Selling, general and administrative expenses for the nine months ended March 31, 2022 were $5.4 million compared to selling, general and administrative expenses of $5.7 million for the nine months ended March 31, 2021. The decrease is primarily due to a $0.2 million decrease in legal fees and a $0.3 million decrease in personnel costs consisting of salaries and benefits. This decrease was partially offset by a $0.1 million charge for environmental remediation.
Loss from operations was $3.3 million for the nine months ended March 31, 2022 compared to income from operations of $0.2 million for the nine months ended March 31, 2021.
Allied had a loss before benefit from income taxes in the first nine months of fiscal 2022 of $3.4 million compared to income before benefit from income taxes in the first nine months of fiscal 2021 of $0.1 million. The Company’s tax provision net of valuation allowance reflects a tax benefit of $0 for the nine months ended March 31, 2022 and 2021. As a result of the Consolidated Appropriations Act of 2021 signed by the President on December 27, 2020, approximately $2,400,000 of expenses incurred that were attributed to the Company’s PPP loan became deductible in the nine months ended March 31, 2021. The deductibility of these expenses created a tax loss for the nine months ended March 31, 2021. In the nine months ended March 31, 2022 the tax benefit of losses in the amount of approximately $873,000 was fully offset by a valuation allowance of equivalent amount. In the nine months ended March 31, 2021 the Company recorded the tax benefit of losses incurred in the amount of approximately $582,000 net of additions to the valuation allowance of like amount. To the extent that the Company’s losses continue in future quarters, the tax benefit of those losses will be fully offset by a valuation allowance. To the extent the Company has taxable income, the taxable income will be offset by net operating loss carryforwards.
Net loss for the nine months ended March 31, 2022 was $3.4 million or $0.85 per basic and diluted share compared to net income of $0.1 million or $0.03 per basic and diluted share for the first nine months of fiscal 2021. The weighted average number of common shares outstanding, used in the calculation of basic earnings per share for fiscal 2022 and 2021 were 4,013,537. The weighted average number of common shares outstanding, used in the calculation of diluted earnings per share for fiscal 2022 and 2021 were 4,013,537 and 4,027,310 respectively.
Liquidity and Capital Resources
The Company’s primary sources of liquidity are its cash, cash equivalents, other items of working capital and available borrowing under the Credit Facility discussed below.
The Company’s working capital was $3.7 million at March 31, 2022 compared to $6.3 million at June 30, 2021. The $2.6 million decrease in working capital is attributed to a cash decrease of $0.3 million, an inventory decrease of $0.8 million, an accounts receivable decrease of $0.3 million, a debt increase of $1.1 million, a accounts payable increase of $0.9 million and an $0.5 million increase in customer deposits. During the first nine months of fiscal 2022, these decreases in working capital were offset by an $0.2 million increase in other current assets and a $1.2 million decrease in other accrued liabilities. Accounts payable and other accrued liabilities are subject to normal fluctuations in purchasing levels and the timing of payments within the quarter. Accounts receivable was $2.6 million at March 31, 2022 and as measured in days sales outstanding (“DSO”) was 37 DSO compared to a 40 DSO at June 30, 2021. The Company does adjust product forecast, order quantities and safety stock based on changes in demand patterns in order to manage inventory levels.
North Mill Loan
The Company is party to a Loan and Security Agreement with North Mill Capital, LLC (“North Mill”), as successor in interest to Summit Financial Resources, L.P., dated effective February 27, 2017, as amended April 16, 2018, April 24, 2019, December 18, 2020 and October 7, 2021 (as amended, the “Credit Agreement”). Pursuant to the Credit Agreement, the Company obtained a secured revolving credit facility (the “Credit Facility”). The Company’s obligations under the Credit Facility are secured by all of the Company’s personal property, both tangible and intangible, pursuant to the terms and subject to the conditions set forth in the Credit Agreement. Availability of funds under the Credit Agreement is based on the Company’s accounts receivable and inventory but will not exceed $4,000,000. At March 31, 2022 borrowing under the agreement was $3,221,532, maximum available borrowing based on eligible collateral was $3,525,688, resulting in availability of $304,156.