UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K





|[x] | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|--- | ----------------------------------------------------------------------------------------
|    |                                                                                         
|    | For the fiscal year ended June 30, 2017                                                 
|    |                                                                                         
|[ ] | 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 0-17449                                                          







PROCYON CORPORATION

(Exact name of registrant as specified in its charter)



Colorado                        59-3280822

(State of incorporation) (I.R.S. Employer ID No.)



1300 South Highland Avenue, Clearwater, Florida 33756

(Address of principal executive offices)(Zip Code)

Issuer’s telephone number, including area code:
(727) 447-2998





|Securities registered pursuant to Section 12(b) of the Act: | None        
|----------------------------------------------------------- | ------------
|Securities registered pursuant to Section 12(g) of the Act: | Common Stock





Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.

[   ] Yes [X  ] No



Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.

[   ] Yes [ X] No



Indicate by checkmark whether the issuer (1) filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [X] 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 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).

Yes [X] No [   ]



Indicate by checkmark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge,
in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [   ]



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





|[   ] Large accelerated
filer                                             | [   ] Accelerated filer      
|------------------------------------------------------------------------- | -----------------------------
|[   ] Non-accelerated filer
(Do not check if a smaller reporting company) | [X] 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 12b-2 of the Exchange Act).

Yes[   ] No [X]



State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average
bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second
fiscal quarter:



The  aggregate market value of the
4,069,791 shares of Common Stock held by non-affiliates was $813,958 on July 26, 2017, the date of the last sale of common stock,
based on the average bid and asked price of $.20 on such  date.



Indicate the number of shares outstanding of each of
the registrant’s classes of common stock, as of the latest practicable date:



As of October 4,
2017, there were 8,077,388 shares of the issuers Common Stock outstanding.



DOCUMENTS INCORPORATED BY REFERENCE:

None.













INDEX







|         | Title                                                                                        | Page
|-------- | -------------------------------------------------------------------------------------------- | ----
|         |                                                                                              |     
|ITEM 1.  | BUSINESS                                                                                     | 3   
|         |                                                                                              |     
|ITEM 2   | PROPERTIES                                                                                   | 6   
|         |                                                                                              |     
|ITEM 3.  | LEGAL PROCEEDINGS                                                                            | 6   
|         |                                                                                              |     
|ITEM 5.  | MARKET FOR COMMON EQUITY, RELATED
STOCKHOLDER

MATTERS AND PURCHASES OF EQUITY SECURITIES    | 6   
|         |                                                                                              |     
|ITEM 7.  | MANAGEMENT’S DISCUSSION AND
ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS       | 8   
|         |                                                                                              |     
|ITEM 8.  | FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA                                                  | 13  
|         |                                                                                              |     
|ITEM 9.  | CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE        | 14  
|         |                                                                                              |     
|ITEM 9A  | CONTROLS AND PROCEDURES                                                                      | 14  
|         |                                                                                              |     
|ITEM 9B  | OTHER INFORMATION                                                                            | 15  
|         |                                                                                              |     
|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE                                       | 15  
|         |                                                                                              |     
|ITEM 11. | EXECUTIVE COMPENSATION                                                                       | 18  
|         |                                                                                              |     
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS,

MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 20  
|         |                                                                                              |     
|ITEM 13. | CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
        AND DIRECTOR INDEPENDENCE             | 21  
|         |                                                                                              |     
|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                       | 21  
|         |                                                                                              |     
|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES                                                      | 22  















2















PART
I

|ITEM |  | 1.	BUSINESS
|---- |  | -----------



History
and Organization



Procyon
Corporation ("Procyon" or the "Company") consolidates the operations of Procyon with Amerx Health Care Corporation®("Amerx") and Sirius Medical Supply, Inc. ("Sirius"), its wholly-owned subsidiaries, for financial purposes.
Collectively throughout this report, Procyon, Amerx and Sirius may be referred to as the "Company," "us,"
or "we" or "our."



Procyon,
a Colorado corporation, was incorporated on March 19, 1987, and was deemed a development stage company until May 1996, when we
acquired Amerx, a corporation based in Clearwater, Florida, which was wholly owned by John C. Anderson, our deceased Chief Executive
Officer. Amerx develops and markets proprietary medical products used in the treatment of pressure ulcers, stasis ulcers, wounds,
dermatitis, inflammation and other skin problems. Historically, Amerx's products are sold through distributors to healthcare institutions
including hospitals, wound care clinics, nursing homes and home health care agencies and to retailers including national and regional
chain stores and pharmacies and to healthcare practitioners who treat wounds. Sirius no longer has any material operations.



Products



Major
product lines - AMERX, AMERIGEL® , HELIX3 Bioactive Collagen®, EXTREMIT-EASE® Compression Garment



Amerx
markets a proprietary line of AMERIGEL® advanced skin and wound care products made with Oakin®, proven to promote healing
in wound and problematic skin conditions including the AMERIGEL® Hydrogel Wound Dressing, AMERIGEL® Post Op Surgical Kits,
AMERIGEL® Saline Wound Wash, AMERIGEL® Care Lotion and AMERIGEL® Barrier Lotion. These products have become the core
for building the foundation for Amerx to grow. In the second half of fiscal 2015, Amerx expanded their product brands by introducing
the HELIX3 Bioactive Collagen®. HELIX3 is available in two forms, Collagen Powder (HELIX3 CP®) and Collagen Matrix (HELIX3
CM®) developed to address market segments previously unavailable to Amerx. In fiscal 2016, Amerx continued its brand expansion
by introducing the AMERX branded wound care product line. The line consists of: AMERX Calcium Alginate Dressing, AMERX Foam Dressing,
AMERX Gauze Dressing, AMERX Hyrdocolloid Dressing, and Amerx Wound Care Kits including AMERX Calcium Alginate Wound Care Kit,
AMERX Collagen Matrix Wound Care Kit, AMERX Collagen Powder Wound Care Kit, AMERX Foam Wound Care Kit and AMERX Hydrogel Wound
Care Kit. In fiscal 2017, Amerx expanded its product line to include a new segment of the wound care market by introducing the
EXTREMIT-EASE® Compression Garment line, a patent-pending product. New products have demonstrated early success and product
expansion has made it possible for Amerx to have success in providing treatments outside its historical niche. Amerx looks to
continue this new product trend in fiscal 2018.



Amerx
wound care products sold under the brand names AMERIGEL, HELIX3, AMERX and EXTREMIT-EASE have received approval for Medicare reimbursement,
assigned by the Pricing, Data Analysis and Coding contractor for Medicare and Medicaid ("PDAC"). We believe this reimbursement
code is beneficial to Amerx's business, allowing customers on Medicare to seek coverage for use of these products.



Amerx
spent approximately $31,000 towards research and development efforts over the past fiscal year. These efforts were directed towards
additional studies aimed at proving product safety and efficacy and expanding existing markets and new products, as well as correcting
FDA and manufacturing compliance issues.



3













The
AMERIGEL® product line with OAKIN® is based on proprietary formulations which are protected as trade secret information
and with registered trademarks. HELIX3®, HELIX3 CP®, HELIX3 CM® and HELIX3 Bioactive Collagen®, OAKIN® and
EXTREMIT-EASE® are registered trademarks of Amerx Health Care. All products are registered with the Food and Drug Administration
("FDA"). In 2017, we filed a patent application related to our EXTREMIT-EASE® product.



Amerx
product lines continue to gain acceptance within the health care community. Amerx owns and operates three different websites.
The sites can be viewed at www.amerigel.com, www.amerxhc.com, and www.amerxstore.com. These websites provide viewer-focused information
about Amerx's products to consumers (amerigel.com) and health care providers (amerxhc.com). Amerxstore.com is equipped to handle
direct sales to the public.



Market
for Products



We
have expanded our product line over the last three fiscal years to address a broader range of wound applications. Our core AMERIGEL®
product line containing Oakin® established our presence in the physician market to address skin and wound care treatment needs.
HELIX3® Bioactive Collagen was added to our product line in fiscal 2015 and AMERX® Kits, dressings and bandages in fiscal
2016 to address the broader wound care market needs for an increasing number of people with diabetes and obesity. This market
is primarily comprised of hospitals, wound care centers, nursing homes, home health care agencies and health care practioners.
The EXTREMIT-EASE® Compression Garment, introduced in 2017, enables Amerx Health Care to compete in the global compression
therapy market, a multi-billion market that is projected to escalate secondary to aging populations, rising prevalence of diabetes,
lymphatic diseases, cancer surgeries, venous diseases and sports injuries.



We
believe Amerx Health Care's products offer quality, moderately priced, efficacious treatment options for acute and chronic wounds,
ulcers and recurring skin conditions; and therapy options for edema most often treated by health care professionals. The retail
market for Amerx products is comprised of national and regional chain stores, independent retail pharmacies and medical supply
stores.



Distribution
and Sales



Amerx's
traditional method of distribution has been through retail and institutional distributors. We expect to continue increasing our
distributor base, particularly with distributors capable of introducing Amerx's products in new medical specialty markets, in
new geographical areas and to new retail chains. Distributors typically purchase products from Amerx on standard credit terms
(2%10, Net 30). Amerx supports its distributors through product literature, advertising and participation at industry trade shows.
All existing distributors sell Amerx products on a non-exclusive basis.



We
periodically receive inquiries about international market distribution for the AMERIGEL® product line. These inquiries have
been generated by our advertising, market presence and web sites (www.amerxhc.com and www.amerigel.com). We respond to and pursue
all such inquiries, while complying with applicable international

regulatory
guidelines.



In fiscal
2017, Amerx generated all of our net sales of approximately $4,012,000.



Significant
Customer



During
fiscal 2017, two customers accounted for approximately 17% of Amerx's sales. The loss of these customers could materially and
adversely affect our financial condition and the results of our operations. The Company has been able to maintain relationships
with its distributors and has been able to establish relationships with new distributors each year.





4





















Manufacturing



During
fiscal 2017, the majority of manufacturing of Amerx's products was completed by non-affiliated manufacturing facilities. Amerx
has written contracts with its manufacturers (and there are no minimum purchase requirements). The agreements / arrangements made
with manufacturers reduces the potential risk associated with relying on a single manufacturer. Amerx believes there are additional
companies that could manufacture Amerx products according to specifications, if necessary.



Amerx's
manufacturing and packaging activities are performed pursuant to Current Good Manufacturing Practices ("CGMP") as defined
under the United States Federal Food, Drug and Cosmetic Act, as amended (the "FFDC Act") and the regulations promulgated
under the FFDC Act. All manufacturing activities are required to comply with the product specifications, supplies and test methods
developed by Amerx specifically for its products, as well as the CGMP.



A
single source currently furnishes a proprietary ingredient contained in the AMERIGEL® products. Amerx does not have a written
contract with this supplier, however, management believes that, if necessary, an alternative supplier could be secured within
a reasonable period of time. The manufacturer generally provides other raw materials and ingredients and we believe there are
numerous other sources for these materials and ingredients. However, there can be no assurance that Amerx would be able to timely
secure an alternative supplier and the failure to replace this supplier in a timely manner could materially harm Amerx's results
of operations.



Proprietary
Rights



The
United States Patent and Trademark Office registered the Company's AMERIGEL® trademark in January 1999. OAKIN®, the principal
proprietary ingredient used in AMERIGEL® products became a registered trademark in 2007. In fiscal 2016, Amerx received registered
trademarks for the OAKIN® logo, HELIX3®, HELIX3 CM®, HELIX3 CP® and the HELIX3® logo. In fiscal 2017, Amerx
received registered trademark approval for the EXTREMIT-EASE® Compression Garment name, logo and mark "WHERE COMPRESSION
MEETS COMPLIANCE". All registered trademarks have been periodically renewed, when required, and are currently in effect.
In 2017 Amerx Health Care filed a patent application related to our EXTREMIT-EASE® compression product. Amerx relies on a
combination of trademarks, patents, trade secret protection and confidentiality agreements to establish and protect its proprietary
rights.



Amerx
purchased the formulation for its Amerigel Care Lotion in fiscal 2017.



Competition



The
market for skin and wound care treatment products in which Amerx operates is highly competitive. Competition is based on product
efficacy, brand recognition, loyalty, quality, price and availability of shelf space in the retail market. Amerx competes against
several well-capitalized companies offering a range of skin treatment products as well as small competitors having a limited number
of products. Amerx has successfully established its products efficacy and value within specialized health care markets and expects
to continue to expand this marketplace.



Order
Placement and Backlog



There
were no back orders as of June 30, 2017 and June 30, 2016, respectively.



Governmental
Approvals and Regulations



The
production and marketing of our products are subject to regulation for safety, efficacy and quality by numerous governmental authorities
in the United States. Amerx's advertising and sales practices are subject to regulation by the Federal Trade Commission (the "FTC"),
the FDA and state agencies. The FFDC Act, as amended, the regulations promulgated thereunder, and other federal and state statutes
and regulations govern, among other things, the testing, manufacture, safety, effectiveness, labeling, storage, record keeping,
approval, advertising and promotion of Amerx's products. The FDA regulates the contents, labeling and advertising of Amerx's products.
Amerx may be required to obtain FDA approval for proposed nonprescription products. This procedure involves extensive clinical
research, and separate FDA approvals are required at various stages of product development. The approval process requires, among
other things, presentation of substantial evidence to the FDA, based on clinical studies, as to the safety and efficacy of the
proposed product. After approval, manufacturers must continue to expend time, money and effort in production and quality control
to assure continual compliance with the Current Good Manufacturing Practices (CGMP) regulations.





