Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Sensus Healthcare, Inc. | |
Entity Central Index Key | 0001494891 | |
Document Type | 10-Q | |
Trading Symbol | SRTS | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 16,518,242 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 6,251,884 | $ 12,484,256 |
Accounts receivable, net | 16,881,672 | 13,145,934 |
Inventories | 1,551,419 | 1,628,817 |
Investment in debt securities | 4,699,954 | 2,892,190 |
Prepaid and other current assets | 2,252,755 | 1,750,994 |
Total Current Assets | 31,637,684 | 31,902,191 |
Property and Equipment, Net | 899,792 | 891,029 |
Patent Rights, Net | 409,640 | 433,737 |
Deposits | 24,272 | 24,272 |
Operating Lease Right-of-Use Assets, Net | 749,114 | 0 |
Total Assets | 33,720,502 | 33,251,229 |
Current Liabilities | ||
Accounts payable and accrued expenses | 4,075,214 | 5,166,239 |
Deferred revenue, current portion | 744,996 | 722,025 |
Operating lease liabilities, current portion | 240,972 | |
Product warranties | 137,942 | 136,217 |
Total Current Liabilities | 5,199,124 | 6,024,481 |
Operating Lease Liabilities | 510,784 | |
Deferred Revenue, Net of Current Portion | 815,164 | 766,732 |
Total Liabilities | 6,525,072 | 6,791,213 |
Stockholders' Equity | ||
Preferred stock, 5,000,000 shares authorized and none issued and outstanding | ||
Common stock, $0.01 par value - 50,000,000 authorized; 16,546,196 issued and 16,512,742 outstanding at March 31, 2019; 16,145,915 issued and 16,112,461 outstanding at December 31, 2018 | 165,461 | 161,459 |
Additional paid-in capital | 42,810,335 | 39,957,905 |
Treasury stock, 33,454 shares at cost, at March 31, 2019 and December 31, 2018, respectively | (133,816) | (133,816) |
Accumulated deficit | (15,646,550) | (13,525,532) |
Total Stockholders' Equity | 27,195,430 | 26,460,016 |
Total Liabilities and Stockholders' Equity | $ 33,720,502 | $ 33,251,229 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
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 | 16,546,196 | 16,512,742 |
Common Stock, outstanding | 16,145,915 | 16,112,461 |
Treasury stock, shares | 33,454 | 33,454 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenues | $ 5,436,599 | $ 5,955,462 |
Cost of Sales | 2,120,621 | 2,015,200 |
Gross Profit | 3,315,978 | 3,940,262 |
Operating Expenses | ||
Selling and marketing | 2,530,346 | 2,214,911 |
General and administrative | 1,013,162 | 1,342,253 |
Research and development | 1,965,507 | 1,497,618 |
Total Operating Expenses | 5,509,015 | 5,054,782 |
Loss From Operations | (2,193,037) | (1,114,520) |
Other Income (Expense) | ||
Interest income | 72,020 | 22,022 |
Interest expense | (33,415) | |
Other Income (Expense), net | 72,020 | (11,393) |
Net Loss | $ (2,121,018) | $ (1,125,913) |
Net Loss per share - basic and diluted (in dollars per share) | $ (0.13) | $ (0.08) |
Weighted average number of shares used in computing net loss per share - basic and diluted (in shares) | 16,119,726 | 13,331,553 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total |
Balance beginning at Dec. 31, 2017 | $ 135,221 | $ (33,454) | $ (133,816) | $ (11,502,771) | $ 11,680,275 |
Balance beginning (in shares) at Dec. 31, 2017 | 13,522,168 | 23,181,641 | |||
Stock based compensation | $ 500 | 541,608 | |||
Exercise of warrants | 293 | 90,867 | |||
Net loss | (1,125,913) | (1,125,913) | |||
Balance end at Mar. 31, 2018 | $ 136,014 | $ (33,454) | (133,816) | (12,628,684) | 11,186,837 |
Balance end (in shares) at Mar. 31, 2018 | 13,601,456 | 23,813,323 | |||
Balance beginning at Dec. 31, 2018 | $ 161,459 | $ (33,454) | (133,816) | (13,525,532) | 26,460,016 |
Balance beginning (in shares) at Dec. 31, 2018 | 16,145,915 | 39,957,905 | |||
Stock based compensation | 154,535 | ||||
Stock based compensation (in shares) | 154,535 | ||||
Exercise of warrants | $ 4,002 | 2,701,897 | |||
Net loss | (2,121,018) | (2,121,018) | |||
Balance end at Mar. 31, 2019 | $ 165,461 | $ (33,454) | $ (133,816) | $ (15,646,550) | $ 27,195,430 |
Balance end (in shares) at Mar. 31, 2019 | 16,546,196 | 42,810,335 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash Flows From Operating Activities | ||
Net loss | $ (2,121,018) | $ (1,125,913) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ||
Bad debt expense (recovery) | 2,345 | |
Depreciation and amortization | 128,435 | 100,534 |
Provision for product warranties | 59,638 | 36,790 |
Stock based compensation | 154,535 | 541,608 |
Decrease (increase) in: | ||
Accounts receivable | (3,735,738) | (3,107,036) |
Inventories | (26,299) | (62,071) |
Prepaid and other current assets | (445,874) | 86,775 |
Increase (decrease) in: | ||
Accounts payable and accrued expenses | (1,144,269) | 87,870 |
Deferred revenue | 71,402 | 5,005 |
Product warranties | (57,913) | (43,467) |
Total Adjustments | (4,996,083) | (2,351,647) |
Net Cash Used In Operating Activities | (7,117,101) | (3,477,560) |
Cash Flows from Investing Activities | ||
Acquisition of property and equipment | (9,404) | (287,594) |
Investment in debt securities - held to maturity | (3,007,764) | |
Investments matured | 1,200,000 | 1,104,635 |
Net Cash Provided By (Used In) Investing Activities | (1,817,168) | 817,041 |
Cash Flows from Financing Activities | ||
Revolving credit facility, net | 2,000,663 | |
Exercise of warrants | 2,701,897 | 90,867 |
Net Cash Provided By Financing Activities | 2,701,897 | 2,091,530 |
