Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 05, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Chembio Diagnostics, Inc. | ||
Entity Central Index Key | 1,092,662 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 56,453,579 | ||
Entity Common Stock, Shares Outstanding | 14,162,702 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 3,790,302 | $ 10,554,464 |
Accounts receivable, net of allowance for doubtful accounts of $42,000 and $52,000 at December 31, 2017 and 2016, respectively | 2,085,340 | 3,383,729 |
Inventories, net | 4,423,618 | 3,335,188 |
Prepaid expenses and other current assets | 554,383 | 840,145 |
TOTAL CURRENT ASSETS | 10,853,643 | 18,113,526 |
FIXED ASSETS, net of accumulated depreciation | 1,909,232 | 1,709,321 |
OTHER ASSETS: | ||
Intangible assets, net | 1,597,377 | 0 |
Goodwill | 1,666,610 | 0 |
Deposits and other assets | 589,159 | 752,389 |
TOTAL ASSETS | 16,616,021 | 20,575,236 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued liabilities | 3,046,303 | 3,013,133 |
Deferred revenue | 50,000 | 392,517 |
TOTAL CURRENT LIABILITIES | 3,096,303 | 3,405,650 |
OTHER LIABILITIES: | ||
Notes payable | 99,480 | 0 |
Deferred tax liability | 341,042 | 0 |
TOTAL LIABILITIES | 3,536,825 | 3,405,650 |
COMMITMENTS AND CONTINGENCIES (Note 13) | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock - 10,000,000 shares authorized; none outstanding | 0 | 0 |
Common stock - $.01 par value; 100,000,000 shares authorized, 12,318,570 and 12,026,847 shares issued and outstanding December 31, 2017 and 2016, respectively | 123,185 | 120,268 |
Additional paid-in capital | 62,821,288 | 60,721,783 |
Accumulated deficit | (50,044,225) | (43,672,465) |
Accumulated other comprehensive income | 178,948 | 0 |
TOTAL STOCKHOLDERS' EQUITY | 13,079,196 | 17,169,586 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 16,616,021 | $ 20,575,236 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Accounts receivable, allowance for doubtful accounts | $ 42,000 | $ 52,000 |
STOCKHOLDERS' EQUITY: | ||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 12,318,570 | 12,026,847 |
Common stock, shares outstanding (in shares) | 12,318,570 | 12,026,847 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
REVENUES: | |||
Net product sales | $ 19,322,302 | $ 13,680,107 | $ 21,886,688 |
License and royalty revenue | 741,534 | 449,685 | 52,753 |
R&D, milestone and grant revenue | 3,951,591 | 3,739,049 | 2,316,044 |
TOTAL REVENUES | 24,015,427 | 17,868,841 | 24,255,485 |
COSTS AND EXPENSES: | |||
Cost of product sales | 12,921,157 | 9,417,505 | 13,768,658 |
Research and development expenses | 8,555,381 | 8,427,554 | 6,377,839 |
Selling, general and administrative expenses | 9,021,439 | 7,595,559 | 7,663,035 |
TOTAL OPERATING EXPENSES | 30,497,977 | 25,440,618 | 27,809,532 |
LOSS FROM OPERATIONS | (6,482,550) | (7,571,777) | (3,554,047) |
OTHER INCOME (EXPENSE): | |||
Other expense | 0 | 0 | (4,814) |
Interest income | 25,430 | 25,548 | 2,412 |
Interest expense | (2,945) | 0 | (836) |
TOTAL OTHER INCOME | 22,485 | 25,548 | (3,238) |
LOSS BEFORE INCOME TAXES (BENEFIT) | (6,460,065) | (7,546,229) | (3,557,285) |
Income tax provision (benefit) | (88,305) | 5,800,818 | (1,160,243) |
NET LOSS | $ (6,371,760) | $ (13,347,047) | $ (2,397,042) |
Basic loss per share (in dollars per share) | $ (0.52) | $ (1.26) | $ (0.25) |
Diluted loss per share (in dollars per share) | $ (0.52) | $ (1.26) | $ (0.25) |
Weighted average number of shares outstanding, basic (in shares) | 12,300,031 | 10,622,331 | 9,626,028 |
Weighted average number of shares outstanding, diluted (in shares) | 12,300,031 | 10,622,331 | 9,626,028 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | |||
Net loss | $ (6,371,760) | $ (13,347,047) | $ (2,397,042) |
Other comprehensive income: | |||
Foreign currency translation adjustments | 178,948 | 0 | 0 |
Comprehensive loss | $ (6,192,812) | $ (13,347,047) | $ (2,397,042) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Accumulated Deficit [Member] | AOCI [Member] | Total |
Balance at Dec. 31, 2014 | $ 96,112 | $ 47,556,426 | $ (27,928,376) | $ 0 | $ 19,724,162 |
Balance (in shares) at Dec. 31, 2014 | 9,611,139 | ||||
Options: | |||||
Exercised | $ 170 | (170) | 0 | 0 | $ 0 |
Exercised (in shares) | 17,109 | 17,109 | |||
Stock option compensation | $ 0 | 334,386 | 0 | 0 | $ 334,386 |
Comprehensive income | 0 | ||||
Net loss | (2,397,042) | 0 | (2,397,042) | ||
Balance at Dec. 31, 2015 | $ 96,282 | 47,890,642 | (30,325,418) | 0 | 17,661,506 |
Balance (in shares) at Dec. 31, 2015 | 9,628,248 | ||||
Common Stock: | |||||
New Stock from Offering | $ 23,000 | 12,470,398 | 0 | 0 | 12,493,398 |
New Stock from Offering (in shares) | 2,300,000 | ||||
Options: | |||||
Exercised | $ 986 | 56,589 | 0 | 0 | $ 57,575 |
Exercised (in shares) | 98,599 | 98,599 | |||
Stock option compensation | $ 0 | 304,154 | 0 | 0 | $ 304,154 |
Comprehensive income | 0 | ||||
Net loss | 0 | 0 | (13,347,047) | 0 | (13,347,047) |
Balance at Dec. 31, 2016 | $ 120,268 | 60,721,783 | (43,672,465) | 0 | 17,169,586 |
Balance (in shares) at Dec. 31, 2016 | 12,026,847 | ||||
Common Stock: | |||||
Purchase of RVR Diagnostics Sdn Bhd | $ 2,692 | 1,680,033 | 0 | 0 | 1,682,725 |
Purchase of RVR Diagnostics Sdn Bhd (in shares) | 269,236 | ||||
Options: | |||||
Exercised | $ 225 | 34,575 | 0 | 0 | $ 34,800 |
Exercised (in shares) | 22,487 | 22,487 | |||
Stock option compensation | $ 0 | 384,897 | 0 | 0 | $ 384,897 |
Comprehensive income | 0 | 0 | 0 | 178,948 | 178,948 |
Net loss | 0 | 0 | (6,371,760) | 0 | (6,371,760) |
Balance at Dec. 31, 2017 | $ 123,185 | $ 62,821,288 | $ (50,044,225) | $ 178,948 | $ 13,079,196 |
Balance (in shares) at Dec. 31, 2017 | 12,318,570 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Cash received from customers and grants | $ 24,971,299 | $ 16,947,194 | $ 30,174,083 |
Cash paid to suppliers and employees | (30,028,299) | (23,677,476) | (28,382,681) |
Interest received | 22,485 | 25,548 | 2,412 |
Interest paid | 0 | 0 | (836) |
Net cash (used in) provided by operating activities | (5,034,515) | (6,704,734) | 1,792,978 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Acquisition of license | 0 | 0 | (550,000) |
Purchase of RVR Diagnostics Sdn Bhd | (850,000) | (550,000) | 0 |
Acquisition of and deposits on fixed assets | (1,026,954) | (118,706) | (480,585) |
Net cash used in investing activities | (1,876,954) | (668,706) | (1,030,585) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from option and warrant exercises | 34,800 | 57,575 | 0 |
Proceeds from note payable | 99,480 | 0 | 0 |
Proceeds from credit line | 0 | 0 | 700,000 |
Repayment of credit line | 0 | 0 | (700,000) |
Proceeds from sale of common stock, net | 0 | 12,493,398 | 0 |
Net cash provided by financing activities | 134,280 | 12,550,973 | 0 |
Effect of exchange rate changes on cash | 13,027 | 0 | 0 |
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (6,764,162) | 5,177,533 | 762,393 |
Cash and cash equivalents - beginning of the period | 10,554,464 | 5,376,931 | 4,614,538 |
Cash and cash equivalents - end of the period | 3,790,302 | 10,554,464 | 5,376,931 |
RECONCILIATION OF NET LOSS TO NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES: | |||
Net Loss | (6,371,760) | (13,347,047) | (2,397,042) |
Adjustments: | |||
Depreciation and amortization | 1,276,963 | 1,139,228 | 1,372,563 |
Provision for (benefit from) deferred taxes | 0 | 5,800,818 | (1,170,969) |
Fair value adjustment to contingent consideration | (148,000) | 0 | 0 |
Share based compensation | 384,897 | 304,154 | 334,386 |
Changes in assets and liabilities: | |||
Accounts receivable | 1,298,389 | (960,758) | 5,915,918 |
Inventories | (1,088,430) | 242,837 | 60,274 |
Prepaid expenses and other current assets | 285,762 | (136,258) | (190,960) |
Deposits and other assets | (512,272) | 1,480 | 0 |
Accounts payable and accrued liabilities | 182,453 | 211,701 | (2,144,598) |
Deferred revenue | (342,517) | 39,111 | 13,406 |
Net cash (used in) provided by operating activities | (5,034,515) | (6,704,734) | 1,792,978 |
Supplemental disclosures for non-cash investing and financing activities: | |||
Deposits on manufacturing equipment transferred to fixed assets | 174,399 | 0 | 20,017 |
Accrual of contingent earn-out | 148,000 | 0 | 0 |
Issuance of common stock for net assets of business acquired | $ 1,682,725 | $ 0 | $ 0 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1 — DESCRIPTION OF BUSINESS: Chembio Diagnostics, Inc. and its subsidiaries (collectively, the “Company” or “Chembio”), develop, manufacture, and commercialize point-of-care (POC) diagnostic tests that are used to detect or monitor diseases. All products that are currently being developed are based on the Company’s patented DPP ® Our product commercialization and product development efforts are focused in three areas: sexually transmitted disease, tropical & fever disease, and technology collaborations. In sexually transmitted disease, we are commercializing tests for HIV and Syphilis. In tropical and fever disease, we are commercializing a test for Zika virus, and developing tests for malaria, dengue virus, chikungunya virus, ebola, lassa Rickettsia typhi Burkholderia pseudomallei Orientia tsutsugamushi Large and growing markets have been established for these kinds of tests, initially in high prevalence regions where they are indispensable for large scale prevention and treatment programs. Our product development is focused on areas where the availability of rapid, POC screening, diagnostic, or confirmatory results can improve health outcomes. More generally, we believe there is and will continue to be a growing demand for diagnostic products that can provide accurate, actionable diagnostic information in a rapid, cost-effective manner at the point of care. Our products are sold to medical laboratories and hospitals, governmental and public health entities, non-governmental organizations, medical professionals and retail establishments, both domestically and internationally, under our STAT PAK ® ® ® ® The Company routinely enters into arrangements with governmental and non-governmental organizations for the funding of certain research and development efforts. |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2017 | |
ACQUISITION [Abstract] | |
ACQUISITION | NOTE 2 — ACQUISITION: On January 9, 2017, pursuant to a stock purchase agreement (the "Stock Purchase Agreement), the Company acquired all of the outstanding common stock of RVR Diagnostics Sdn Bhd ("RVR"), a privately-held Malaysia based manufacturing company focused on assembly and sales of rapid medical assays, for $3,231,000. The Company acquired RVR, which subsequently changed its name to Chembio Diagnostics Malaysia Sdn Bhd ("CDM"), to have a better presence in Asia, access to lower cost, shorter approval time of in-country regulatory approvals, and a lower cost assembly operation. Total consideration was: (i) a cash payment of $1,400,000, of which $550,000 was paid as a deposit in December 2016; (ii) 269,236 shares of Chembio's common stock, with a value at closing of $1,683,000, of which 7,277 shares were held back to satisfy certain potential claims under the Stock Purchase Agreement and became issuable to the sellers on the one-year anniversary of the closing; and, a contingent $148,000 milestone payment based on the achievement of performance goals related to sales by CDM during the 12 months ended December 31, 2017. The performance goals were not achieved and the related $148,000 accrual was reversed during the fourth quarter of 2017 and recognized in Selling, general, and administrative expenses associated with the change in fair value. As a result of the consideration paid exceeding the preliminary fair value of the net assets acquired, goodwill in the amount of $1,503,361 was recorded in connection with this acquisition, none of which will be deductible for tax purposes. In addition, the Company recorded $1,800,000 in intangible assets associated with the addition of CDM’s intellectual property, customer base and distribution channels, trade names, order backlog, industry reputation, and management talent and workforce. The acquisition was accounted for using the purchase method of accounting. The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of January 9, 2017: Amount Property, plant and equipment $ 235,141 Goodwill 1,651,361 Deferred tax liability (307,636 ) Contingent consideration (148,000 ) Other intangible assets (estimated useful life): Intellectual property (approximate 10 year weighted average) 800,000 Customer contracts / relationships (approximate 10 year weighted average) 700,000 Order backlog (3 months) 200,134 Trade names (approximate 11 year weighted average) 100,000 Total consideration $ 3,231,000 The Company calculated the fair value of the fixed assets based on the net book value of CDM as that approximates fair value. The intellectual property, customer contracts and trade names were based on discounted cash flows using management estimates. The order backlog was based on an order that CDM had at the closing that was shipped in the first quarter of 2017, and valued at an estimated net income. The following represents unaudited pro forma operating results for the year ended