5





















We
believe that, as of June 30, 2017 we are in compliance with all applicable laws and regulations relating to our operations in
all material respects. Compliance with the various provisions of national, state and local laws and regulations has had a
material adverse effect upon the capital expenditures, earnings, financial position, liquidity and competitive position of
the Company. We have incurred and will continue to incur costs in order to remain compliant with the latest regulations of
the US Securities and Exchange Commission (“SEC”) and the FDA.



Employees



As
of September 1, 2017, the Company and its subsidiary employ a total of 16 full time and 2 part time employees, consisting of 5
management employees, 5 sales-related employees and 8 administrative employees. One employee works under Procyon and seventeen
employees work under the Amerx subsidiary.



ITEM
2.	PROPERTIES



We
currently maintain our corporate office, and those of Amerx and Sirius, at 1300 South Highland Ave, Clearwater, Florida 33756.
Our office consists of approximately 3,800 square feet of space. We own the building free and clear of any mortgage or lien.



On
May 29, 2015 the Company entered into a lease agreement to lease 3,200 square feet of warehouse space in Clearwater, FL. The Company’s
product line expansion required additional warehouse space. The lease is a sixty-three month lease starting July 1, 2015 and ending
September 30, 2020. Lease payments started at $1,700 per month in year one and will increase to $1,913 per month in year five.



ITEM
3. 	LEGAL PROCEEDINGS



The
Company and its subsidiaries are not a party to any pending material legal proceedings nor is our property the subject of a pending
legal proceeding.



PART
II



ITEM
5. 	MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES.



The
Company’s Common Stock is quoted on the OTCQB electronic quotations system run by OTC Markets Group, Inc. The following
table sets forth for each period indicated the high and low closing bid prices for the Common Stock, as reported by OTC Markets
Group, Inc. Bid quotations reflect inter-dealer quotations, without retail markups, markdowns or commissions, and do not necessarily
reflect actual transactions.





6





















|Fiscal 2017    |  |   | HIGH |  |  |   | LOW | 
|-------------- |  | - | ---- |  |  | - | --- | 
|               |  |   |      |  |  |   |     | 
|First Quarter  |  | $ | .22  |  |  | $ | .13 | 
|Second Quarter |  | $ | .30  |  |  | $ | .13 | 
|Third Quarter  |  | $ | .31  |  |  | $ | .13 | 
|Fourth Quarter |  | $ | .19  |  |  | $ | .18 | 
|               |  |   |      |  |  |   |     | 
|Fiscal 2016    |  |   |      |  |  |   |     | 
|First Quarter  |  | $ | .13  |  |  | $ | .08 | 
|Second Quarter |  | $ | .12  |  |  | $ | .09 | 
|Third Quarter  |  | $ | .12  |  |  | $ | .08 | 
|Fourth Quarter |  | $ | .15  |  |  | $ | .08 | 



As
of October 5, 2017, there were approximately 110 record holders of the Company’s Common Stock. On October 5, 2017, the
closing bid price of the Company’s common stock was $.20 and the closing ask price was $.20. On July 26, 2017, the last
date on which a sale occurred, the last reported sale price was $.20.



Holders
of Common Stock are entitled to receive such dividends if declared by the Company’s Board of Directors. We have not declared
any dividends on our Common Stock and have no current plans to declare a dividend in the immediate future.



Holders
of the Series A Cumulative Convertible Preferred Stock (the “Preferred Stock”) are entitled to receive, if declared
by the Board of Directors, quarterly dividends at an annual rate of $.10 per share. Dividends accrue without interest, from the
date of issuance, and are payable in arrears in cash or common stock, when and if declared by the Board of Directors. No dividends
had been declared or paid at June 30, 2017, and dividends, if ever declared, in arrears at such date total $357,426.



Holders
of the Preferred Stock have the right to convert their shares of Preferred Stock into an equal number of shares of Common Stock
of the Company. In addition, every holder of preferred stock is entitled to that number of votes equal to the number of shares
of common stock into which the preferred stock is convertible. Such preferred shares will automatically convert into one share
of Common Stock at the close of a public offering of Common Stock by the Company provided the Company receives gross proceeds
of at least $1,000,000, and the initial offering price of the Common Stock sold in such offering is equal to or in excess of $1
per share. During fiscal 2017, one holder of shares of Preferred Stock voluntarily converted their Preferred shares into shares
of Common Stock. So long as any shares of Series A Preferred Stock are outstanding, the Company is prohibited from declaring dividends
or other distributions related to its Common Stock or purchasing, redeeming or otherwise acquiring any of the Common Stock.



As
reflected in the price quotations above, there have been price fluctuations in the Company’s Common Stock. Factors that
may have caused or can cause market prices to fluctuate include the number of shares available in the public float, any purchase
or sale of a significant number of shares during a relatively short time period, quarterly fluctuations in results of operations,
issuance of additional securities, entrance of such securities into the public float, market conditions specific to the Company’s
industry and market conditions in general, and the willingness of broker-dealers to effect transactions in low priced securities.
In addition, the stock market in general has experienced significant price and volume fluctuations in recent years. These fluctuations,
which may be unrelated to a Company’s operating performance, have had a substantial effect on the market price for many
small capitalization companies such as the Company. Factors such as those cited above, as well as other factors that may be unrelated
to the operating performance of the Company, may significantly affect the price of the Common Stock.







7



















Equity
Compensation Plan Information



The
following table contains information regarding Procyon’s equity compensation plans as of June 30, 2017. The Company maintains
one equity compensation plan, Procyon Corporation 2009 Stock Option Plan (the "2009 Option Plan"), which was approved
by our shareholders in December 2009. Our 1998 Omnibus Stock Option plan (the “1998 Option Plan”) expired by its own
terms in December 2008. No additional options may be issued under the 1998 Option Plan, and none remain outstanding.



Equity
Compensation Plan Information

|Plan
    category                                                                                                                          | Number
    of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average
    exercise price of outstanding options, warrants and rights | Number
    of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column
    (a))                                                    
|------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                           | (a)                                                                                             | (b)                                                                             | (c)                                                                                                                                                                                                    
|Equity
                                         compensation plans approved by security holders:
        
        2009
        Option Plan | 65,000                                                                                          | .17                                                                             | 500,000
    shares of Common Stock for Non-Qualified Stock Options (250,000 of which have been issued) and Stock Appreciation Rights and
    500,000 shares of Common Stock for Incentive Stock Options
|Equity
    compensation plans not approved by security holders                                                                             | -                                                                                               | -                                                                               |                                                                                                                                                                                                        
|Total                                                                                                                                      | 65,000                                                                                          | .17                                                                             | 500,000
    shares of Common Stock for Non-Qualified Stock Options (250,000 of which have been issued) and Stock Appreciation Rights and
    500,000 shares of Common Stock for Incentive Stock Options



|ITEM 7. |  | MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- |  | --------------------------------------------------------------------------------------



Safe
Harbor Statement under the Private Securities Litigation Reform Act of 1995



This
Report on Form 10-K, including Management’s Discussion and Analysis or Plan of Operation, contains forward-looking statements.
When used in this report, the words “may”, “will”‚ “expect”‚ “anticipate”‚
“continue”‚ “estimate”‚ “project”‚ “intend”‚ “hope”‚
“believe” and similar expressions, variations of these words or the negative of those words, and, any statement regarding
possible or assumed future results of operations of the Company’s and its subsidiaries’ business, the markets for
its products, anticipated expenditures, regulatory developments or competition, or other statements regarding matters that are
not historical facts, are intended to identify forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions and financial trends including,
without limitation, business conditions in the skin and wound care market and the general economy, competitive factors, changes
in product mix, production delays, manufacturing capabilities, new and unanticipated governmental regulations and other risks
or uncertainties detailed in other of the Company’s Securities and Exchange Commission filings. Such statements are based
on management’s current expectations and are subject to risks, uncertainties and assumptions. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual plan of operations,
business strategy, operating results and financial position could differ materially from those expressed in, or implied by, such
forward-looking statements.



8





















Our
business in general is subject to certain risks including but not limited to the following





-we
may not be able to produce or obtain, or may have to obtain at excessive prices, the raw materials and finished goods we need;

-the
vendors on whom we rely for manufacturing certain products may go out of business, fail to meet demand or provide shipments on
an untimely basis;

-competitive
pressures may require us to lower our prices on certain products, thereby adversely affecting operational results;

-we
may not be able to obtain, or obtain at uneconomic expense and protracted time, the regulatory approval of new products;

-no
assurance can be given that we will remain in compliance with applicable FDA and other regulatory requirements once clearance
or approval has been obtained for a product. We must incur expense and spend time and effort to ensure compliance with these complex
regulations. Possible regulatory actions could include warning letters, fines, damages, injunctions, civil penalties, recalls,
seizures of our products, and criminal prosecution;

-consumers
or distributors may not favorably receive our new or existing products;

-we
may not be able to obtain adequate financing to fund our operations or expansion;

-a
relatively small group of products may represent a significant portion of our net revenues or net earnings from time to time;
if the volume or pricing of any of these products declines, it could have a material adverse effect on our business, financial
position and results of operations;

-we
currently sell approximately 17% of our products to two customers; the loss of those customers would have a material adverse effect
upon our financial position and results of operations;

-we
could experience reduced revenues and profits if Medicare or other government programs change, delay or deny reimbursement claims;

-we
are subject to various federal, state, and international laws and regulations pertaining to government benefit program reimbursement,
price reporting and regulation, and health care fraud and abuse, including anti-kickback and false claims laws, the Medicaid Rebate
Statute, the Veterans Health Care Act, and individual state laws relating to pricing and sales and marketing practices; violations
of these laws may be punishable by criminal and/or civil sanctions, including, in some instances, substantial fines, imprisonment,
and exclusion from participation in federal and state health care programs, including Medicare, Medicaid, and Veterans Administration
health programs; violations of these laws, or allegations of such violations, could disrupt our business and result in a material
adverse effect on our revenues, profitability, and financial condition;

-the
loss of senior management or other key personnel, or our inability to attract and retain additional senior management or other
key personnel, could adversely affect our ability to execute our business plan;

-we
could become subject to new unanticipated governmental regulations or fail to comply with regulations applicable to our products,
which could materially and adversely affect our business, financial position and results of operations; and

-legislative
or regulatory programs that may influence prices of prescription drugs could have a material adverse effect on our business;

-the
demand for our products may decrease because of various factors, such as adverse business conditions and a sluggish U.S. economy;

-our
product supply and related patient access to products could be negatively impacted by, among other things: (i) seizure or recalls
of products or forced closings of manufacturing plants, (ii) supply chain continuity including from natural or man-made disasters
at one of our facilities or at a critical supplier or vendor, as well as our failure or the failure of any of our vendors or suppliers
to comply with Current Good Manufacturing Practices and other applicable regulations and quality assurance guidelines that could
lead to manufacturing shutdowns, product shortages and delays in product manufacturing, (iii) manufacturing, quality assurance/quality
control, supply problems or governmental approval delays, (iv) the failure of a sole source or single source supplier to provide
us with necessary raw materials, supplies or finished goods for an extended period of time, (v) the failure of a third-party manufacturer
to supply us with finished product on time, (vi) construction or regulatory approval delays related to new facilities or the expansion
of existing facilities (vii) the failure to meet new and emerging regulations requiring products to be tracked throughout the
distribution channels using unique identifiers and (viii) other manufacturing or distribution issues including limits to manufacturing
capacity due to regulatory requirements; changes in the types of products produced; physical limitations or other business interruptions;

-we
may experience an increase in the number and magnitude of delinquent or uncollectible customer accounts during periods of economic
downturn.



9















CRITICAL
ACCOUNTING POLICIES AND ESTIMATES



Our
financial statements have been prepared in accordance with standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), which require us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and the related disclosures. A summary of those significant accounting policies can be found in the Notes
to the Consolidated Financial Statements included in this annual report. The estimates used by management are based upon our historical
experiences combined with management’s understanding of current facts and circumstances. Certain of our accounting policies
are considered critical as they are both important to the portrayal of our financial condition and the results of its operations
and require significant or complex judgments on the part of management. We believe that the following critical accounting policies
affect the more significant judgments and estimates used in the preparation of our financial statements.





Advertising
and Marketing



The
Company uses several forms of advertising, including sponsorships to agencies who represent the professionals in their respective
fields. The Company expenses these sponsorships over the term of the advertising arrangements, on a straight line basis. Other
forms of advertising used by the Company include professional journal advertisements and mailing campaigns, exhibiting at Trade
Shows, and maintaining a internet presence. These forms of advertising are expensed when incurred.



Deferred
Income Taxes



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 exacted 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.
We did not have a valuation allowance as of June 30, 2017. 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.