Net Decrease in Cash and Cash Equivalents | (6,232,372) | (568,991) |
Cash and Cash Equivalents - Beginning | 12,484,256 | 10,085,468 |
Cash and Cash Equivalents - Ending | 6,251,884 | 9,516,479 |
Supplemental Disclosure of Cash Flow Information | ||
Interest Paid | 33,415 | |
Non Cash Investing and Financing Activities | ||
Transfer of inventory to property and equipment | 103,697 | |
Lease liabilities arising from obtaining right-of-use-assets | $ 805,000 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2019 | |
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 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 subsidiary in Israel. The Company operates as one segment from 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, 2018 included in the Company’s Form 10-K, filed with the SEC. The results for the three months ended March 31, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, 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 for all contracts as of the date of adoption. 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, which is generally upon shipment of the goods and performance of the service. 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 maintaining and repairing 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. Disaggregated revenue for the three months ended March 31, 2019 and 2018 was as follows: For the Three Months Ended March 31, 2019 2018 Product Revenue $ 4,930,924 $ 5,532,647 Service Revenue 505,675 422,815 Total Revenue $ 5,436,599 $ 5,955,462 The Company operates in a highly regulated environment in which state regulatory approval is sometimes required prior to the customer being able to use the product, primarily in the U.S. dermatology market. In these cases, where regulatory approval is pending, revenue is deferred until such time as regulatory approval is obtained. Deferred revenue as of March 31, 2019 was as follows: Service Product Total Deferred Revenue Balance, beginning of period $ 1,455,757 $ 33,000 $ 1,488,757 Revenue recognized (368,956 ) (33,000 ) (401,956 ) Amounts invoiced 473,359 — 473,359 Balance, end of period $ 1,560,160 $ — $ 1,560,160 The Company does not disclose information about remaining performance obligations of deposits for products that have original expected durations of one year or less. Estimated service revenue to be recognized in the future related to the performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2019 is as follows: Year Service Revenue 2019 (April 1 – December 31, 2019) $ 579,785 2020 539,914 2021 405,892 2022 34,569 Total $ 1,560,160 The Company provides warranties in conjunction with the sale of its products. These warranties 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 81% and 100% for the three months ended March 31, 2019 and 2018, respectively. A single customer in the US accounted for approximately 53% and 75% of revenues for the three months ended March 31, 2019 and 2018, respectively, and approximately 87% of the accounts receivable as of March 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018, the Company had approximately $5,679,000 and $11,726,000, 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 $ 2,892,190 $ — $ 623 $ 2,891,567 Total Short Term: 2,892,190 — 623 2,891,567 Total Investments December 31, 2018 $ 2,892,190 $ — $ 623 $ 2,891,567 Short-Term: Corporate bonds $ 4,699,954 $ 1,226 $ — $ 4,701,180 Total Short Term: 4,699,954 1,226 — 4,701,180 Total Investments March 31, 2019 $ 4,699,954 $ 1,226 $ — $ 4,701,180 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 $0 as of March 31, 2019 and December 31, 2018. Bad debt expense for the three months ended March 31, 2019 and 2018 was approximately $0 and $2,000, 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. The diluted net income per share is computed by giving effect to all potential dilutive common share equivalents outstanding for the period, using the treasury stock method for options and warrants, as well as unvested restricted shares. In periods when the Company has incurred a net loss, options, warrants and unvested 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 were excluded as follows: For the Three Months Ended March 31, 2019 2018 Warrants 256,035 — Stock options 64,463 3,660 Shares 70,951 — Advertising Costs Advertising and promotion expenses are charged to expense as incurred. Advertising and promotion expense included in selling expense in the accompanying statements of operations amounted to approximately $539,000 and $522,000 for the three months ended March 31, 2019 and 2018, respectively. Leases The Company evaluates arrangements at inception to determine if an arrangement is or contains a lease. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company uses an incremental borrowing rate that the Company would expect to incur for a fully collateralized loan over a similar term under similar economic conditions to determine the present value of the lease payments. The lease payments used to determine the Company’s operating lease assets may include lease incentives and stated rent increases and are recognized in the Company’s operating lease assets in the Company’s condensed consolidated balance sheets. Operating lease assets are amortized to rent expense over the lease term and included in operating expenses in the condensed consolidated statements of operations. Recently issued and Adopted accounting Standards 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 leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 1, 2018, including interim periods within those fiscal years, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption of the amendments in the update is permitted. The Company adopted this standard in the first quarter of 2019 using the modified retrospective approach. The adoption of this standard resulted in the recognition of operating lease right-of-use assets and associated lease liabilities on our balance sheet of approximately $805,000 and $805,000, respectively, as of January 1, 2019. Additional required disclosures have been included within Note 6 - Leases. Such adoption did not have a material impact on our liquidity, results of operations or our compliance with the revolving credit facility covenants. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Note 2 — Property and Equipment As of March 31, 2019 As of December 31, 2018 Estimated Useful Lives (unaudited) Operations equipment $ 854,302 $ 852,273 3 years Tradeshow and demo equipment 890,929 784,244 3 years Computer equipment 117,666 112,521 3 years 1,862,897 1,749,038 Less accumulated depreciation (963,105 ) (858,009 ) Property and Equipment, Net $ 899,792 $ 891,029 Depreciation expense was approximately $104,000 and $76,000, for the three months ended March 31, 2019 and 2018, respectively. |
PATENT RIGHTS
PATENT RIGHTS | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PATENT RIGHTS | Note 3 — Patent Rights As of March 31, As of December 31, 2019 2018 (unaudited) Gross carrying amount $ 1,253,018 $ 1,253,018 Less accumulated amortization (843,378 ) (819,281 ) Patent Rights, Net $ 409,640 $ 433,737 Amortization expense was approximately $24,000 for the three months ended March 31, 2019 and 2018. As of March 31, 2019, future remaining amortization expense is as follows: Year 2019 (April 1 – December 31, 2019) $ 72,290 2020 96,386 2021 96,386 2022 96,386 2023 48,192 Total $ 409,640 |
REVOLVING CREDIT FACILITY
REVOLVING CREDIT FACILITY | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
REVOLVING CREDIT FACILITY | Note 4 — Revolving Credit Facility 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% (6.25% at March 31, 2019) and Prime plus 1.50% on non-formula borrowings (7.00% at March 31, 2019), 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, 2019 and December 31, 2018. There were no borrowings outstanding under the revolving credit facility at March 31, 2019 and December 31, 2018. 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, 2019 | |
Product Warranties Disclosures [Abstract] | |
PRODUCT WARRANTIES | Note 5 — Product Warranties Changes in product warranty liability were as follows for the nine months ended March 31, 2019: Balance, beginning of period $ 136,217 Warranties accrued during the period 59,638 Payments on warranty claims (57,913 ) Balance, end of period $ 137,942 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
LEASES | Note 6 — Leases 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 entered into a two-year lease for office space starting in September 2018. The leases include an option to extend with prior notice and with terms to be negotiated. The Company currently does not have any lease with a term under 12 months. On March 19, 2019, the Company’s Israeli subsidiary signed a 10-year lease for a manufacturing facility, effective April 1, for approximately 5,800 square feet. The landlord has provided a four-month grace period rent free from April to July 2019, after which the 10 year lease will begin. The monthly rental payment starts at approximately $5,300 and will be subject to periodic escalations at amounts specified in the lease plus the consumer price index. In addition, the Company is responsible for maintenance fees covering its portion of the expenses of common areas. After 2, 4, 6 and 8 years, and with 180 days prior notice, the Company has the right to terminate the lease at its sole discretion with no penalty. The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of March 31, 2019. Maturity of Operating Lease Liabilities Amount 2019 (April 1 – December 31, 2019) $ 187,420 2020 245,237 2021 230,674 2022 176,866 Total undiscounted operating leases payments $ 840,197 Less: Imputed interest (88,441 ) Present Value of Operating Lease Liabilities $ 751,756 Other Information Weighted-average remaining lease term 3.3 years Weighted-average discount rate 5.0 % An initial ROU asset of approximately $805,000 was recognized as a non-cash assets addition with the adoption of the new lease accounting standard. The ROU asset was reduced by approximately $56,000 during the three months ended March 31, 2019. Cash paid for amounts included in the present value of operating lease liabilities was approximately $62,000 for the three months ended March 31, 2019 and is included in operating cash flows. Operating lease cost was approximately $65,000 for the three months ended March 31, 2019. |
COMMITMENT AND CONTINGENCIES