December 31, 2016 as if the operations of CDM had been included in the Company’s Condensed Consolidated Statements of Operations as of January 1, 2016: Pro Forma Total revenues $ 19,151,653 Net loss $ (13,473,084 ) Net loss per common share $ (1.26 ) Diluted net loss per common share $ (1.26 ) The pro forma financial information includes business combination accounting effects from the acquisition including amortization charges from acquired intangible assets of approximately $398,000. The unaudited pro forma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2016. CDM's net revenues and pre-tax loss for the year ended December 31, 2017 were approximately $ 1,465,000 and ($406,000), |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES: (a) Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (Chembio Diagnostic Systems, Inc. and Chembio Diagnostics Malaysia Sdn Bhd). All significant intercompany transactions and balances are eliminated in consolidation. (b) Use of Estimates: The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in certain areas. Generally, matters subject to estimation and judgment include accounts receivable realization, inventory obsolescence, asset impairments, recognition of revenue persuant to milestones, useful lives of intangible and fixed assets, stock-based compensation, and deferred tax asset valuation allowances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from those estimates. (c) Fair Value of Financial Instruments: The carrying value for cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair value of the Company's notes payable approximates the recorded value as the rate is based upon the current rates offered to the Company for similar financial instruments. (d) Cash and Cash Equivalents: Cash and cash equivalents are defined as short-term, highly liquid investments with original maturities of three months or less. (e) Concentrations of Credit Risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade receivables. The Company places its temporary cash instruments with well-known financial institutions and, at times, may maintain balances in excess of the FDIC insurance limit. The Company monitors the credit ratings of the financial institutions to mitigate this risk. Concentration of credit risk with respect to trade receivables is principally mitigated by the Company’s ability to obtain letters of credit from certain foreign customers and its diverse customer base, both in number of customers and geographic locations. (f) Inventories: Inventories, consisting of material, labor and manufacturing overhead, are stated at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method. (g) Fixed Assets: Fixed assets are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, which range from three to seven years. Leasehold improvements are amortized over the useful life of the asset or the lease term, whichever is shorter. Deposits paid for fixed assets are capitalized and not depreciated until the related asset is placed in service. (h) License Agreements: The Company records up-front payments related to sublicense agreements as prepaids and amortizes them over their respective economic life. As of December 31, 2017 and 2016, total prepaids were $100,000 and $237,500, respectively. Amortization expenses for the licenses above for the years ended December 31, 2017, 2016 and 2015 were $137,500 $319,319, and $442,557, respectively. (i) Valuation of Long-Lived Assets and Intangible Assets: Long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. No impairment of long-lived tangible and intangible assets was recorded for the years ended December 31, 2017 and 2016. (j) Revenue Recognition: The Company recognizes revenue for product sales in accordance with ASC 605, whereby revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred, or services have been rendered, the sales price is fixed and determinable, and collectability is reasonably assured. Revenue typically is recognized at time of shipment. Sales are recorded net of discounts, rebates and returns. For certain contracts, the Company recognizes revenue from non-milestone contracts and grant revenues when earned. Grants are invoiced after expenses are incurred. Revenues from projects or grants funded in advance are deferred until earned. The Company follows the recognition of revenue under the milestone method for certain collaborative research projects defining milestones at the inception of the agreement. In April 2017, the Company entered into a $1.0 million agreement with FIND to develop a simple, point-of-care fever panel assay that can identify multiple life-threatening acute febrile illnesses common in the Asia Pacific region. The Company earned $0.8 million for the year ended December 31, 2017, as R&D, milestone and grant revenue in our Consolidated Statements of Operations. In August 2016, the Company was awarded a grant of $5.9 million from BARDA, which is part of the U.S. Department of Health And Human Resources to develop a rapid Zika virus assay. The Company earned $2.2 million and $2.7 million for the year ended December 31, 2017 and from inception through December 31, 2017, respectively, as R&D, milestone and grant revenue in our Consolidated Statements of Operations. In September 2016, the Company was awarded a $0.7 million contract from the USDA to develop a Bovid TB assay. The Company earned $0.4 million and $0.7 million for the year ended December 31, 2017 and from inception through December 31, 2017, respectively, as R&D, milestone and grant revenue in our Consolidated Statements of Operations. (k) Research and Development: Research and development (R&D) costs are expensed as incurred. (l) Stock-Based Compensation: Stock-based compensation expense is calculated using the Black-Scholes valuation model based on awards ultimately expected to vest, reduced for forfeitures, and expensed on a straight-line basis over the requisite service period of the grant. During 2017, the Company adopted ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". (m) I ncome Taxes: The Company accounts for income taxes under an asset and liability approach that recognizes deferred tax assets and liabilities based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company follows a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. The guidance relates to, among other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest and penalties accrued related to uncertain tax positions are recorded in tax expense. The Company assesses the realizability of its net deferred tax assets on an annual basis. If, after considering all relevant positive and negative evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized, the Company will reduce the net deferred tax assets by a valuation allowance. The realization of net deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of net operating loss carryforwards. (n) Loss Per Share: Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted loss per share for the year ended December 31, 2017, 2016 and 2015 reflects the potential dilution from the exercise or conversion of other securities into common stock, if dilutive. There were 810,670, 600,549 and 658,631 options outstanding as of December 31, 2017, 2016 and 2015, respectively, which were not included in the calculation of diluted income per share for the years ended because their effect would have been anti-dilutive. (o) Goodwill and Intangible Assets: Goodwill represents the excess of the purchase price we paid over the fair value of the net tangible and identifiable intangible assets acquired in our acquisition of CDM in January 2017. Goodwill is not amortized but rather is tested annually as of the first day of the fiscal fourth quarter, or sooner if we believe that indicators of impairment exist. We make a qualitative evaluation about the likelihood of goodwill impairment, which is based on a number of applicable factors. If we conclude that it is more likely than not that the carrying value of the applicable reporting unit is greater than its fair value, then we would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value, provided the impairment charge does not exceed the total amount of goodwill allocated to the reporting unit. For the year ended December 31, 2017, the results of our goodwill impairment analysis did not result in any impairment. Following is a table that reflects changes in Goodwill: Beginning balance 1/1/17 $ - Acquisition of CDM 1,651,361 Changes in foreign currency exchange rate 15,249 Balance at December 31, 2017 $ 1,666,610 In addition, the Company recorded certain intangible assets as part of the CDM acquisition which are as follows as of December 31, 2017: Cost Accumulated Amortization Net Book Value Intellectual property $ 886,872 $ 88,687 $ 798,185 Customer contracts/relationships 776,013 77,601 698,412 Order backlog 221,867 221,867 - Trade names 110,859 10,079 100,780 $ 1,995,611 $ 398,234 $ 1,597,377 Amortization expense for the year ended December 31, 2017 was $398,234. (p) Foreign Currency Translation: Assets and liabilities of non-U.S. subsidiaries that use a currency other than U.S. dollars as their functional currency are translated to U.S. dollars at end of period currency exchange rates. The consolidated statements of operations of non-U.S. subsidiaries are translated to U.S. dollars at average period currency exchange rates. The effect of translation for non-U.S subsidiaries is generally reported in Other comprehensive income. (q) Recent Accounting Pronouncements Affecting the Company: In May 2014, the Financial Accounting Standards Board (“FASB”) issued converged guidance on recognizing revenue in contracts with customers, ASU 2014-09, Revenue from Contracts with Customers Except for expanded disclosures to be included in our first interim financial statements for the fiscal year end 2018, we have completed our evaluation of the new standard and assessed the impact of adoption on our consolidated financial statements. We reviewed significant open contracts with customers for each revenue stream, and based on our evaluation, revenue recognition under the new standard will not have a material impact on the Company’s consolidated financial statements because: i) product sales revenue is recognized when control of the goods is transferred to the customer (i.e., the date of shipment, which is consistent under ASC 605), and ii) R&D, milestone and grant revenue do not generally constitute exchange transactions and therefore the new standard does not apply. The Company has also assessed its control framework as a result of adopting the new standard and notes minimal, insignificant changes to its systems and other controls processes. The new standard permits two adoption methods under ASU 2014-09. The guidance may be adopted through either retrospective application to all periods presented in the consolidated financial statements (full retrospective) or through a cumulative effect adjustment to retained earnings at the effective date (modified retrospective). The Company adopted the new standard effective January 1, 2018 using the modified retrospective transition method. Under that method, we applied the rules to all contracts existing as of January 1, 2018. We estimated the cumulative effect recorded to the opening balance of retained earnings to be immaterial. The disclosures in our notes to the consolidated financial statements related to revenue recognition will be expanded under the new standard, specifically around the quantitative and qualitative information about performance obligations, changes in contract assets and liabilities, and disaggregation of revenue. The Company expects to make these enhanced disclosures in its interim financial statements for the first quarter of 2018. In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Assets. This ASU is intended to simplify the presentation of deferred taxes on the balance sheet and will require an entity to present all deferred tax assets and deferred tax liabilities as non-current on the balance sheet. Under the current guidance, entities are required to separately present deferred taxes as current or non-current. Netting deferred tax assets and deferred tax liabilities by tax jurisdiction will still be required under the new guidance. This guidance will be effective for Chembio beginning in 2018, with early adoption permitted. The Company does not believe this new accounting standard update will have a material impact on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, which amends the ASC and creates Topic 842, Leases. Topic 842 will require lessees to recognize lease assets and lease liabilities for those leases classified as operating leases under previous US GAAP on the balance sheet. This guidance is effective for annual periods beginning after December 15, 2018 and early adoption is permitted. We are in the initial stages of evaluating the effect of the standard on our financial statements and will continue to evaluate. While not yet in a position to assess the full impact of the application of the new standard, the Company expects that the impact of recording the lease liabilities and the corresponding right-to-use assets will have a significant impact on its total assets and liabilities with a minimal impact on equity. In March 2016, the FASB issued authoritative guidance under ASU 2016-09, Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 provides for simplification of several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017. As the Company has a full valuation allowance against its U.S. net deferred tax assets, the adoption of this standard for recognition of the tax effect of deductions for employee share awards in excess of compensation costs (“windfall”) did not have a material impact on our consolidated financial statements and related disclosures. See Note 8 – Income Taxes, for additional information. Should the full valuation allowance be reversed in future periods, the adoption of this new guidance could introduce more volatility in the calculation of our effective tax rate, depending on the Company’s share price at exercise or vesting of share-based awards as compared to grant date. The other provisions of ASU 2016-09 did not have a material impact on our consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES [Abstract] | |
