Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 28, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Sensus Healthcare, Inc. | |
Entity Central Index Key | 1,494,891 | |
Document Type | 10-Q | |
Trading Symbol | SRTS | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 13,568,002 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 9,516,479 | $ 10,085,468 |
Accounts receivable, net | 8,062,946 | 4,958,255 |
Inventories | 1,233,454 | 1,171,383 |
Investment in debt securities | 1,104,635 | |
Prepaid and other current assets | 477,533 | 566,972 |
Total Current Assets | 19,290,412 | 17,886,713 |
Property and Equipment, Net | 605,235 | 394,078 |
Patent Rights, Net | 506,026 | 530,123 |
Deposits | 26,936 | 24,272 |
Total Assets | 20,428,609 | 18,835,186 |
Current Liabilities | ||
Accounts payable and accrued expenses | 4,155,764 | 4,067,894 |
Product warranties | 140,045 | 146,722 |
Deferred revenue, current portion | 663,643 | 652,242 |
Total Current Liabilities | 4,959,452 | 4,866,858 |
Revolving credit facility | 4,215,633 | 2,214,970 |
Deferred Revenue, Net of Current Portion | 66,687 | 73,083 |
Total Liabilities | 9,241,772 | 7,154,911 |
Stockholders' Equity | ||
Preferred stock, 5,000,000 shares authorized and none issued and outstanding | ||
Common stock, $0.01 par value - 50,000,000 authorized; 13,601,456 issued and 13,568,002 outstanding at March 31, 2018; 13,522,168 issued and 13,488,714 outstanding at December 31, 2017 | 136,014 | 135,221 |
Additional paid-in capital | 23,813,323 | 23,181,641 |
Treasury stock, 33,454 shares at cost, at March 31, 2018 and December 31, 2017, respectively | (133,816) | (133,816) |
Accumulated deficit | (12,628,684) | (11,502,771) |
Total Stockholders' Equity | 11,186,837 | 11,680,275 |
Total Liabilities and Stockholders' Equity | $ 20,428,609 | $ 18,835,186 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 50,000,000 | 50,000,000 |
Common stock, issued | 13,601,456 | 13,522,168 |
Common Stock, outstanding | 13,568,002 | 13,488,714 |
Treasury stock, shares | 33,454 | 33,454 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Revenues | $ 5,955,462 | $ 4,354,349 |
Cost of Sales | 2,015,200 | 1,499,701 |
Gross Profit | 3,940,262 | 2,854,648 |
Operating Expenses | ||
Selling and marketing | 2,214,911 | 2,263,481 |
General and administrative | 1,342,253 | 1,043,953 |
Research and development | 1,497,618 | 1,135,426 |
Total Operating Expenses | 5,054,782 | 4,442,860 |
Loss From Operations | (1,114,520) | (1,588,212) |
Other Income (Expense) | ||
Interest income | 22,022 | 22,720 |
Interest expense | (33,415) | (6,641) |
Other Income (Expense), net | (11,393) | 16,079 |
Net Loss | $ (1,125,913) | $ (1,572,133) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.08) | $ (0.12) |
Weighted average number of shares used in computing net loss per share - basic and diluted (in shares) | 13,331,553 | 13,219,170 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($) | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total |
Balance beginning at Dec. 31, 2017 | $ 135,221 | $ 23,181,641 | $ (133,816) | $ (11,502,771) | $ 11,680,275 |
Balance beginning (in shares) at Dec. 31, 2017 | 13,522,168 | (33,454) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock based compensation | $ 500 | 541,108 | 541,608 | ||
Stock based compensation (in shares) | 50,000 | ||||
Exercise of warrants | $ 293 | 90,574 | 90,867 | ||
Exercise of warrants (in shares) | 29,288 | ||||
Net loss | (1,125,913) | (1,125,913) | |||
Balance end at Mar. 31, 2018 | $ 136,014 | $ 23,813,323 | $ (133,816) | $ (12,628,684) | $ 11,186,837 |
Balance end (in shares) at Mar. 31, 2018 | 13,601,456 | (33,454) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash Flows From Operating Activities | ||
Net loss | $ (1,125,913) | $ (1,572,133) |
Adjustments to reconcile net income (loss) to net cash and cash equivalents used in operating activities: | ||
Bad debt expense | 2,345 | 169,054 |
Depreciation and amortization | 100,534 | 94,157 |
Provision for product warranties | 36,790 | 80,122 |
Stock based compensation | 541,608 | 104,070 |
Decrease (increase) in: | ||
Accounts receivable | (3,107,036) | (1,290,900) |
Inventories | (62,071) | (282,406) |
Prepaid and other current assets | 86,775 | (256,274) |
Increase (decrease) in: | ||
Accounts payable and accrued expenses | 87,870 | 559,423 |
Deferred revenue | 5,005 | (297,879) |
Product warranties | (43,467) | (68,300) |
Total Adjustments | (2,351,647) | (1,188,933) |
Net Cash Used In Operating Activities | (3,477,560) | (2,876,066) |
Cash Flows from Investing Activities | ||
Acquisition of property and equipment | (287,594) | (144,492) |
Investment in debt securities - held to maturity | (1,840,228) | |
Investments matured | 1,104,635 | 1,500,000 |
Net Cash Provided By (Used In) Investing Activities | 817,041 | (484,720) |
Cash Flows from Financing Activities | ||
Exercise of warrants | 90,867 | |
Revolving credit facility, net | 2,000,663 | 1,500,000 |
Net Cash Provided By Financing Activities | 2,091,530 | 1,344,532 |
Net Decrease in Cash and Cash Equivalents | (568,991) | (1,901,254) |
Cash and Cash Equivalents - Beginning | 10,085,468 | |
Cash and Cash Equivalents - Ending | 9,516,479 | 3,141,223 |
Supplemental Disclosure of Cash Flow Information | ||
Interest Paid | $ 33,415 | $ 6,641 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 1 — Organization and Summary of Significant Accounting Policies Description of the Business Sensus Healthcare, Inc. (the “Company”) is a manufacturer of superficial radiation therapy devices and has established a distribution and marketing network to sell the devices to healthcare providers globally. The Company was organized on May 7, 2010 as a limited liability corporation. On January 1, 2016, the Company completed a corporate conversion pursuant to which Sensus Healthcare, Inc. succeeded to the business of Sensus Healthcare, LLC. In February 2018, the Company opened a wholly-owned subsidiary in Israel. The Company operates as one segment based at its corporate headquarters located in Boca Raton, Florida. Basis of Presentation The accompanying unaudited condensed financial statements in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC. Accordingly, they do not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial statements. The interim financial information is unaudited, but reflects all normal adjustments and accruals which are, in the opinion of management, considered necessary to provide a fair presentation for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2017 included in the Company’s Form 10-K, filed with the SEC. The results for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, any other interim periods, or any future year or period. Principles of consolidation The accompanying condensed consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary in Israel. All inter-company balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates to which it is reasonably possible that a change could occur in the near term include, inventory reserves, receivable allowances, recoverability of long lived assets and estimation of the Company’s product warranties. Actual results could differ from those estimates. Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” using the modified retrospective method. The adoption of this standard did not result in a significant change to the Company’s historical revenue recognition policies and there were no necessary adjustments required to retained earnings upon adoption. Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identifies the contracts with a customer; (ii) identifies the performance obligations within the contract, including whether they are distinct and capable of being distinct in the context of the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when, or as, the Company satisfies each performance obligation. The Company’s revenue consists of sales of the Company’s devices and services related to repairing and maintaining the devices. The agreement for the sale of the devices and the service contract are usually signed at the same time and in some instances a service contract is signed on a stand-alone basis. Revenue for service contracts is recognized over the service contract period on a straight-line basis. The Company determined that in practice no significant discount is given on the service contract when it is offered with the device purchase as compared to when it is sold on a stand-alone basis, by comparing the median selling price of the service contract as stand-alone and the median selling price of the service contract when sold together with the device. The service level provided is identical when the service contract is purchased stand-alone or together with the device; there is no termination provision in the service contract nor any penalties in practice for cancellation of the service contract. The service contract is not considered a performance obligation until it is paid, and it does not provide a material right for a significant discount when purchased with the device. The service portion of a sales contract or a stand alone service contract is accounted for over the period of time of the service contract only when the customer exercises the option by paying for the service contract. For the three months ended March 31, 2018, service contract revenue was approximately 7% of total revenues. The Company operates in a highly-regulated environment and is continually entering into new markets in which regulatory approval is sometimes required prior to the customer being able to use the product. In these cases, where regulatory approval is pending, revenue is deferred until such time as regulatory approval is obtained. Deferred revenue consists of payments from customers for long term separately priced service contracts and deposits on products. Deferred revenue as of March 31, 2018 and December 31, 2017 was as follows: As of March 31, As of December 31, 2018 2017 (unaudited) Service contracts $ 575,158 $ 570,242 Deposits on products 88,485 82,000 Total deferred revenue, current portion $ 663,643 $ 652,242 Service contracts, net of current portion 66,687 73,083 Total deferred revenue $ 730,330 $ 725,325 The Company provides warranties, generally for one year, in conjunction with the sale of its product. These warranties are short term in nature and entitle the customer to repair, replacement, or modification of the defective product subject to the terms of the respective warranty. The Company records an estimate of future warranty claims at the time the Company recognizes revenue from the sale of the product based upon management’s estimate of the future claims rate. Shipping and handling costs are expensed as incurred and are included in cost of sales. Segment and Geographical Information The Company’s revenue is generated primarily from customers in the United States, which represented approximately 100% and 99% for the three months ended March 31, 2018 and 2017, respectively. A customer in the US accounted for approximately 75% and 51% of revenues for the three months ended March 31, 2018 and 2017, respectively, and approximately 93% and 87% of the accounts receivable as of March 31, 2018 and December 31, 2017, respectively. Cash and Cash Equivalents The Company maintains its cash and cash equivalents with financial institutions which balances exceed the federally insured limits. Federally insured limits are $250,000 for deposits. As of March 31, 2018 and December 31, 2017, the Company had approximately $9,255,000 and $9,952,000, respectively in excess of federally insured limits. For purposes of the statement of cash flows, the Company considers all highly liquid financial instruments with a maturity of three months or less when purchased to be a cash equivalent. Investments Short-term investments consist of investments which the Company expects to convert into cash within one year and long-term investments after one year. The Company classifies its investments in debt securities at the time of purchase as h e carried at amortized cost plus accrued interest and consist of the following: Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Short-Term: Corporate bonds $ 602,599 $ — $ 256 $ 602,343 United States Treasury bonds 502,036 — 332 501,704 Total Short Term: 1,104,635 — 588 1,104,047 Total Investments December 31, 2017 $ 1,104,635 $ — $ 588 $ 1,104,047 There were no investments as of March 31, 2018. Accounts Receivable The Company does business and extends credit based on an evaluation of each customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. The allowance for doubtful accounts was approximately $16,000 as of March 31, 2018 and December 31, 2017. Bad debt expense for the three months ended March 31, 2018 and 2017 was approximately $2,000 and $169,000, respectively. Inventories Inventories consist of finished product and components and are stated at the lower of cost or net realizable value, determined using the first-in-first-out method. Earnings Per Share Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period using the treasury stock method for options and warrants. The diluted net income per share is computed by giving effect to all potential dilutive common share equivalents outstanding for the period. In periods when the Company has incurred a net loss, options and warrants to purchase common shares are considered common share equivalents but have been excluded from the calculation of diluted net loss per share as their effect is antidilutive. Shares excluded were computed under the treasury stock method as follows: For the Three Months Ended March 31, 2018 2017 Stock options 3,660 — Warrants — 4,025 Unvested shares — 39,509 Advertising Costs Advertising and promotion expenses are charged to expense as incurred. Advertising and promotion expense included in selling and marketing expense in the accompanying statements of operations amounted to approximately $522,000 and $733,000 for the three months ended March 31, 2018 and 2017, respectively. Recently issued and Adopted accounting Standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 eliminated transaction- and industry-specific revenue recognition guidance under current GAAP and replaced it with a principle based approach for determining revenue recognition. ASU 2014-09 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. In April 2016, the FASB also issued ASU 2016-10, Identifying Performance Obligations and Licensing, implementation guidance on principal versus agent, identifying performance obligations, and licensing. ASU 2016-10 is effective for reporting periods beginning after December 15, 2017. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted the new revenue recognition standard in the first quarter of 2018 using the full retrospective method. There was not a material impact to revenues as a result of applying ASC 606 for the three months ended March 31, 2018, and there have not been significant changes to our business processes, systems, or internal controls as a result of implementing the standard. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for lease s In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting. The amendments included in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update will be applied prospectively to an award modified on or after the adoption date. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this standard in the first quarter of 2018 and it did not have a material impact on its financial statements. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Note 2 — Property and Equipment As of March 31, As to December 31, Estimated 2018 2017 Useful Lives (unaudited) Operations and rental equipment $ 652,573 $ 542,639 3 years Tradeshow and demo equipment 436,247 271,275 3 years Computer equipment 106,987 94,298 3 years 1,195,807 908,212 Less accumulated depreciation (590,572 ) (514,134 ) Property and Equipment, Net $ 605,235 $ 394,078 Depreciation expense was approximately $76,000 and $70,000 for the three months ended March 31, 2018 and 2017, respectively. |
PATENT RIGHTS
PATENT RIGHTS | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PATENT RIGHTS | Note 3 — Patent Rights As to March 31, As of December 31, 2018 2017 (unaudited) Gross carrying amount $ 1,253,018 $ 1,253,018 Less accumulated amortization (746,992 ) (722,895 ) Patent Rights, Net 506,026 530,123 Amortization expense was approximately $24,000 for the three months ended March 31, 2018 and 2017. As of March 31, 2018, future remaining amortization expense is as follows: Year 2018 (April 1 – December 31, 2018) $ 72,280 2019 96,386 2020 96,386 2021 96,386 2022 96,386 Thereafter 48,202 Total $ 506,026 |
REVOLVING CREDIT FACILITY
REVOLVING CREDIT FACILITY | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
REVOLVING CREDIT FACILITY | Note 4 — Revolving Credit Facility On March 12, 2013, the Company entered into a two-year $3 million revolving credit facility. The credit facility was amended and extended effective March 12, 2015 through May 12, 2017. The maximum borrowing was reduced to $1,500,000 and was limited by the Company’s eligible borrowing base of 80% of eligible accounts receivable. On September 21, 2016, a second amendment to the credit facility extended the facility through September 21, 2017, increased the maximum borrowing to $2,000,000 and expanded the eligible accounts receivables to include certain international receivables. The Company was not in compliance in April and May 2017 with one of its financial covenants. On June 27, 2017, the covenant defaults were waived and the agreement was amended to modify the financial covenants effective June 2017. An amendment signed on September 15, 2017 extended the maturity date of the credit line through November 19, 2017. On October 31, 2017, the Company amended its revolving credit facility to extend the maturity to October 31, 2019 and to amend the financial covenants. The availability under the amended facility will equal the lesser of the $5 million commitment amount or the borrowing base plus the $2.5 million non-formula sublimit. The borrowing base consists of 80% of eligible accounts receivable, as defined in the agreement. Interest, at Prime plus 0.75% (5.50% at March 31, 2018) and Prime plus 1.50% on non-formula borrowings (6.25% at March 31, 2018), is payable monthly, and the outstanding principal and interest are due on the maturity date. The facility is secured by all of the Company’s assets and limits the amount of additional indebtedness, restricts the sale, disposition or transfer of assets of the Company and requires the maintenance of a certain monthly adjusted quick ratio restrictive covenant, as defined in the agreement. The Company was in compliance with its financial covenants as of March 31, 2018 and December 31, 2017. Approximately $4,216,000 was outstanding under the revolving credit facility at March 31, 2018 and $2,215,000 at December 31, 2017. The Company pays commitment fees of 0.25% per annum on the average unused portion of the line of credit. |
PRODUCT WARRANTIES
PRODUCT WARRANTIES | 3 Months Ended |
Mar. 31, 2018 | |
Product Warranties Disclosures [Abstract] | |
PRODUCT WARRANTIES | Note 5 — Product Warranties Changes in product warranty liability were as follows for the three months ended March 31, 2018: Balance, beginning of period $ 146,722 Warranties accrued during the period 36,790 Payments on warranty claims (43,467 ) Balance, end of period $ 140,045 |
COMMITMENT AND CONTINGENCIES
COMMITMENT AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENT AND CONTINGENCIES | Note 6 — Commitment and Contingencies Operating Lease Agreements In July 2016, the Company renewed its lease with an unrelated third party for its headquarters office. The renewal was effective September 1, 2016 and expanded the office space being occupied. The lease expires in September 2022 and lease payments increase by 3% annually. In February 2017 and January 2018, the Company signed amendments to expand further the leased office space. The Company’s Israeli subsidiary also leases office space starting in February 2018. Future minimum lease payments as of March 31, 2018 are as follows: Year Minimum Lease Payment 2018 164,000 2019 217,000 2020 224,000 2021 231,000 2022 177,000 Total $ 1,008,000 Rental expense for three months ended March 31, 2018 and 2017 was approximately $53,000 and $40,000, respectively. Manufacturing Agreement In July 2010, the Company entered into a three-year contract manufacturing agreement with an unrelated third party for the production and manufacture of the Company’s main product in accordance with the Company’s product specifications. The agreement renews for successive years unless either party notifies the other party in writing, at least 60 days prior to the anniversary date of this agreement that it will not renew the agreement. The Company or the manufacturer has the option to terminate the agreement with 90 days written notice. Any change in the relationship with the manufacturer could have an adverse effect on the Company’s business. Purchases from this manufacturer totaled approximately $1,137,000 and $1,275,000 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, and December 31, 2017 approximately $986,000 and $829,000, respectively, was due to this manufacturer, which is presented in accounts payable and accrued expenses in the accompanying balance sheets. Legal contingencies The Company is party to certain legal proceedings in the ordinary course of business. The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and related contingencies. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | Note 7 — Employee Benefit Plans We sponsor a 401(k) defined contribution retirement plan that allows eligible employees to contribute a portion of their compensation through payroll deductions in accordance with specified plan guidelines. We make contributions to the plans that include matching a percentage of the employees’ contributions up to certain limits. Expenses related to this plan totaled approximately $24,000 and $0 for the three months ended March 31, 2018 and 2017, respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | Note 8 — Stockholders’ Equity The Company has authorized 50,000,000 shares of common stock, of which 13,601,456 were issued and 13,568,002 outstanding at March 31, 2018; 13,522,168 shares were issued and 13,488,714 were outstanding as of December 31, 2017. Stock Issuances On January 1, 2016, Sensus Healthcare, LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Sensus Healthcare, Inc. As a result of the corporate conversion, the holders of the different classes of units of Sensus Healthcare, LLC became holders of common stock of Sensus Healthcare, Inc. Holders of warrants and options, respectively, to purchase membership interests of Sensus Healthcare, LLC became holders of warrants and options to purchase common stock of Sensus Healthcare, Inc., respectively. Each membership interest converted to one share of common stock. Warrants In April 2013, the closing date of the second common offering, the Company’s placement agent received investor rights to 5 year warrants to purchase 86,376 common shares of the Company at an exercise price of $4.55 per unit, which was equal to 110% of the offering price. During the three months ended March 31, 2018, 73,309 of the warrants were exercised, and 13,067 warrants expired. In June 2016, from the Company’s IPO, the investors received three-year warrants to purchase 2,300,000 shares of common stock at an exercise price of $6.75 per share; the warrants are exercisable through June 2, 2019. Following the first anniversary of the date of issuance, if certain conditions are met, the Company may redeem any and all of the outstanding warrants at a price equal to $0.01 per warrant. In addition, the underwriter’s representatives for the IPO received four-year warrants to purchase up to 138,000 units, consisting of one share of common stock and one warrant to purchase one share of common stock. The warrants for the units are exercisable between June 2, 2017 and June 2, 2021 at an exercise price of $6.75 per unit. The following table summarizes the Company’s warrant activity: Common Unit Warrants Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (In Years) Outstanding – December 31, 2017 2,524,376 $ 6.67 1.50 Granted — — — Exercised (73,309 ) 4.55 — Expired (13,067 ) 4.55 — Outstanding – March 31, 2018 2,438,000 $ 6.75 1.30 Exercisable – March 31, 2018 2,438,000 $ 6.75 1.30 The intrinsic value of the common stock warrants was approximately $0 and $19,000 as of March 31, 2018, and December 31, 2017, respectively. 2016 and 2017 equity incentive Plans The Company has limited the aggregate number of shares of common stock to be awarded under the 2016 Equity Incentive Plan to 397,473 shares and no more than 397,473 shares of common stock in the aggregate may be granted in connection with incentive stock options. The Company has limited the aggregate number of shares of common stock to be awarded under the 2017 Equity Incentive Plan to 500,000 shares and no more than 500,000 shares of common stock in the aggregate may be granted in connection with incentive stock options. In addition, unless the Compensation Committee specifically determines otherwise, the maximum number of shares available under the 2016 and 2017 Plans and the awards granted under those plans will be subject to appropriate adjustment in the case of any stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, exchanges or other changes in capitalization affecting our common stock. On June 2, 2016, 307,666 shares of restricted stock were issued to employees and were recorded at the fair value of $5.25 as per the initial offering price. In addition, on January 20, 2017, 10,000 shares of restricted stock were issued to one employee and were recorded at the fair value of $4.99 per share. The restricted shares vest 25% per year over a four-year vesting period and are being recognized as expense on a straight-line basis over the vesting period of the awards. On January 25, 2018, 80,000 fully vested shares were granted to the nonemployee directors, and 229,334 stock options with a four year vesting period were granted to employees. The shares were recorded at the fair value of $5.55 per share for a total of $444,000 and the stock options were valued using a Black Scholes model at $3.52 per option using the assumptions noted in the following table. 2018 Expected volatility 67.8 % Risk-free interest rate 2.5 % Expected life 6.25 years Dividend yield 0.0 % The Company recognizes forfeitures as they occur rather than estimating a forfeiture rate. The reduction of stock compensation expense related to the 30,000 shares forfeited for the three months ended in March 31, 2018 was approximately $39,000. A summary of the restricted stock activity is presented as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at December 31, 2017 237,000 $ 5.24 Granted — — Vested (2,500 ) 4.99 Forfeited (30,000 ) 5.25 Unvested balance at March 31, 2018 204,500 $ 5.24 The following table summarizes the Company’s stock option activity: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (In Years) Outstanding – December 31, 2017 — $ — — Granted 229,334 3.52 4.00 Exercised — — — Expired — — — Outstanding – March 31, 2018 229.334 $ 3.52 3.83 Exercisable – March 31, 2018 — — — The intrinsic value of the stock options was approximately $21,000 and $0 as of March 31, 2018, and December 31, 2017, respectively. Stock compensation expense of approximately $541,000 and $104,000 was recognized for the three months ended March 31, 2018 and 2017, respectively. Unrecognized stock compensation expense was approximately $1,584,000 as of March 31, 2018, which will be recognized over the remaining vesting period. As of March 31, 2018, no shares were available to be granted under the 2016 Plan and 305,473 shares were available to be granted under the 2017 Plan. Treasury Stock The Company accounts for purchases of treasury stock under the cost method with the cost of such share purchases reflected in treasury stock in the accompanying condensed balance sheet. As of March 31, 2018, the Company had 33,454 treasury shares. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Note 9 — Income Taxes Book income before taxes was negative for the three months ended March 31, 2018. Tax expense for the three months ended March 31, 2018 and 2017 was $0. There are no uncertain tax positions that would require recognition in the financial statements. If the Company incurs an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax liability would be reported as income taxes. The Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof as well as other factors. The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition. As of March 31, 2018, the Company has U.S. federal and certain state tax returns subject to examination, beginning with those filed for the year 2014. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 10 — Subsequent Events The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements were issued for potential recognition or disclosure. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements. |
ORGANIZATION AND SUMMARY OF S17
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS | Description of the Business Sensus Healthcare, Inc. (the “Company”) is a manufacturer of superficial radiation therapy devices and has established a distribution and marketing network to sell the devices to healthcare providers globally. The Company was organized on May 7, 2010 as a limited liability corporation. On January 1, 2016, the Company completed a corporate conversion pursuant to which Sensus Healthcare, Inc. succeeded to the business of Sensus Healthcare, LLC. In February 2018, the Company opened a wholly-owned subsidiary in Israel. The Company operates as one segment based at its corporate headquarters located in Boca Raton, Florida. |
BASIS OF PRESENTATION | Basis of Presentation The accompanying unaudited condensed financial statements in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC. Accordingly, they do not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial statements. The interim financial information is unaudited, but reflects all normal adjustments and accruals which are, in the opinion of management, considered necessary to provide a fair presentation for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2017 included in the Company’s Form 10-K, filed with the SEC. The results for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, any other interim periods, or any future year or period. |
PRINCIPLES OF CONSOLIDATION | Principles of consolidation The accompanying condensed consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary in Israel. All inter-company balances and transactions have been eliminated. |
USE OF ESTIMATES | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates to which it is reasonably possible that a change could occur in the near term include, inventory reserves, receivable allowances, recoverability of long lived assets and estimation of the Company’s product warranties. Actual results could differ from those estimates. |
REVENUE RECOGNITION | Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” using the modified retrospective method. The adoption of this standard did not result in a significant change to the Company’s historical revenue recognition policies and there were no necessary adjustments required to retained earnings upon adoption. Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identifies the contracts with a customer; (ii) identifies the performance obligations within the contract, including whether they are distinct and capable of being distinct in the context of the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when, or as, the Company satisfies each performance obligation. The Company’s revenue consists of sales of the Company’s devices and services related to repairing and maintaining the devices. The agreement for the sale of the devices and the service contract are usually signed at the same time and in some instances a service contract is signed on a stand-alone basis. Revenue for service contracts is recognized over the service contract period on a straight-line basis. The Company determined that in practice no significant discount is given on the service contract when it is offered with the device purchase as compared to when it is sold on a stand-alone basis, by comparing the median selling price of the service contract as stand-alone and the median selling price of the service contract when sold together with the device. The service level provided is identical when the service contract is purchased stand-alone or together with the device; there is no termination provision in the service contract nor any penalties in practice for cancellation of the service contract. The service contract is not considered a performance obligation until it is paid, and it does not provide a material right for a significant discount when purchased with the device. The service portion of a sales contract or a stand alone service contract is accounted for over the period of time of the service contract only when the customer exercises the option by paying for the service contract. For the three months ended March 31, 2018, service contract revenue was approximately 7% of total revenues. The Company operates in a highly-regulated environment and is continually entering into new markets in which regulatory approval is sometimes required prior to the customer being able to use the product. In these cases, where regulatory approval is pending, revenue is deferred until such time as regulatory approval is obtained. Deferred revenue consists of payments from customers for long term separately priced service contracts and deposits on products. Deferred revenue as of March 31, 2018 and December 31, 2017 was as follows: As of March 31, As of December 31, 2018 2017 (unaudited) Service contracts $ 575,158 $ 570,242 Deposits on products 88,485 82,000 Total deferred revenue, current portion $ 663,643 $ 652,242 Service contracts, net of current portion 66,687 73,083 Total deferred revenue $ 730,330 $ 725,325 The Company provides warranties, generally for one year, in conjunction with the sale of its product. These warranties are short term in nature and entitle the customer to repair, replacement, or modification of the defective product subject to the terms of the respective warranty. The Company records an estimate of future warranty claims at the time the Company recognizes revenue from the sale of the product based upon management’s estimate of the future claims rate. Shipping and handling costs are expensed as incurred and are included in cost of sales. |