Revenue
Recognition



The
Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin Topic 13, “Revenue
Recognition”, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence
of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer
is fixed or determinable; and, (4) collectibility is reasonably assured. We recognize revenue related to product sales upon the
shipment of such orders to customers, provided that the risk of loss has passed to the customer and we have received and verified
any written documentation required to bill Medicare, other third-party payers and customers. We record revenue at the amounts
expected to be collected from Medicare, other third-party payers and directly from customers. We delay recognizing revenue for
shipments where the Company has not received the required documentation, until the period when such documentation is received.



10



















Revenue
from Contracts with Customers (Topic 606)



In May
2014, the FASB issued a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when
a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects
to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing,
and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will be effective for the Company
beginning July 1, 2018 and early adoption is not permitted. We are currently evaluating the impact this standard will have on
our consolidated financial statements.



Stock
Based Compensation



Stock
based compensation is accounted for in accordance with Topic 718 - Compensation - Stock Compensation in the Accounting Standards
Codification. All share-based payments to employees, including grants of employee stock options, are to be recognized in the statement
of operations based upon their fair values and rescinds the acceptance of pro forma disclosure.



Recent
Developments



Three
voluntary product recalls initiated in 2104-2016 were closed in fiscal 2017. Amerx corrected the issues involved with the recalls,
absorbed the financial impact of the recalls in 2015-2016 and re-established sales with the majority of customers affected.



General



Our
continuing operations and revenues consist of the operations of and revenues generated by Amerx, our wholly-owned subsidiary.
Amerx skin and wound care products, marketed under the trademark AMERIGEL® and containing the proprietary ingredient
OAKIN®, promote wound healing and healthy skin through moderately priced products for treatment of problematic
skin and wound conditions.



Amerx
markets AMERIGEL®, HELIX3®, AMERX wound care products and EXTREMIT-EASE® compression
garments to institutional customers such as hospitals, wound care clinics, skilled nursing facilities, home health agencies and
to physicians and other health care practitioners. AMERIGEL® products are also marketed to retail customers through
direct sales, internet sales and through independent and retail chain drug stores and to physicians and other health care practitioners.



Amerx’s
products are distributed to institutions and to retail stores through national, regional and local distributors as well as through
direct sales and internet sales. As Amerx grows, more focus is being placed on distributor sales over direct sales.



11

















Future
Expectations



Amerx
expects to further penetrate the health care market through its participation in industry trade shows, advertisements in trade
journals, development of additional distributor relationships and by opening new geographical territories (including international
markets). Amerx management seeks to develop additional markets as the AMERIGEL®, HELIX3®, AMERX
and EXTREMIT-EASE® product lines gain broader acceptance in markets involved in advanced wound and skin care. Amerx management
also seeks to develop new products to be released as soon as practicable.



Results
of Operations



Comparison
of Fiscal 2017 and 2016.



During
fiscal 2017 and 2016, our results of operations related solely to the operations of Amerx. Net sales during fiscal 2017 were approximately
$4,012,000 as compared to approximately $3,449,000 in fiscal 2016, an increase of approximately $563,000, or 16%. Sales grew through
continued sales of core brands combined with growth in new product brand sales.



Cost
of sales were approximately $1,263,000 in fiscal 2017, as compared to approximately $1,030,000 in fiscal 2016, an increase of
approximately $233,000 or 23%. Cost of sales in fiscal 2017, as a percentage of net sales, increased approximately 1% to 31%.



Gross
profit increased to approximately $2,750,000 during fiscal 2017, as compared to approximately $2,419,000 during fiscal 2016, an
increase of about $331,000, or 14%. As a percentage of net sales, gross profit was approximately 69% in fiscal 2017 as compared
to 70% in fiscal 2016.



Operating
expenses during fiscal 2017 were approximately $2,720,000, consisting of approximately $1,567,000 in salaries and benefits and
$1,153,000 in selling, general and administrative expenses. Operating expenses in fiscal 2016 were approximately $2,522,000 and
consisted of approximately $1,455,000 in salaries and benefits and approximately $1,067,000 in selling, general and administrative
expenses. This represents an increase in expenses of approximately $198,000 in fiscal 2017 over the operating expenses in fiscal
2016. As a percentage of net sales, operating expenses during fiscal 2017 were 68% as compared to 73% during fiscal 2016; as net
sales increased approximately $563,000 for the year on an approximately $198,000 increase in expenses. Salaries and Benefits increased
with the implementation and accrual of Sales Incentive and Profit incentive plans and the addition of a full time management employee
responsible for FDA compliance. Selling, General and Administrative expenses increased slightly due to cost associated general
business activities.



Income
from operations finished at approximately $30,000 in 2017, as compared to approximately $104,000 loss in fiscal 2016. Income before
income taxes finished at approximately $29,000 in 2017, as compared to income of approximately $190,000 in 2016. Net income (after
dividend requirements for Preferred Shares) was approximately $26,000 during fiscal 2017, compared to approximately $90,000 during
fiscal 2016. The Company also recorded approximately $17,000 of income tax expense when determining the net income available to
common shares in fiscal 2017. Although sales increased in fiscal 2017, net income before income taxes declined from fiscal 2016
net sales as a result of increased cost of sales and operating expenses without the benefit of additional proceeds from the sale
of an asset as occurred in 2016.



The
decrease in net income before income taxes was attributable increase in sales as well, however this was offset by lack of proceeds
received from the sale of one of the Company’s 510(k) Notification and Clearance which was not being utilized by the Company.



As
of June 30, 2017, the Company had deferred tax asset of $663,738, consisting primarily of the tax benefit of net operating loss
carryforwards. Management still believes it is more likely than not that it will realize the benefit of the NOL carryforward,
despite the set back from this fiscal year as sales continue to trend upward. Therefore, a valuation allowance is not considered
necessary.

12





















Liquidity
and Capital Resources



Historically,
we have financed our operations through revenues from operations. As of June 30, 2017, our principal sources of liquidity included
inventories of approximately $577,000, net accounts receivable of approximately $392,000, cash of approximately $173,000, and
certificates of deposit of approximately $214,000. We had net working capital of approximately $1,151,000 at June 30, 2017.



Operating
activities provided cash of approximately $200,000 during fiscal 2017, and approximately $19,000 during fiscal 2016, consisting
primarily of an increase in accounts receivable of $148,000 in fiscal 2017 and a decrease in inventory of $254,000 in fiscal 2016.
Cash provided by investing activities during fiscal 2017 was approximately $43,000 as compared to cash used in fiscal 2016 of
approximately $207,000, respectively. Cash used in financing activities during fiscal 2017 was $129,000 and provided by $43,000
during fiscal 2016.



During
fiscal 2017, one holder of shares of Preferred Stock converted their shares to Common Stock.



Commitments
of Capital Expenditures



At
June 30, 2017, the Company had no commitments for capital expenditures.



Off-Balance
Sheet Arrangements



During
fiscal years 2017 and 2016, we did not have any relationships or arrangements with unconsolidated entities or financial partnerships,
such as entities often referred to as structured finance or special purpose entities, which would have been established for the
purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.



ITEM
8. 	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Consolidated
financial statements as of June 30, 2017, and 2016 were audited by Ferlita, Walsh, Gonzalez and Rodriguez, P.A., the Company’s
independent auditors, as indicated in their report included appearing at page F-1.



INDEX
TO FINANCIAL STATEMENTS





|                                                        | Page
|------------------------------------------------------- | ----
|                                                        |     
|Report of Independent Registered Public Accounting Firm | F-1 
|                                                        |     
|Consolidated Balance Sheets                             | F-2 
|                                                        |     
|Consolidated Statements of Operations                   | F-3 
|                                                        |     
|Consolidated Statements of Stockholders’ Equity         | F-4 
|                                                        |     
|Consolidated Statements of Cash Flows                   | F-5 
|                                                        |     
|Notes to Consolidated Financial Statements              | F-6 





13























|ITEM 9. |  | CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|------- |  | -------------------------------------------------------------------------------------



None.



ITEM
9A.	          CONTROLS AND PROCEDURES.



Management
of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, has conducted an evaluation
of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange
Act of 1934, as of the end of the period covered by this report. Based on that evaluation, management, including the Chief Executive
Officer and Chief Financial Officer, concluded that, as of the date of this report, the Company’s disclosure controls and
procedures were not effective in ensuring that all material information relating to the Company required to be disclosed in this
report has been made known to management in a timely manner and ensuring that this information is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and regulations, because of the identification of a certain
material weakness in our internal controls over financial reporting which is identified below, which we view as an integral part
of our disclosure controls and procedures.



Our
management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls
and procedures or our internal controls over financial reporting will, in all instances, prevent all errors and all fraud. A control
system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that the objectives of
the control system are met. While our control systems provide a reasonable assurance level, the design of our control systems
reflects the fact that there are resource constraints, and the benefits of such controls were considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the financial reports of the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple
errors or mistakes. Additionally, a control can be circumvented by the individual act of some person, by collusion of two or more
persons, or by management’s override of a specific control. The design of any system of controls is also based in part on
certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.



(a)
Management’s annual report on internal control over financial reporting. Our management is responsible for establishing
and maintaining adequate internal control over financial reporting for the Company. The Company’s internal controls system
was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation
and fair presentation of published financial statements.



All
internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to
be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.



The
Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of June
30, 2017. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in Internal Control—Integrated Framework, Guidance for Smaller Public Companies. Our assessment
based on those criteria concludes that, as of June 30, 2017, the Company’s internal control over financial reporting was
not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with Generally Accepted Accounting Principles (“GAAP”) rules as more
fully described below. This was due to a deficiency that existed in the design or operation of our internal controls over financial
reporting that adversely affected our internal controls and that may be considered to be a material weakness. The matter involving
internal controls and procedures that the Company’s management considers to be a material weakness under the standards of
the Public Company Accounting Oversight Board in fiscal 2017 is inadequate segregation of duties consistent with control objectives.
Management believes that this material weakness did not have an adverse effect on the Company’s financial results reported
herein. We believe that this material weakness will be remedied with growth of the company in the future and hiring of additional
personnel.



The
Company is committed to continuous improvement of our internal control environment and financial organization. As part of this
commitment, we intend to increase our personnel resources and technical accounting expertise within the accounting function through
outside assistance from accounting experts and increase our segregation of duties within the company within the limits of our
existing personnel. In addition, we intend to continually evaluate our policies and procedures to keep up with and expand our
internal controls and quality of financial reporting within our personnel as our company grows. We expect to involve the board
of directors more during the year regarding Company operations, including annual and quarterly risk assessments, strategic planning,
and financial oversight and reporting. We expect to strengthen the expertise of the board by adding future members that have financial
and business expertise in our industry. We intend to add additional members to the audit committee and require the audit committee
members to further their understanding of Sarbanes-Oxley rules and requirements and continue their oversight responsibility of
implementing necessary and effective internal control policies and procedures. We intend to monitor and evaluate the effectiveness
of our internal controls and procedures over financial reporting on an ongoing basis and are committed to taking further action
and implementing additional improvements as necessary and as resources allow.





14

















(b)
Attestation report of the independent registered public accounting firm. This annual report does not include an attestation
report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s independent registered public accounting firm
pursuant to Item 308(b) of Regulation S-K.



(c)
Changes in internal control over financial reporting. The Company has eliminated all material weaknesses with the exception
of the segregation of duties weakness noted above. The Company will not be able to eliminate this weakness until such time as
growth in the numbers of employees permits. As the Company grows this will be addressed.



ITEM
9B.      OTHER INFORMATION



PART
III



ITEM
10. 	     DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.



Directors
and Executive Officers



|                         |     | Capacities in                                              | Director
|------------------------ | --- | ---------------------------------------------------------- | --------
|NAME                     | Age | Which Served                                               | Since   
|                         |     |                                                            |         
|Regina W. Anderson       | 70  | Chief Executive Officer, and                               | 2005    
|                         |     | Chairman of the Board                                      |         
|Fred W. Suggs, Jr.       | 70  | Director                                                   | 1995    
|James B. Anderson        | 47  | Director, Chief Financial Officer;                         |         
|                         |     | Vice President - Operations, Amerx                         |         
|                         |     | Health Care Corp.                                          | 2006    
|Justice W. Anderson      | 40  | Director,
    Vice President Sales & Marketing; President, |         
|                         |     | Vice
    President Marketing, Amerx Health Care Corp.      | 2006    
|Michael T. Foley         | 79  | Director                                                   | 2006    
|Joseph R. Treshler       | 64  | Director                                                   | 2013    
|Dr. Paul E. Kudelko, Sr. | 77  | Director                                                   | 2013    
|George O. Borak          | 56  | Vice President - Sales, Amerx Health Care Corp.            |         
|                         |     |                                                            |         





Regina
Anderson. Ms. Anderson has served as Chairman of the Board of Directors since September 2005, and as our Chief Executive Officer
since November 2005. Ms. Anderson has 35 years experience in the medical field and 29 years of management experience. Ms. Anderson
worked at Health South Rehabilitation Hospital for ten years as Outpatient Director, in charge of the main outpatient center plus
four satellite offices. Prior to her work at HealthSouth, Regina was Vice-President of Operations at Stuffit Direct Marketing
Company from 1980 through 1989. Regina received her Masters Degree from Kansas State University in 1970.



