Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 01, 2019 | |
Cover [Abstract] | ||
Entity Registrant Name | Fuse Medical, Inc. | |
Entity Central Index Key | 0000319016 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 74,600,181 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Trading Symbol | FZMD | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity File Number | 000-10093 | |
Entity Tax Identification Number | 59-1224913 | |
Entity Address, Address Line One | 1565 N. Central Expressway | |
Entity Address, Address Line Two | Suite 220 | |
Entity Address, City or Town | Richardson | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75080 | |
City Area Code | 469 | |
Local Phone Number | 862-3030 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,031,270 | $ 844,314 |
Accounts receivable, net of allowance of $1,747,600 and $667,963, respectively | 4,759,131 | 5,225,999 |
Inventories, net of allowance of $4,416,483 and $1,711,871, respectively | 8,189,621 | 11,075,889 |
Prepaid expenses and other current assets | 17,365 | 29,553 |
Total current assets | 13,997,387 | 17,175,755 |
Property and equipment, net | 27,123 | 42,974 |
Deferred tax asset | 760,993 | |
Intangible assets, net | 1,226,975 | 1,288,040 |
Goodwill | 2,905,089 | 2,905,089 |
Total assets | 18,156,574 | 22,172,851 |
Current liabilities: | ||
Accounts payable | 2,526,096 | 2,712,919 |
Accrued expenses | 2,909,729 | 2,784,271 |
Notes payable - related parties | 150,000 | 150,000 |
Senior secured revolving credit facility | 1,752,501 | 1,477,448 |
Total current liabilities | 7,338,326 | 7,124,638 |
Earn-out liability | 13,581,529 | 13,581,529 |
Total liabilities | 20,919,855 | 20,706,167 |
Commitments and contingencies | ||
Stockholders' (deficit) equity: | ||
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.01 par value; 100,000,000 shares authorized, 74,600,181 shares issued and 70,221,566 shares outstanding as of September 30, 2019, and 74,600,181 shares issued and 70,221,566 shares outstanding as of December 31, 2018. | 714,891 | 714,891 |
Additional paid-in capital | 487,524 | |
Retained earnings (Accumulated deficit) | (3,965,696) | 751,793 |
Total stockholders' (deficit) equity | (2,763,281) | 1,466,684 |
Total liabilities and stockholders' (deficit) equity | $ 18,156,574 | $ 22,172,851 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Net of allowance, accounts receivable | $ 1,747,600 | $ 667,963 |
Net of allowance, inventories | $ 4,416,483 | $ 1,711,871 |
Preferred Stock Par Value | $ 0.01 | $ 0.01 |
Preferred Stock Shares Authorized | 20,000,000 | 20,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Par Value | $ 0.01 | $ 0.01 |
Common Stock Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock Shares Issued | 74,600,181 | 74,600,181 |
Common Stock Shares Outstanding | 70,221,566 | 70,221,566 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net revenues | $ 5,716,344 | $ 6,784,304 | $ 15,562,928 | $ 18,506,810 |
Cost of revenues | 4,787,939 | 3,047,373 | 8,987,196 | 9,941,271 |
Gross profit | 928,405 | 3,736,931 | 6,575,732 | 8,565,539 |
Operating expenses: | ||||
Selling, general, administrative and other | 2,263,964 | 1,932,991 | 6,604,066 | 6,432,798 |
Commissions | 1,741,770 | 1,405,024 | 3,752,295 | 4,599,080 |
Depreciation and amortization | 25,596 | 4,829 | 76,916 | 10,650 |
Total operating expenses | 4,031,330 | 3,342,844 | 10,433,277 | 11,042,528 |
Operating loss (income) | (3,102,925) | 394,087 | (3,857,545) | (2,476,989) |
Other expense: | ||||
Interest expense | (34,900) | (25,920) | (88,362) | (101,835) |
Total other expense | (34,900) | (25,920) | (88,362) | (101,835) |
Operating income (loss) before tax | (3,137,825) | 368,167 | (3,945,907) | (2,578,824) |
Income tax expense (benefit) | 926,517 | 90,985 | 771,582 | (505,742) |
Net income (loss) | $ (4,064,342) | $ 277,182 | $ (4,717,489) | $ (2,073,082) |
Net income (loss) per common share - basic | $ (0.06) | $ 0 | $ (0.07) | $ (0.03) |
Weighted average number of common shares outstanding - basic | 70,221,566 | 68,658,304 | 70,221,566 | 66,816,698 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings/ (Deficit) [Member] |
Beginning Balance, Amount at Dec. 31, 2017 | $ (7,981,509) | $ 671,583 | $ (8,653,092) | |
Beginning Balance, Shares at Dec. 31, 2017 | 69,158,308 | |||
Restricted stock awards granted | 79,083 | 79,083 | ||
Stock options granted | 59,003 | 59,003 | ||
