PCYN 10-K & 10-Q changes, risk factors and insider trading

During fiscal 20232024 and 2022,2023, our results of operations related solely to the operations of AMERX. Net sales during fiscal 20232024 were approximately $4,687,000$4,984,000 as compared to approximately $4,842,000$4,687,000 in fiscal 2022,2023, aan decreaseincrease of approximately $155,000$297,000 or 3%.6%. The fluctuationincrease in sales was a result of expanding new markets offset by reductions and purchasing trends in traditional markets. AMERX believes the new market expansion will continue in fiscal 20242025 with further plans to expand our traditional market channels.

Operating expenses during fiscal 20232024 were approximately $3,667,000,$4,123,000, consisting of approximately $1,860,000$2,085,000 in salaries and benefits and $1,807,000$2,038,000 in selling, general and administrative expenses. Operating expenses in fiscal 20222023 were approximately $3,723,000$3,667,000 and consisted of approximately $2,012,000$1,860,000 in salaries and benefits and approximately $1,711,000$1,807,000 in selling, general and administrative expenses. This represents aan decreaseincrease in expenses of approximately $56,000$456,000 in fiscal 20232024 over the operating expenses in fiscal 2022.2023. As a percentage of net sales, operating expenses during fiscal 20232024 were 78%83% as compared to 77%78% during fiscal 20222023; as gross profit increased approximately $84,000$321,000 for the year on an approximately $56,000$456,000 decreaseincrease in operating expenses. Salaries and Benefits decreasedincreased when compared to previous year with fluctuations in personnel and reduced commission’s associated with lower sales volumes.. Selling, General and Administrative expenses increased primarily due to increases in marketing efforts, expenses related to selling our products on the internet, and softwareshipping expenses.

Losses from operations finished at approximately $97,000$232,000 in 2023,2024, as compared to losses of approximately $237,000$97,000 in fiscal 2022.2023. Losses before income taxes finished at approximately $65,000$171,000 in 2023,2024, as compared to losses of approximately $235,000$65,000 in 2022.2023. Net loss (after dividend requirements for Preferred Shares) was approximately $74,000$67,000 during fiscal 2023, compared to approximately $227,000$313,000 of net loss during fiscal 2022.2024. The Company recorded approximately $15,000$170,000 of income tax benefitexpense when determining the net loss available to common shares in fiscal 2023,2024, compared to $26,000$15,000 income tax benefit when determining the net income available in common shares in fiscal 2022.2023.

Operating activities providedused cash of approximately $61,000 during fiscal 2024, and provided approximately $145,000 during fiscal 2023, and used approximately $383,000 during fiscal 2022, consisting primarily of aan decreaseincrease in inventoryvaluation allowance of approximately $182,000,$209,000, in fiscal 20232024 and a decrease in income,inventory, in fiscal 2022.2023. Cash used inby investing activities during fiscal 20232024 was approximately $455,000$64,000 as compared to cash used in investing activities in fiscal 20222023 of approximately $83,000,$455,000, respectively. Cash used in financing activities during fiscal 20232024 was $0 compared cash used by financing activities of $0 during fiscal 2022,2023, respectively.

During fiscal year 2023,2024, we had no material cash requirements, including commitments for capital expenditures. In the 20242025 fiscal year, the Company does not anticipate having any external cash needs. The Company has adequate funds to cover any planned capital expenditures. The Company also believes that it will continue to generate enough funds through its operations in the short and long term future to meet its capital needs. TheAlthough the Company plans to leave cash balances in insured bank accounts that have no risk of loss.loss, from time to time the cash balance may exceed insured limits.

During fiscal 2023,2024, nothree holderholders of shares of Preferred Stock converted itstheir shares to Common Stock.

In fiscal 20232024 to date, management has expanded on the services and options the Company provides for its customers. WeAmerx haveexpanded introducedour collagen line with the introduction of a individual size Collagen Gel tube and two new RolledWound GauzeRecovery formKit ofoptions for our Amerxprofessional Branded Collagen Wound Care Kits. We also introduced a gel form of our Collagen products.market.

Accounts receivable allowance reflects a reserve that reduces our customer accounts and receivable to the net amount estimated to be collectible. The valuation of accounts receivable is based upon the credit-worthiness of customers and third-party payers as well as historical collection experience. Allowances for doubtfulexpected accountscredit losses are recorded as a selling, general and administrative expense for estimated amounts expected to be uncollectible from third-party payers and customers. The Company bases its estimates on its historical collection experience, current trends, credit policy and on the analysis of accounts by aging category. At DecemberMarch 31, 2023,2024, and June 30, 2023, our allowance for doubtfulexpected accountscredit losses totaled $15,000 and $11,625, respectively.