INVENTORIES | NOTE 4 — INVENTORIES: Inventories consist of the following at: December 31, 2017 December 31, 2016 Raw materials $ 1,767,684 $ 1,824,248 Work in process 286,413 535,320 Finished goods 2,369,521 975,620 $ 4,423,618 $ 3,335,188 |
FIXED ASSETS
FIXED ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
FIXED ASSETS [Abstract] | |
FIXED ASSETS | NOTE 5 — FIXED ASSETS: Fixed assets consist of the following at: December 31, 2017 December 31, 2016 Machinery and equipment $ 4,582,759 $ 3,962,051 Furniture and fixtures 449,548 437,962 Computer and telephone equipment 422,946 343,167 Leasehold improvements 2,258,779 2,012,945 7,714,032 6,756,125 Less accumulated depreciation and amortization (5,804,800 ) (5,046,804 ) $ 1,909,232 $ 1,709,321 There were no capital leases at the end of December 31, 2017. Fixed assets at December 31, 2017 also include $538,406 in equipment, that is undergoing validation and as such is not yet being depreciated. Depreciation expense for the 2017, 2016 and 2015 years aggregated $727,563, $782,711 and $893,305, respectively. As of December 31, 2017 and 2016, the Company had paid deposits on various pieces of equipment classified within Deposits and Other Assets aggregating $257,455 and $31,900, respectively. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE 6 — ACCOUNTS PAYABLE AND ACCRUED LIABILITIES: Accounts payable and accrued liabilities consist of the following at: December 31, 2017 December 31, 2016 Accounts payable – suppliers $ 1,494,759 $ 1,437,290 Accrued commissions 126,827 221,982 Accrued royalties / license fees 429,297 352,660 Accrued payroll 187,305 167,575 Accrued vacation 309,767 289,587 Accrued bonuses 282,500 282,500 Accrued expenses - other 215,848 261,539 Total $ 3,046,303 $ 3,013,133 |
DEFERRED RESEARCH AND DEVELOPME
DEFERRED RESEARCH AND DEVELOPMENT REVENUE | 12 Months Ended |
Dec. 31, 2017 | |
DEFERRED RESEARCH AND DEVELOPMENT REVENUE [Abstract] | |
DEFERRED RESEARCH AND DEVELOPMENT REVENUE | NOTE 7 — DEFERRED RESEARCH AND DEVELOPMENT REVENUE: The Company recognizes income from R&D milestones when those milestones are reached and non-milestone contracts and grants when earned. These projects are invoiced after expenses are incurred. Any projects or grants funded in advance are deferred until earned. As of December 31, 2017 and 2016, there were $50,000 and $392,517 unearned advanced revenues, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 8 The (benefit from) provision for income taxes for the years ended December 31, 2017, 2016, and 2015 is comprised of the following: 2017 2016 2015 Current Federal $ (97,339 ) $ - $ - State 9,034 - 10,726 Total current (benefit) provision (88,305 ) - 10,726 Deferred Federal - 5,778,185 (1,171,865 ) State - 22,633 896 Total deferred (benefit) provision - 5,800,818 (1,170,969 ) Total (benefit) provision $ (88,305 ) $ 5,800,818 $ (1,160,243 ) On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 34% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Tax Act also puts in place new tax laws that will apply prospectively, which include, but are not limited to, (1) implementing a base erosion and anti-abuse tax, (2) generally eliminating U.S.federal income taxes on dividends from foreign subsidiaries, (3) a new provision designed to tax currently in the U.S. global intangible low-taxed income (“GILTI”) of foreign subsidiaries, which allows for the possibility of utilizing foreign tax credits to offset the income tax liability (subject to some limitations), and (4) a lower effective U.S. tax rate on certain revenues from sources outside the U.S. The Company calculated its best estimate of the impact of the Act in accordance with its understanding of the Act and guidance available as of the date of this filing and recorded a $97,339 tax benefit in the period in which the legislation was enacted, related to a credit for alternative minimum taxes (AMT) paid in prior periods. A provisional amount related the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future resulted in a charge of $3,906,774, which was fully offset by an equivalent adjustment to the deferred tax valuation allowance. No provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was deemed necessary. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, the Company has determined that the $97,339 benefit recorded which relates to the AMT credit is a provisional amount and a reasonable estimate of December 31, 2017. The Company had an ownership change as described in Internal Revenue Code Sec. 382 during 2004 (“2004 change”). As a result, the Company’s net operating losses prior to the 2004 change of $5,832,516 were subject to an annual limitation of $150,608 and for the first five (5) years are entitled to a BIG (Built-In-Gains) of $488,207 per year. These net operating losses expire in 2020 through 2024. The Company had a second ownership change during 2006 (“2006 change”). The net operating losses incurred between the 2004 change and the 2006 change of $8,586,861 were subject to an annual limitation of $1,111,831 and for the first five (5) years are entitled to a BIG of $1,756,842 per year. These net operating losses expire in 2020 through 2026. After applying the above limitations, at December 31, 2017, the Company has post-change net operating loss carry-forwards of approximately $26,660,530 which expire between 2018 and 2037. In addition the Company has research and development tax credit carryforwards of approximately $1,461,351 for the year ended December 31, 2017, which expire between 2025 and 2037. As referenced in Note 2 - Acquisition, the Company acquired the stock of RVR Diagnostics Sdn Bhd, a Malaysia corporation, during the current year. RVR is on tax holiday through December 31, 2018. Accordingly, no taxes nor (benefit) have been provided on RVR results. 2017 2016 Inventory reserves $ 244,158 $ 253,380 Accrued expenses 102,332 53,140 Net operating loss carry-forwards 5,800,144 7,487,937 Research and development credit 1,918,137 1,461,351 Other credits - 97,339 Other 167,522 292,556 Depreciation 91,258 31,285 Deferred tax assets 8,323,551 9,676,988 Intangibles (341,042 ) - Deferred tax liabilities (341,042 ) - Net deferred tax assets before valuation allowance 7,982,509 9,676,988 Less valuation allowances (8,323,551 ) (9,676,988 ) Net noncurrent deferred tax liabilities $ (341,042 ) $ - The components of (loss) before income taxes consisted of the following: Year Ending December 31, 2017 2016 2015 United States operations $ (6,054,002 ) $ (7,546,229 ) $ (3,557,285 ) International operations (406,063 ) - - (Loss) before taxes $ (6,460,065 ) $ (7,546,229 ) $ (3,557,285 ) A reconciliation of the Federal statutory rate to the effective rate applicable to loss before income taxes is as follows: Year Ending December 31, 2017 2016 2015 Federal income tax at statutory rates (34.00 )% (34.00 )% (34.00 )% State income taxes, net of federal benefit 0.09 % 0.21 % 0.23 % Nondeductible expenses 1.04 % 0.57 % 1.38 % Foreign rate differential 2.14 % - - Change in valuation allowance 99.41 % 114.81 % 9.46 % Impact of Tax Act on valuation allowance (60.48 )% - - AMT refund under Tax Act (1.51 )% - - Tax credits (7.07 )% 0.00 % (9.46 )% Other (0.99 )% 0.04 % 0.34 % Income tax (benefit) (1.37 )% 81.63 % (32.05 )% Interest and penalties, if any, related to income tax liabilities are included in income tax expense. As of December 31, 2017, the Company does not have a liability for uncertain tax positions. The Company files Federal and state income tax returns. Tax years for fiscal 2014 through 2016 are open and potentially subject to examination by the federal and state taxing authorities. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 9 — STOCKHOLDERS’ EQUITY: (a) Common Stock In August of 2016, the Company closed on an underwritten public offering of 2,300,000 shares of its common stock at $6.00 per share. The net proceeds of the offering, after deducting the underwriters' discounts and other offering expenses payable by the Company, was approximately $12,493,000. During 2017, options to purchase 56,969 shares of the Company’s common stock were exercised for 22,487 shares of common stock at exercise prices ranging from $3.48 to $4.45 by surrendering options and shares of common stock already owned . During 2016, options to purchase 191,804 shares of the Company’s common stock were exercised for 98,599 shares of common stock at exercise prices ranging from $2.80 to $5.56 by paying cash or surrendering options already owned. During 2015, options to purchase 41,141 shares of the Company’s common stock were exercised for 17,109 shares of common stock at exercise prices ranging from $2.16 to $3.60 by paying cash or surrendering options already owned (b) Preferred Stock The Company has 10,000,000 shares of preferred stock authorized and none outstanding. These shares can become issuable upon an approved resolution by the board of directors and the filing of a Certificate of Designation with the state of Nevada. (c) Options The Compensation Committee of the Board of Directors may issues options persuant to employee stock option plans that have been approved by the Company's stockholders. (d) Warrants As of December 31, 2017 and 2016, the Company had no warrants outstanding to purchase shares of common stock. |
RIGHTS AGREEMENT
RIGHTS AGREEMENT | 12 Months Ended |
Dec. 31, 2017 | |
RIGHTS AGREEMENT [Abstract] | |
RIGHTS AGREEMENT | NOTE 10 — RIGHTS AGREEMENT: In March 2010, the Company entered into a Rights Agreement (the "Rights Agreement") between the Company and Action Stock Transfer Corp., as Rights Agent. The Rights Agreement expired at the end of November 2015. Pursuant to the Rights Agreement, the Company declared a dividend distribution of one preferred share purchase right (a "Right") for each outstanding share of Common Stock, $0.01 par value (the "Common Stock"), of the Company. The Board of Directors set the payment date for the distribution of the Rights as March 8, 2010, and the Rights were distributed to the Company’s shareholders of record on that date. The description and terms of the Rights are set forth in the Rights Agreement. Rights Initially Not Exercisable. Separation and Distribution of Rights |
EMPLOYEE STOCK OPTION PLAN
EMPLOYEE STOCK OPTION PLAN | 12 Months Ended |
Dec. 31, 2017 | |
EMPLOYEE STOCK OPTION PLAN [Abstract] | |