Net income (loss) | (734,967) | $ (734,967) | ||
Ending Balance, Amount at Mar. 31, 2018 | (8,578,390) | $ 671,583 | (8,515,006) | (734,967) |
Ending Balance, Shares at Mar. 31, 2018 | 69,158,308 | |||
Beginning Balance, Amount at Dec. 31, 2017 | (7,981,509) | $ 671,583 | (8,653,092) | |
Beginning Balance, Shares at Dec. 31, 2017 | 69,158,308 | |||
Net income (loss) | (2,073,082) | |||
Ending Balance, Amount at Sep. 30, 2018 | (5,007,404) | $ 713,688 | (3,648,010) | (2,073,082) |
Ending Balance, Shares at Sep. 30, 2018 | 73,368,835 | |||
Beginning Balance, Amount at Mar. 31, 2018 | (8,578,390) | $ 671,583 | (8,515,006) | (734,967) |
Beginning Balance, Shares at Mar. 31, 2018 | 69,158,308 | |||
Restricted stock awards granted | 79,083 | 79,083 | ||
Stock options granted | 167,313 | 167,313 | ||
CPM working capital purchase price adjustment | (397,463) | (397,463) | ||
Inventory capital transaction | 1,547,807 | 1,547,807 | ||
Net income (loss) | (1,615,297) | (1,615,297) | ||
Ending Balance, Amount at Jun. 30, 2018 | (8,796,947) | $ 671,583 | (7,118,266) | (2,350,264) |
Ending Balance, Shares at Jun. 30, 2018 | 69,158,308 | |||
Restricted stock awards granted | 52,722 | 52,722 | ||
Stock options granted | 259,639 | 259,639 | ||
Purchase of Maxim Surgical | 3,200,000 | $ 42,105 | 3,157,895 | |
Purchase of Maxim Surgical, Shares | 4,210,527 | |||
Net income (loss) | 277,182 | 277,182 | ||
Ending Balance, Amount at Sep. 30, 2018 | (5,007,404) | $ 713,688 | (3,648,010) | (2,073,082) |
Ending Balance, Shares at Sep. 30, 2018 | 73,368,835 | |||
Beginning Balance, Amount at Dec. 31, 2018 | 1,466,684 | $ 714,891 | 751,793 | |
Beginning Balance, Shares at Dec. 31, 2018 | 74,600,181 | |||
Stock options granted | 244,407 | 244,407 | ||
Net income (loss) | (510,998) | (510,998) | ||
Ending Balance, Amount at Mar. 31, 2019 | 1,200,093 | $ 714,891 | 244,407 | 240,795 |
Ending Balance, Shares at Mar. 31, 2019 | 74,600,181 | |||
Beginning Balance, Amount at Dec. 31, 2018 | 1,466,684 | $ 714,891 | 751,793 | |
Beginning Balance, Shares at Dec. 31, 2018 | 74,600,181 | |||
Net income (loss) | (4,717,489) | |||
Ending Balance, Amount at Sep. 30, 2019 | (2,763,281) | $ 714,891 | 487,524 | (3,965,696) |
Ending Balance, Shares at Sep. 30, 2019 | 74,600,181 | |||
Beginning Balance, Amount at Mar. 31, 2019 | 1,200,093 | $ 714,891 | 244,407 | 240,795 |
Beginning Balance, Shares at Mar. 31, 2019 | 74,600,181 | |||
Stock options granted | 254,700 | 254,700 | ||
Net income (loss) | (142,149) | (142,149) | ||
Ending Balance, Amount at Jun. 30, 2019 | 1,312,644 | $ 714,891 | 499,107 | 98,646 |
Ending Balance, Shares at Jun. 30, 2019 | 74,600,181 | |||
Stock options granted | (11,583) | (11,583) | ||
Net income (loss) | (4,064,342) | (4,064,342) | ||
Ending Balance, Amount at Sep. 30, 2019 | $ (2,763,281) | $ 714,891 | $ 487,524 | $ (3,965,696) |
Ending Balance, Shares at Sep. 30, 2019 | 74,600,181 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (4,717,489) | $ (2,073,082) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 76,916 | 10,650 |
Share-based compensation | 487,524 | 696,843 |
Provision for bad debts and discounts | 1,079,637 | 187,755 |
Provision for slow moving and obsolete inventory | 2,704,612 | 711,828 |
Deferred taxes, net of valuation allowance | 760,993 | (533,639) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (612,769) | 2,598,303 |
Inventories | 181,656 | 1,201,714 |
Prepaid expenses and other current assets | 12,188 | 10,396 |
Accounts payable | (186,823) | (440,540) |
Accrued expenses | 125,458 | 568,280 |
Net cash (used in) provided by operating activities | (88,097) | 2,938,508 |
Cash flows from investing activities | ||
Purchase of property and equipment | (35,984) | |
Acquisition of Maxim Surgical, net of cash acquired | (63,097) | |
Net cash used in investing activities | (99,081) | |
Cash flows from financing activities | ||
Payments on senior secured revolving credit facility, net | 275,053 | (2,651,799) |
Net cash provided by (used in) financing activities | 275,053 | (3,049,262) |
Net increase (decrease) in cash and cash equivalents | 186,956 | (209,835) |
Cash and cash equivalents - beginning of period | 844,314 | 804,715 |
Cash and cash equivalents - end of period | 1,031,270 | 594,880 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 69,257 | 84,872 |
Non-cash investing and financing activities: | ||
Inventory contributed by stockholder | 2,063,742 | |
CPM [Member] | ||