SEGMENT AND GEOGRAPHICAL INFORMATION | Segment and Geographical Information The Company’s revenue is generated primarily from customers in the United States, which represented approximately 100% and 99% for the three months ended March 31, 2018 and 2017, respectively. A customer in the US accounted for approximately 75% and 51% of revenues for the three months ended March 31, 2018 and 2017, respectively, and approximately 93% and 87% of the accounts receivable as of March 31, 2018 and December 31, 2017, respectively. |
CASH AND CASH EQUIVALENTS | Cash and Cash Equivalents The Company maintains its cash and cash equivalents with financial institutions which balances exceed the federally insured limits. Federally insured limits are $250,000 for deposits. As of March 31, 2018 and December 31, 2017, the Company had approximately $9,255,000 and $9,952,000, respectively in excess of federally insured limits. For purposes of the statement of cash flows, the Company considers all highly liquid financial instruments with a maturity of three months or less when purchased to be a cash equivalent. |
INVESTMENTS | Investments Short-term investments consist of investments which the Company expects to convert into cash within one year and long-term investments after one year. The Company classifies its investments in debt securities at the time of purchase as h e carried at amortized cost plus accrued interest and consist of the following: Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Short-Term: Corporate bonds $ 602,599 $ — $ 256 $ 602,343 United States Treasury bonds 502,036 — 332 501,704 Total Short Term: 1,104,635 — 588 1,104,047 Total Investments December 31, 2017 $ 1,104,635 $ — $ 588 $ 1,104,047 There were no investments as of March 31, 2018. |
ACCOUNTS RECEIVABLE | Accounts Receivable The Company does business and extends credit based on an evaluation of each customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. The allowance for doubtful accounts was approximately $16,000 as of March 31, 2018 and December 31, 2017. Bad debt expense for the three months ended March 31, 2018 and 2017 was approximately $2,000 and $169,000, respectively. |
INVENTORIES | Inventories Inventories consist of finished product and components and are stated at the lower of cost or net realizable value, determined using the first-in-first-out method. |
EARNINGS PER SHARE | Earnings Per Share Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period using the treasury stock method for options and warrants. The diluted net income per share is computed by giving effect to all potential dilutive common share equivalents outstanding for the period. In periods when the Company has incurred a net loss, options and warrants to purchase common shares are considered common share equivalents but have been excluded from the calculation of diluted net loss per share as their effect is antidilutive. Shares excluded were computed under the treasury stock method as follows: For the Three Months Ended March 31, 2018 2017 Stock options 3,660 — Warrants — 4,025 Unvested shares — 39,509 |
ADVERTISING COSTS | Advertising Costs Advertising and promotion expenses are charged to expense as incurred. Advertising and promotion expense included in selling and marketing expense in the accompanying statements of operations amounted to approximately $522,000 and $733,000 for the three months ended March 31, 2018 and 2017, respectively. |
RECENTLY ISUED ACCOUNTING PRONOUNCEMENT | Recently issued and Adopted accounting Standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 eliminated transaction- and industry-specific revenue recognition guidance under current GAAP and replaced it with a principle based approach for determining revenue recognition. ASU 2014-09 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. In April 2016, the FASB also issued ASU 2016-10, Identifying Performance Obligations and Licensing, implementation guidance on principal versus agent, identifying performance obligations, and licensing. ASU 2016-10 is effective for reporting periods beginning after December 15, 2017. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted the new revenue recognition standard in the first quarter of 2018 using the full retrospective method. There was not a material impact to revenues as a result of applying ASC 606 for the three months ended March 31, 2018, and there have not been significant changes to our business processes, systems, or internal controls as a result of implementing the standard. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for lease s In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting. The amendments included in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update will be applied prospectively to an award modified on or after the adoption date. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this standard in the first quarter of 2018 and it did not have a material impact on its financial statements. |
ORGANIZATION AND SUMMARY OF S18
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of deferred revenue | Deferred revenue as of March 31, 2018 and December 31, 2017 was as follows: As of March 31, As of December 31, 2018 2017 (unaudited) Service contracts $ 575,158 $ 570,242 Deposits on products 88,485 82,000 Total deferred revenue, current portion $ 663,643 $ 652,242 Service contracts, net of current portion 66,687 73,083 Total deferred revenue $ 730,330 $ 725,325 |
Schedule of investment | These securities ar e carried at amortized cost plus accrued interest and consist of the following: Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Short-Term: Corporate bonds $ 602,599 $ — $ 256 $ 602,343 United States Treasury bonds 502,036 — 332 501,704 Total Short Term: 1,104,635 — 588 1,104,047 Total Investments December 31, 2017 $ 1,104,635 $ — $ 588 $ 1,104,047 |
Schedule of antidilutive | Shares excluded were computed under the treasury stock method as follows: For the Three Months Ended March 31, 2018 2017 Stock options 3,660 — Warrants — 4,025 Unvested shares — 39,509 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | As of March 31, As to December 31, Estimated 2018 2017 Useful Lives (unaudited) Operations and rental equipment $ 652,573 $ 542,639 3 years Tradeshow and demo equipment 436,247 271,275 3 years Computer equipment 106,987 94,298 3 years 1,195,807 908,212 Less accumulated depreciation (590,572 ) (514,134 ) Property and Equipment, Net $ 605,235 $ 394,078 |
PATENT RIGHTS (Tables)
PATENT RIGHTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | As to March 31, As of December 31, 2018 2017 (unaudited) Gross carrying amount $ 1,253,018 $ 1,253,018 Less accumulated amortization (746,992 ) (722,895 ) Patent Rights, Net 506,026 530,123 |
Schedule of amortization expense | As of March 31, 2018, future remaining amortization expense is as follows: Year 2018 (April 1 – December 31, 2018) $ 72,280 2019 96,386 2020 96,386 2021 96,386 2022 96,386 Thereafter 48,202 Total $ 506,026 |
PRODUCT WARRANTIES (Tables)
PRODUCT WARRANTIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Product Warranties Disclosures [Abstract] | |