EMPLOYEE STOCK OPTION PLAN | NOTE 11 — EMPLOYEE STOCK OPTION PLAN: Effective June 3, 2008, the Company’s stockholders voted to approve the 2008 Stock Incentive Plan (“SIP”), with 750,000 shares of Common Stock available to be issued. At the Annual Stockholder meeting on September 22, 2011 the Company’s stockholders voted to approve an increase to the shares of Common Stock issuable under the SIP by 125,000 to 750,000. Under the terms of the SIP, the Compensation Committee of the Company’s Board has the discretion to select the persons to whom awards are to be granted. Awards can be stock options, restricted stock and/or restricted stock units. The awards become vested at such times and under such conditions as determined by the Compensation Committee. As of December 31, 2017, there were 480,172 options exercised, 228,177 options outstanding and 41,651 options still available to be issued under the SIP. Effective June 19, 2014, the Company’s stockholders voted to approve the 2014 Stock Incentive Plan (“SIP14”), with 800,000 shares of Common Stock available to be issued. Under the terms of the SIP14, the Compensation Committee of the Company’s Board has the discretion to select the persons to whom awards are to be granted. Awards can be stock options, restricted stock and/or restricted stock units. The awards become vested at such times and under such conditions as determined by the Compensation Committee. As of December 31, 2017, there were 22,000 options exercised, 375,625 options outstanding and 402,375 options still available to be issued under the SIP14. The Company's results for the years ended December 31, 2017, 2016 and 2015 include stock-based compensation expense totaling $384,897, $304,100, and $334,400 respectively. Such amounts have been included in the Consolidated Statements of Operations within cost of goods sold ($47,000, $-, and $- respectively), research and development ($89,400, $89,200, and $62,700 respectively) and selling, general and administrative expenses ($248,497, $214,900, and $271,700 respectively). Stock option compensation expense in the years ended December 31, 2017, 2016 and 2015 represents the estimated fair value of options outstanding which is being amortized on a straight-line basis over the requisite vesting period of the entire award. The weighted average estimated fair value of stock options granted in the years ended December 31, 2017 and 2016 were $2.77 and $2.75 per share, respectively. The Company did not grant any stock options during the year ended December 31, 2015. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based on the Company’s historical experience with similar type options. The weighted-average assumptions made in calculating the fair values of options are as follows for the respective years ended: December 31, 2017 December 31, 2016 December 31, 2015 Expected term (in years) 5.48 4.71 n/a Expected volatility 43.31 % 45.78 % n/a Expected dividend yield n/a n/a n/a Risk-free interest rate 1.78 % 0.92 % n/a The Company granted 267,875 new options during the year ended December 31, 2017 to employees. The following table provides stock options activity for the years ended December 31, 2017, 2016, and 2015: Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2014 691,869 3.66 3.97 years $ 334,636 Granted - - Exercised 41,141 2.25 65,449 Forfeited/expired/cancelled 1,250 4.30 Outstanding at December 31, 2015 649,478 3.75 3.21 years $ 1,032,362 Exercisable at December 31, 2015 359,228 3.89 2.03 years $ 522,039 Outstanding at December 31, 2015 649,478 3.75 3.21 years $ 1,032,362 Granted 142,875 7.08 Exercised 191,804 3.73 629,143 Forfeited/expired/cancelled - - Outstanding at December 31, 2016 600,549 4.55 3.43 years $ 1,463,052 Exercisable at December 31, 2016 267,549 4.14 2.66 years $ 731,997 Outstanding at December 31, 2016 600,549 $ 4.55 3.43 years $ 1,463,052 Granted 267,875 $ 6.40 Exercised 56,969 $ 4.19 100,018 Forfeited/expired/cancelled 785 $ 5.56 Outstanding at December 31, 2017 810,670 $ 5.18 3.69 years $ 2,477,853 Exercisable at December 31, 2017 371,295 $ 4.44 2.62 years $ 1,409,440 The following table summarizes information about stock options outstanding at December 31, 2017: Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Shares Average Remaining Contract Life (Year) Weighted Average Exercise Price Aggregate Intrinsic Value Shares Weighted Average Exercise Price Aggregate Intrinsic Value 1 to 2.79999 - - $ - $ - - $ - $ - 2.8 to 4.59999 362,750 2.68 3.51 1,702,125 244,000 3.55 1,135,255 4.6 to 6.39999 240,045 3.56 5.73 592,678 96,545 5.49 261,585 6.4 to 8.19999 161,000 6.26 7.06 183,050 12,000 7.15 12,600 8.2 to 10 46,875 3.44 8.86 - 18,750 8.86 - Total 810,670 3.69 $ 5.18 $ 2,477,853 371,295 $ 4.44 $ 1,409,440 As of December 31, 2017, there was $735,946 of net unrecognized compensation cost related to stock options that are not vested, which is expected to be recognized over a weighted average period of approximately 2.57 years. The total fair value of shares vested during the year ended December 31, 2017, was $380,465. |
GEOGRAPHIC INFORMATION AND ECON
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY | 12 Months Ended |
Dec. 31, 2017 | |
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY [Abstract] | |
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY | NOTE 12 — GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY: The Company produces only one group of similar products known collectively as “rapid medical tests,” and it operates in a single business segment. Net product sales by geographic area are as follows: For the years ended December 31, 2017 December 31, 2016 December 31, 2015 Africa $ 3,568,455 $ 2,363,944 $ 3,673,199 Asia 1,626,750 227,564 172,250 Europe 1,763,274 1,131,193 1,164,476 North America 3,887,820 5,082,319 6,525,951 South America 8,476,003 4,875,087 10,350,812 $ 19,322,302 $ 13,680,107 $ 21,886,688 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 — COMMITMENTS AND CONTINGENCIES: Employment Contracts: The Company has multi-year contracts with two key employees. The contracts call for salaries presently aggregating $770,000 per year, and they expire in March 2019 and March 2020. The following table is a schedule of future minimum salary commitments: 2018 $ 770,000 2019 485,500 2020 85,000 Pension Plan: The Company has a 401(k) plan established for its employees whereby it matches 40% of the first 5% (or 2% of salary) that an employee contributes to the plan. Matching contribution expenses totaled $91,150, $96,051 and $90,915 for the years ended December 31, 2017, 2016, and 2015, respectively. Obligations Under Operating Leases: The Company leases industrial space used for office, R&D and manufacturing facilities, currently with a monthly rent of $29,773. The current lease expires on April 30, 2019. The lease provides for annual increases of 2.5% percent each year starting May 1, 2016. In February of 2014, the Company entered into a lease for office and warehouse space, effective March 1, 2014, a short distance from its current facility currently with a monthly rent of $16,017. The space is used primarily for warehousing and provides for additional office space. The lease expires on April 30, 2020. The lease provides for annual increases of 3.0% percent each year starting March 1, 2016. The Company also leases office, warehouse, and manufacturing space in a single building in Kuala Lumpur, Malaysia persuant to two separate leases that each expire on April 30, 2020 and have an additional three year renewal option with combined monthly rent of approximately $3,600. The following is a schedule of future minimum rental commitments for the years ending December 31, 2018 $ 603,335 2019 371,036 2020 84,152 $ 1,058,523 Rent expense was $586,730, $516,708 and $511,900 for the years ended December 31, 2017, 2016, and 2015, respectively. Economic Dependency: Customers are considered major customers when net sales exceed 10% of the Company's total net sales for period or outstanding trade receivables exceed 10% of current assets. The Company had the following major customers for the respective periods: For the years ended Accounts Receivable December 31, 2017 December 31, 2016 December 31, 2015 December 31, 2017 December 31, 2016 Sales % of Sales Sales % of Sales Sales % of Sales Customer 1 $ 8,065,217 42 % $ 4,801,577 35 % $ 10,132,512 46 % $ - $ 828,848 Customer 2 - - 1,796,477 13 % 4,526,908 21 % - - The following table delineates purchases the Company had with vendors in excess of 10% of total purchases for the periods indicated: For the years ended Accounts Payable December 31, 2017 December 31, 2016 December 31, 2015 December 31, 2017 December 31, 2016 Purchases % of Purc. Purchases % of Purc. Purchases % of Purc. Vendor 1 $ * * $ 652,273 11 % $ * * $ * $ * Vendor 2 746,868 12 % * * * * * * Vendor 3 849,966 14 % * * * * * * Vendor 4 884,698 14 % * * 794,536 11 % * * In the table above, an asterisk (*) indicates that purchases from the vendor did not exceed 10% for the period indicated. The Company purchases materials pursuant to intellectual property rights agreements that are important components in its products. Management believes that other suppliers could provide similar materials on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which could adversly affect operating results. |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2017 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | NOTE 14 — QUARTERLY FINANCIAL DATA (UNAUDITED): The sum of the earnings per common share may not equal the corresponding annual amounts due to interim quarter rounding. For the Quarters Ended in Fiscal 2017 March 31 June 30 September 30 December 31 Total revenues $ 6,325,167 $ 4,114,814 $ 7,587,374 $ 5,988,072 Gross product margin 2,208,212 689,099 2,067,934 1,435,896 Net loss (1,615,574 ) (2,173,093 ) (584,661 ) (1,998,432 ) Basic loss per share (0.13 ) (0.18 ) (0.05 ) (0.16 ) Diluted loss per share (0.13 ) (0.18 ) (0.05 ) (0.16 ) For the Quarters Ended in Fiscal 2016 March 31 June 30 September 30 December 31 Total revenues $ 6,601,099 $ 3,266,405 $ 3,746,461 $ 4,254,876 Gross product margin 2,481,468 347,972 707,733 725,428 Net loss (303,590 ) (8,347,482 ) (2,138,218 ) (2,557,757 ) Basic loss per share (0.03 ) (0.86 ) (0.19 ) (0.21 ) Diluted loss per share (0.03 ) (0.86 ) (0.19 ) (0.21 ) |
NOTE PAYABLE
NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
NOTE PAYABLE [Abstract] | |
NOTE PAYABLE | NOTE 15 — NOTE PAYABLE: In September 2017, the Company entered into an agreement with an equipment vendor to purchase automated assembly equipment for approximately $660,000. The terms call for prepayments of 30% down, 60% at time of factory acceptance testing and 10% after delivery. The vendor agreed to lend the Company 15%, 40%, and 10% of each originally scheduled payment, respectively. The Company will pay interest at an annual rate of 12% until delivery. Thirty days after delivery, the Company will begin making monthly payments of principal and interest of approximately $20,150, at an annual rate of 12% over a twenty-four month period. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16 — SUBSEQUENT EVENT: On February 13, 2018, the Company closed on an underwritten registered public offering of 1,783,760 shares of its common stock at a public offering price of $6.75 per share for gross proceeds of approximately $12.0 million. The net proceeds, after underwriting discounts and commissions, and estimated expenses are approximately $11.0 million. We intend to use the net proceeds for business expansion and working capital, including product development; operational expansion or improvements, such as new automated equipment and a facilities update; clinical trials and other related activities, and sales and marketing. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2017 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS [Abstract] | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | Schedule II Valuation and Qualifying Accounts Additions Description Balance at beginning of period Charged to statement of income Charged to other accounts Deductions Balance at end of period Year ended December 31, 2017: Allowance for doubtful accounts $ 52,000 $ - $ - $ 10,000 $ 42,000 Inventory Reserve $ 245,000 $ 119,920 $ - $ 170,137 $ 194,783 Year ended December 31, 2016: Allowance for doubtful accounts $ 52,000 $ - $ - $ - $ 52,000 Inventory Reserve $ 218,000 $ 221,478 $ - $ 194,478 $ 245,000 Year ended December 31, 2015: Allowance for doubtful accounts $ 52,000 $ - $ - $ - $ 52,000 Inventory Reserve $ 218,000 $ 256,302 $ - $ 256,302 $ 218,000 |
SIGNIFICANT ACCOUNTING POLICI25
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Principles of Consolidation | (a) Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (Chembio Diagnostic Systems, Inc. and Chembio Diagnostics Malaysia Sdn Bhd). All significant intercompany transactions and balances are eliminated in consolidation. |
Use of Estimates | (b) Use of Estimates: The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in certain areas. Generally, matters subject to estimation and judgment include accounts receivable realization, inventory obsolescence, asset impairments, recognition of revenue persuant to milestones, useful lives of intangible and fixed assets, stock-based compensation, and deferred tax asset valuation allowances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from those estimates. |
Fair Value of Financial Instruments | (c) Fair Value of Financial Instruments: The carrying value for cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair value of the Company's notes payable approximates the recorded value as the rate is based upon the current rates offered to the Company for similar financial instruments. |
Cash and Cash Equivalents | (d) Cash and Cash Equivalents: Cash and cash equivalents are defined as short-term, highly liquid investments with original maturities of three months or less. |
Concentrations of Credit Risk | (e) Concentrations of Credit Risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade receivables. The Company places its temporary cash instruments with well-known financial institutions and, at times, may maintain balances in excess of the FDIC insurance limit. The Company monitors the credit ratings of the financial institutions to mitigate this risk. Concentration of credit risk with respect to trade receivables is principally mitigated by the Company’s ability to obtain letters of credit from certain foreign customers and its diverse customer base, both in number of customers and geographic locations. |
Inventories | (f) Inventories: Inventories, consisting of material, labor and manufacturing overhead, are stated at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method. |
Fixed Assets | (g) Fixed Assets: Fixed assets are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, which range from three to seven years. Leasehold improvements are amortized over the useful life of the asset or the lease term, whichever is shorter. Deposits paid for fixed assets are capitalized and not depreciated until the related asset is placed in service. |