COMMITMENT AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENT AND CONTINGENCIES | Note 7 — Commitments and Contingencies 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 SRT-100, the Company’s main product in accordance with the Company’s product specifications. The agreement renews for successive one-year periods 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 upon 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 $1,911,000 and $1,137,000 for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, and December 31, 2018 approximately $663,000 and $1,041,000, 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. In November 2015, the Company learned that the Department of Justice (the “Department”) had commenced an investigation of the billing to Medicare by a physician who had treated patients with the Company’s SRT-100. The Company received a Civil Investigative Demand from the Department seeking documents and written responses in connection with that investigation. The Company has fully cooperated with the investigation. The Department has advised the Company that it was considering expanding the investigation to determine whether the Company had any involvement in the physician’s use of certain reimbursement codes. The Company disputes that it has engaged in any wrongdoing with respect to such reimbursement claims; among other things, the Company does not submit claims for reimbursement or provide coding or billing advice to physicians. To the Company’s knowledge, the Department has made no determination as to whether the Company engaged in any wrongdoing, or whether to pursue any legal action against the Company. Should the Department decide to pursue legal action, the Company believes it has strong and meritorious defenses and will vigorously defend itself. At this time, the Company is unable to estimate the cost associated with this matter. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | Note 8 — 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 $28,000 and $24,000 for the three months ended March 31, 2019 and 2018, respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | Note 9 — Stockholders’ Equity The Company has authorized 50,000,000 shares of common stock, of which 16,546,196 were issued and 16,512,742 outstanding at March 31, 2019; 16,145,915 shares were issued and 16,112,461 were outstanding as of December 31, 2018. Warrants In April 2013, the closing date of the Company’s 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 first quarter of 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. During the first quarter of 2019, warrants for 400,281 shares were exercised. 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, 2018 2,438,000 $ 6.75 0.55 Granted — — — Exercised (400,281 ) 6.75 — Expired — — — Outstanding – March 31, 2019 2,037,719 $ 6.75 0.32 Exercisable – March 31, 2019 2,037,719 $ 6.75 0.32 The intrinsic value of the common stock warrants was approximately $550,000 and $1,609,000 as of March 31, 2019, and December 31, 2018, 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 and on October 1, 2018, 30,000 shares of restricted stock were issued to employees and were recorded at the fair value of $8.58 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 certain 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: Expected volatility 67.8 % Risk-free interest rate 2.5 % Expected life 6.25 years Dividend yield 0.0 % Expected Volatility Risk-Free Interest Rate Expected Term or Life The stock options had an intrinsic value of approximately $337,000 and $427,000 as of March 31, 2019 and December 31, 2018, respectively. The Company recognizes forfeitures as they occur rather than estimating a forfeiture rate. The reduction of stock compensation expense related to the forfeitures was approximately $0 and $39,000 for the three months ended March 31, 2019 and 2018, respectively. Unrecognized stock compensation expense was approximately $1,233,000 as of March 31, 2019, which will be recognized over the remaining vesting period. A summary of the restricted stock activity is presented as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at December 31, 2018 165,834 $ 5.84 Granted — — Vested (2,500 ) 4.99 Forfeited — — Unvested balance at March 31, 2019 163,334 $ 5.85 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, 2018 229,334 $ 5.55 9.08 Granted — — — Exercised — — — Expired — — — Outstanding – March 31, 2019 229,334 $ 5.55 8.83 Exercisable – March 31, 2019 57,334 $ 5.55 8.83 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, 2019 and December 31, 2018, the Company had 33,454 treasury shares. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Note 10 — Income Taxes Book income before taxes was negative for the three months ended March 31, 2019. Tax expense for the three months ended March 31, 2019 and 2018 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, 2019, the Company has U.S. federal and certain state tax returns subject to examination, beginning with those filed for the year 2015. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 11 — 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 S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