Deferred income taxes are recognized for the expected tax consequences in future years for differences between the tax bases of assets and liabilities and their financial reporting amounts, based upon enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. The Company accounts for income taxes under Topic 740 - Income Tax in the Accounting Standards Codification. A valuation allowance is used to reduce deferred tax assets to the net amount expected to be recovered in future periods. The estimates for deferred tax assets and the corresponding valuation allowance require us to exercise complex judgments. We periodically review and adjust those estimates based upon the most current information available. The Company had a valuation allowance of $176,532$229,066 as of DecemberMarch 31, 20232024 and $0 as of June 30, 2023, respectively. Because the recoverability of deferred tax assets is directly dependent upon future operating results, actual recoverability of deferred tax assets may differ materially from our estimates.

As of DecemberMarch 31, 20232024 the Company's principal sources of liquid assets included cash of $267,804,$325,130, inventories of $530,863,$535,493, and net accounts receivable of $509,608.$481,884. The Company also has $570,944$576,522 in Certificate of Deposits. The Company had net working capital of $1,524,127,$1,501,553, and long-term lease of $230,576,$185,379, at DecemberMarch 31, 2023.2024.

During the sixnine months ended DecemberMarch 31, 20232024 cash decreased from $451,306 as of June 30, 2023, to $267,804.$325,130. Operating activities used cash of $121,965$63,891 during the period. Investing activities used cash of $61,537$62,285 during the period.

The Company reflected a net non-current deferred tax assetliabilities of $15,512,$21,417, at DecemberMarch 31, 2023.2024. Because the recoverability of deferred tax assets is directly dependent upon future operating results, actual recoverability of deferred tax assets may differ materially from our estimates.

Comparison of the three and sixnine months ended DecemberMarch 31, 20232024 and 2022.2023.

Net sales during the quarter ended DecemberMarch 31, 2023,2024, were $1,200,053$1,198,539 as compared to the previous year's quarter net sales of $1,183,937,$1,124,824, an increase of $16,116,$73,715, or approximately 1%.7%. Net sales during the sixnine months ended DecemberMarch 31, 2023,2024, were $2,373,160$3,571,699 as compared to the previous year's period net sales of $2,359,640,$3,484,464, an increase of $13,520,$87,235, or approximately 1%.3%.

Gross profit during the quarter ended DecemberMarch 31, 2023,2024, was $936,729$937,765 as compared to $890,482$861,270 during the quarter ended DecemberMarch 31, 2022,2023, an increase of $46,447$76,495 or 5%.9%. As a percentage of net sales, gross profit was approximately 78% in the quarter ended DecemberMarch 31, 2023,2024, and approximately 75%77% in the corresponding quarter in 2022.2023. We believe the increase in Gross Profit comes from a shift in sales channels to more sales coming from our highest margin channelchannels of physician and retail sales. Gross profit during the sixnine months ended DecemberMarch 31, 2023,2024, was $1,849,131$2,786,896 as compared to $1,771,281$2,632,551 during the sixnine months ended DecemberMarch 31, 2022,2023, an increase of $77,850$154,345 or 9%.6%. As a percentage of net sales, gross profit was approximately 78% in the sixnine months ended DecemberMarch 31, 2023,2024, and approximately 75%76% in the corresponding quarterperiod in 2022.2023. We believe the increase in Gross Profit comes from a shift in sales channels to more sales coming from our highest margin channelchannels of physician and retail sales.

Operating loss increased by $69,870$30,562 to an operating loss of $101,415$81,792 for the quarter ended DecemberMarch 31, 2023,2024, as compared to an operating loss of $31,545$51,230 in the comparable quarter of the prior year. The increase in net loss for the three month period, of the comparable quarter of the prior year before income taxes was primarily attributable to the increases in operating expenses. Operating loss increased by $115,808$146,370 to an operating loss of $158,806$240,598 for the sixnine months ended DecemberMarch 31, 2023,2024 as compared to an operating loss of $42,998$94,228 in the comparable period of the prior year. The increase in net loss for the sixnine month period, of the comparable period of the prior year before income taxes was primarily attributable to the increases in operating expenses.