License Agreements | (h) License Agreements: The Company records up-front payments related to sublicense agreements as prepaids and amortizes them over their respective economic life. As of December 31, 2017 and 2016, total prepaids were $100,000 and $237,500, respectively. Amortization expenses for the licenses above for the years ended December 31, 2017, 2016 and 2015 were $137,500 $319,319, and $442,557, respectively. |
Valuation of Long-Lived Assets and Intangible Assets | (i) Valuation of Long-Lived Assets and Intangible Assets: Long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. No impairment of long-lived tangible and intangible assets was recorded for the years ended December 31, 2017 and 2016. |
Revenue Recognition | (j) Revenue Recognition: The Company recognizes revenue for product sales in accordance with ASC 605, whereby revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred, or services have been rendered, the sales price is fixed and determinable, and collectability is reasonably assured. Revenue typically is recognized at time of shipment. Sales are recorded net of discounts, rebates and returns. For certain contracts, the Company recognizes revenue from non-milestone contracts and grant revenues when earned. Grants are invoiced after expenses are incurred. Revenues from projects or grants funded in advance are deferred until earned. The Company follows the recognition of revenue under the milestone method for certain collaborative research projects defining milestones at the inception of the agreement. In April 2017, the Company entered into a $1.0 million agreement with FIND to develop a simple, point-of-care fever panel assay that can identify multiple life-threatening acute febrile illnesses common in the Asia Pacific region. The Company earned $0.8 million for the year ended December 31, 2017, as R&D, milestone and grant revenue in our Consolidated Statements of Operations. In August 2016, the Company was awarded a grant of $5.9 million from BARDA, which is part of the U.S. Department of Health And Human Resources to develop a rapid Zika virus assay. The Company earned $2.2 million and $2.7 million for the year ended December 31, 2017 and from inception through December 31, 2017, respectively, as R&D, milestone and grant revenue in our Consolidated Statements of Operations. In September 2016, the Company was awarded a $0.7 million contract from the USDA to develop a Bovid TB assay. The Company earned $0.4 million and $0.7 million for the year ended December 31, 2017 and from inception through December 31, 2017, respectively, as R&D, milestone and grant revenue in our Consolidated Statements of Operations. |
Research and Development | (k) Research and Development: Research and development (R&D) costs are expensed as incurred. |
Stock-Based Compensation | (l) Stock-Based Compensation: Stock-based compensation expense is calculated using the Black-Scholes valuation model based on awards ultimately expected to vest, reduced for forfeitures, and expensed on a straight-line basis over the requisite service period of the grant. During 2017, the Company adopted ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". |
Income Taxes | (m) I ncome Taxes: The Company accounts for income taxes under an asset and liability approach that recognizes deferred tax assets and liabilities based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company follows a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. The guidance relates to, among other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest and penalties accrued related to uncertain tax positions are recorded in tax expense. The Company assesses the realizability of its net deferred tax assets on an annual basis. If, after considering all relevant positive and negative evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized, the Company will reduce the net deferred tax assets by a valuation allowance. The realization of net deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of net operating loss carryforwards. |
Loss Per Share | (n) Loss Per Share: Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted loss per share for the year ended December 31, 2017, 2016 and 2015 reflects the potential dilution from the exercise or conversion of other securities into common stock, if dilutive. There were 810,670, 600,549 and 658,631 options outstanding as of December 31, 2017, 2016 and 2015, respectively, which were not included in the calculation of diluted income per share for the years ended because their effect would have been anti-dilutive. |
Goodwill and Intangible Assets | (o) Goodwill and Intangible Assets: Goodwill represents the excess of the purchase price we paid over the fair value of the net tangible and identifiable intangible assets acquired in our acquisition of CDM in January 2017. Goodwill is not amortized but rather is tested annually as of the first day of the fiscal fourth quarter, or sooner if we believe that indicators of impairment exist. We make a qualitative evaluation about the likelihood of goodwill impairment, which is based on a number of applicable factors. If we conclude that it is more likely than not that the carrying value of the applicable reporting unit is greater than its fair value, then we would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value, provided the impairment charge does not exceed the total amount of goodwill allocated to the reporting unit. For the year ended December 31, 2017, the results of our goodwill impairment analysis did not result in any impairment. Following is a table that reflects changes in Goodwill: Beginning balance 1/1/17 $ - Acquisition of CDM 1,651,361 Changes in foreign currency exchange rate 15,249 Balance at December 31, 2017 $ 1,666,610 In addition, the Company recorded certain intangible assets as part of the CDM acquisition which are as follows as of December 31, 2017: Cost Accumulated Amortization Net Book Value Intellectual property $ 886,872 $ 88,687 $ 798,185 Customer contracts/relationships 776,013 77,601 698,412 Order backlog 221,867 221,867 - Trade names 110,859 10,079 100,780 $ 1,995,611 $ 398,234 $ 1,597,377 Amortization expense for the year ended December 31, 2017 was $398,234. |
Foreign Currency Translation | (p) Foreign Currency Translation: Assets and liabilities of non-U.S. subsidiaries that use a currency other than U.S. dollars as their functional currency are translated to U.S. dollars at end of period currency exchange rates. The consolidated statements of operations of non-U.S. subsidiaries are translated to U.S. dollars at average period currency exchange rates. The effect of translation for non-U.S subsidiaries is generally reported in Other comprehensive income. |
Recent Accounting Pronouncements Affecting the Company | (q) Recent Accounting Pronouncements Affecting the Company: In May 2014, the Financial Accounting Standards Board (“FASB”) issued converged guidance on recognizing revenue in contracts with customers, ASU 2014-09, Revenue from Contracts with Customers Except for expanded disclosures to be included in our first interim financial statements for the fiscal year end 2018, we have completed our evaluation of the new standard and assessed the impact of adoption on our consolidated financial statements. We reviewed significant open contracts with customers for each revenue stream, and based on our evaluation, revenue recognition under the new standard will not have a material impact on the Company’s consolidated financial statements because: i) product sales revenue is recognized when control of the goods is transferred to the customer (i.e., the date of shipment, which is consistent under ASC 605), and ii) R&D, milestone and grant revenue do not generally constitute exchange transactions and therefore the new standard does not apply. The Company has also assessed its control framework as a result of adopting the new standard and notes minimal, insignificant changes to its systems and other controls processes. The new standard permits two adoption methods under ASU 2014-09. The guidance may be adopted through either retrospective application to all periods presented in the consolidated financial statements (full retrospective) or through a cumulative effect adjustment to retained earnings at the effective date (modified retrospective). The Company adopted the new standard effective January 1, 2018 using the modified retrospective transition method. Under that method, we applied the rules to all contracts existing as of January 1, 2018. We estimated the cumulative effect recorded to the opening balance of retained earnings to be immaterial. The disclosures in our notes to the consolidated financial statements related to revenue recognition will be expanded under the new standard, specifically around the quantitative and qualitative information about performance obligations, changes in contract assets and liabilities, and disaggregation of revenue. The Company expects to make these enhanced disclosures in its interim financial statements for the first quarter of 2018. In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Assets. This ASU is intended to simplify the presentation of deferred taxes on the balance sheet and will require an entity to present all deferred tax assets and deferred tax liabilities as non-current on the balance sheet. Under the current guidance, entities are required to separately present deferred taxes as current or non-current. Netting deferred tax assets and deferred tax liabilities by tax jurisdiction will still be required under the new guidance. This guidance will be effective for Chembio beginning in 2018, with early adoption permitted. The Company does not believe this new accounting standard update will have a material impact on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, which amends the ASC and creates Topic 842, Leases. Topic 842 will require lessees to recognize lease assets and lease liabilities for those leases classified as operating leases under previous US GAAP on the balance sheet. This guidance is effective for annual periods beginning after December 15, 2018 and early adoption is permitted. We are in the initial stages of evaluating the effect of the standard on our financial statements and will continue to evaluate. While not yet in a position to assess the full impact of the application of the new standard, the Company expects that the impact of recording the lease liabilities and the corresponding right-to-use assets will have a significant impact on its total assets and liabilities with a minimal impact on equity. In March 2016, the FASB issued authoritative guidance under ASU 2016-09, Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 provides for simplification of several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017. As the Company has a full valuation allowance against its U.S. net deferred tax assets, the adoption of this standard for recognition of the tax effect of deductions for employee share awards in excess of compensation costs (“windfall”) did not have a material impact on our consolidated financial statements and related disclosures. See Note 8 – Income Taxes, for additional information. Should the full valuation allowance be reversed in future periods, the adoption of this new guidance could introduce more volatility in the calculation of our effective tax rate, depending on the Company’s share price at exercise or vesting of share-based awards as compared to grant date. The other provisions of ASU 2016-09 did not have a material impact on our consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting |
ACQUISITION (Tables)
ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
ACQUISITION [Abstract] | |
Fair values of assets acquired and liabilities assumed | The acquisition was accounted for using the purchase method of accounting. The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of January 9, 2017: Amount Property, plant and equipment $ 235,141 Goodwill 1,651,361 Deferred tax liability (307,636 ) Contingent consideration (148,000 ) Other intangible assets (estimated useful life): Intellectual property (approximate 10 year weighted average) 800,000 Customer contracts / relationships (approximate 10 year weighted average) 700,000 Order backlog (3 months) 200,134 Trade names (approximate 11 year weighted average) 100,000 Total consideration $ 3,231,000 The Company calculated the fair value of the fixed assets based on the net book value of CDM as that approximates fair value. The intellectual property, customer contracts and trade names were based on discounted cash flows using management estimates. The order backlog was based on an order that CDM had at the closing that was shipped in the first quarter of 2017, and valued at an estimated net income. |
Unaudited pro forma operating results | Pro Forma Total revenues $ 19,151,653 Net loss $ (13,473,084 ) Net loss per common share $ (1.26 ) Diluted net loss per common share $ (1.26 ) |
SIGNIFICANT ACCOUNTING POLICI27