Fred
W. Suggs, Jr. Mr. Suggs has served on our Board of Directors since 1995. He is a member of the Compensation committee and
Chairman of the Ethics committee. He has been a practicing attorney since 1975. He is a partner in the Greenville, South Carolina
office of Ogletree, Deakins, Nash, Smoak & Stewart, specializing in labor and employment law. He has been certified as a specialist
in labor and unemployment law by the South Carolina Supreme Court and is a frequent lecturer on labor and employment law issues.
Mr. Suggs graduated from Kansas State University with a B.S. degree and he received his J.D. degree from the University of Alabama.



James
B. Anderson. Mr. Anderson, a Director since 2006, has served as our Chief Financial Officer since June 2005. In addition,
from September 22, 2005, until that position was filled by Regina Anderson on November 1, 2005, Mr. Anderson served as Interim
Chief Executive Officer. On June 28, 2005, Mr. Anderson was appointed to serve as the President of Sirius Medical Supply, Inc.
Since 1993, Mr. Anderson has been involved with Amerx Health Care Corporation as its Chief Information Officer until 2005, when
he was appointed VP of Operations. In 1996, Mr. Anderson became involved with Procyon Corporation after its merger and has since
performed the duties of Vice President of Operations. Prior to Mr. Anderson’s work with the Company, he was involved with
importing and exporting to Russia and Direct Mail Marketing. He received a B.S. from the University of South Florida. Mr. Anderson
is the son of John C. Anderson, our late President, Chief Executive Officer and Chairman of the Board, the son of Regina Anderson,
the Company’s Chairman of the Board and Chief Executive Officer, and the brother of Justice W. Anderson, our Vice President
of Sales & Marketing and the President of Amerx Health Care Corporation.





15















Justice
W. Anderson.Mr. Anderson currently serves as the Vice President of
Sales and Marketing for Procyon and President and V.P. of Marketing for Amerx Health Care Corporation. He has served on Procyon's
Board of Directors since 2006. Mr. Anderson served as the Vice President of Sales for Amerx from January of 2001 until June of
2012 when the new V.P. of Sales was hired. Mr. Anderson has served on the Corporate Advisory Board of the American Academy of
Podiatric Practice Management. Mr. Anderson joined Amerx in 2000 after receiving his B.A. degree from the University of Florida.
Mr. Anderson is the son of John C. Anderson, our late President, Chief Executive Officer and Chairman of the Board, son of Regina
Anderson, the Company's Chairman of the board and Chief Executive Officer and the brother of James B. Anderson, our Chief Financial
Officer.



Michael
T. Foley.Mr. Foley has been a Director of the Company since 2006 and is the Chairman of the Audit Committee. He is currently
a Vice President and Director of Suwannee Lumber Company, which sold substantially all of its assets in June 2013. From 1997 to
2003, Mr. Foley served as President and CEO of Gypsum Products, Inc. of Largo, FL. From 1972 to 1996 Mr. Foley served in various
capacities at Florida Forest Products, Inc. including President, Chairman and CEO. Prior to his association with these building
material suppliers, Mr. Foley worked for International Paper in pulp and newsprint sales. Michael received his Bachelor of Business
Administration degree from the University of Notre Dame in 1960 and subsequently served on that university's National Alumni Board.
He obtained his MBA from the University of Florida in 1965. Mr. Foley has been a member of the Pinellas County Committee of 100
and was appointed by Governor Lawton Chiles to the State of Florida Community Health Purchasing Alliance (CHPA) Board. Mr. Foley
is also a retired Captain in the U.S. Naval Reserve.



Joseph
R. Treshler. Mr. Treshler has served on the Board of Director’s since January 2013 and is a member of the Audit and
Compensation Committees. Mr. Treshler serves at the Vice President of Business Management & Development of Covanta Energy
Corporation, and is responsible for Covanta’s asset management, business development, project implementation, client community
relations, community affairs and Clean World Initiative efforts in Florida. Mr. Treshler earned his B.S. degree in Chemical Engineering
in 1974 from Iowa State University of Science and Technology. He is a Professional Engineer registered to practice in the State
of Florida. Mr. Treshler was appointed by the Company’s Board of Directors to serve on the Audit Committee on January 8,
2013 and to serve on the Ethics Committee on June 7, 2013.



Dr.
Paul E. Kudelko, Sr. Dr. Kudelko has served as a Director of the Company since December 2013 and is a member of the Ethics
Committee. Dr. Kudelko is a retired cardiovascular physician. At the time of his retirement in 2010, Dr. Kudelko had practiced
with the Clearwater Cardiovascular and Interventional Consultants for the past seven years. Dr. Kudelko attended Duquesne University,
graduated from the Kirksville College of Osteopathic Medicine, and was a resident in medicine at Detroit Osteopathic Hospital
and Riverside Hospital, Trenton, MI. Dr. Kudelko acted as Affiliate Assistant Professor, Department of Family Medicine, and Department
of Internal Medicine, at the University of South Florida College of Medicine in Tampa, FL for a total of approximately eleven
years.



George
O. Borak. George O. Borak Mr. Borak joined Amerx Health Care as Vice President of Sales in June of 2012. Mr. Borak has 33
years of experience in the medical field and 22 years in sales management. Most recently, he was Vice President of Sales and Marketing
for Darco International where his duties included managing Sales, Marketing, Customer Service, OEM and International Sales. Prior
to that he was in sales and sales management for several orthopedic companies. Mr. Borak earned his Bachelors of Science degree
in Marketing Management from Youngstown State University in 1983, while working as a clinician in the Emergency and Orthopedic
Departments of a local hospital.







16



















Compliance
with Section 16(a) of the Exchange Act



Under
the securities laws of the United States, our directors, executive officers, and any persons holding more than ten percent of
our Common Stock are required to report their initial ownership of the Company’s Common Stock and any subsequent changes
in that ownership to the Securities and Exchange Commission and the Company. Specific due dates for these reports have been established
and we are required to disclose any failure to file, or late filing, of such reports. Based solely on our review of the reports
and amendments thereto furnished to the Company and written representations that all reports that were required to be filed in
fiscal 2017, our officers, directors and beneficial owners of more than ten percent of its Common Stock complied with all Section
16(a) filing requirements.



Committees
of the Board



The
Board of Directors has delegated certain of its authority to an Audit Committee, Compensation Committee and an Ethics Committee.



The
Compensation Committee is composed of Messrs. Suggs (Chairman) and Treshler. No member of the Compensation Committee is a former
or current officer or employee of the Company. The primary function of the Compensation Committee is to review and make recommendations
to the Board with respect to the compensation, including bonuses, of the Company's officers and to administer the Company’s
Option Plan. The Board of Directors adopted a Compensation Committee Charter during the 2008 fiscal year. The charter for the
compensation committee may be viewed on the company website (www.procyoncorp.com).



The
Company formed an Audit Committee in July 2004. In December 2006, the Board nominated Michael T. Foley as director and Audit Committee
member and Chair. In January 2013, the Board appointed Joseph R. Treshler as director and a member of the Audit Committee. The
Board believes that Mr. Foley and Mr. Treshler are independent pursuant to The NASDAQ Stock Market, Inc. (“NASDAQ”)
rules and both Messrs Foley and Treshler also meet the requirements of an audit committee financial expert. In addition, we have
determined that Mr. Foley and Mr. Treshler are also independent within the meaning of SEC Rule 10A-3(b)(1). The function of the
Audit Committee is to review and approve the scope of audit procedures employed and to review and approve the audit reports rendered
by the Company's independent auditors and to approve the audit fees charged by the independent auditors. In addition, pursuant
to the Sarbanes-Oxley Act of 2002 and rules promulgated thereunder, the Audit Committee is responsible for, among other things,
pre-approving all audit and non-audit services performed by the independent auditors, approving the engagement of the auditors
and receiving certain reports from the independent auditors prior to the filing of the audit report. The Audit Committee reports
to the Board of Directors with respect to such matters and recommends the selection of independent auditors. The Audit Committee
adopted a charter in October 2006, which may be viewed on the Company website (www.procyoncorp.com).



The
Company also formed an Ethics Committee of the board members in 2004. The members are Messrs. Suggs (Chairman) and Kudelko. The
charter for the ethics committee may be viewed on the company website (www.procyoncorp.com).
The function of the Ethics Committee is to oversee officers, directors and employees in conducting business on behalf of the Company
in an honest and ethical manner. The Ethics Committee is responsible for monitoring and reporting any possible violations of the
Code of Ethics to the Board of Directors.





The
Company does not have a Nominating Committee. However, the entire board of directors, which is comprised of a majority of independent
directors, performs the function of a nominating committee. There have been no material changes to the procedures by which security
holders may recommend nominees to our board of directors.



In
fiscal 2017, the Board of Directors held eleven formal meetings. A majority of directors attended each meeting in person or by
telephone. The Compensation Committee held seven meetings during fiscal 2017. The Audit Committee held three meetings during fiscal
2017 The Ethics Committee held two meeting during fiscal 2017.



Code
of Ethics for Senior Financial Officers



The
Company has adopted a Code of Ethics for Senior Financial Officers. The Code of Ethics applies to all senior financial officers
of the Company, including the Chief Executive Officer, the Chief Financial Officer, the Treasurer and any other person performing
similar functions. A copy of the Code of Ethics may be viewed on our website, at www.procyoncorp.com.





17

















ITEM
11.     	EXECUTIVE COMPENSATION.



Summary
Compensation Table. The following table sets forth compensation information for the two fiscal years ended June 30, 2017
and 2016 of the Company’s Chief Executive Officer, Chief Financial Officer, the President and Vice President of Sales of
our subsidiary, Amerx Health Care Corp. (the “Named Executive Officers”). Elements of compensation for our Named Executive
Officers include salary, discretionary cash bonuses, stock option awards and other prerequisites and benefits. We do not have
a pension plan and do not offer non-qualified deferred compensation arrangements.





|Name and Principal Position                                |  | Year |      | Salary($) |  | Bonus($) |         | Option Awards($) |  | Non-equity incentive plan compensation($)(3) |        | All Other Compensation($) |  | Total($)         
|---------------------------------------------------------- |  | ---- | ---- | --------- |  | -------- | ------- | ---------------- |  | -------------------------------------------- | ------ | ------------------------- |  | -----------------
|Regina W. Anderson,                                        |  |      | 2017 |           |  | $        | 161,821 |                  |  | $                                            | 0      |                           |  | $               0
|President, Chief Executive Officer                         |  |      | 2016 |           |  | $        | 158,772 |                  |  | $                                            | 0      |                           |  | $               0
|Justice W. Anderson,                                       |  |      | 2017 |           |  | $        | 214,043 |                  |  | $                                            | 30,980 |                           |  | $    4,745(2)    
|President (Amerx )                                         |  |      | 2016 |           |  | $        | 214,043 |                  |  | $                                            | 40,944 |                           |  | $    5,140(1)    
|James B. Anderson,                                         |  |      | 2017 |           |  | $        | 151,233 |                  |  | $                                            | 0      |                           |  | $               0
|Chief Financial Officer, Vice Pres. of Operations (Amerx ) |  |      | 2016 |           |  | $        | 128,985 |                  |  | $                                            | 0      |                           |  | $               0
|George O. Borak,                                           |  |      | 2017 |           |  | $        | 149,995 |                  |  | $                                            | 23,939 |                           |  | $               0
|Vice Pres. Of Sales (Amerx )                               |  |      | 2016 |           |  | $        | 148,994 |                  |  | $                                            | 29,002 |                           |  | $               0



1.	Aggregate
grant date fair value. 40,000 options granted with $0.15 exercise price.

2. Aggregate
grant date fair value. 25,000 options granted with $0.19 exercise price.

3.	Profit
sharing earned in fiscal 2016/2017 respectively, but paid on or about October 1, 2016/2017 respectively.



18















Narrative
Disclosure to Summary Compensation Table



Named
Executive Officer's Employment Contracts



Regina
W. Anderson, our Chief Executive Officer, entered into a Restated and Amended Executive Employment Agreement, effective July 1,
2017, with Procyon. The Agreement provides for a base annual salary of $158,000 and other benefits, including certain short-term
and long-term incentive bonus compensation based upon the Company achieving certain financial goals for net profit. Ms. Anderson's
Agreement calls for a term of six months, but may be terminated by either party, with or without cause, upon thirty days’
written notice.



Justice
W. Anderson, the President of Amerx, entered into a Restated and Amended Executive Employment Agreement with the Company and Amerx
effective July 1, 2017. The Agreement provides for a base annual salary of $210,000 and other benefits, including certain short-term
and long-term incentive bonus compensation based upon Amerx achieving certain financial goals for sales and net profit. Mr. Anderson's
Agreement calls for a term of one year, but may be terminated by either party, with or without cause, upon thirty days’
written notice.



James
B. Anderson, the Vice President of Operations of Amerx and the Company's Chief Financial Officer, entered into a Restated and
Amended Executive Employment Agreement with Procyon and Amerx effective July 1, 2017. The Agreement provides for an annual base
salary of $150,000 and other benefits, including short-term and long-term incentive bonus compensation based upon Amerx achieving
certain operational and financial goals. Mr. Anderson's Agreement calls for a term of one year, but may be terminated by either
party, with or without cause, upon thirty days’ written notice.