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 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 subsidiary in Israel. The Company operates as one segment from 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, 2018 included in the Company’s Form 10-K, filed with the SEC. The results for the three months ended March 31, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, 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 for all contracts as of the date of adoption. 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, which is generally upon shipment of the goods and performance of the service. 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 maintaining and repairing 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. Disaggregated revenue for the three months ended March 31, 2019 and 2018 was as follows: For the Three Months Ended March 31, 2019 2018 Product Revenue $ 4,930,924 $ 5,532,647 Service Revenue 505,675 422,815 Total Revenue $ 5,436,599 $ 5,955,462 The Company operates in a highly regulated environment in which state regulatory approval is sometimes required prior to the customer being able to use the product, primarily in the U.S. dermatology market. In these cases, where regulatory approval is pending, revenue is deferred until such time as regulatory approval is obtained. Deferred revenue as of March 31, 2019 was as follows: Service Product Total Deferred Revenue Balance, beginning of period $ 1,455,757 $ 33,000 $ 1,488,757 Revenue recognized (368,956 ) (33,000 ) (401,956 ) Amounts invoiced 473,359 — 473,359 Balance, end of period $ 1,560,160 $ — $ 1,560,160 The Company does not disclose information about remaining performance obligations of deposits for products that have original expected durations of one year or less. Estimated service revenue to be recognized in the future related to the performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2019 is as follows: Year Service Revenue 2019 (April 1 – December 31, 2019) $ 579,785 2020 539,914 2021 405,892 2022 34,569 Total $ 1,560,160 The Company provides warranties in conjunction with the sale of its products. These warranties 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 81% and 100% for the three months ended March 31, 2019 and 2018, respectively. A single customer in the US accounted for approximately 53% and 75% of revenues for the three months ended March 31, 2019 and 2018, respectively, and approximately 87% of the accounts receivable as of March 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018, the Company had approximately $5,679,000 and $11,726,000, 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 $ 2,892,190 $ — $ 623 $ 2,891,567 Total Short Term: 2,892,190 — 623 2,891,567 Total Investments December 31, 2018 $ 2,892,190 $ — $ 623 $ 2,891,567 Short-Term: Corporate bonds $ 4,699,954 $ 1,226 $ — $ 4,701,180 Total Short Term: 4,699,954 1,226 — 4,701,180 Total Investments March 31, 2019 $ 4,699,954 $ 1,226 $ — $ 4,701,180 |
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 $0 as of March 31, 2019 and December 31, 2018. Bad debt expense for the three months ended March 31, 2019 and 2018 was approximately $0 and $2,000, 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. The diluted net income per share is computed by giving effect to all potential dilutive common share equivalents outstanding for the period, using the treasury stock method for options and warrants, as well as unvested restricted shares. In periods when the Company has incurred a net loss, options, warrants and unvested 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 were excluded as follows: For the Three Months Ended March 31, 2019 2018 Warrants 256,035 — Stock options 64,463 3,660 Shares 70,951 — |
ADVERTISING COSTS | Advertising Costs Advertising and promotion expenses are charged to expense as incurred. Advertising and promotion expense included in selling expense in the accompanying statements of operations amounted to approximately $539,000 and $522,000 for the three months ended March 31, 2019 and 2018, respectively. |
LEASES | Leases The Company evaluates arrangements at inception to determine if an arrangement is or contains a lease. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company uses an incremental borrowing rate that the Company would expect to incur for a fully collateralized loan over a similar term under similar economic conditions to determine the present value of the lease payments. The lease payments used to determine the Company’s operating lease assets may include lease incentives and stated rent increases and are recognized in the Company’s operating lease assets in the Company’s condensed consolidated balance sheets. Operating lease assets are amortized to rent expense over the lease term and included in operating expenses in the condensed consolidated statements of operations. |
RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS | Recently issued and Adopted accounting Standards 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 leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 1, 2018, including interim periods within those fiscal years, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption of the amendments in the update is permitted. The Company adopted this standard in the first quarter of 2019 using the modified retrospective approach. The adoption of this standard resulted in the recognition of operating lease right-of-use assets and associated lease liabilities on our balance sheet of approximately $805,000 and $805,000, respectively, as of January 1, 2019. Additional required disclosures have been included within Note 6 - Leases. Such adoption did not have a material impact on our liquidity, results of operations or our compliance with the revolving credit facility covenants. |
ORGANIZATION AND SUMMARY OF S_3