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Schedule of Goodwill | Following is a table that reflects changes in Goodwill: Beginning balance 1/1/17 $ - Acquisition of CDM 1,651,361 Changes in foreign currency exchange rate 15,249 Balance at December 31, 2017 $ 1,666,610 |
Schedule of Finite-Lived Intangible Assets | In addition, the Company recorded certain intangible assets as part of the CDM acquisition which are as follows as of December 31, 2017: Cost Accumulated Amortization Net Book Value Intellectual property $ 886,872 $ 88,687 $ 798,185 Customer contracts/relationships 776,013 77,601 698,412 Order backlog 221,867 221,867 - Trade names 110,859 10,079 100,780 $ 1,995,611 $ 398,234 $ 1,597,377 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES [Abstract] | |
Schedule of inventories | Inventories consist of the following at: December 31, 2017 December 31, 2016 Raw materials $ 1,767,684 $ 1,824,248 Work in process 286,413 535,320 Finished goods 2,369,521 975,620 $ 4,423,618 $ 3,335,188 |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FIXED ASSETS [Abstract] | |
Schedule of fixed assets | Fixed assets consist of the following at: December 31, 2017 December 31, 2016 Machinery and equipment $ 4,582,759 $ 3,962,051 Furniture and fixtures 449,548 437,962 Computer and telephone equipment 422,946 343,167 Leasehold improvements 2,258,779 2,012,945 7,714,032 6,756,125 Less accumulated depreciation and amortization (5,804,800 ) (5,046,804 ) $ 1,909,232 $ 1,709,321 |
ACCOUNTS PAYABLE AND ACCRUED 30
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES [Abstract] | |
Schedule of accounts payable and accrued liabilities | Accounts payable and accrued liabilities consist of the following at: December 31, 2017 December 31, 2016 Accounts payable – suppliers $ 1,494,759 $ 1,437,290 Accrued commissions 126,827 221,982 Accrued royalties / license fees 429,297 352,660 Accrued payroll 187,305 167,575 Accrued vacation 309,767 289,587 Accrued bonuses 282,500 282,500 Accrued expenses - other 215,848 261,539 Total $ 3,046,303 $ 3,013,133 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES [Abstract] | |
Schedule of provision (benefit) for income taxes | The (benefit from) provision for income taxes for the years ended December 31, 2017, 2016, and 2015 is comprised of the following: 2017 2016 2015 Current Federal $ (97,339 ) $ - $ - State 9,034 - 10,726 Total current (benefit) provision (88,305 ) - 10,726 Deferred Federal - 5,778,185 (1,171,865 ) State - 22,633 896 Total deferred (benefit) provision - 5,800,818 (1,170,969 ) Total (benefit) provision $ (88,305 ) $ 5,800,818 $ (1,160,243 ) |
Schedule of deferred tax assets | As referenced in Note 2 - Acquisition, the Company acquired the stock of RVR Diagnostics Sdn Bhd, a Malaysia corporation, during the current year. RVR is on tax holiday through December 31, 2018. Accordingly, no taxes nor (benefit) have been provided on RVR results. 2017 2016 Inventory reserves $ 244,158 $ 253,380 Accrued expenses 102,332 53,140 Net operating loss carry-forwards 5,800,144 7,487,937 Research and development credit 1,918,137 1,461,351 Other credits - 97,339 Other 167,522 292,556 Depreciation 91,258 31,285 Deferred tax assets 8,323,551 9,676,988 Intangibles (341,042 ) - Deferred tax liabilities (341,042 ) - Net deferred tax assets before valuation allowance 7,982,509 9,676,988 Less valuation allowances (8,323,551 ) (9,676,988 ) Net noncurrent deferred tax liabilities $ (341,042 ) $ - |
Components of (loss) before income taxes | The components of (loss) before income taxes consisted of the following: Year Ending December 31, 2017 2016 2015 United States operations $ (6,054,002 ) $ (7,546,229 ) $ (3,557,285 ) International operations (406,063 ) - - (Loss) before taxes $ (6,460,065 ) $ (7,546,229 ) $ (3,557,285 ) |
Schedule of reconciliation of the Federal statutory rate to the effective rate applicable to loss before income taxes | A reconciliation of the Federal statutory rate to the effective rate applicable to loss before income taxes is as follows: Year Ending December 31, 2017 2016 2015 Federal income tax at statutory rates (34.00 )% (34.00 )% (34.00 )% State income taxes, net of federal benefit 0.09 % 0.21 % 0.23 % Nondeductible expenses 1.04 % 0.57 % 1.38 % Foreign rate differential 2.14 % - - Change in valuation allowance 99.41 % 114.81 % 9.46 % Impact of Tax Act on valuation allowance (60.48 )% - - AMT refund under Tax Act (1.51 )% - - Tax credits (7.07 )% 0.00 % (9.46 )% Other (0.99 )% 0.04 % 0.34 % Income tax (benefit) (1.37 )% 81.63 % (32.05 )% |
EMPLOYEE STOCK OPTION PLAN (Tab
EMPLOYEE STOCK OPTION PLAN (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
EMPLOYEE STOCK OPTION PLAN [Abstract] | |
Assumptions made in calculating the fair values of options | The weighted-average assumptions made in calculating the fair values of options are as follows for the respective years ended: December 31, 2017 December 31, 2016 December 31, 2015 Expected term (in years) 5.48 4.71 n/a Expected volatility 43.31 % 45.78 % n/a Expected dividend yield n/a n/a n/a Risk-free interest rate 1.78 % 0.92 % n/a |
Stock options activity | The following table provides stock options activity for the years ended December 31, 2017, 2016, and 2015: Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2014 691,869 3.66 3.97 years $ 334,636 Granted - - Exercised 41,141 2.25 65,449 Forfeited/expired/cancelled 1,250 4.30 Outstanding at December 31, 2015 649,478 3.75 3.21 years $ 1,032,362 Exercisable at December 31, 2015 359,228 3.89 2.03 years $ 522,039 Outstanding at December 31, 2015 649,478 3.75 3.21 years $ 1,032,362 Granted 142,875 7.08 Exercised 191,804 3.73 629,143 Forfeited/expired/cancelled - - Outstanding at December 31, 2016 600,549 4.55 3.43 years $ 1,463,052 Exercisable at December 31, 2016 267,549 4.14 2.66 years $ 731,997 Outstanding at December 31, 2016 600,549 $ 4.55 3.43 years $ 1,463,052 Granted 267,875 $ 6.40 Exercised 56,969 $ 4.19 100,018 Forfeited/expired/cancelled 785 $ 5.56 Outstanding at December 31, 2017 810,670 $ 5.18 3.69 years $ 2,477,853 Exercisable at December 31, 2017 371,295 $ 4.44 2.62 years $ 1,409,440 |
Summary of stock options outstanding | The following table summarizes information about stock options outstanding at December 31, 2017: Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Shares Average Remaining Contract Life (Year) Weighted Average Exercise Price Aggregate Intrinsic Value Shares Weighted Average Exercise Price Aggregate Intrinsic Value 1 to 2.79999 - - $ - $ - - $ - $ - 2.8 to 4.59999 362,750 2.68 3.51 1,702,125 244,000 3.55 1,135,255 4.6 to 6.39999 240,045 3.56 5.73 592,678 96,545 5.49 261,585 6.4 to 8.19999 161,000 6.26 7.06 183,050 12,000 7.15 12,600 8.2 to 10 46,875 3.44 8.86 - 18,750 8.86 - Total 810,670 3.69 $ 5.18 $ 2,477,853 371,295 $ 4.44 $ 1,409,440 |
GEOGRAPHIC INFORMATION AND EC33
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY [Abstract] | |
Net sales by geographic area | The Company produces only one group of similar products known collectively as “rapid medical tests,” and it operates in a single business segment. Net product sales by geographic area are as follows: For the years ended December 31, 2017 December 31, 2016 December 31, 2015 Africa $ 3,568,455 $ 2,363,944 $ 3,673,199 Asia 1,626,750 227,564 172,250 Europe 1,763,274 1,131,193 1,164,476 North America 3,887,820 5,082,319 6,525,951 South America 8,476,003 4,875,087 10,350,812 $ 19,322,302 $ 13,680,107 $ 21,886,688 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Schedule of future minimum salary commitment | The Company has multi-year contracts with two key employees. The contracts call for salaries presently aggregating $770,000 per year, and they expire in March 2019 and March 2020. The following table is a schedule of future minimum salary commitments: 2018 $ 770,000 2019 485,500 2020 85,000 |
Schedule of future minimum rental commitments | The following is a schedule of future minimum rental commitments for the years ending December 31, 2018 $ 603,335 2019 371,036 2020 84,152 $ 1,058,523 |
Customer and purchase concentration risks | Customers are considered major customers when net sales exceed 10% of the Company's total net sales for period or outstanding trade receivables exceed 10% of current assets. The Company had the following major customers for the respective periods: For the years ended Accounts Receivable December 31, 2017 December 31, 2016 December 31, 2015 December 31, 2017 December 31, 2016 Sales % of Sales Sales % of Sales Sales % of Sales Customer 1 $ 8,065,217 42 % $ 4,801,577 35 % $ 10,132,512 46 % $ - $ 828,848 Customer 2 - - 1,796,477 13 % 4,526,908 21 % - - The following table delineates purchases the Company had with vendors in excess of 10% of total purchases for the periods indicated: For the years ended Accounts Payable December 31, 2017 December 31, 2016 December 31, 2015 December 31, 2017 December 31, 2016 Purchases % of Purc. Purchases % of Purc. Purchases % of Purc. Vendor 1 $ * * $ 652,273 11 % $ * * $ * $ * Vendor 2 746,868 12 % * * * * * * Vendor 3 849,966 14 % * * * * * * Vendor 4 884,698 14 % * * 794,536 11 % * * In the table above, an asterisk (*) indicates that purchases from the vendor did not exceed 10% for the period indicated. |
QUARTERLY FINANCIAL DATA (UNA35
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |
Quarterly Financial Information | The sum of the earnings per common share may not equal the corresponding annual amounts due to interim quarter rounding. For the Quarters Ended in Fiscal 2017 March 31 June 30 September 30 December 31 Total revenues $ 6,325,167 $ 4,114,814 $ 7,587,374 $ 5,988,072 Gross product margin 2,208,212 689,099 2,067,934 1,435,896 Net loss (1,615,574 ) (2,173,093 ) (584,661 ) (1,998,432 ) Basic loss per share (0.13 ) (0.18 ) (0.05 ) (0.16 ) Diluted loss per share (0.13 ) (0.18 ) (0.05 ) (0.16 ) For the Quarters Ended in Fiscal 2016 March 31 June 30 September 30 December 31 Total revenues $ 6,601,099 $ 3,266,405 $ 3,746,461 $ 4,254,876 Gross product margin 2,481,468 347,972 707,733 725,428 Net loss (303,590 ) (8,347,482 ) (2,138,218 ) (2,557,757 ) Basic loss per share (0.03 ) (0.86 ) (0.19 ) (0.21 ) Diluted loss per share (0.03 ) (0.86 ) (0.19 ) (0.21 ) |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) | Jan. 09, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||||||||||
Deposit for investments | $ 850,000 | $ 550,000 | $ 0 | |||||||||
Fair values of Assets Acquired and Liabilities Assumed [Abstract] | ||||||||||||
Goodwill | $ 1,666,610 | $ 0 | 1,666,610 | 0 | ||||||||
Other intangible assets (estimated useful life): | ||||||||||||
Net sales | 5,988,072 | $ 7,587,374 | $ 4,114,814 | $ 6,325,167 | $ 4,254,876 | $ 3,746,461 | $ 3,266,405 | $ 6,601,099 | 24,015,427 | 17,868,841 | 24,255,485 | |
Loss before income taxes | (6,460,065) | (7,546,229) | $ (3,557,285) | |||||||||
RVR Diagnostics Sdn Bhd [Member] | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Deposit for investments | $ 550,000 | |||||||||||
Shares issued (in shares) | 269,236 | |||||||||||
Shares issued , value | $ 1,683,000 | |||||||||||
Shares held back (in shares) | 7,277 | |||||||||||
Business acquisition transaction costs | $ 25,000 | 25,000 | ||||||||||
Fair values of Assets Acquired and Liabilities Assumed [Abstract] | ||||||||||||
Property, plant and equipment | $ 235,141 | |||||||||||
Goodwill | 1,503,361 | |||||||||||
Deferred tax liability | (307,636) | |||||||||||
Contingent consideration | (148,000) | |||||||||||
Other intangible assets (estimated useful life): | ||||||||||||
Other intangible assets | 1,800,000 | |||||||||||
Total consideration | 3,083,000 | |||||||||||
Cash payment | 1,400,000 | |||||||||||
Unaudited Pro Forma Operating Results [Abstract] | ||||||||||||
Total Revenue | 1,465,000 | 19,151,653 | ||||||||||
Net loss | $ (406,000) | $ (13,473,084) | ||||||||||
Net loss per common share | $ (1.26) | |||||||||||
Diluted net loss per common share | $ (1.26) | |||||||||||
Amortization of Intangible Assets | $ 398,000 | |||||||||||
RVR Diagnostics Sdn Bhd [Member] | Intellectual Property [Member] | ||||||||||||
Other intangible assets (estimated useful life): | ||||||||||||
Other intangible assets | 800,000 | |||||||||||
Weighted average useful life | 10 years | |||||||||||
RVR Diagnostics Sdn Bhd [Member] | Customer Contracts / Relationships [Member] | ||||||||||||
Other intangible assets (estimated useful life): | ||||||||||||
Other intangible assets | 700,000 | |||||||||||
Weighted average useful life | 10 years | |||||||||||
RVR Diagnostics Sdn Bhd [Member] | Order Backlog [Member] | ||||||||||||
Other intangible assets (estimated useful life): | ||||||||||||
Other intangible assets | 200,134 | |||||||||||
Weighted average useful life | 3 months | |||||||||||
RVR Diagnostics Sdn Bhd [Member] | Trade Names [Member] | ||||||||||||
Other intangible assets (estimated useful life): | ||||||||||||
Other intangible assets | $ 100,000 | |||||||||||
Weighted average useful life | 11 years |
SIGNIFICANT ACCOUNTING POLICI37
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Roll Forward] | |||
Goodwill, Beginning balance | $ 0 | ||
Acquisition of CDM | 1,651,361 | ||
Changes in foreign currency exchange rate | 15,249 | ||
Goodwill, Ending balance | 1,666,610 | $ 0 | |
Goodwill, Impairment Loss | 0 | 0 | |
License Agreement [Abstract] | |||
Prepaid payments for license agreements | 100,000 | 237,500 | |