Cash flows from financing activities | ||
Purchase price adjustment - CPM acquisition | (397,463) | |
Maxim Surgical, LLC [Member] | ||
Non-cash investing and financing activities: | ||
Stock issued for Maxim Acquisition | $ 3,200,000 |
Nature of Operations
Nature of Operations | 9 Months Ended |
Sep. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Nature of Operations | Note 1. Nature of Operations Overview Fuse Medical, Inc., a Delaware corporation (the “ Company through a merger. On December 19, 2016 (the “ Change-in-Control Date NC 143 Mr. Brooks Board RMI Mr. Reeg On December 31, 2017, the Company completed the acquisition of CPM Medical Consultants, LLC (“ CPM CPM Acquisition Agreement CPM Acquisition On August 1, 2018, (“ Maxim Closing Date Maxim Maxim Purchase Agreement Maxim Acquisition Basis of Presentation The interim unaudited condensed consolidated financial statements included herein reflect all material adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) which, in the opinion of the Company’s management, are ordinary and necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under generally accepted accounting principles in the United States of America (“ GAAP SEC The audited condensed consolidated balance sheet information as of December 31, 2018, was derived from the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2018 (“ 2018 Annual Report Exchange Act The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the entire fiscal year or for any other period as the Company has historically experienced seasonal trends with greater revenue and volume between the last two calendar quarters compared to the first two calendar quarters of the year. Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared as if the Company will continue as a going concern. Through September 30, 2019, the Company has accumulated losses of $3,965,696 and stockholders’ deficits of $2,763,281. The Company’s ability to continue as a going concern for at least one year beyond the date of this filing is dependent upon the Company’s (i) successful execution of key rebranding initiatives, (ii) introduction, commercialization and sales of new proprietary products and product lines, (iii) increased sale of existing products, with strategic emphasis on selling more retail cases (“ Retail Cases RLOC Amegy Bank The Company’s management expects to fund its future business development activities and its working capital needs largely from available cash, improved future operations, and other traditional financing sources, such as a revolving line of credit facility, term notes, or private placements, until such time sufficient funds are provided by operations. There can be no assurance that the Company’s financing efforts will be successful, or if the Company’s management will be able to achieve sufficient revenue and profitability growth from operations. If the Company fails to cure the current event of default under the RLOC or another event of default occurs under the RLOC, the Company could be prohibited from borrowing for its working capital needs. If the loans are accelerated and the Company does not have sufficient cash on hand to pay all amounts due, the Company could be required to sell assets, to refinance all or a portion of its indebtedness or to obtain additional financing. Refinancing may not be possible and additional financing may not be available on commercially reasonable terms, or at all. If the Company cannot borrow under the RLOC, the Company would need to seek additional financing, if available, or curtail our operations. Additional financing may include restrictions on the Company’s operations, or, with equity financing, may result in the Company’s stockholders’ ownership being diluted. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Principles of Consolidation The unaudited condensed consolidated financial statements consolidate the accounts of CPM and Maxim, the Company’s wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Reclassification The provision for slow moving and obsolete inventory for the prior period unaudited condensed consolidated statement of cash flows has been reclassified to conform to the presentation of the current period unaudited condensed consolidated financial statements. This reclassification had no effect on the previously reported unaudited condensed consolidated balance sheets, statement of operations, and changes in stockholders’ equity. Use of Estimates The preparation of the consolidated financial statements in accordance with GAAP, requires the Company’s management to make estimates and assumptions that affect the Company’s reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying unaudited condensed consolidated financial statements include the valuation of inventories, the Company’s effective income tax rate, and the recoverability of deferred tax assets, which are based upon the Company’s expectation of future taxable income and allowable deductions and the fair value calculations of stock-based compensation and earn-out liability. (See Note 3, “CPM Acquisition”) Segment Reporting In accordance with Accounting Standards Update (“ ASU Net Loss Per Common Share Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Shares of restricted stock are included in the basic weighted-average number of common shares outstanding from the time they vest. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. For the three and nine month periods ended September 30, 2019 and 2018, the Company excluded the effects of outstanding stock options as their effects were antidilutive due to the Company’s net loss during these periods. During the preparation of the unaudited condensed consolidated financial statements for the quarter ended September 30, 2019, the Company identified an error in the weighted average number of shares used in its calculation of earnings per share for the three and nine month periods ended September 30, 2018. Three Months Ended September 30, 2018 As Previously Reported As Revised Weighted average number of common shares outstanding 54,118,506 68,658,304 Net loss per share - basic $ (0.01 ) $ - Nine Months Ended September 30, 2018 As Previously Reported As Revised Weighted average number of common shares outstanding 54,118,506 66,816,698 Net loss per share - basic $ (0.04 ) $ (0.03 ) The Company performed a quantitative and qualitative analysis and determined that the error was not material to the previously reported results for the three and nine month periods ended September 30, 2018. Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. In connection with the CPM Acquisition, the Company recorded a $13,581,529 liability related to the earn-out (“ Earn-Out The fair value of the Earn-Out liability was calculated using the Monte Carlo simulation, which was then applied to estimated Earn-Out payments with a discount rate of four percent (4%). To determine the fair value of the Earn-Out liability, the Company’s management evaluates assumptions that require significant judgement. Significant assumptions used for estimating the Earn-Out liability included gross margins of approximately forty-eight percent (48%), net income margins averaging nine percent (9%) per year, revenue growth of approximately five percent (5%) over a forecast horizon period of 11 years. For the year ended December 31, 2018, the Company determined the earnings threshold as detailed in the CPM Acquisition Agreement were not met and therefore no payments for either the base or bonus Earn-Out tranches were achieved, based on the Company’s 2018 financial performance. The Earn-Out was re-measured to fair value under the probability weighted income approach. As a result, the initial fair value of the Earn-Out liability was reduced by $5,663,014 from $19,244,543 to $13,581,529, with the offset reflected as “Change in fair value of contingent purchase consideration” on the Company’s 2018 Annual Report. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded values of notes payable approximate their respective fair values based upon their effective interest rates. Cash and Cash Equivalents The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at September 30, 2019 and December 31, 2018. The Company’s cash is concentrated in large financial institutions that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any financial institution losses from the Change-in-Control Date through September 30, 2019. As of September 30, 2019, and December 31, 2018, there were deposits of $574,868 and $322,693 , respectively , Accounts Receivable and Allowances Accounts receivable are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable and an allowance for contractual discount pricing. Credit is extended to customers based on an evaluation of their financial condition, industry reputation, and other judgment factors considered by the Company’s