obligation.
|
•
|
Portfolio Approach - the Company applied the Portfolio Approach to contract reviews within its identified revenue streams that have similar characteristics and the Company believes this approach would not differ materially than if applying Topic 606 to each individual contract.
|
|
|
For the Years Ended June 30,
|
|||||||
|
|
2020
|
|
2019
|
|||||
Numerator:
|
|
|
|
|
|||||
Numerator for basic loss per share:
|
|
|
|
|
|||||
Net loss
|
|
$
|
(650,280
|
)
|
|
$
|
(250,016
|
)
|
|
Undeclared dividends on preferred stock
|
|
51,741
|
|
|
51,600
|
|
|||
Net loss applicable to common shareholders
|
|
$
|
(702,021
|
)
|
|
$
|
(301,616
|
)
|
|
Numerator for diluted earnings per share:
|
|
|
|
|
|||||
Net loss applicable to common shareholders
|
|
$
|
(702,021
|
)
|
|
$
|
(301,616
|
)
|
|
Undeclared dividends on preferred stock
|
|
—
|
|
|
—
|
|
|||
Net loss
|
|
$
|
(650,280
|
)
|
|
$
|
(301,616
|
)
|
|
Denominator:
|
|
|
|
|
|||||
Denominator for basic loss per share - weighted average shares outstanding
|
|
7,415,329
|
|
|
7,415,329
|
|
|||
Weighted average preferred stock converted to common stock
|
|
—
|
|
|
—
|
|
|||
Denominator for diluted loss per share - weighted average and assumed conversion
|
|
7,415,329
|
|
—
|
|
7,415,329
|
|
||
Net loss per share:
|
|
|
|
|
|||||
Basic net loss per share
|
|
$
|
(0.09
|
)
|
|
$
|
(0.04
|
)
|
|
Diluted net loss per share
|
|
$
|
(0.09
|
)
|
|
$
|
(0.04
|
)
|
|
|
For the Years Ended June 30,
|
||||
|
|
2020
|
|
2019
|
||
Stock options
|
|
157,000
|
|
|
213,000
|
|
Convertible preferred stock
|
|
5,118,060
|
|
|
4,773,120
|
|
Total potential dilutive securities not included in income per share
|
|
5,275,060
|
|
|
4,986,120
|
|
|
2020
|
|
2019
|
||||
Trademarks and trade names
|
|
|
|
||||
Net carrying amount
|
$
|
—
|
|
|
$
|
605,006
|
|
Total
|
$
|
—
|
|
|
$
|
605,006
|
|
|
Gross
Carrying Amount |
|
Impairment
|
|
Adjusted
Gross Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Value |
||||||||||
Amortized Intangible Assets Licenses
|
|
|
|
|
|
|
|
|
|
||||||||||
|
$
|
199,000
|
|
|
$
|
—
|
|
|
$
|
199,000
|
|
|
$
|
(76,950
|
)
|
|
$
|
122,050
|
|
Total
|
$
|
199,000
|
|
|
$
|
—
|
|
|
$
|
199,000
|
|
|
$
|
(76,950
|
)
|
|
$
|
122,050
|
|
|
Gross
Carrying Amount |
|
Impairment
|
|
Adjusted
Gross Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Value |
||||||||||
Amortized Intangible Assets Licenses
|
|
|
|
|
|
|
|
|
|
||||||||||
|
$
|
199,000
|
|
|
$
|
—
|
|
|
$
|
199,000
|
|
|
$
|
(57,300
|
)
|
|
$
|
141,700
|
|
Total
|
$
|
199,000
|
|
|
$
|
—
|
|
|
$
|
199,000
|
|
|
$
|
(57,300
|
)
|
|
$
|
141,700
|
|
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Accrued compensation
|
$
|
417,829
|
|
|
$
|
396,609
|
|
Line of credit and notes payable interest accrual
|
1,224
|
|
|
1,013
|
|
||
Customer deposits
|
14,320
|
|
|
16,006
|
|
||
Warranty reserve
|
32,078
|
|
|
32,078
|
|
||
Sales tax payable
|
100,176
|
|
|
100,582
|
|
||
Rent payable
|
—
|
|
|
70,587
|
|
||
Other accruals
|
115,420
|
|
|
39,832
|
|
||
Total accrued expenses
|
$
|
681,047
|
|
|
$
|
656,707
|
|
|
|
||
Year ending June 30,
|
EIDL Loan Payment
|
||
2021
|
$
|
234
|
|
2022
|
2,870
|
|
|
2023
|
2,980
|
|
|
2024
|
3,094
|
|
|
2025
|
3,212
|
|
|
Thereafter
|
137,610
|
|
|
Total
|
$
|
150,000
|
|
|
|
|
|||||||||||||
|
2020
|
|
2019
|
||||||||||
|
Common
Stock Options |
|
Weighted
Average Exercise Price |
|
Common
Stock
Options
|
|
Weighted
Average Exercise Price |
||||||
Outstanding at the beginning of the year
|
213,000
|
|
|
$
|
1.48
|
|
|
367,500
|
|
|
$
|
1.78
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(56,000