Accumulated amortization | 137,500 | 319,319 | $ 442,557 |
Intangible assets [Abstract] | |||
Finite-Lived Intangible Assets, Accumulated Amortization | 137,500 | 319,319 | $ 442,557 |
Finite-Lived Intangible Assets, Net | $ 1,597,377 | $ 0 | |
Summary of weighted average shares used for computation of basic and diluted earnings per share [Abstract] | |||
Basic (in shares) | 12,300,031 | 10,622,331 | 9,626,028 |
Diluted (in shares) | 12,300,031 | 10,622,331 | 9,626,028 |
Summary of common share equivalent basis, used in diluted per share computations [Abstract] | |||
Options and warrants excluded from computation of earnings per share (in shares) | 810,670 | 600,549 | 658,631 |
RVR Diagnostics Sdn Bhd [Member] | |||
License Agreement [Abstract] | |||
Accumulated amortization | $ 398,234 | ||
Intangible assets [Abstract] | |||
Finite-Lived Intangible Assets, Gross | 1,995,611 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 398,234 | ||
Finite-Lived Intangible Assets | 1,597,377 | ||
Amortization of intangible assets | $ 398,000 | ||
Fever Panel [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Revenue from grants | 800,000 | ||
Maximum amount of development agreement | 998,630 | ||
Zika Virus [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Revenue from grants | 2,195,821 | ||
Revenue from grants from inception | 2,668,583 | ||
Maximum amount of development agreement | 5,933,742 | ||
Bovid TB [Member] | |||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Revenue from grants | 298,380 | ||
Revenue from grants from inception | 419,863 | ||
Maximum amount of development agreement | $ 669,423 | ||
Minimum [Member] | |||
Fixed Assets [Abstract] | |||
Estimated useful lives of fixed assets | 3 years | ||
Maximum [Member] | |||
Fixed Assets [Abstract] | |||
Estimated useful lives of fixed assets | 7 years | ||
Intellectual Property [Member] | RVR Diagnostics Sdn Bhd [Member] | |||
License Agreement [Abstract] | |||
Accumulated amortization | $ 88,687 | ||
Intangible assets [Abstract] | |||
Finite-Lived Intangible Assets, Gross | 886,872 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 88,687 | ||
Finite-Lived Intangible Assets | 798,185 | ||
Customer Contracts / Relationships [Member] | RVR Diagnostics Sdn Bhd [Member] | |||
License Agreement [Abstract] | |||
Accumulated amortization | 77,601 | ||
Intangible assets [Abstract] | |||
Finite-Lived Intangible Assets, Gross | 776,013 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 77,601 | ||
Finite-Lived Intangible Assets | 698,412 | ||
Order Backlog [Member] | RVR Diagnostics Sdn Bhd [Member] | |||
License Agreement [Abstract] | |||
Accumulated amortization | 221,867 | ||
Intangible assets [Abstract] | |||
Finite-Lived Intangible Assets, Gross | 221,867 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 221,867 | ||
Finite-Lived Intangible Assets | 0 | ||
Trade Names [Member] | RVR Diagnostics Sdn Bhd [Member] | |||
License Agreement [Abstract] | |||
Accumulated amortization | 10,079 | ||
Intangible assets [Abstract] | |||
Finite-Lived Intangible Assets, Gross | 110,859 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 10,079 | ||
Finite-Lived Intangible Assets | $ 100,780 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories [Abstract] | ||
Raw materials | $ 1,767,684 | $ 1,824,248 |
Work in process | 286,413 | 535,320 |
Finished goods | 2,369,521 | 975,620 |
Inventories | $ 4,423,618 | $ 3,335,188 |
FIXED ASSETS (Details)
FIXED ASSETS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of fixed assets [Abstract] | |||
Fixed assets, gross | $ 7,714,032 | $ 6,756,125 | |
Less accumulated depreciation and amortization | (5,804,800) | (5,046,804) | |
Fixed assets, net | 1,909,232 | 1,709,321 | |
Depreciation expense | 727,563 | 782,711 | $ 893,305 |
Deposits on various pieces of equipment | 257,455 | 31,900 | |
Machinery and Equipment [Member] | |||
Summary of fixed assets [Abstract] | |||
Fixed assets, gross | 4,582,759 | 3,962,051 | |
Furniture and Fixtures [Member] | |||
Summary of fixed assets [Abstract] | |||
Fixed assets, gross | 449,548 | 437,962 | |
Computer and Telephone Equipment [Member] | |||
Summary of fixed assets [Abstract] | |||
Fixed assets, gross | 422,946 | 343,167 | |
Leasehold Improvements [Member] | |||
Summary of fixed assets [Abstract] | |||
Fixed assets, gross | 2,258,779 | $ 2,012,945 | |
Capital Leases [Member] | |||
Summary of fixed assets [Abstract] | |||
Fixed assets, net | 0 | ||
Equipment Undergoing Validation [Member] | |||
Summary of fixed assets [Abstract] | |||
Fixed assets, gross | $ 538,406 |
ACCOUNTS PAYABLE AND ACCRUED 40
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Summary of accounts payable and accrued liabilities [Abstract] | ||
Accounts payable - suppliers | $ 1,494,759 | $ 1,437,290 |
Accrued commissions | 126,827 | 221,982 |
Accrued royalties / license fees | 429,297 | 352,660 |
Accrued payroll | 187,305 | 167,575 |
Accrued vacation | 309,767 | 289,587 |
Accrued bonuses | 282,500 | 282,500 |
Accrued expenses - other | 215,848 | 261,539 |
Total | $ 3,046,303 | $ 3,013,133 |
DEFERRED RESEARCH AND DEVELOP41
DEFERRED RESEARCH AND DEVELOPMENT REVENUE (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
DEFERRED RESEARCH AND DEVELOPMENT REVENUE [Abstract] | ||
Deferred revenue | $ 50,000 | $ 392,517 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | 24 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2003 | Dec. 31, 2005 | |
Current [Abstract] | ||||||
Federal | $ (97,339) | $ 0 | $ 0 | |||
State | 9,034 | 0 | 10,726 | |||
Total current (benefit) provision | (88,305) | 0 | 10,726 | |||
Deferred [Abstract] | ||||||
Federal | 0 | 5,778,185 | (1,171,865) | |||
State | 0 | 22,633 | 896 | |||
Total deferred (benefit) provision | 0 | 5,800,818 | (1,170,969) | |||
Total (benefit) provision | $ (88,305) | $ 5,800,818 | $ (1,160,243) | |||
Income Tax Disclosure [Line Items] | ||||||
Effective income tax rate | 34.00% | 34.00% | 34.00% | |||
Income tax expense (benefit) | $ (97,339) | |||||
Net operating losses | 26,660,530 | $ 5,832,516 | $ 8,586,861 | |||
Annual limitation | 150,608 | 1,111,831 | ||||
Built-in-gains of net operating losses | $ 488,207 | $ 1,756,842 | ||||
Income tax expense | 3,906,774 | |||||
Summary of deferred tax assets [Abstract] | ||||||
Inventory reserves | 244,158 | $ 253,380 | ||||
Accrued expenses | 102,332 | 53,140 | ||||
Net operating loss carry-forwards | 5,800,144 | 7,487,937 | ||||
Research and development credit | 1,918,137 | 1,461,351 | ||||
Other credits | 0 | 97,339 | ||||
Other | 167,522 | 292,556 | ||||
Depreciation | 91,258 | 31,285 | ||||
Deferred Tax Assets, Gross | 8,323,551 | 9,676,988 | ||||
Deferred Tax Assets Intangible Assets | (341,042) | 0 | ||||
Deferred Tax Liabilities, Gross | (341,042) | 0 | ||||
Noncurrent deferred tax assets | 7,982,509 | 9,676,988 | ||||
Less valuation allowances | (8,323,551) | (9,676,988) | ||||
Net noncurrent deferred tax liabilities | (341,042) | 0 | ||||
Components of (loss) before income taxes [Abstract] | ||||||
United States operations | (6,054,002) | (7,546,229) | $ (3,557,285) | |||
International operations | (406,063) | 0 | 0 | |||
(Loss) before taxes | $ (6,460,065) | $ (7,546,229) | $ (3,557,285) | |||
Summary of reconciliation of the Federal statutory rate to the effective rate applicable to income (loss) before income taxes [Abstract] | ||||||
Federal income tax at statutory rates | (34.00%) | (34.00%) | (34.00%) | |||
State income taxes, net of federal benefit | 0.09% | 0.21% | 0.23% | |||
Foreign rate differential | 2.14% | 0.00% | 0.00% | |||
Nondeductible expenses | 1.04% | 0.57% | 1.38% | |||
Change in valuation allowance | 99.41% | 114.81% | 9.46% | |||
Impact of Tax Act on valuation allowance | (60.48%) | 0.00% | 0.00% | |||
AMT refund under Tax Act | (1.51%) | 0.00% | 0.00% | |||
Tax credits | (7.07%) | 0.00% | (9.46%) | |||
Other | (0.99%) | 0.04% | 0.34% | |||
Income tax (benefit) | (1.37%) | 81.63% | (32.05%) | |||
Research and Development Tax Credit Carryforward [Member] | ||||||
Tax Credit Carryforward [Line Items] | ||||||
Tax credit carryforward | $ 1,461,351 | |||||
Plan [Member] | ||||||
Income Tax Disclosure [Line Items] | ||||||
Effective income tax rate | 21.00% | |||||
Summary of reconciliation of the Federal statutory rate to the effective rate applicable to income (loss) before income taxes [Abstract] | ||||||
Federal income tax at statutory rates | (21.00%) | |||||
Federal [Member] | Minimum [Member] | ||||||
Income Tax Contingency [Line Items] | ||||||
Open tax year | 2,014 | |||||
Federal [Member] | Maximum [Member] | ||||||
Income Tax Contingency [Line Items] | ||||||
Open tax year | 2,016 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Common Stock [Abstract] | ||||
Shares sold in underwritten public offering (in shares) | 2,300,000 | |||
Price per share of common stock sold in the offering (in dollars per share) | $ 6 | |||
Proceeds from sale of offering | $ 12,493,398 | $ 0 | $ 12,493,398 | $ 0 |
Number of stock options exercised under the plan (in shares) | 56,969 | 191,804 | 41,141 | |
Exercised (in shares) | 22,487 | 98,599 | 17,109 | |
Exercise prices of stock option, minimum (in dollars per share) | $ 3.48 | $ 2.80 | $ 2.16 | |
Exercise prices of stock option, maximum (in dollars per share) | $ 4.45 | $ 5.56 | $ 3.60 | |
Preferred Stock [Abstract] | ||||
Preferred stock - shares authorized (in shares) | 10,000,000 | 10,000,000 | ||
Preferred stock - shares outstanding (in shares) | 0 | 0 | ||
Warrants [Abstract] | ||||
Warrants outstanding (in shares) | 0 | 0 |
RIGHTS AGREEMENT (Details)
RIGHTS AGREEMENT (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
RIGHTS AGREEMENT [Abstract] | ||
Preferred stock dividend declared for each common stock (in shares) | 1 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Minimum combined ownership of outstanding shares of common stock by acquiring person | 20.00% |
EMPLOYEE STOCK OPTION PLAN (Det
EMPLOYEE STOCK OPTION PLAN (Details) - USD ($) | 12 Months Ended | ||||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2017 | Dec. 31, 2014 | Dec. 31, 2008 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of stock options exercised under the plan (in shares) | 56,969 | 191,804 | 41,141 | ||||
Stock options, number of shares [Roll forward] | |||||||
Exercised (in shares) | 56,969 | 191,804 | 41,141 | ||||
Stock options, additional disclosure [Abstract] | |||||||
Outstanding, aggregate intrinsic value, end of period | $ 2,477,853 | ||||||
Exercisable, aggregate intrinsic value, end of period | 1,409,440 | ||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||||
Allocated share-based compensation expense | $ 384,897 | $ 304,100 | $ 334,400 | ||||
Stock Options [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of stock options outstanding under the plan (in shares) | 600,549 | 649,478 | 649,478 | 810,670 | 691,869 | ||
Number of stock options exercised under the plan (in shares) | 56,969 | 191,804 | 41,141 | ||||
Weighted average estimated grant-date fair value of stock options granted (in dollars per share) | $ 2.77 | $ 2.75 | $ 0 | ||||
Assumptions made in calculating fair values of options [Abstract] | |||||||
Expected term | 5 years 5 months 23 days | 4 years 8 months 16 days | |||||
Expected volatility | 43.31% | 45.78% | |||||
Risk-free interest rate | 1.78% | 0.92% | |||||
Stock options, number of shares [Roll forward] | |||||||
Outstanding, beginning of period (in shares) | 600,549 | 649,478 | 691,869 | ||||
Granted (in shares) | 267,875 | 142,875 | 0 | ||||
Exercised (in shares) | 56,969 | 191,804 | 41,141 | ||||
Forfeited/expired/cancelled (in shares) | 785 | 0 | 1,250 | ||||
Outstanding, end of period (in shares) | 810,670 | 600,549 | 649,478 | ||||
Exercisable, end of period (in shares) | 371,295 | 267,549 | 359,228 | ||||
Stock options, weighted average exercise price per share [Roll Forward] | |||||||
Outstanding, beginning of period (in dollars per share) | $ 4.55 | $ 3.75 | $ 3.66 | ||||
Granted (in dollars per share) | 6.40 | 7.08 | 0 | ||||
Exercised (in dollars per share) | 4.19 | 3.73 | 2.25 | ||||
Forfeited/expired/cancelled (in dollars per share) | 5.56 | 0 | 4.30 | ||||
Outstanding, end of period (in dollars per share) | 5.18 | 4.55 | 3.75 | ||||
Exercisable, end of period (in dollars per share) | $ 4.44 | $ 4.14 | $ 3.89 | ||||
Stock options, additional disclosure [Abstract] | |||||||
Outstanding, weighted average remaining contractual term | 3 years 8 months 8 days | 3 years 5 months 5 days | 3 years 2 months 16 days | 3 years 11 months 19 days | |||
Exercisable, weighted average remaining contractual term | 2 years 7 months 13 days | 2 years 7 months 28 days | 2 years 11 days | ||||
Outstanding, aggregate intrinsic value, beginning of period | $ 1,463,052 | $ 1,032,362 | $ 334,636 | ||||
Exercised, aggregate intrinsic value | 100,018 | 629,143 | 65,449 | ||||
Outstanding, aggregate intrinsic value, end of period | 2,477,853 | 1,463,052 | 1,032,362 | ||||
Exercisable, aggregate intrinsic value, end of period | $ 1,409,440 | 731,997 | 522,039 | ||||
Net unrecognized compensation cost | $ 735,946 | ||||||
Weighted average period for recognition of net unrecognized compensation cost | 2 years 6 months 25 days | ||||||