management. The Company generally does not require collateral or other security interest to support accounts receivable. Based on trends and specific factors, the customer’s credit terms may be modified, including required payment upon delivery. The Company performs regular on-going credit evaluations of its customers as deemed relevant. As events, trends, and circumstances warrant, the Company’s management estimates the amounts that are uncollectible. These amounts are recognized as bad debt expense and are reflected within selling, general, administrative and other expenses on the Company’s accompanying unaudited condensed consolidated statements of operations. When accounts are deemed uncollectible, they are often referred to the Company’s outside legal firm for litigation. Accounts deemed uncollectible are written-off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Accounts deemed uncollectible are removed from the Company’s accounts receivable portfolio, with a corresponding offset to the allowance for doubtful accounts receivable. The Company may record additional allowances for doubtful accounts based on known trends and expectations to ensure the Company’s accounts receivable portfolio is recorded at net realizable value. Specific allowances are re-evaluated and adjusted as additional facts and information become available. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received. The Company’s management estimates its allowance for contractual discount pricing, by evaluating specific accounts where information indicates the customer is offered contractual pricing and discount allowances. In these arrangements, the Company’s management uses assumptions and judgement, based on the best available facts and circumstances to record a specific allowance for the amounts due from those customers. The allowance is offset by a corresponding reduction to revenue. These specific allowances are re-evaluated, analyzed, and adjusted as additional information becomes available to determine the total amount of the allowance. The Company may record additional allowances based on trends and expectations to ensure the Company’s accounts receivable portfolio is recorded at net realizable value. Inventories Inventories are stated at the lower of cost or net realizable value (first-in, first-out) less an allowance for slow-moving inventory, expired inventory, and inventory obsolescence. Inventories consist entirely of finished goods and include internal and external fixation products; upper and lower extremity plating and total joint reconstruction; soft tissue fixation and augmentation for sports medicine procedures; spinal implants for trauma, degenerative disc disease, and deformity indications (collectively, “ Orthopedic Implants Biologics During the three and nine months ended September 30, 2019 the Company revised its estimate for slow moving and obsolete inventory. As a result, the Company’s management increased the inventory reserve for slow moving and obsolescence by approximately $2.4 million, which is reflected in Inventory and Cost of Revenues on the Company’s unaudited condensed consolidated balance sheets and statements of operations, respectively. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets per the following table. Expenditures for additions and improvements are capitalized, while repairs and maintenance are expensed as incurred. Category Useful Life Computer equipment and software 3 years Furniture and fixtures 3 years Office equipment 3 years Software 3 years Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation is removed. A gain is recorded when consideration received is more than the disposed asset’s cost, net of depreciation, and a loss is recorded when consideration received is less than the disposed asset’s cost, net of depreciation. Long-Lived Assets The Company reviews long-lived assets quarterly or whenever changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which generally represents furniture and fixtures. Earnings before interest, taxes, depreciation and amortization (“ EBITDA Goodwill and Other Intangible Assets Goodwill is determined based on an acquisition purchase price in excess of the fair value of identified net assets acquired. Intangible assets with lives restricted by contractual, legal or other means are amortized over their useful lives. Goodwill is not amortized, but is tested at least annually for