We
entered into a Restated and Amended Executive Employment Agreement with George Borak effective July 1, 2017 to serve as Amerx's
Vice President - Sales for a base annual salary of $160,000 plus certain incentive and other benefits, including a growth incentive
providing for the payment of a certain incentive bonus based upon specified increases in sales over the previous year.



Outstanding
Equity Awards



An
Agreement to grant 40,000 Options to purchase common stock was executed and delivered to Justice Anderson, pursuant to his executive
employment agreement, on September 27, 2016, but with a grant date of June 30, 2016.



An
Agreement to grant 25,000 Options to purchase common stock was executed and delivered to Justice Anderson, pursuant to his executive
employment agreement, on August 23, 2017, but with a grant date of June 30, 2017.



Compensation
of Directors



No
employee of the Company receives any additional compensation for his services as a director. No non-employee director receives
any compensation for his service; however, the Board of Directors has authorized payment of reasonable travel or other out-of-pocket
expenses incurred by non-management directors in attending meetings of the Board of Directors. The Board of Directors may consider
alternative director compensation arrangements from time to time.



Stock
Option Plan



The
Company maintains the Procyon Corporation 2009 Stock Option Plan.



The
Procyon Corporation 2009 Stock Option Plan (the "2009 Option Plan") was approved by our shareholders on December 8,
2009. Pursuant to the terms of the 2009 Option Plan, the plan shall continue in effect until December 8, 2019. The purpose of
the 2009 Option Plan is to advance the interests of the Company and the Company's stockholders by enhancing the Company's ability
to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such
persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of
such persons with those of the Company's stockholders.





19















The
2009 Option Plan provides for the granting of Incentive Stock Options, meeting the requirements of §422 of the Internal Revenue
Code (the "Code"), Non-Qualified Stock Options, which do not qualify as Incentive Stock Options, and Stock Appreciation
Rights ("SARs") (together, an "Award"). The Plan is administered by our Compensation Committee.



The
Board of Directors has authorized the issuance of 500,000 shares of common stock to underlie the granting of Incentive
Stock Options and 500,000 shares of common stock to underlie the granting of Non-Qualified Stock Options and SARs under the
2009 Option Plan. The Board issued 250,000 shares of common stock to underlie Non-Qualified Stock Options on September 27,
2016, effective on June 30, 2016. As of June 30, 2017, 65,000 Options to purchase common stock were awarded to Justice
Anderson, pursuant to the terms of his employment agreements, effective October 1, 2015 and July 1, 2016, respectively. The
1,000,000 shares of common stock that have been reserved for the 2009 Option Plan (250,000 recently issued for Non-Qualified
Stock Options) have not been registered under the Securities Act of 1933. We have no present plans to register such
shares.



Eligible
participants under the 2009 Option Plan must be such full or part-time officers and other Employees, Non-Employee Directors and
key persons (including consultants and prospective employees) of the Company and its Subsidiaries as are selected from time to
time by the Compensation Committee in its sole discretion. Only employees may receive Incentive Stock Options. Employees, non-employee
directors and consultants may receive Non-Qualified Stock Options or SARs.



Non-Qualified
Stock Options granted under the 2009 Option Plan many have a term of not more than ten years from the date of grant. The exercise
price must be not less than 100% of the fair market value of the underlying common stock on the date of grant. Incentive Stock
Options can be granted under the 2009 Option Plan for a term not exceeding ten years, except for Ten Percent Owners of our common
stock, as defined in the Plan, for whom the maximum option term is five years. Incentive Stock Options are granted with an exercise
price of not less than 100% of the fair market value of the underlying common stock on the date of grant. However, for Incentive
Stock Options owned by Ten Percent Owners, the exercise price must be 110% of the Fair Market Value of the underlying stock on
the date of grant.





ITEM
12. 	             SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.



The
following table sets forth certain information regarding beneficial ownership of our Common Stock as of October 5, 2017 by (i)
each person known by the Company to own beneficially more than 5% of the outstanding Common Stock, (ii) each director or director
nominee, and (iii) all executive officers and directors as a group. Each person has sole voting and sole investment or dispositive
power with respect to the shares shown except as noted. As to the Company's preferred stock, as of October 5, 2017 no officer
or director of the company owned any preferred shares. In addition, no individual shareholder beneficially owned more than 5%
of the Company's preferred shares.





|Common Shareholdings on October 5, 2017                    
|-----------------------------------------------------------
|                                                           
|Name and Address                                           
|Regina W. Anderson                                         
|Fred W. Suggs                                              
|James B. Anderson                                          
|Justice W. Anderson                                        
|Michael T. Foley                                           
|Joseph R. Treshler                                         
|Paul E. Kudelko                                            
|George O. Borak                                            
|All directors and officers as a group (eight persons)      
|Roy M. Speer Foundation, 2535 Success Dr., Odessa, FL 33556



* Less
than 1%





20



















| | (1) | Member
                                         of the Compensation Committee.
| | --- | ------------------------------------------------------------------------------

| | (2) | Member
                                         of the Audit Committee.
| | --- | -----------------------------------------------------------------------

| | (3) | Except
                                         as noted above, the address for all persons listed is 1300 S. Highland Ave, Clearwater,
                                         Florida 33756
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Mr.
                                         Anderson beneficially owns 3,350,500 shares of common stock as Trustee of the John C.
                                         Anderson Trust in accordance with Mr. Anderson's will. He also owns of record 73,000
                                         shares of common stock.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Includes
                                         10,000 shares in joint name with his wife.
| | --- | --------------------------------------------------------------------------------------------

| | (6) | Includes
                                         17,945 shares of common stock owned of record by Mr. Foley’s wife’s trust,
                                         of which shares Mr. Foley disclaims beneficial ownership.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM
13. 	    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.



Other
than transactions described below, since July 1, 2016, there has not been, nor is there currently proposed, any transaction or
series of similar transactions to which we were or will be a party:





| | · | in which the amount involved
exceeds $120,000; and,                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | in which any director, nominee for director, executive officer, shareholder which beneficially owns five percent or more of our common stock or any member of their immediate family members, had or will have a direct or indirect material interest.



Regina
W. Anderson, our Chairman and Chief Executive Officer, personally guaranteed the $250,000 line of credit of which $0 and
$125,000 was drawn out at June 30, 2017 and 2016, respectively.



Director
Independence



We
have determined that the following directors are independent within applicable NASDAQ rules: Messrs. Suggs, Foley, Treshler and
Kudelko. Regina, James and Justice Anderson are not independent as they are executive officers of the Company and its subsidiaries.
Accordingly, our Board of Directors is composed of a majority of independent directors. Our Compensation Committee, Audit Committee
and Ethics Committee are composed entirely of independent directors pursuant to applicable NASDAQ rules. In addition, Mr. Foley
and Mr. Treshler, also meet the definition of independence under SEC Rule 10A-3.



ITEM
14. 	PRINCIPAL ACCOUNTING FEES AND SERVICES



Audit
Fees. In fiscal 2017, the Company paid to its independent accountants $52,500 in fees related directly to the audit and review
of the Company’s financial statements. In fiscal 2016, the Company paid to its independent accountants $54,600 in fees related
directly to the audit and review of the Company’s financial statements.



Audit-Related
Fees. The Company’s independent accountants performed no other audit-related services for the Company during fiscal 2017
and 2016, other than the audit services described above.



Tax
Fees: In fiscal 2017, the Company paid to its independent accountants $2,000 in fees related directly to tax preparations. In
fiscal 2016, the Company paid to its independent accountants $2,000 in fees related directly to tax preparations.

21





















ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.



(a)	Exhibits



| | 1. | The
                                         financial statements filed herewith are listed in the Index to Financial Statements included
                                         in Item 7.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Exhibit
    No. |       | Document
|--------------- | ----- | --------
|*               | 3.1   |         
|+               | 3.1.1 |         
|*               | 3.2   |         
|+               | 4.1   |         
|&               | 10.1  |         
|/               | 10.3  |         
|/               | 10.4  |         
|+               | 10.5  |         
|o               | 10.6  |         
|**              | 10.7  |         
|//              | 10.9  |         
|//              | 10.10 |         
|//              | 10.11 |         
|//              | 10.12 |         
|++              | 14.1  |         
|x               | 31.1  |         
|x               | 31.2  |         
|x               | 32.1  |         



*	Incorporated
by reference to the Company’s Registration Statement on Form S-1, S.E.C. File No.33-13273.

+	Incorporated
by reference to the Company’s Form 10-KSB for the fiscal year ended June 30, 1995.

o	Incorporated
by reference to the Company’s Form 8-K filed on or about February 2, 1996.

/	Incorporated
by reference to the Company’s Form 8-K filed on or about August 8, 2006.

++	Incorporated
by reference to the Company’s Schedule 14A filed on or about October 15, 2004.

**	Incorporated
by reference to the Company’s Form 8-K filed on or about August 3, 2009.

x	Filed
herewith.

&	Incorporated
by reference to the Company’s Schedule 14A filed on or about November 9, 2009.

#	Incorporated
by reference to the Company’s Form 8-K filed on or about July 2, 2012.

//	Incorporated
by reference to the Company’s Form 8-K filed on or about August 23, 2017.

##	Incorporated
by reference to the Company’s Form 8-K filed on or about December 17, 2012.





22



















SIGNATURES



Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, there unto duly authorized.





| | PROCYON CORPORATION                        
| | -------------------------------------------
| |                                            
| | By: /s/ Regina W. Anderson                 
| | Regina W. Anderson, Chief Executive Officer



Date: October 11, 2017



Pursuant to the requirements of the Securities
Exchange Act of 1934, the following persons on behalf of the registrant and in the capacities and on the dates indicated have signed
this report below.





|Signature              | Title                           | Date            
|---------------------- | ------------------------------- | ----------------
|                       |                                 |                 
|/s/ Regina W. Anderson | Chief Executive Officer,        | October 11, 2017
|Regina W. Anderson     | President                       |                 
|                       |                                 |                 
|/s/ James B. Anderson  | Chief Financial Officer         | October 11, 2017
|James B. Anderson      | President (Sirius) and Director |                 
|                       |                                 |                 



|/s/ Justice W. Anderson | President (Amerx) and Director | October 11, 2017
|----------------------- | ------------------------------ | ----------------
|Justice W. Anderson     |                                |                 
|                        |                                |                 
|/s/ Michael T. Foley    | Director                       | October 11, 2017
|Michael T. Foley        |                                |                 
|                        |                                |                 
|/s/ Fred W. Suggs, Jr.  | Director                       | October 10, 2017
|Fred W. Suggs, Jr.      |                                |                 
|                        |                                |                 
|/s/ Joseph R. Treshler  | Director                       | October 11, 2017
|Joseph R. Treshler      |                                |                 
|                        |                                |                 
|/s/ Paul Kudelko        | Director                       | October 11, 2017
|Paul Kudelko            |                                |                 
|                        |                               







23

















EXHIBIT INDEX





|Exhibit No. | Document                                                                                                                                                         | Item No.
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------
|            |                                                                                                                                                                  |         
|* 3.1       | Articles of Incorporation                                                                                                                                        | 3       
|+ 3.1.1     | Articles of Amendment to Articles of Incorporation                                                                                                               | 3       
|* 3.2       | Bylaws                                                                                                                                                           | 3       
|+ 4.1       | Designation of Series A Preferred Stock                                                                                                                          | 4       
|&10.1       | Procyon Corporation 2009 Stock Option Plan                                                                                                                       |         
|- 10.2      | Office Lease dated September 23, 2003                                                                                                                            |         
|/ 10.3      | Promissory Note dated July 21, 2006                                                                                                                              |         
|/ 10.4      | Mortgage dated July 21, 2006                                                                                                                                     |         
|+10.5       | Loan and Security Agreement, dated as of January 1, 1995, by and between the Company and Amerx Health Care Corp., including Promissory Notes issued there under. | 10      
|o 10.6      | Agreement and Plan of Exchange, dated January 31, 1996, by and between the Company and Amerx.                                                                    |         
|**10.7      | Asset Purchase Agreement between Sirius Medical Supply, Inc. and Priority Diabetes Supply, Inc., effective July 31, 2009.                                        |         
|//10.9      | Restated
and Amended Executive Executive Employment Agreement effective July 1, 2017 - Justice W. Anderson                                                       |         
|//10.10     | Restated
and Amended Executive Executive Employment Agreement effective July 1, 2017 - James B. Anderson                                                         |         



|//10.11 | Restated
and Amended Executive Executive Employment Agreement effective July 1, 2017 - Regina W. Anderson        |   
|------- | ---------------------------------------------------------------------------------------------------------------- | --
|//10.12 | Restated
and Amended Executive Executive Employment Agreement effective July 1, 2017 - George Borak              |   
|++14.1  | Code of Ethics for Senior Financial Officers.                                                                    |   
|x 31.1  | Certification of Regina W. Anderson pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)                            | 31
|x 31.2  | Certification of James B. Anderson pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)                             | 31
|x 32.1  | Certification Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 | 32



| |    |                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------
| | *  | Incorporated by reference to the Company’s Registration Statement on Form S-1, S.E.C. File No.33-13273.
| | +  | Incorporated by reference to the Company’s Form 10-KSB for the fiscal year ended June 30, 1995.        
| | o  | Incorporated by reference to the Company’s Form 8-K filed on or about February 2, 1996.                
| | /  | Incorporated by reference to the Company’s Form 8-K filed on or about August 8, 2006.                  
| | -  | Incorporated by reference to the Company’s Form 10-QSB for the period ending September 30, 2003.       
| | ++ | Incorporated by reference to the Company’s Schedule 14A filed on or about October 15, 2004.            
| | ** | Incorporated by reference to the Company’s Form 8-K filed on or about August 3, 2009.                  
| | x  | Filed herewith.                                                                                        
| | &  | Incorporated by reference to the Company’s Schedule 14A filed on or about November 9, 2009.            
| | #  | Incorporated by reference to the Company’s Form 8-K filed on or about July 2, 2012.                    
| | // | Incorporated
    by reference to the Company’s Form 8-K filed on or about August 23, 2017.             
| | ## | Incorporated by reference to the Company’s Form 8-K filed on or about December 17, 2012.               