|
)
|
|
1.51
|
|
|
(154,500
|
)
|
|
$
|
2.21
|
|
|
Outstanding at the end of the year
|
157,000
|
|
|
$
|
1.47
|
|
|
213,000
|
|
|
$
|
1.48
|
|
Exercisable at the end of the year
|
157,000
|
|
|
$
|
1.47
|
|
|
213,000
|
|
|
1.48
|
|
|
Weighted average fair value of options granted during the year
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
Number
Outstanding at June 30, 2020 |
|
Weighted
Average Remaining Contractual Life (Years) |
|
Weighted
Average Exercise Price |
|
Number
Exercisable at June 30, 2020 |
|
Weighted
Average Exercise Price |
||||||
Range of Exercise Prices
|
|
|
|
|
|
|
|
|
|
||||||
$0.79
|
21,000
|
|
|
5.83
|
|
$
|
0.79
|
|
|
21,000
|
|
|
$
|
0.79
|
|
$1.45 to $2.12
|
136,000
|
|
|
3.83
|
|
$
|
1.57
|
|
|
136,000
|
|
|
$
|
1.57
|
|
Total
|
157,000
|
|
|
|
|
|
|
157,000
|
|
|
|
|
2020
|
|
2019
|
||||
Current income tax provision
|
|
|
|
||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
State
|
—
|
|
|
—
|
|
||
|
—
|
|
|
—
|
|
||
Deferred income tax provision
|
|
|
|
||||
Federal
|
(8,061
|
)
|
|
44,287
|
|
||
State
|
(2,303
|
)
|
|
12,653
|
|
||
Change in valuation allowance
|
10,364
|
|
|
(56,940
|
)
|
||
|
—
|
|
|
—
|
|
||
Income tax expense (benefit)
|
$
|
—
|
|
|
$
|
—
|
|
|
2020
|
|
2019
|
||||
Deferred income tax assets:
|
|
|
|
||||
Net operating loss carryforward
|
$
|
7,212,393
|
|
|
$
|
7,102,298
|
|
Executive post retirement costs
|
—
|
|
|
166,317
|
|
||
General business credit
|
207,698
|
|
|
207,698
|
|
||
Allowance for doubtful accounts
|
25,728
|
|
|
23,207
|
|
||
Accrued vacation
|
43,741
|
|
|
40,565
|
|
||
Inventory reserve
|
69,432
|
|
|
102,002
|
|
||
Accelerated depreciation
|
69,196
|
|
|
127,642
|
|
||
Warranty reserve
|
6,736
|
|
|
6,736
|
|
||
Total deferred income tax assets
|
7,634,924
|
|
|
7,776,465
|
|
||
Valuation allowance
|
(7,609,293
|
)
|
|
(7,619,657
|
)
|
||
|
25,631
|
|
|
156,808
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Accelerated depreciation
|
(25,631
|
)
|
|
(156,808
|
)
|
||
Total deferred income tax liabilities
|
(25,631
|
)
|
|
(156,808
|
)
|
||
|
$
|
—
|
|
|
$
|
—
|
|
|
2020
|
|
2019
|
||||
Balance July 1,
|
$
|
791,985
|
|
|
$
|
851,371
|
|
Actuarial adjustment
|
(758,021
|
)
|
|
42,505
|
|
||
Payment of benefits
|
(33,964
|
)
|
|
(101,891
|
)
|
||
Balance June 30,
|
—
|
|
|
791,985
|
|
|
June 30,
|
|
June 30,
|
||||
|
2020
|
|
2019
|
||||
Assets
|
|
|
|
||||
Total assets
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
||||
Accrued lease termination costs
|
90
|
|
|
91
|
|
||
Total liabilities
|
90
|
|
|
91
|
|
||
Net liabilities of discontinued operations
|
$
|
(90
|
)
|
|
$
|
(91
|
)
|
(in thousands)
|
|
For the Years Ended June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
||||||||||
Domestic
|
|
$
|
5,781
|
|
|
61.5
|
%
|
|
$
|
5,587
|
|
|
58.0
|
%
|
Foreign
|
|
3,619
|
|
|
38.5
|
%
|
|
4,040
|
|
|
42.0
|
%
|
||
Total
|
|
$
|
9,400
|
|
|
100.0
|
%
|
|
$
|
9,627
|
|
|
100.0
|
%
|
|
|
Year Ended
|
|
|
|
|
June 30, 2020
|
|
|
Operating lease costs:
|
|
|
||
Fixed
|
|
407,757
|
|
|
Total:
|
|
$
|
407,757
|
|
|
|
|
|
June 30,
|
|
|
Leases (operating)
|
|
Classification on the Balance Sheet
|
|
2020
|
|
|
Assets
|
|
|
|
|
||
Operating lease ROU assets
|
|
Right-of-use asset
|
|
$
|
1,107,127
|
|
Liabilities
|
|
|
|
|
||
Current
|
|
Current portion of operating lease liabilities
|
|
$
|
278,634
|
|
Non-current
|
|
Operating lease liabilities
|
|
$
|
896,533
|
|
|
|
Operating
|
|
|
|
|
|
||
2021
|
|
$
|
336,596
|
|
2022
|
|
321,497
|
|
|
2023
|
|
259,546
|
|
|
2024
|
|
263,588
|
|
|
2025
|