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Disaggregation of Revenue | Disaggregated revenue for the three months ended March 31, 2019 and 2018 was as follows: For the Three Months Ended March 31, 2019 2018 Product Revenue $ 4,930,924 $ 5,532,647 Service Revenue 505,675 422,815 Total Revenue $ 5,436,599 $ 5,955,462 |
Schedule of deferred revenue | Deferred revenue as of March 31, 2019 was as follows: Service Product Total Deferred Revenue Balance, beginning of period $ 1,455,757 $ 33,000 $ 1,488,757 Revenue recognized (368,956 ) (33,000 ) (401,956 ) Amounts invoiced 473,359 — 473,359 Balance, end of period $ 1,560,160 $ — $ 1,560,160 |
Schedule of estimated service revenue recognised | Estimated service revenue to be recognized in the future related to the performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2019 is as follows: Year Service Revenue 2019 (April 1 – December 31, 2019) $ 579,785 2020 539,914 2021 405,892 2022 34,569 Total $ 1,560,160 |
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 $ 2,892,190 $ — $ 623 $ 2,891,567 Total Short Term: 2,892,190 — 623 2,891,567 Total Investments December 31, 2018 $ 2,892,190 $ — $ 623 $ 2,891,567 Short-Term: Corporate bonds $ 4,699,954 $ 1,226 $ — $ 4,701,180 Total Short Term: 4,699,954 1,226 — 4,701,180 Total Investments March 31, 2019 $ 4,699,954 $ 1,226 $ — $ 4,701,180 |
Schedule of antidilutive | Shares were excluded as follows: For the Three Months Ended March 31, 2019 2018 Warrants 256,035 — Stock options 64,463 3,660 Shares 70,951 — |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | As of March 31, 2019 As of December 31, 2018 Estimated Useful Lives (unaudited) Operations equipment $ 854,302 $ 852,273 3 years Tradeshow and demo equipment 890,929 784,244 3 years Computer equipment 117,666 112,521 3 years 1,862,897 1,749,038 Less accumulated depreciation (963,105 ) (858,009 ) Property and Equipment, Net $ 899,792 $ 891,029 |
PATENT RIGHTS (Tables)
PATENT RIGHTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | As of March 31, As of December 31, 2019 2018 (unaudited) Gross carrying amount $ 1,253,018 $ 1,253,018 Less accumulated amortization (843,378 ) (819,281 ) Patent Rights, Net $ 409,640 $ 433,737 |
Schedule of amortization expense | Amortization expense was approximately $24,000 for the three months ended March 31, 2019 and 2018. As of March 31, 2019, future remaining amortization expense is as follows: Year 2019 (April 1 – December 31, 2019) $ 72,290 2020 96,386 2021 96,386 2022 96,386 2023 48,192 Total $ 409,640 |
PRODUCT WARRANTIES (Tables)
PRODUCT WARRANTIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Product Warranties Disclosures [Abstract] | |
Schedule of changes in product warranty liability | Changes in product warranty liability were as follows for the nine months ended March 31, 2019: Balance, beginning of period $ 136,217 Warranties accrued during the period 59,638 Payments on warranty claims (57,913 ) Balance, end of period $ 137,942 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of future minimum lease payments for operating leases | The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of March 31, 2019. Maturity of Operating Lease Liabilities Amount 2019 (April 1 – December 31, 2019) $ 187,420 2020 245,237 2021 230,674 2022 176,866 Total undiscounted operating leases payments $ 840,197 Less: Imputed interest (88,441 ) Present Value of Operating Lease Liabilities $ 751,756 Other Information Weighted-average remaining lease term 3.3 years Weighted-average discount rate 5.0 % |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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, 2018 2,438,000 $ 6.75 0.55 Granted — — — Exercised (400,281 ) 6.75 — Expired — — — Outstanding – March 31, 2019 2,037,719 $ 6.75 0.32 Exercisable – March 31, 2019 2,037,719 $ 6.75 0.32 |
Schedule of Stock Options, Valuation Assumptions | 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, 2018 165,834 $ 5.84 Granted — — Vested (2,500 ) 4.99 Forfeited — — Unvested balance at March 31, 2019 163,334 $ 5.85 |
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, 2018 229,334 $ 5.55 9.08 Granted — — — Exercised — — — Expired — — — Outstanding – March 31, 2019 229,334 $ 5.55 8.83 Exercisable – March 31, 2019 57,334 $ 5.55 8.83 |
ORGANIZATION AND SUMMARY OF S_4
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Total Revenue | $ 5,436,599 | $ 5,955,462 |
Product [Member] | ||
Total Revenue | 4,930,924 | 5,532,647 |
Service [Member] | ||
Total Revenue | $ 505,675 | $ 422,815 |
ORGANIZATION AND SUMMARY OF S_5
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Deferred Revenue Arrangement [Line Items] | |
Balance, beginning of period | $ 1,488,757 |
Revenue recognized | (401,956) |
Amounts invoiced | 473,359 |
Balance, end of period | 1,560,160 |
Service [Member] | |
Deferred Revenue Arrangement [Line Items] | |
Balance, beginning of period | 1,455,757 |
Revenue recognized | (368,956) |
Amounts invoiced | 473,359 |
Balance, end of period | 1,560,160 |
Product [Member] | |
Deferred Revenue Arrangement [Line Items] | |
Balance, beginning of period | 33,000 |
Revenue recognized | (33,000) |
Amounts invoiced | |
Balance, end of period |
ORGANIZATION AND SUMMARY OF S_6
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | Mar. 31, 2019USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
2019 | $ 579,785 |
2020 | 539,914 |
2021 | 405,892 |
2022 | 34,569 |
Total | $ 1,560,160 |
ORGANIZATION AND SUMMARY OF S_7
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Amortized Cost | $ 4,699,954 | $ 2,892,190 |