24

























































PROCYON CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
Years Ended June 30, 2017 and 201 6





























































TABLE OF CONTENTS





|                                                        | Page No.
|------------------------------------------------------- | --------
|                                                        |         
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | F-1     
|                                                        |         
|                                                        |         
|FINANCIAL STATEMENTS                                    |         
|                                                        |         
|                                                        |         
|Consolidated Balance Sheets                             | F-2     
|                                                        |         
|Consolidated Statements of Operations                   | F-3     
|                                                        |         
|Consolidated Statements of Stockholders’ Equity         | F-4     
|                                                        |         
|Consolidated Statements of Cash Flows                   | F-5     
|                                                        |         
|Notes to Financial Statements                           | F-6     

















REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM





Board
of Directors and Shareholders of

Procyon
Corporation and Subsidiaries







We
have audited the accompanying consolidated balance sheets of Procyon Corporation and Subsidiaries as of June 30, 2017 and 2016
and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the
two-year period ended June 30, 2017. Procyon Corporation and Subsidiaries’ management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial statements based on our audits.



We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.



In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Procyon Corporation and Subsidiaries as of June 30, 2017 and 2016 and the results of its operations and
its cash flows for each of the years in the two-year period ended June 30, 2017, in conformity with accounting principles generally
accepted in the United States of America.





FERLITA,
WALSH, GONZALEZ & RODRIGUEZ, P.A.

Certified
Public Accountants

Tampa,
Florida



October
9, 2017





|F - 1
|-----











|PROCYON CORPORATION & SUBSIDIARIES                                   |  |      |            |     
|-------------------------------------------------------------------- |  | ---- | ---------- | ----
|CONSOLIDATED BALANCE SHEETS                                          |  |      |            |     
|June 30, 2017 and 2016                                               |  |      |            |     
|                                                                     |  |      |            |     
|                                                                     |  | 2017 |            | 2016
|ASSETS                                                               |  |      |            |     
|                                                                     |  |      |            |     
|CURRENT ASSETS                                                       |  |      |            |     
|Cash                                                                 |  | $    | 173,173    |     
|Certificates of Deposit, plus accrued interest                       |  |      | 102,141    |     
|Accounts Receivable, less allowance for doubtful                     |  |      | 391,539    |     
|accounts of $1,001 and $2,665 respectively                           |  |      |            |     
|Other Receivables                                                    |  |      | —          |     
|Inventories                                                          |  |      | 506,719    |     
|Prepaid Expenses                                                     |  |      | 175,206    |     
|Deferred Tax Asset                                                   |  |      | 242,841    |     
|TOTAL CURRENT ASSETS                                                 |  |      | 1,591,619  |     
|                                                                     |  |      |            |     
|CERTIFICATES OF DEPOSIT, PLUS ACCRUED INTEREST                       |  |      | 111,669    |     
|                                                                     |  |      |            |     
|PROPERTY AND EQUIPMENT, NET                                          |  |      | 513,779    |     
|                                                                     |  |      |            |     
|OTHER ASSETS                                                         |  |      |            |     
|Deposits                                                             |  |      | 4,192      |     
|Inventories                                                          |  |      | 70,655     |     
|Intangible Asset                                                     |  |      | 17,000     |     
|Deferred Tax Asset                                                   |  |      | 420,897    |     
|                                                                     |  |      | 512,744    |     
|                                                                     |  |      |            |     
|TOTAL ASSETS                                                         |  | $    | 2,729,811  |     
|                                                                     |  |      |            |     
|                                                                     |  |      |            |     
|LIABILITIES AND STOCKHOLDERS' EQUITY                                 |  |      |            |     
|                                                                     |  |      |            |     
|CURRENT LIABILITIES                                                  |  |      |            |     
|Accounts Payable                                                     |  | $    | 120,584    |     
|Capital Lease Liability                                              |  |      | 3,788      |     
|Line of Credit                                                       |  |      | —          |     
|Accrued Expenses                                                     |  |      | 315,829    |     
|TOTAL CURRENT LIABILITIES                                            |  |      | 440,201    |     
|                                                                     |  |      |            |     
|CAPITAL LEASE LIABILITY                                              |  |      | 2,110      |     
|                                                                     |  |      |            |     
|TOTAL LIABILITIES                                                    |  |      | 442,311    |     
|                                                                     |  |      |            |     
|COMMITMENTS AND CONTINGENCIES (NOTE I)                               |  |      | —          |     
|                                                                     |  |      |            |     
|STOCKHOLDERS' EQUITY                                                 |  |      |            |     
|Preferred Stock, 496,000,000 shares                                  |  |      | —          |     
|authorized, none issued.                                             |  |      |            |     
|Series A Cumulative Convertible Preferred Stock,                     |  |      | 136,860    |     
|no par value; 4,000,000 shares authorized;                           |  |      |            |     
|177,100 and 194,100 shares issued and outstanding,
    respectively. |  |      |            |     
|Common Stock, no par value, 80,000,000 shares                        |  |      | 4,434,766  |     
|authorized; 8,077,388 and 8,060,388 shares
    issued and            |  |      |            |     
|outstanding, respectively.                                           |  |      |            |     
|Paid-in Capital                                                      |  |      | 15,885     |     
|Accumulated Deficit                                                  |  |      | (2,300,011 | )   
|TOTAL STOCKHOLDERS' EQUITY                                           |  |      | 2,287,500  |     
|                                                                     |  |      |            |     
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           |  | $    | 2,729,811  |     





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



|F - 2
|-----











|PROCYON
    CORPORATION & SUBSIDIARIES                            |                                                |                       |           |                      
|----------------------------------------------------------------- | ---------------------------------------------- | --------------------- | --------- | ---------------------
|CONSOLIDATED
    STATEMENTS OF OPERATIONS                         |                                                |                       |           |                      
|Years
    Ended June 30, 2017 and 2016                            |                                                |                       |           |                      
|                                                                  |                                                |                       |           |                      
|                                                                  |                                                |                       |           | 2017                 
|                                                                  |                                                |                       |           |                      
|NET SALES                                                         |                                                | $       4,012,419     |           | $       3,449,151    
|                                                                  |                                                |                       |           |                      
|COST OF SALES                                                     |                                                | 1,262,626             |           | 1,030,458            
|                                                                  |                                                |                       |           |                      
|GROSS PROFIT                                                      |                                                | 2,749,793             |           | 2,418,693            
|                                                                  |                                                |                       |           |                      
|OPERATING EXPENSES                                                |                                                |                       |           |                      
|                                                                  | Salaries and Benefits                          |                       | 1,567,049 |                      
|                                                                  | Selling, General and Administrative            |                       | 1,152,780 |                      
|                                                                  |                                                |                       |           | 2,719,829            
|                                                                  |                                                |                       |           |                      
|INCOME / (LOSS) FROM OPERATIONS                                   |                                                | 29,964                |           | (103,572)            
|                                                                  |                                                |                       |           |                      
|OTHER INCOME (EXPENSE)                                            |                                                |                       |           |                      
|                                                                  | Gain on Sale of Notification
    and Clearance |                       | -         |                      
|                                                                  | (Loss) on Disposal of Assets                   |                       | -         |                      
|                                                                  | Interest Expense                               |                       | (2,846)   |                      
|                                                                  | Interest Income                                |                       | 1,868     |                      
|                                                                  |                                                |                       |           | (978)                
|                                                                  |                                                |                       |           |                      
|INCOME BEFORE INCOME TAXES                                        |                                                | 28,986                |           | 190,170              
|                                                                  |                                                |                       |           |                      
|INCOME TAX EXPENSE                                                |                                                | (16,608)              |           | (80,601)             
|                                                                  |                                                |                       |           |                      
|NET INCOME                                                        |                                                | 12,378                |           | 109,569              
|                                                                  |                                                |                       |           |                      
|Dividend requirements on preferred stock                          |                                                | 13,315                |           | (19,410)             
|                                                                  |                                                |                       |           |                      
|Basic net income (loss) available to common shares                |                                                | $            25,693   |           | $            90,159  
|                                                                  |                                                |                       |           |                      
|Basic net income (loss) per common share                          |                                                | $                0.00 |           | $                0.01
|                                                                  |                                                |                       |           |                      
|Weighted average number of common shares outstanding              |                                                | 8,062,536             |           | 8,060,388            
|                                                                  |                                                |                       |           |                      
|Diluted net income (loss) per common share                        |                                                | $                0.00 |           | $                0.01
|                                                                  |                                                |                       |           |                      
|Weighted average number of common shares outstanding,
    diluted |                                                | 8,279,704             |           | 8,254,598            







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





|F - 3
|-----











|PROCYON
    CORPORATION & SUBSIDIARIES                         |  |                     |   |             
|-------------------------------------------------------------- |  | ------------------- | - | ------------
|CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY |  |                     |  
|Years
    Ended June 30, 2017 and 2016                         |  |                     |   |             
|                                                               |  |                     |   |             
|                                                               |  | Preferred
    Stock |   | Common Stock
|                                                               |  | Shares              |   | Amount      
|                                                               |  |                     |   |             
|Balance, June 30, 2015                                         |  | 194,100             | $ | 149,950     
|                                                               |  |                     |   |             
|Stock Options Issued                                           |  | -                   |   | -           
|                                                               |  |                     |   |             
|Net Income                                                     |  | -                   |   | -           
|                                                               |  |                     |   |             
|Balance, June 30, 2016                                         |  | 194,100             | $ | 149,950     
|                                                               |  |                     |   |             
|Stock Options Issued                                           |  | -                   |   | -           
|                                                               |  |                     |   |             
|Preferred Stock Converted to Common                            |  | (17,000)            |   | (13,090)    
|                                                               |  |                     |   |             
|Net Income                                                     |  | -                   |   | -           
|                                                               |  |                     |   |             
|Balance, June 30, 2017                                         |  | 177,100             | $ | 136,860     







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







|F - 4
|-----











|PROCYON CORPORATION &
    SUBSIDIARIES                                                 |                                                        |                      |                                                    
|-------------------------------------------------------------------------------------- | ------------------------------------------------------ | -------------------- | ---------------------------------------------------
|CONSOLIDATED STATEMENTS
    OF CASH FLOWS                                              |                                                        |                      |                                                    
|Years Ended June 30, 2017
    and 2016                                                 |                                                        |                      |                                                    
|                                                                                       |                                                        |                      |                                                    
|                                                                                       |                                                        |                      |                                                    
|                                                                                       |                                                        |                      |                                                    
|CASH FLOWS FROM OPERATING ACTIVITIES                                                   |                                                        |                      |                                                    
|                                                                                       |                                                        |                      |                                                    
|Net  Income                                                                            |                                                        | $        12,378      |                                                    
|Adjustments to reconcile net  income to net
    cash provided by operating activities: |                                                        |                      |                                                    
|                                                                                       | Depreciation                                           | 45,681               |                                                    
|                                                                                       | Loss on Disposal of Assets                             | -                    |                                                    
|                                                                                       | (Decrease) Increase in Allowance for Doubtful Accounts | (1,664)              |                                                    
|                                                                                       | Deferred Income Taxes                                  | 16,608               |                                                    
|                                                                                       | Accrued Interest on Certificates of Deposit            | (336)                |                                                    
|                                                                                       | Stock Based Compensation                               | 4,745                |                                                    
|                                                                                       | Decrease (increase) in:                                |                      |                                                    
|                                                                                       |                                                        | Accounts Receivable  | 148,327                                            
|                                                                                       |                                                        | Other Receivables    | 150,000                                            
|                                                                                       |                                                        | Inventory            | 111,317                                            
|                                                                                       |                                                        | Prepaid Expenses     | (9,999)                                            
|                                                                                       | Increase (decrease) in:                                |                      |                                                    
|                                                                                       |                                                        | Accounts Payable     | (237,594)                                          
|                                                                                       |                                                        | Accrued Expenses     | (39,903)                                           
|                                                                                       |                                                        |                      | NET CASH PROVIDED BY OPERATING ACTIVITIES          
|                                                                                       |                                                        |                      |                                                    
|CASH FLOW FROM INVESTING ACTIVITIES                                                    |                                                        |                      |                                                    
|                                                                                       | Purchase of Certificate of Deposit                     | -                    |                                                    
|                                                                                       | Redemption of Certificate of Deposit                   | 79,084               |                                                    
|                                                                                       | Acquisition of Intangible Asset                        | (17,000)             |                                                    
|                                                                                       | Purchase of Property & Equipment                       | (18,856)             |                                                    
|                                                                                       |                                                        |                      | NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|                                                                                       |                                                        |                      |                                                    
|CASH FLOW FROM FINANCING ACTIVITIES                                                    |                                                        |                      |                                                    
|                                                                                       | Payments on Capital Lease                              | (3,788)              |                                                    
|                                                                                       | Proceeds from Line of Credit                           | 70,000               |                                                    
|                                                                                       | Repayment of Line of Credit                            | (195,000)            |                                                    
|                                                                                       |                                                        |                      | NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|                                                                                       |                                                        |                      |                                                    
|                                                                                       |                                                        |                      | NET CHANGE IN CASH                                 
|                                                                                       |                                                        |                      |                                                    
|CASH AT BEGINNING OF THE YEAR                                                          | 59,173                                                 |                      | 204,227                                            
|                                                                                       |                                                        |                      |                                                    
|CASH AT END OF THE YEAR                                                                | $      173,173                                         |                      | $        59,173                                    
|                                                                                       |                                                        |                      |                                                    
|SUPPLEMENTAL DISCLOSURES                                                               |                                                        |                      |                                                    
|                                                                                       | Interest Paid                                          | $          2,846     |                                                    
|                                                                                       | Taxes Paid                                             |                      | $                  -                               
|                                                                                       |                                                        |                      |                                                    
|NONCASH TRANSACTION DISCLOSURES                                                        |                                                        |                      |                                                    
|                                                                                       | Capital Lease Obligation on New Equipment              | $                  - |                                                    