Schedule of changes in product warranty liability | Changes in product warranty liability were as follows for the three months ended March 31, 2018: Balance, beginning of period $ 146,722 Warranties accrued during the period 36,790 Payments on warranty claims (43,467 ) Balance, end of period $ 140,045 |
COMMITMENT AND CONTINGENCIES (T
COMMITMENT AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments for operating leases | Future minimum lease payments as of March 31, 2018 are as follows: Year Minimum Lease Payment 2018 164,000 2019 217,000 2020 224,000 2021 231,000 2022 177,000 Total $ 1,008,000 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of warrant activity | The following table summarizes the Company’s warrant activity: Common Unit Warrants Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (In Years) Outstanding – December 31, 2017 2,524,376 $ 6.67 1.50 Granted — — — Exercised (73,309 ) 4.55 — Expired (13,067 ) 4.55 — Outstanding – March 31, 2018 2,438,000 $ 6.75 1.30 Exercisable – March 31, 2018 2,438,000 $ 6.75 1.30 |
Schedule of Stock Options, Valuation Assumptions | The shares were recorded at the fair value of $5.55 per share for a total of $444,000 and the stock options were valued using a Black Scholes model at $3.52 per option using the assumptions noted in the following table. 2018 Expected volatility 67.8 % Risk-free interest rate 2.5 % Expected life 6.25 years Dividend yield 0.0 % |
Summary of restricted stock activity | A summary of the restricted stock activity is presented as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at December 31, 2017 237,000 $ 5.24 Granted — — Vested (2,500 ) 4.99 Forfeited (30,000 ) 5.25 Unvested balance at March 31, 2018 204,500 $ 5.24 |
Schedule of option activity | The following table summarizes the Company’s stock option activity: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (In Years) Outstanding – December 31, 2017 — $ — — Granted 229,334 3.52 4.00 Exercised — — — Expired — — — Outstanding – March 31, 2018 229.334 $ 3.52 3.83 Exercisable – March 31, 2018 — — — |
ORGANIZATION AND SUMMARY OF S24
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue, current portion | $ 663,643 | $ 652,242 |
Service contracts, net of current portion | 66,687 | 73,083 |
Total deferred revenue | 730,330 | 725,325 |
Service Contracts [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue, current portion | 575,158 | 570,242 |
Deposits on Products [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue, current portion | $ 88,485 | $ 82,000 |
ORGANIZATION AND SUMMARY OF S25
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Amortized Cost | $ 1,104,635 |
Gross Unrealized Gain | |
Gross Unrealized Loss | 588 |
Fair Value | 1,104,047 |
Short Term [Member] | |
Amortized Cost | 1,104,635 |
Gross Unrealized Gain | |
Gross Unrealized Loss | 588 |
Fair Value | 1,104,047 |
Short Term [Member] | Corporate Bonds [Member] | |
Amortized Cost | 602,599 |
Gross Unrealized Gain | |
Gross Unrealized Loss | 256 |
Fair Value | 602,343 |
Short Term [Member] | United States Treasury Bonds [Member] | |
Amortized Cost | 502,036 |
Gross Unrealized Gain | |
Gross Unrealized Loss | 332 |
Fair Value | $ 501,704 |
ORGANIZATION AND SUMMARY OF S26
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 3,600 | |
Stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 4,025 | |
Unvested Shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 39,509 |
ORGANIZATION AND SUMMARY OF S27
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2018USD ($)Segment | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of operating segments | Segment | 1 | ||
Cash, FDIC insured amount | $ 250,000 | ||
Cash uninsured amount | 9,255,000 | $ 9,952,000 | |
Allowance for doubtful accounts receivable, current | 16,000 | $ 16,000 | |
Advertising and promotion expense | $ 522,000 | $ 733,000 | |
Product warranty term | 1 year | ||
Bad debt expense | $ 2,345 | $ 169,054 | |
UNITED STATES | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Reveune percent | 100.00% | 99.00% | |
UNITED STATES | Customer [Member] | Revenue [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Reveune percent | 75.00% | 51.00% | |
UNITED STATES | Customer [Member] | Accounts Receivable [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Reveune percent | 93.00% | 87.00% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,195,807 | $ 908,212 |
Less accumulated depreciation | (590,572) | (514,134) |
Property and Equipment, Net | 605,235 | 394,078 |
Tradeshow and Demo Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 436,247 | 271,275 |
Property, plant and equipment, useful Life | 3 years | |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 106,987 | 94,298 |
Property, plant and equipment, useful Life | 3 years | |
Operations and Rental Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 652,573 | $ 542,639 |
Property, plant and equipment, useful Life | 3 years |
PROPERTY AND EQUIPMENT (Detai29
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 76,000 | $ 70,000 |
PATENT RIGHTS (Details)
PATENT RIGHTS (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Gross carrying amount | $ 1,253,018 | $ 1,253,018 |
Less accumulated amortization | (746,992) | (722,895) |
Patent Rights, Net | $ 506,026 | $ 530,123 |
PATENT RIGHTS (Details 1)
PATENT RIGHTS (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
2018 (April 1- December 31, 2018) | $ 72,280 | |
2,019 | 96,386 | |
2,020 | 96,386 | |
2,021 | 96,386 | |
2,022 | 96,386 | |
Thereafter | 48,202 | |
Patent Rights, Net | $ 506,026 | $ 530,123 |
PATENT RIGHTS (Details Narrativ
PATENT RIGHTS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 24,000 | $ 24,000 |
REVOLVING CREDIT FACILITY (Deta
REVOLVING CREDIT FACILITY (Details Narrative) - USD ($) | Mar. 12, 2013 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 21, 2016 | Mar. 12, 2015 |
Debt Disclosure [Abstract] | |||||
Debt instrument, term | 2 years | ||||
Line of credit facility, maximum borrowing capacity | $ 3,000,000 | $ 2,000,000 | $ 1,500,000 | ||
Line of credit percentage of borrowing base to accounts receivables | 80.00% | ||||
Debt instrument, basis spread on variable rate | 0.75% | ||||
Debt instrument, interest rate, effective percentage | 5.50% | ||||
Line of credit, outstanding | $ 4,215,633 | $ 2,214,970 | |||
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | ||||
Line of credit description | On June 27, 2017, the covenant defaults were waived and the agreement was amended to modify the financial covenants effective June 2017. An amendment signed on September 15, 2017 extended the maturity date of the credit line through November 19, 2017. On October 31, 2017, the Company amended its revolving credit facility to extend the maturity to October 31, 2019 and to amend the financial covenants. The availability under the amended facility will equal the lesser of the $5 million commitment amount or the borrowing base plus the $2.5 million non-formula sublimit. The borrowing base consists of 80% of eligible accounts receivable, as defined in the agreement. |
PRODUCT WARRANTIES (Details)
PRODUCT WARRANTIES (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | |
Balance, beginning of period | $ 146,722 |
Warranties accrued during the period | 36,790 |
Payments on warranty claims | (43,467) |
Balance, end of period | $ 140,045 |
COMMITMENT AND CONTINGENCIES (D
COMMITMENT AND CONTINGENCIES (Details) | Mar. 31, 2018USD ($) |
Operating Leases, Future Minimum Payments Due [Abstract] | |
2018 (April 1- December 31, 2018) | $ 164,000 |
2,019 | 217,000 |
2,020 | 224,000 |
2,021 | 231,000 |
2,022 | 177,000 |
Total | $ 1,008,000 |
COMMITMENT AND CONTINGENCIES 36
COMMITMENT AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2010 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Payments to suppliers | $ 1,137,000 | $ 1,275,000 | ||
Accounts payable and accrued expenses | $ 986,000 | $ 829,000 | ||
Lease expiration date | Sep. 30, 2022 | |||
Percentage of increase in lease payments | 3.00% | |||
Rental expense | $ 53,000 | $ 40,000 | ||
Manufacturing agreement contract term | 3 years |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Retirement Benefits [Abstract] | ||
Expenses related to employee benefit plan | $ 24,000 | $ 0 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Common Unit Warrants [Member] | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Class of Warrant or Right, Outstanding [Roll Forward] | |
Outstanding at beginning | shares | 2,524,376 |
Granted | shares | |
Exercised | shares | (73,309) |
Forfeited | shares | (13,067) |
Outstanding at ending | shares | 2,438,000 |
Exercisable at end | shares | 2,438,000 |
Class of Warrant or Right, Exercise Price of Warrants or Rights [Roll Forward] | |
Outstanding at beginning | $ / shares | $ 6.67 |
Granted | $ / shares | |
Exercised | $ / shares | 4.55 |
Forfeited | $ / shares | 4.55 |
Outstanding at ending | $ / shares | 6.75 |
Exercisable at ending | $ / shares | $ 6.75 |
Class Of Warrant Or Right Weighted Average Remaining Contract Term Of Warrants Or Rights [Roll Forward] | |
Outstanding at beginning | 1 year 6 months |
Outstanding at ending | 1 year 3 months 19 days |
Exercisable at ending | 1 year 3 months 19 days |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Expected volatility | 67.80% |
Risk-free interest rate | 2.50% |
Expected life | 6 years 2 months 30 days |
Dividend yield | 0.00% |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested balance at beginning | shares | 237,000 |
Granted | shares | |
Vested | shares | (2,500) |
Forfeited | shares | (30,000) |
Unvested balance at end | shares | 204,500 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Rollforward] | |
Unvested balance at beginning | $ / shares | $ 5.24 |
Granted | $ / shares | |
Vested | $ / shares | 4.99 |
Forfeited | $ / shares | 5.25 |
Unvested balance at end | $ / shares | $ 5.24 |
STOCKHOLDERS' EQUITY (Details 3
STOCKHOLDERS' EQUITY (Details 3) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Number of Options | |
Outstanding at beginning | shares | |
Granted | shares | 229,334 |
Exercised | shares | |
Expired | shares | |
Outstanding at end | shares | 229.334 |
Exercisable at end | shares | |
Weighted Average Exercise | |
Outstanding at beginning (in dollars per share) | $ / shares | |
Granted (in dollars per share) | $ / shares | 3.52 |
Exercised | $ / shares | |
Expired | $ / shares | |
Outstanding at end (in dollars per share) | $ / shares | 3.52 |
Exercisable at end (in dollars per share) | $ / shares | |
Granted | 4 years |
Outstanding at end | 3 years 9 months 29 days |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Jan. 20, 2017 | Jun. 30, 2016 | Jun. 02, 2016 | Jun. 30, 2016 | Apr. 30, 2013 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Common stock, authorized | 50,000,000 | 50,000,000 | ||||||
Common stock, issued | 13,601,456 | 13,522,168 | ||||||
Common stock,outstanding | 13,568,002 | 13,488,714 | ||||||
Description of membership interest | Each membership interest converted to one share of common stock. | |||||||
Stock compensation expense | $ 541,608 | $ 104,070 | ||||||
Weighted average grant date fair value (in dollars per share) | ||||||||
Number of restricted stock granted | ||||||||
Unrecognized stock compensation expense | $ 1,584,000 | |||||||
Reduction of stock compensation expense shares forfeited | 30,000 | |||||||
Reduction of stock compensation expense value forfeited | $ 39,000 | |||||||
Intrinsic value of the stock options | $ 21,000 | $ 0 | ||||||
Treasury stock | 33,454 | 33,454 | ||||||
Common Unit Warrants [Member] | ||||||||
Number of warrant outstanding | 2,438,000 | 2,524,376 | ||||||
Warrant exercise price (in dollars per share) | $ 6.75 | $ 6.67 | ||||||
Exercised | (73,309) | |||||||
Forfeited | (13,067) | |||||||
Number of warrant granted | ||||||||
Warrant granted exercise price (in dollars per share) | ||||||||
Intrinsic value of common stock warrants | $ 0 | $ 19,000 | ||||||
Investor [Member] | Common Unit Warrants [Member] | IPO [Member] | ||||||||
Warrant term | 3 years | |||||||
Number of warrant granted | 2,300,000 | |||||||
Warrant granted exercise price (in dollars per share) | $ 6.75 | |||||||
Date of warrants exercisable | Jun. 2, 2019 | |||||||
Warrant redemption price (in dollars per warrant) | $ 0.01 | |||||||
Underwriter's Representatives [Member] | Common Unit Warrants [Member] | IPO [Member] | ||||||||
Warrant term | 4 years | |||||||
Number of warrant granted | 138,000 | |||||||
Warrant granted exercise price (in dollars per share) | $ 6.75 | |||||||
Minimum [Member] | Underwriter's Representatives [Member] | Common Unit Warrants [Member] | IPO [Member] | ||||||||
Date of warrants exercisable | Jun. 2, 2017 | |||||||
Maximum [Member] | Underwriter's Representatives [Member] | Common Unit Warrants [Member] | IPO [Member] | ||||||||
Date of warrants exercisable | Jun. 2, 2021 | |||||||
2016 Equity Incentive Plan [Member] | ||||||||
Number of authorized shares under the plan | 397,473 | |||||||
Number of restricted stock granted | 0 | |||||||
2017 Equity Incentive Plan [Member] | ||||||||
Number of authorized shares under the plan | 500,000 | |||||||
Number of restricted stock granted | 305,473 | |||||||
Unvested Restricted Stock [Member] | 2016 Equity Incentive Plan [Member] | ||||||||
Weighted average grant date fair value (in dollars per share) | $ 4.99 | |||||||
Vesting period | 4 years | |||||||
Number of restricted stock granted | 10,000 | 307,666 | ||||||
Initial offering price (in dollars per share) | $ 5.25 | |||||||
Vesting percentage | 25.00% | |||||||
Description of vesting rights | The restricted shares vest 25% per year over a four-year vesting period and are being recognized as expense on a straight-line basis over the vesting period of the awards. | |||||||
Placement Agent [Member] | Investor [Member] | Common Unit Warrants [Member] | ||||||||
Warrant term | 5 years | |||||||
Number of warrant outstanding | 86,376 | |||||||
Warrant exercise price (in dollars per share) | $ 4.55 | |||||||
Percentage of offering price | 110.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Tax expense | $ 0 | $ 0 |