Gross Unrealized Gain | 1,226 | |
Gross Unrealized Loss | 623 | |
Fair Value | 4,701,180 | 2,891,567 |
Short Term [Member] | ||
Amortized Cost | 4,699,954 | 2,892,190 |
Gross Unrealized Gain | 1,226 | |
Gross Unrealized Loss | 623 | |
Fair Value | 4,701,180 | 2,891,567 |
Short Term [Member] | Corporate Bonds [Member] | ||
Amortized Cost | 4,699,954 | 2,892,190 |
Gross Unrealized Gain | 1,226 | |
Gross Unrealized Loss | ||
Fair Value | $ 4,701,180 | 2,891,567 |
Short Term [Member] | Corporate Bonds [Member] | ||
Gross Unrealized Gain | ||
Gross Unrealized Loss | $ 623 |
ORGANIZATION AND SUMMARY OF S_8
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 256,035 | |
Stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 64,463 | 3,660 |
Shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 70,951 |
ORGANIZATION AND SUMMARY OF S_9
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019USD ($)Segment | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Jan. 02, 2019USD ($) | |
Number of operating segments | Segment | 1 | |||
Cash, FDIC insured amount | $ 250,000 | |||
Cash uninsured amount | 5,679,000 | $ 11,726,000 | ||
Allowance for doubtful accounts receivable, current | 0 | 0 | ||
Bad debt expense (recoveries) | $ 2,345 | |||
Advertising and promotion expense | $ 539,000 | $ 522,000 | ||
Product warranty term | 1 year | |||
Operating lease right-of-use | $ 749,114 | $ 0 | $ 805,000 | |
Lease liabilities | $ 751,756 | $ 805,000 | ||
UNITED STATES | ||||
Reveune percent | 81.00% | 100.00% | ||
Customer [Member] | Accounts Receivable [Member] | UNITED STATES | ||||
Reveune percent | 87.00% | 87.00% | ||
UNITED STATES | Customer [Member] | Revenue [Member] | ||||
Reveune percent | 53.00% | 75.00% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,862,897 | $ 1,749,038 |
Less accumulated depreciation | (963,105) | (858,009) |
Property and Equipment, Net | 899,792 | 891,029 |
OperationsEquipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 854,302 | 852,273 |
Property, plant and equipment, useful Life | 3 years | |
Tradeshow and Demo Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 890,929 | 784,244 |
Property, plant and equipment, useful Life | 3 years | |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 117,666 | $ 112,521 |
Property, plant and equipment, useful Life | 3 years |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 104,000 | $ 76,000 |
PATENT RIGHTS (Details)
PATENT RIGHTS (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Gross carrying amount | $ 1,253,018 | $ 1,253,018 |
Less accumulated amortization | (843,378) | (819,281) |
Patent Rights, Net | $ 409,640 | $ 433,737 |
PATENT RIGHTS (Details 1)
PATENT RIGHTS (Details 1) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 (April 1 - December 31, 2019) | $ 72,290 | |
2020 | 96,386 | |
2021 | 96,386 | |
2022 | 96,386 | |
2023 | 48,192 | |
Patent Rights, Net | $ 409,640 | $ 433,737 |
PATENT RIGHTS (Details Narrativ
PATENT RIGHTS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
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, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | |||
Debt instrument, term | 2 years | ||
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 | 6.25% | ||
Line of credit, outstanding | $ 0 | $ 0 | |
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | ||
Line of credit description | 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 $2.5 million non-formula sublimit. The borrowing base consists of 80% of eligible accounts receivable, as defined in the agreement. |
PRODUCT WARRANTIES (Details)
PRODUCT WARRANTIES (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | |
Balance, beginning of period | $ 136,217 |
Warranties accrued during the period | 59,638 |
Payments on warranty claims | (57,913) |
Balance, end of period | $ 137,942 |
LEASES (Details)
LEASES (Details) - USD ($) | Mar. 31, 2019 | Jan. 02, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
2019 (April 1 - December 31, 2019) | $ 187,420 | |
2020 | 245,237 | |
2021 | 230,674 | |
2022 | 176,866 | |
Total undiscounted operating leases payments | 840,197 | |
Less: Imputed interest | (88,441) | |
Present Value of Operating Lease Liabilities | $ 751,756 | $ 805,000 |
Other Information | ||
Weighted-average remaining lease term | 3 years 3 months 19 days | |
Weighted-average discount rate | 5.00% |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2010 | Mar. 31, 2019 | Jan. 02, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||||
Lease expires | Sep. 30, 2022 | |||
Lease payments increase | 3.00% | |||
Manufacturing agreement contract term | 3 years | 10 years | ||
Monthly rental payment | $ 5,300 | |||
Operating Lease Right-of-Use Assets, Net | 749,114 | $ 805,000 | $ 0 | |
Decrease in ROU asset | 56,000 | |||
Cash paid for amounts included in present value of operating lease liabilities | 62,000 | |||
Operating lease cost | $ 65,000 |
COMMITMENT AND CONTINGENCIES (D
COMMITMENT AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2010 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Payments to suppliers | $ 1,911,000 | $ 1,137,000 | ||
Accounts payable and accrued expenses | $ 663,000 | $ 1,041,000 | ||
Manufacturing agreement contract term | 3 years | 10 years |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Expenses related to employee benefit plan | $ 28,000 | $ 24,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Class of Warrant or Right, Outstanding [Roll Forward] | ||