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







|F - 5
|-----

|
|













PROCYON CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Business Activity



Procyon
Corporation has two wholly-owned subsidiaries, Amerx Health Care Corp. (Amerx) and Sirius Medical Supply, Inc. (Sirius). Amerx
manufactures and markets wound and skin care products primarily in the United States whereas Sirius previously marketed diabetic
supplies primarily to Medicare patients in the United States. As previously reported, in July 2009, we sold substantially all
of the assets of Sirius to a third party, such that, as of July 31, 2009, Sirius no longer has any material operations. Management
is considering various options for the future direction of Sirius.



Principles
of Consolidation



The
consolidated financial statements include the accounts of Procyon Corporation and its wholly-owned subsidiaries, Amerx and Sirius.
All material inter-company accounts and transactions are eliminated.



Use
of Estimates



The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.



Cash
and Cash Equivalents



For
the purpose of the Statements of Cash Flows, the Company considers cash-on-hand, demand deposits in banks and highly liquid investments
purchased with an original maturity of three months or less to be cash equivalents.



Concentration
of Credit Risk



The
Company maintains its cash at various financial institutions. All noninterest-bearing transaction accounts are fully insured by
the Federal Deposit Insurance Corporation, regardless of the balance of the account, at all insured institutions. At June 30,
2017 and 2016, our uninsured cash balance was $0.



Revenue
Recognition



The
Company recognizes revenue in accordance with S.E.C. Staff Accounting Bulletin Topic 13 - Revenue Recognition which requires that
four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery
has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed or determinable; and, (4) collectibility
is reasonably assured.



The
Company recognizes revenue related to product sales to customers who have placed orders upon shipment of such orders. The Company
records revenue at the amounts expected to be collected directly from customers.



|F - 6
|-----

|
|









Revenue
from Contracts with Customers (Topic 606)



In
May 2014, the FASB issued a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs
when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity
expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount,
timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will be effective for
the Company beginning July 1, 2018 and early adoption is not permitted. We are currently evaluating the impact this standard will
have on our consolidated financial statements.



Accounts
Receivable and Concentration of Credit Risk



Amerx
grants credit to customers, most of whom are national pharmaceutical distributors, drug stores nationwide and physicians. Amerx
wholesales its products to national pharmaceutical distributors and drug stores at a sales term of 2/10, net 30 days. Amerx has
a written return policy with its customers. Each return request is reviewed by management for approval. Sales to physicians are
at contracted rates and standard payment term is 2/10 net 30 days.



The
valuation of accounts receivable is based upon the credit-worthiness of customers as well as historical collection experience.
Estimating the credit worthiness of customers and recoverability of customer accounts requires us to exercise considerable judgment.
Allowances for doubtful accounts 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 and write-off
experience, current trends, credit policy, and on analysis of accounts receivable by aging category. As of June 30, 2017 and 2016,
accounts receivable allowance was approximately $1,000 and $2,700, or less than 1% and 1% respectively of gross accounts receivable.



Inventories



Inventories
are valued at the lower of average cost or market determined by the first-in, first-out method.



Property
and Equipment



Property
and equipment are stated at cost. Depreciation is computed on a straight-line basis over their estimated useful lives. Leased
equipment is recorded at it’s fair market value at the beginning of the lease term and is depreciated over the life of the
equipment. Depreciation on leased equipment is included in depreciation expense.



Intangible
Asset



During
the year ended June 30, 2017, the Company acquired the formulation of its care lotion from its manufacturer. The Company is currently
evaluating the useful life of this asset.









|F - 7
|-----



|
|











Deferred
Income Taxes



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 exacted 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.
We did not have a valuation allowance as of June 30, 2017 and 2016. Because the recoverability of deferred tax assets is directly
dependent upon future operating results, actual recover ability of deferred tax assets may differ materially from our estimates.



Fair
Value of Financial Instruments



The
carrying value of cash, accounts receivable, prepaid expenses, deposits, inventory, accounts payable and accrued expenses approximate
fair value.



Considerable
judgement is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not
necessarily indicative of the amounts that the Company could realize in a current market exchange.



Shipping
and Handling Costs



Shipping
and handling costs incurred were approximately $93,000 and $92,000 for the years ended June 30, 2017, and 2016, respectively,
and were included in selling, general and administrative expenses.



Advertising
and Marketing



The
Company records advertising and marketing expenses in the periods in which they are incurred. During the years ended June 30,
2017 and 2016, approximately $478,000 and $451,000, of advertising and marketing costs were included in selling, general and administrative
expenses for each respective year.



Stock
Based Compensation



The
Company maintains the Procyon Corporation 2009 Stock Option Plan (the "2009 Option Plan"). The 2009 Option Plan was
approved by the Company's shareholders on December 8, 2009 and will expire on December 8, 2019.







|F - 8
|-----



|
|











The
2009 Option Plan provides for the granting of incentive stock options, non-qualified stock options, and stock appreciation rights
("SARs") to eligible officers, directors, employees and consultants of the Company and its subsidiaries. The 2009 Option
Plan is administered by the Compensation Committee. The Board of Directors has authorized the issuance of 500,000 shares of common
stock to underlie the granting of incentive stock options and 500,000 shares of common stock to underlie the granting of non-qualified
stock options and SARs under the 2009 Option Plan. The Board issued 250,000 shares of common stock to underlie Non-Qualified Stock
Options, on September 27, 2016, effective June 30, 2016. However, 40,000 Options to purchase common stock were awarded to Justice
Anderson pursuant to his employment agreement effective July 1, 2016 and 25,000 Options to purchase common stock were awarded
to Justice Anderson pursuant to his employment agreement effective July 1, 2017. As of June 30, 2017, no other stock options or
other awards have been granted under the 2009 Option Plan. The 1,000,000 shares of common stock that have been reserved for the
2009 Option Plan (250,000 recently issued for Non-Qualified Stock Options) have not been registered under the Securities Act of
1933.



Eligible
participants under the 2009 Option Plan must be such full or part-time officers and other employees, non-employee directors and
key persons (including consultants and prospective employees) of the Company and its Subsidiaries as are selected from time to
time by the Compensation Committee in its sole discretion. Only employees may receive incentive stock options. Employees, non-employee
directors and consultants may receive non-qualified stock options or SARs. No stock options or SARs have been granted under the
2009 Option Plan.



Non-Qualified
Stock Options granted under the 2009 Option Plan many have a term of not more than ten years from the date of grant. The exercise
price must be not less than 100% of the fair market value of the underlying common stock on the date of grant. Incentive Stock
Options can be granted under the 2009 Option Plan for a term not exceeding ten years, except for Ten Percent Owners of our common
stock, as defined in the Plan, for whom the maximum option term is five years. Incentive Stock Options are granted with an exercise
price of not less than 100% of the fair market value of the underlying common stock on the date of grant. However, for Incentive
Stock Options owned by Ten Percent Owners, the exercise price must be 110% of the Fair Market Value of the underlying stock on
the date of grant.



The
fair value of a stock option is determined using the Black-Scholes option-pricing model, which values options based on the stock
price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments,
and the risk-free interest rate over the life of the option.



The
Black-Scholes option valuation model was developed for estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions
can materially affect the fair value of the options. Our options do not have the characteristics of traded options, therefore,
the option valuation models do not necessarily provide a reliable measure of the fair value of our options.





|F - 9
|-----



|
|











Agreements
to grant 40,000 and 25,000 Options to purchase common stock were executed and delivered to Justice Anderson, pursuant to his executive
employment agreements, on September 27, 2016 and August 23, 2017, respectively, but with grant dates of June 30, 2016 and June
30, 2017, respectively. Equity instruments issued to non-employees in exchange for goods, fees and services are accounted for
under the fair value-based method of Accounting Standards Codification Topic 718 - Compensation - Stock Compensation (“Topic
718").



Additional
information with respect to stock option activity is as follows:



| |                                      | Number of
                                                                               Shares |  | Weighted Average
                                                                               Exercise Price
| | ------------------------------------ | ----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------
| | Outstanding at June 30, 2016         |                                                                                                 |  |                                                                                                               
| | Granted                              |                                                                                                 |  |                                                                                                               
| | Exercised                            |                                                                                                 |  |                                                                                                               
| | Cancelled                            |                                                                                                 |  |                                                                                                               
| | Outstanding at June 30, 2017         |                                                                                                 |  |                                                                                                               
| | Options exercisable at June 30, 2016 |                                                                                                 |  |                                                                                                               
| | Options exercisable at June 30, 2017 |                                                                                                 |  |                                                                                                               



Net
Income Per Common Share



The
Company computes net income per share in accordance with Accounting Standards Codification Topic 260 - Earnings per Share (Topic
260). Topic 260 requires presentation of both basic and diluted earnings per shares (EPS) on the face of the income statement.
Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of common
shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding
during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted
method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to
be purchased from the exercise of stock options. Diluted EPS excludes all dilutive potential common shares if their effect is
anti-dilutive.



Subsequent
Events



We
have evaluated subsequent events through October 9, 2017, which is the date the financial statements were available to be issued.



Note
B - OTHER RECEIVABLES



Other
receivables at June 30, 2016 in the amount of $150,000 was the result of the Company selling a notification and clearance it held
during the fiscal year ended June 30, 2016 for $300,000 that was not being utilized (510k Clearance). The entire amount was received
by June 30, 2017.









|F - 10
|------



|
|













NOTE
C - INVENTORIES



Inventories
consisted of the following:



|               |  | June 30, 2017 |         | June 30, 2016
|-------------- |  | ------------- | ------- | -------------
|Finished Goods |  | $             | 384,350 |              
|Raw Materials  |  |               | 193,024 |              
|               |  | $             | 577,374 |              



At
June 30, 2017, $70,655 of our inventory was considered non-current as it will not be used within a one year period.



NOTE
D - PROPERTY AND EQUIPMENT



Property
and equipment consisted of the following:



|As of June 30, 2017           |  | Owned |          | Capitalized Leases |  | Total
|----------------------------- |  | ----- | -------- | ------------------ |  | -----
|Office Equipment              |  | $     | 145,103  |                    |  | $    
|Furniture and Fixtures        |  |       | 29,150   |                    |  |      
|Software                      |  |       | 56,870   |                    |  |      
|Leasehold improvements        |  |       | 77,026   |                    |  |      
|Production Equipment          |  |       | 23,027   |                    |  |      
|Building                      |  |       | 479,336  |                    |  |      
|Land                          |  |       | 64,547   |                    |  |      
|                              |  |       | 875,059  |                    |  |      
|Less accumulated depreciation |  |       | (372,265 | )                  |  |      
|                              |  | $     | 502,794  |                    |  | $    



Depreciation
expense was $45,681 for the year ended June 30, 2017.







|F - 11
|------



|
|













|As of June 30, 2016           |  | Owned |          | Capitalized Leases |  | Total
|----------------------------- |  | ----- | -------- | ------------------ |  | -----
|Office Equipment              |  | $     | 130,518  |                    |  | $    
|Furniture and Fixtures        |  |       | 26,860   |                    |  |      
|Software                      |  |       | 56,870   |                    |  |      
|Leasehold Improvements        |  |       | 77,026   |                    |  |      
|Production Equipment          |  |       | 21,043   |                    |  |      
|Building                      |  |       | 479,336  |                    |  |      
|Land                          |  |       | 64,547   |                    |  |      
|                              |  |       | 856,200  |                    |  |      
|Less accumulated depreciation |  |       | (326,582 | )                  |  |      
|                              |  | $     | 529,618  |                    |  | $    



Depreciation
expense was $37,706 for the year ended June 30, 2016.