|
137,082
|
|
|
Thereafter
|
|
978
|
|
|
Total lease payments
|
|
1,319,287
|
|
|
Less interest
|
|
144,120
|
|
|
Present value of lease liabilities
|
|
$
|
1,175,167
|
|
|
|
Operating
|
|
|
|
|
|
||
2019
|
|
$
|
356,414
|
|
2020
|
|
272,881
|
|
|
2021
|
|
256,311
|
|
|
2022
|
|
188,755
|
|
|
2023
|
|
189,790
|
|
|
Thereafter
|
|
96,830
|
|
|
Total lease payments
|
|
$
|
1,360,981
|
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our financial statements.
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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ITEM 14.
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PRINCIPAL ACCOUNTING FEES AND SERVICES
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1.
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Documents Filed as Part of This Annual Report on Form 10-K:
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a.
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Financial Statements
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2.
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Financial Statement Schedules
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3.
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EXHIBITS
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3.1
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(a)
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Restated Articles of Incorporation of the Company. (8)
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(b)
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Agreement and Plan of Merger dated as of September 28, 2001 between Escalon Pennsylvania, Inc. and Escalon Medical Corp. (8)
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(c)
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Statement with respect to shares dated February 15, 2018. (18)
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3.2
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Bylaws of Registrant. (8)
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4.6
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Description of Securities
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10.6
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Employment Agreement between the Company and Richard J. DePiano dated May 12, 1998. (6)**
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10.7
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Non-Exclusive Distributorship Agreement between Company and Scott Medical Products dated October 12, 2000. (9)
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10.13
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Supply Agreement between the Company and Bausch & Lomb Surgical, Inc. dated August 13, 1999. (5)
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10.29
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Company’s amended and restated 1999 Equity Incentive Plan. (13) **
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10.33
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Manufacturing Supply and Distribution Agreement between Sonomed, Inc. and Ophthalmic Technologies, Inc. dated as of March 11, 2004. (15)
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10.34
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Supplemental Executive Retirement Benefit Agreement for Richard DePiano dated June 23, 2005. (16)**
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10.35
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Settlement Agreement with Intralase Corp, dated February 27, 2008 (4).