Exercised | 400,281 | |
Common Warrants [Member] | ||
Class of Warrant or Right, Outstanding [Roll Forward] | ||
Outstanding at beginning | 2,438,000 | |
Granted | ||
Exercised | (400,281) | (73,309) |
Expired | ||
Outstanding at ending | 2,438,000 | |
Exercisable at end | 2,037,719 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights [Roll Forward] | ||
Outstanding at beginning | $ 6.75 | |
Granted | ||
Exercised | 6.75 | |
Expired | ||
Outstanding at ending | 6.75 | |
Exercisable at ending | $ 6.75 | |
Class Of Warrant Or Right Weighted Average Remaining Contract Term Of Warrants Or Rights [Roll Forward] | ||
Outstanding at beginning | 6 months 18 days | |
Outstanding at ending | 3 months 26 days | |
Exercisable at ending | 3 months 26 days |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) | 3 Months Ended |
Mar. 31, 2019 | |
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, 2019$ / 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 | 165,834 |
Granted | shares | |
Vested | shares | (2,500) |
Forfeited | shares | |
Unvested balance at end | shares | 163,334 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Rollforward] | |
Unvested balance at beginning | $ / shares | $ 5.84 |
Granted | $ / shares | |
Vested | $ / shares | 4.99 |
Forfeited | $ / shares | |
Unvested balance at end | $ / shares | $ 5.85 |
STOCKHOLDERS' EQUITY (Details 3
STOCKHOLDERS' EQUITY (Details 3) - $ / shares | 1 Months Ended | 3 Months Ended |
Jan. 25, 2018 | Mar. 31, 2019 | |
Number of Options | ||
Outstanding at beginning | 229,334 | |
Granted | ||
Exercised | ||
Expired | ||
Outstanding at end | 229,334 | |
Exercisable at end | 57,334 | |
Weighted Average Exercise | ||
Outstanding at beginning (in dollars per share) | $ 5.55 | |
Granted (in dollars per share) | $ 5.55 | |
Exercised | ||
Expired | ||
Outstanding at end (in dollars per share) | 5.55 | |
Exercisable at end (in dollars per share) | $ 5.55 | |
Outstanding at beginning | 9 years 29 days | |
Outstanding at end | 8 years 9 months 29 days | |
Exercisable at end | 8 years 9 months 29 days |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Oct. 01, 2018 | Jan. 20, 2017 | Jun. 02, 2016 | Jan. 25, 2018 | Dec. 31, 2016 | Jun. 30, 2016 | Apr. 30, 2013 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Common stock, authorized | 50,000,000 | 50,000,000 | ||||||||
Common stock, issued | 16,546,196 | 16,512,742 | ||||||||
Common stock,outstanding | 16,145,915 | 16,112,461 | ||||||||
Common stock, par value | $ 0.01 | $ 0.01 | ||||||||
Weighted average grant date fair value (in dollars per share) | ||||||||||
Exercised | 400,281 | |||||||||
Intrinsic value of common stock warrants | $ 550,000 | $ 1,609,000 | ||||||||
Number of restricted stock granted | ||||||||||
Stock option Granted | ||||||||||
Weighted Average Exercise Price Stock option Granted (in dollars per share) | $ 5.55 | |||||||||
Options, Vested in Period, Fair Value | $ 444,000 | |||||||||
Stock options fair value | $ 3.52 | |||||||||
Stock options unvested | 229,334 | 229,334 | ||||||||
Intrinsic value of Stock options | $ 337,000 | $ 427,000 | ||||||||
Unrecognized stock compensation expense | 1,233,000 | |||||||||
Reduction of stock compensation expense value forfeited | $ 0 | $ 39,000 | ||||||||
Treasury stock | 33,454 | 33,454 | ||||||||
Common Warrants [Member] | ||||||||||
Number of warrant outstanding | 2,438,000 | 2,438,000 | ||||||||
Warrant exercise price (in dollars per share) | $ 6.75 | $ 6.75 | ||||||||
Exercised | (400,281) | (73,309) | ||||||||
Forfeited | (13,067) | |||||||||
Number of warrant granted | ||||||||||
Warrant granted exercise price (in dollars per share) | ||||||||||
Nonemployee Directors [Member] | ||||||||||
Stock option Granted | 80,000 | |||||||||
Investor [Member] | Common Warrants [Member] | Placement Agent [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% | |||||||||
2016 Equity Incentive Plan [Member] | ||||||||||
Number of authorized shares under the plan | 397,473 | |||||||||
2016 Equity Incentive Plan [Member] | Shares [Member] | ||||||||||
Vesting period | 4 years | |||||||||
Number of restricted stock granted | 30,000 | 10,000 | 307,666 | |||||||
Initial offering price (in dollars per share) | $ 5.25 | |||||||||
Vesting percentage | 25.00% | |||||||||
Description of vesting rights | he 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. | |||||||||
2017 Equity Incentive Plan [Member] | ||||||||||
Number of authorized shares under the plan | 500,000 | |||||||||
IPO [Member] | Investor [Member] | Common Warrants [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. 8, 2019 | |||||||||
Warrant redemption price (in dollars per warrant) | $ 0.01 | |||||||||
IPO [Member] | Underwriter's Representatives [Member] | Common Warrants [Member] | ||||||||||
Warrant term | 4 years | |||||||||
Number of warrant granted | 138,000 | |||||||||
Warrant granted exercise price (in dollars per share) | $ 6.75 | |||||||||
IPO [Member] | Underwriter's Representatives [Member] | Common Warrants [Member] | Maximum [Member] | ||||||||||
Date of warrants exercisable | Jun. 2, 2021 | |||||||||
IPO [Member] | Underwriter's Representatives [Member] | Common Warrants [Member] | Minimum [Member] | ||||||||||
Date of warrants exercisable | Jun. 2, 2017 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Tax expense | $ 0 | $ 0 |