In
2016, the Company leased certain equipment under agreements classified as a capital lease through January 31, 2019. The annual
rent is $3,788. The asset and liability under the capital lease is recorded at the lower of the present value of the minimum lease
payments or the fair market value of the asset. The equipment is depreciated over the lower of its related lease terms or its
estimated productive life. Depreciation of the equipment under the capital lease is included in depreciation expense for the years
ended June 30, 2017 and 2016.



Future
minimum lease payments under the capital lease is as follows:



|Year ending June 30: |                       | Amount
|-------------------- | --------------------- | ------
|                     | 2018                  |       
|                     | 2019                  |       
|                     |                       |       
|                     | Less: Current Portion |       
|                     |                       |       



NOTE
E - INTANGIBLE ASSETS



On
June 30, 2017, the Company acquired the formulation of its care lotion from its manufacturer for $17,000. The Company is currently
evaluating the useful life of this asset.



NOTE
F - ACCRUED EXPENSES



Accrued
expenses consist of the following at June 30, 2017 and 2016.



|                          |  | 2017 |         | 2016
|------------------------- |  | ---- | ------- | ----
|Accrued Payroll           |  | $    | 135,133 |     
|Accrued Paid Time Off     |  |      | 35,768  |     
|Accrued Professional Fees |  |      | 35,000  |     
|Accrued Incentive Plan    |  |      | 99,480  |     
|Other                     |  |      | 10,448  |     
|Total                     |  | $    | 315,829 |     



NOTE
G - RELATED PARTY TRANSACTIONS



Our
Chief Executive Officer, Regina W. Anderson, guarantees the $250,000 line of credit.



NOTE
H - LINE OF CREDIT



The
Company has a $250,000, due-on-demand line of credit with a financial institution, collateralized by the Company's inventory of
$577,374 and net accounts receivable assets of $391,539. The line of credit is renewable annually in April. The Chief Executive
Officer of the Company personally guaranteed the line of credit to the Company. At June 30, 2017, and 2016, respectively the Company
owed $0 and $125,000, respectively, on the line of credit. Interest expense for the years ended June 30, 2017 and 2016 was $2,846
and $4,466, respectively. The line of credit extends terms of cash advances at a variable rate set equal to the bank's prime rate
at the time of advance. The interest rate (4.25% at June 30, 2017) can fluctuate according to the bank's changes in its published
prime rate.



NOTE
I - COMMITMENTS AND CONTINGENCIES



Three
voluntary product recalls initiated on November 10, 2014; March 9, 2015; and May 20, 2016 respectively, were closed in Fiscal
2017. Total recall costs incurred through June 30, 2017 were $205,973.





|F - 12
|------



|
|











The Company leases warehouse office space under operating
leases expiring through year 2021. Lease expenses for the fiscal years ended June 30, 2017 and 2016 were $20,859 and $16,371,
respectively. The minimum lease payments due under the lease agreements for fiscal years ended June 30, are as follows:



| | 2018 |  |  |   | 22,989 | 
| | ---- |  |  | - | ------ | 
| | 2019 |  |  |   | 23,678 | 
| | 2020 |  |  |   | 24,389 | 
| | 2021 |  |  |   | 6,142  | 
| |      |  |  | $ | 77,198 | 



NOTE
J - STOCKHOLDERS’ EQUITY



During
January 1995, the Company's Board of Directors authorized the issuance of up to 4,000,000 shares of Series A Cumulative Convertible
Preferred Stock. The preferred stockholders are entitled to receive, if declared by the board of directors, quarterly dividends
at an annual rate of $.10 per share of Series A Cumulative Convertible Preferred Stock per annum. Dividends accrue without interest
and are cumulative from the date of issuance of the Series A Cumulative Convertible Preferred Stock and are payable quarterly
in arrears in cash or publicly traded common stock when and if declared by the board of directors. As of June 30, 2017, no dividends
have been declared. Dividends in arrears on the outstanding preferred shares total $357,426 or approximately $2.02 per share as
of June 30, 2017. So long as any shares of Series A Preferred Stock are outstanding, the Company is prohibited from declaring
dividends or other distributions related to its Common Stock or purchasing, redeeming or otherwise acquiring any of the Common
Stock.



The
preferred stockholders have the right to convert each share of Series A Cumulative Convertible Preferred Stock into one share
of the Company's common stock at any time without additional consideration. Each share of Series A Cumulative Convertible Preferred
Stock is subject to mandatory conversion into one share of common stock of the Company, effective as of the close of a public
offering of the Company's common stock provided, however, that the offering must provide a minimum of $1 million in gross proceeds
to the Company and the initial offering price of such common stock must be at least $1 per share. In addition to the rights described
above, the holders of the Series A Cumulative Convertible Preferred Stock have voting rights equal to the common stockholders
based upon the number of shares of common stock into which the Series A Cumulative Convertible Preferred Stock is convertible.
The Company is obligated to reserve an adequate number of shares of its common stock to satisfy the conversion of all of the outstanding
Series A Cumulative Convertible Preferred stock.



Share-based
compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately
expected to vest. As share-based compensation expense recognized in the statement of operations is based on awards ultimately
expected to vest, it can be reduced for estimated forfeitures. The ASC topic Stock Compensation requires forfeitures to be estimated
at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The share
based compensation charged against income for the periods ended June 30, 2017 and 2016 was $4,745 and $5,150 respectively.



|F - 13
|------



|
|











The Black-Scholes option-pricing model, which values options based on the stock price at the grant date, the expected life of the
option, the estimated volatility of the stock and the risk free interest rate over the life of the option. The assumptions used
in the Black-Scholes model were as follows for the stock options granted for the year ended June 30, 2017:



|Stock Price at Date of Grant        |  | $ | 0.190  |  
|----------------------------------- |  | - | ------ | -
|Risk-free interest rate             |  |   | 1.89   | %
|Expected volatility of common stock |  |   | 292    | %
|Dividend yield                      |  |   | 0      | %
|Expected life of options            |  |   | 5Years |  



NOTE
K - EARNINGS PER SHARE



As
required by Accounting Standards Codification Topic 260 - Earnings per Share (“Topic 260"), the following table sets
forth the computation of basic and diluted earnings per share:



|                                                                                                      |  | Years Ended June 30,
|----------------------------------------------------------------------------------------------------- |  | --------------------
|                                                                                                      |  | 2017                
|Numerator:                                                                                            |  |                     
|Net Income                                                                                            |  | $                   
|Adjustment for basic earnings per share:                                                              |  |                     
|Dividend requirements on preferred stock                                                              |  |                     
|Numerator for basic earnings per share- Net income available to common stockholders                   |  | $                   
|Effect of dilutive securities:                                                                        |  |                     
|Numerator for diluted earnings per share- Net income available to common stockholder                  |  | $                   
|Denominator:                                                                                          |  |                     
|Denominator for basic earnings per share- Weighted-average common shares                              |  |                     
|Effect of dilutive securities: Stock options                                                          |  |                     
|Weighted-average Dilutive potential common shares                                                     |  |                     
|Denominator for dilutive earnings per share- Adjusted weighted-average shares and assumed conversions |  |                     
|Basic Net Income per share                                                                            |  | $                   
|Diluted Net Income per share                                                                          |  | $                   



NOTE
L - INCOME TAXES AND AVAILABLE CARRYFORWARD



As
of June 30, 2017, the Company had consolidated income tax net operating loss ("NOL") carryforward for federal
income tax purposes of approximately $1,680,000. The NOL will expire in various years ending through the year 2035. The
utilization of certain of the loss carryforwards are limited under Section 382 of the Internal Revenue Code.









|F - 14
|------



|
|











The
components of the provision for income taxes expenses are attributable to continuing operations as follows:



| |          | Year Ended
                                                                               June 30, 2017 |  | Year Ended
                                                                               June 30, 2016
| | -------- | ------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------
| |          |                                                                                                         |  |                                                                                                        
| | Current  |                                                                                                         |  | $                                                                                                      
| | Federal  |                                                                                                         |  |                                                                                                        
| | State    |                                                                                                         |  |                                                                                                        
| |          |                                                                                                         |  |                                                                                                        
| | Deferred |                                                                                                         |  |                                                                                                        
| | Federal  |                                                                                                         |  | $                                                                                                      
| | State    |                                                                                                         |  |                                                                                                        
| |          |                                                                                                         |  | $                                                                                                      





Deferred
income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax
assets and liabilities are as follows:





|                                     |  | Current |         | Non-Current
|------------------------------------ |  | ------- | ------- | -----------
|Deferred tax assets:                 |  |         |         |            
|NOL and contribution carryforwards   |  | $       | 212,237 |            
|Accrued compensated absences         |  |         | 13,459  |            
|Accrued bonus                        |  |         | 16,768  |            
|Allowance for doubtful accounts      |  |         | 377     |            
|                                     |  |         | 242,841 |            
|Deferred tax (liabilities):          |  |         |         |            
|Excess of tax over book depreciation |  |         | —       |            
|Total deferred tax (liabilities)     |  |         | —       |            
|Net deferred tax asset (liability)   |  | $       | 242,841 |            



The
change in the valuation allowance is as follow:



|June 30, 2016                   |  | $ | — | 
|------------------------------- |  | - | - | 
|June 30, 2017                   |  |   | — | 
|Decrease in valuation allowance |  | $ | — | 



Management believes it is more likely than not that it will
realize the benefit of the NOL carryforward, because of its continuing trend of earnings. Therefore, a valuation allowance is not
considered necessary.



Income
taxes for the years ended June 30, 2017 and 2016 differ from the amounts computed by applying the effective income tax rates of
37.63%, to income before income taxes as a result of the following:



|                                                    |  | 2017 |         | 2016
|--------------------------------------------------- |  | ---- | ------- | ----
|Expected benefit (provision) at US statutory rate   |  | $    | (9,856  | )   
|State income tax net of federal benefit (provision) |  |      | (1,052  | )   
|Nondeductible expense                               |  |      | (5,700  | )   
|Income tax benefit (expense)                        |  | $    | (16,608 | )   



The
earliest tax year still subject to examination by taxing jurisdictions is fiscal year June 30, 2014.







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NOTE
M - CONCENTRATION OF SUPPLY RISK



The
Company's manufacturing and packaging activities are performed at a production facility owned and operated by a non-affiliated
pharmaceutical manufacturer. At the present time, the manufacturer is the major source of the Company’s wound care products.
The sudden loss or failure of this manufacturer could significantly impair Amerx’s ability to fulfill customer orders on
a short-term basis and therefore, could materially and adversely affect the Company’s operations. However, the Company has
maintained a long-term relationship with this manufacturer and does not expect a discontinuance of its wound care products from
the manufacturer in the near term. The Company has also opened relationships with other manufactures to address supply risk.



There
were no back orders as of June 30, 2017 and 2016, respectively, due to the timely receipt of product from the manufacturer.



NOTE
N - MAJOR CUSTOMER



During
the year ended June 30, 2017, sales from two customers accounted for approximately 17% of Amerx’s sales. The loss of these
customers would have a material adverse effect on our financial condition or the results of our operations. During the year ended
June 30, 2016, two customers accounted for 21% of Amerx’s sales.



NOTE
O - RESEARCH AND DEVELOPMENT



Amerx
incurred $31,298 and $20,040 during the years ended June 30, 2017 and 2016, respectively, towards research and development efforts.
These efforts were directed towards additional studies aimed at expanding existing markets, correcting issues with FDA compliance
and manufacturing.



NOTE
P - RECENT ACCOUNTING PRONOUNCEMENTS



In
May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which
clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the
new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the
award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the
annual period ending June 30, 2019 and interim periods within that annual period. Early adoption is permitted. The Company is
currently evaluating the effect that ASU No. 2017-09 will have on its consolidated financial statements and related disclosures.













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In
February 2016, the FASB issued ASU No. 2016-02, Leases, related to the recognition of lease assets and lease liabilities. The
new guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability,
other than leases that meet the definition of a short- term lease, and requires expanded disclosures about leasing arrangements.
The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly
changed from the current guidance. Lessor accounting is similar to the current guidance, but updated to align with certain changes
to the lessee model and the new revenue recognition standard. The new guidance is effective for the Company on July 1, 2019, with
early adoption permitted. The Company is currently evaluating the impact that ASU No. 2016-02 will have on its consolidated financial
statements and related disclosures.



On
November 20, 2015, FASB issued Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification
of Deferred Taxes. Under the ASU, all deferred tax assets and liabilities, as well any valuation allowances, will be netted and
presented in a classified balance sheet as one noncurrent amount. ASU No. 2015-17 becomes effective for public entities for annual
periods beginning after December 15, 2016, and for interim periods within those annual periods. The standard's requirements may
be applied prospectively or retrospectively to all prior periods presented, and early adoption is allowed. The Company is currently
evaluating the impact that ASU No. 2015-17 will have on its consolidated financial statements and disclosures.

















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