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10.36
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Vascular Access Sales Agreement with Vascular Solutions, Inc. dated April 28, 2010 (17)
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10.37
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2013 Equity Incentive Plan dated December 27, 2013 incorporate by reference.
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10.38
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Debt Exchange Agreement as of February 14, 2018 (18)
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10.39
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Business Loan Agreement with TD Bank, N.A. dated June 29, 2018. (19)
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10.40
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Promissory Note dated June 29, 2018 between the Company and TD Bank N.A. (19)
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10.41
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Agreement of Deposit Account dated June 29, 2018 between the Company and TD Bank N.A. (19)
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21
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Subsidiaries. (11)
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23.1
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31.1
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31.2
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32.1
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32.2
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*
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Filed herewith
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**
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Management contract of compensatory plan
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(1)
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Filed as an exhibit to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-1 dated November 9, 1993 (Registration No. 33-69360).
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(2)
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Filed as an exhibit to the Company’s Form 10-KSB for the year ended June 30, 1994.
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(3)
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Filed as an exhibit to the Company’s Form 10-KSB for the year ended June 30, 1995.
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(4)
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Filed as an exhibit to the Company’s Form 8-K dated February 27, 2008.
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(5)
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Filed as an exhibit to the Company’s Form 10-KSB for the year ended June 30, 1999.
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(6)
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Filed as an exhibit to the Company’s Form 8-K/A, dated March 31, 2000
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(7)
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Filed as an exhibit to the Company’s Registration Statement on Form s-* dated February 25, 2000 (Registration No. 333-31138).
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(8)
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Filed as an exhibit to the Company’s Proxy Statement on Schedule 14A, as filed by the Company with the SEC on September 21, 2001.
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(9)
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Filed as an exhibit to the Company’s Form 10-KSB for the year ended June 30, 2001.
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(10)
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Filed as an exhibit to the Company’s Form 10-Q for the quarter ended March 31, 2001.
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(11)
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Filed as an exhibit to the Company’s Form 10-KSB/A for the year ended June 30, 2002.
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(12)
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Filed as an exhibit to the Company’s Form 10-Q for the quarter ended December 31, 2002.
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(13)
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Filed as an exhibit to the Company’s Form 10-Q for the quarter ended December 31, 2003.
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(14)
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Filed as an exhibit to the Company’s Registration Statement on Form S-3 dated April 8, 2004 (Registration No. 333-114332).
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(15)
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Filed as an exhibit to the Company’s Form 10-Q for the quarter ended March 31, 2004.
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(16)
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Filed as an exhibit to the Company’s Form 8-K, dated June 23, 2005.
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(17)
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Filed as an exhibit to the Company’s Form 8-K, dated May 6, 2010.
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(18)
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Filed as an exhibit to the Company's Form 8-K, dated February 15, 2018
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(19)
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Filed as exhibit to the Company's Form 8-K dated July 6, 2018
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Escalon Medical Corp.
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(Registrant)
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By:
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/s/ Richard J. DePiano, Jr.
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Richard J. DePiano, Jr.
Chief Executive Officer
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By:
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/s/ Richard J. DePiano, Jr.
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Chairman and Chief Executive Officer (Principal Executive Officer)
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September 28, 2020
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Richard J. DePiano, Jr.
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||
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By:
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/s/ Mark Wallace
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Chief Operating Officer and Principal Financial & Accounting Officer
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September 28, 2020
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Mark Wallace
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By:
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/s/ John P. Dogum
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Director
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September 28, 2020
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John P. Dogum
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By:
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/s/ Lisa Napolitano
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Director
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September 28, 2020
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Lisa Napolitano
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||
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By:
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/s/ C. Todd Trusk
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Director
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September 28, 2020
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C. Todd Trusk
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||
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By:
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/s/ David J Jacovini
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Director
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September 28, 2020
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David J Jacovini
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