Total fair value of stock options vested during period | $ 380,465 | ||||||
2008 Stock Incentive Plan [Member] | Stock Options [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized under the plan (in shares) | 750,000 | 750,000 | |||||
Increase in number of shares authorized (in shares) | 125,000 | ||||||
Number of stock options outstanding under the plan (in shares) | 228,177 | 228,177 | |||||
Number of stock options exercised under the plan (in shares) | 480,172 | ||||||
Options still available to be issued (in shares) | 41,651 | ||||||
Stock options, number of shares [Roll forward] | |||||||
Exercised (in shares) | 480,172 | ||||||
Outstanding, end of period (in shares) | 228,177 | ||||||
2014 Stock Incentive Plan [Member] | Stock Options [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized under the plan (in shares) | 800,000 | ||||||
Number of stock options outstanding under the plan (in shares) | 375,625 | 375,625 | |||||
Number of stock options exercised under the plan (in shares) | 22,000 | ||||||
Options still available to be issued (in shares) | 402,375 | ||||||
Stock options, number of shares [Roll forward] | |||||||
Exercised (in shares) | 22,000 | ||||||
Outstanding, end of period (in shares) | 375,625 | ||||||
Cost of Goods Sold [Member] | |||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||||
Allocated share-based compensation expense | $ 47,000 | 0 | 0 | ||||
Research and Development Expense [Member] | |||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||||
Allocated share-based compensation expense | 89,400 | 89,200 | 62,700 | ||||
Selling, General and Administrative Expenses [Member] | |||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||||
Allocated share-based compensation expense | $ 248,497 | $ 214,900 | $ 271,700 |
EMPLOYEE STOCK OPTION PLAN, Par
EMPLOYEE STOCK OPTION PLAN, Part 2 (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Range of Exercise Prices [Abstract] | |||
Range of exercise prices, minimum (in dollars per share) | $ 3.48 | $ 2.80 | $ 2.16 |
Range of exercise prices, maximum (in dollars per share) | $ 4.45 | $ 5.56 | $ 3.60 |
Stock Options Outstanding [Abstract] | |||
Shares (in shares) | 810,670 | ||
Average remaining contract life | 3 years 8 months 8 days | ||
Weighted average exercise price (in dollars per share) | $ 5.18 | ||
Aggregate intrinsic value | $ 2,477,853 | ||
Stock Options Exercisable [Abstract] | |||
Shares (in shares) | 371,295 | ||
Weighted average exercise price (in dollars per share) | $ 4.44 | ||
Aggregate intrinsic value | $ 1,409,440 | ||
1 to 2.79999 [Member] | |||
Range of Exercise Prices [Abstract] | |||
Range of exercise prices, minimum (in dollars per share) | $ 1 | ||
Range of exercise prices, maximum (in dollars per share) | $ 2.79999 | ||
Stock Options Outstanding [Abstract] | |||
Shares (in shares) | 0 | ||
Average remaining contract life | 0 years | ||
Weighted average exercise price (in dollars per share) | $ 0 | ||
Aggregate intrinsic value | $ 0 | ||
Stock Options Exercisable [Abstract] | |||
Shares (in shares) | 0 | ||
Weighted average exercise price (in dollars per share) | $ 0 | ||
Aggregate intrinsic value | $ 0 | ||
2.8 to 4.59999 [Member] | |||
Range of Exercise Prices [Abstract] | |||
Range of exercise prices, minimum (in dollars per share) | $ 2.8 | ||
Range of exercise prices, maximum (in dollars per share) | $ 4.59999 | ||
Stock Options Outstanding [Abstract] | |||
Shares (in shares) | 362,750 | ||
Average remaining contract life | 2 years 8 months 5 days | ||
Weighted average exercise price (in dollars per share) | $ 3.51 | ||
Aggregate intrinsic value | $ 1,702,125 | ||
Stock Options Exercisable [Abstract] | |||
Shares (in shares) | 244,000 | ||
Weighted average exercise price (in dollars per share) | $ 3.55 | ||
Aggregate intrinsic value | $ 1,135,255 | ||
4.6 to 6.39999 [Member] | |||
Range of Exercise Prices [Abstract] | |||
Range of exercise prices, minimum (in dollars per share) | $ 4.6 | ||
Range of exercise prices, maximum (in dollars per share) | $ 6.39999 | ||
Stock Options Outstanding [Abstract] | |||
Shares (in shares) | 240,045 | ||
Average remaining contract life | 3 years 6 months 22 days | ||
Weighted average exercise price (in dollars per share) | $ 5.73 | ||
Aggregate intrinsic value | $ 592,678 | ||
Stock Options Exercisable [Abstract] | |||
Shares (in shares) | 96,545 | ||
Weighted average exercise price (in dollars per share) | $ 5.49 | ||
Aggregate intrinsic value | $ 261,585 | ||
6.4 to 8.19999 [Member] | |||
Range of Exercise Prices [Abstract] | |||
Range of exercise prices, minimum (in dollars per share) | $ 6.4 | ||
Range of exercise prices, maximum (in dollars per share) | $ 8.19999 | ||
Stock Options Outstanding [Abstract] | |||
Shares (in shares) | 161,000 | ||
Average remaining contract life | 6 years 3 months 4 days | ||
Weighted average exercise price (in dollars per share) | $ 7.06 | ||
Aggregate intrinsic value | $ 183,050 | ||
Stock Options Exercisable [Abstract] | |||
Shares (in shares) | 12,000 | ||
Weighted average exercise price (in dollars per share) | $ 7.15 | ||
Aggregate intrinsic value | $ 12,600 | ||
8.2 to 10 [Member] | |||
Range of Exercise Prices [Abstract] | |||
Range of exercise prices, minimum (in dollars per share) | $ 8.2 | ||
Range of exercise prices, maximum (in dollars per share) | $ 10 | ||
Stock Options Outstanding [Abstract] | |||
Shares (in shares) | 46,875 | ||
Average remaining contract life | 3 years 5 months 8 days | ||
Weighted average exercise price (in dollars per share) | $ 8.86 | ||
Aggregate intrinsic value | $ 0 | ||
Stock Options Exercisable [Abstract] | |||
Shares (in shares) | 18,750 | ||
Weighted average exercise price (in dollars per share) | $ 8.86 | ||
Aggregate intrinsic value | $ 0 |
GEOGRAPHIC INFORMATION AND EC47
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Sales-Year over Year | $ 19,322,302 | $ 13,680,107 | $ 21,886,688 |
Africa [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Sales-Year over Year | 3,568,455 | 2,363,944 | 3,673,199 |
Asia [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Sales-Year over Year | 1,626,750 | 227,564 | 172,250 |
Europe [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Sales-Year over Year | 1,763,274 | 1,131,193 | 1,164,476 |
North America [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Sales-Year over Year | 3,887,820 | 5,082,319 | 6,525,951 |
South America [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net Sales-Year over Year | $ 8,476,003 | $ 4,875,087 | $ 10,350,812 |
COMMITMENTS AND CONTINGENCIES48
COMMITMENTS AND CONTINGENCIES (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)KeyEmployeeLease | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Employment Contracts [Abstract] | |||
Number of key employees with whom Company has employment contracts | KeyEmployee | 2 | ||
Aggregate annual salaries of employment contracts | $ 770,000 | ||
Contract one, expiration date | Mar. 31, 2019 | ||
Contract two, expiration date | Mar. 31, 2020 | ||
Future minimum salary commitments [Abstract] | |||
2,018 | $ 770,000 | ||
2,019 | 485,500 | ||
2,020 | $ 85,000 | ||
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of employer's matching contribution | 40.00% | ||
Expenses related to matching contribution | $ 91,150 | $ 96,051 | $ 90,915 |
Schedule of future minimum rental commitments [Abstract] | |||
2,018 | 603,335 | ||
2,019 | 371,036 | ||
2,020 | 84,152 | ||
Total | 1,058,523 | ||
Rent expense | 586,730 | 516,708 | 511,900 |
Economic Dependency [Abstract] | |||
Sales | 19,322,302 | 13,680,107 | $ 21,886,688 |
Accounts Receivable | 2,085,340 | 3,383,729 | |
Accounts Payable | $ 1,494,759 | 1,437,290 | |
Customer Concentration Risk [Member] | |||
Economic Dependency [Abstract] | |||
Concentration risk percentage | 10.00% | ||
Customer Concentration Risk [Member] | Customer 1 [Member] | |||
Economic Dependency [Abstract] | |||
Accounts Receivable | $ 0 | 828,848 | |
Customer Concentration Risk [Member] | Customer 2 [Member] | |||
Economic Dependency [Abstract] | |||
Accounts Receivable | $ 0 | $ 0 | |
Supplier Concentration Risk [Member] | |||
Economic Dependency [Abstract] | |||
Concentration risk percentage | 10.00% | ||
Maximum [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employee contribution subject to employer matching contribution | 5.00% | ||
Employer matching contribution | 2.00% | ||
Medford [Member] | |||
Entity Location [Line Items] | |||
Monthly rent | $ 29,773 | ||
Lease expiration date | Apr. 30, 2019 | ||
Percentage of monthly rent increase in year three through five | 2.50% | ||
Holbrook [Member] | |||
Entity Location [Line Items] | |||
Monthly rent | $ 16,017 | ||
Lease expiration date | Apr. 30, 2020 | ||
Percentage of monthly rent increase in year three through five | 3.00% | ||
Kuala Lumpur [Member] | |||
Entity Location [Line Items] | |||
Monthly rent | $ 3,600 | ||
Lease expiration date | Apr. 30, 2020 | ||
Number of separate leases | Lease | 2 | ||
Number of additional year of renewal option | 3 years | ||
Sales [Member] | Customer Concentration Risk [Member] | Customer 1 [Member] | |||
Economic Dependency [Abstract] | |||
Concentration risk percentage | 42.00% | 35.00% | 46.00% |
Sales | $ 8,065,217 | $ 4,801,577 | $ 10,132,512 |
Sales [Member] | Customer Concentration Risk [Member] | Customer 2 [Member] | |||
Economic Dependency [Abstract] | |||
Concentration risk percentage | 0.00% | 13.00% | 21.00% |
Sales | $ 0 | $ 1,796,477 | $ 4,526,908 |
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor 1 [Member] | |||
Economic Dependency [Abstract] | |||
Concentration risk percentage | 11.00% | ||
Purchases | $ 652,273 | ||
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor 2 [Member] | |||
Economic Dependency [Abstract] | |||
Concentration risk percentage | 12.00% | ||
Purchases | $ 746,868 | ||
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor 3 [Member] | |||
Economic Dependency [Abstract] | |||
Concentration risk percentage | 14.00% | ||
Purchases | $ 849,966 | ||
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor 4 [Member] | |||
Economic Dependency [Abstract] | |||
Concentration risk percentage | 14.00% | 11.00% | |
Purchases | $ 884,698 | $ 794,536 |
QUARTERLY FINANCIAL DATA (UNA49
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Selected Quarterly Financial Information [Abstract] | |||||||||||
Total revenues | $ 5,988,072 | $ 7,587,374 | $ 4,114,814 | $ 6,325,167 | $ 4,254,876 | $ 3,746,461 | $ 3,266,405 | $ 6,601,099 | $ 24,015,427 | $ 17,868,841 | $ 24,255,485 |
Gross product margin | 1,435,896 | 2,067,934 | 689,099 | 2,208,212 | 725,428 | 707,733 | 347,972 | 2,481,468 | |||
Net loss | $ (1,998,432) | $ (584,661) | $ (2,173,093) | $ (1,615,574) | $ (2,557,757) | $ (2,138,218) | $ (8,347,482) | $ (303,590) | |||
Basic loss per share (in dollars per share) | $ (0.16) | $ (0.05) | $ (0.18) | $ (0.13) | $ (0.21) | $ (0.19) | $ (0.86) | $ (0.03) | $ (0.52) | $ (1.26) | $ (0.25) |
Diluted loss per share (in dollars per share) | $ (0.16) | $ (0.05) | $ (0.18) | $ (0.13) | $ (0.21) | $ (0.19) | $ (0.86) | $ (0.03) | $ (0.52) | $ (1.26) | $ (0.25) |
NOTE PAYABLE (Details)
NOTE PAYABLE (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2017 | |
NOTE PAYABLE [Abstract] | ||
Debt instrument, face amount | $ 660,000 | |
Percentage of first prepayment of the term | 30.00% | |
Percentage of second prepayment of the term | 60.00% | |
Percentage of prepayment after delivery | 10.00% | |
Percentage of first prepayment of the term by the vendor | 15.00% | |
Percentage of second prepayment of the term by the vendor | 40.00% | |
Percentage of prepayment after delivery by the vendor | 10.00% | |
Annual interest rate | 12.00% | |
Period after delivery before beginning monthly payments | 30 days | |
Periodic payment debt instrument, principal and interest | $ 20,150 | |
Term of debt instrument | 24 months |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Feb. 13, 2018 | Aug. 31, 2016 | Dec. 31, 2016 |
Subsequent Event [Line Items] | |||
Underwritten public offering (in shares) | 2,300,000 | ||
Public offering price per share (in dollars per share) | $ 6 | ||
Gross proceeds from public offering | $ 12,493,398 | ||
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Underwritten public offering (in shares) | 1,783,760 | ||
Public offering price per share (in dollars per share) | $ 6.75 | ||
Gross proceeds from public offering | $ 12,000,000 | ||
Net proceeds after underwriting discounts and commissions, and estimated expenses | $ 11,000,000 |
SCHEDULE II - VALUATION AND Q52
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for Doubtful Accounts [Member] | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at beginning of period | $ 52,000 | $ 52,000 | $ 52,000 |
Charged to statement of income | 0 | 0 | 0 |
Charged to other accounts | 0 | 0 | 0 |
Deductions | 10,000 | 0 | 0 |
Balance at end of period | 42,000 | 52,000 | 52,000 |
Inventory Reserve [Member] | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at beginning of period | 245,000 | 218,000 | 218,000 |
Charged to statement of income | 119,920 | 221,478 | 256,302 |
Charged to other accounts | 0 | 0 | 0 |
Deductions | 170,137 | 194,478 | 256,302 |
Balance at end of period | $ 194,783 | $ 245,000 | $ 218,000 |