impairment, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. The Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company’s intangible assets subject to amortization consist primarily of acquired non-compete agreements, product technology, and customer relationships. Amortization expense is calculated using the straight-line method over the asset’s expected useful life. (See Note 4, “Maxim Acquisition” for Goodwill and Other Intangibles for additional related disclosures.) Revenue Recognition The Company’s revenues are generated from the sales of Orthopedic Implants and Biologics to support orthopedic surgeries. The Company obtains purchase orders from its customers for the sale of its products which sets forth the general terms and conditions including line item pricing and payment terms (generally due upon receipt). The Company recognizes revenue when its customers obtain control over the assets (generally when the title passes upon shipment or when a product is utilized in a surgery) and it is probable that the Company will collect substantially all the amounts due. Individual promised goods are the Company’s only performance obligation. Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are probable and reasonably estimable. The Company’s management reduces revenue to account for estimates of the Company’s credits and refunds. The Company includes shipping and handling fees in net revenues. Shipping and handling costs are associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold. Revenue Differentiation The Company measures sales volume based on medical procedures in which the Company’s products are sold and used (“ Cases Retail Cases Wholesale Cases Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Category Retail $ 5,050,785 $ 5,227,442 $ 12,425,874 $ 13,661,292 Wholesale 665,559 1,556,862 3,137,054 4,845,518 Total $ 5,716,344 $ 6,784,304 $ 15,562,928 $ 18,506,810 Stock-Based Compensation Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the pro-rata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. Recent Accounting Pronouncements The Company considers the applicability and impact of all ASUs issued, both effective and not yet effective. In February 2016, the Financial Accounting Standards Board (the “ FASB In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. The Company adopted ASU 2017-04 for the three months ended September 30, 2019 on a prospective basis. The adoption of ASU 2017-04 had no impact on the condensed consolidated financial position, results of operations or cash flows for the period ended September 30, 2019. The Company adopted provisions of ASU 2017-04 as it simplified the goodwill impairment testing process resulting in reductions of costs and time associated with the goodwill impairment testing. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by the Company’s management to have a material impact on the Company's present or future consolidated financial statements. |
CPM Acquisition
CPM Acquisition | 9 Months Ended |
Sep. 30, 2019 | |
CPM [Member] | |
Acquisition | Note 3. CPM Acquisition On December 31, 2017 (the “ CPM Effective Date Pursuant to the CPM Acquisition Agreement the Company issued 50 million shares of its Common Stock, to NC 143, the former owner of CPM, in exchange for one-hundred percent (100%) of the outstanding membership interests of CPM, at an agreed-upon value of $0.20 per share of it’s common stock, par value $0.01 per share, Common Stock The Company’s management engaged an independent third-party valuation specialist to calculate the fair value of the Earn-Out liability. The Company recorded $19,244,543 as a contingent liability related to the fair value of the $26,000,000 Earn-Out liability As of December 31, 2018, the Earn-Out was re-measured to fair value under the probability weighted income approach. As a result, the initial fair value of the Earn-Out liability was reduced from $19,244,543 to $13,581,529. The Earn-Out liability was reduced by $5,663,014, with the offset reflected as “Change in fair value of contingent purchase consideration” on the Company’s 2018 Annual Report. The Company’s management will evaluate the estimated fair value of the Earn-Out liability each reporting period. (See Note 2, “Fair Value Measurements”) The CPM Acquisition Agreement provided for a working capital post-closing adjustment (“ CPM Post-Closing Adjustment |
Maxim Acquisition
Maxim Acquisition | 9 Months Ended |
Sep. 30, 2019 | |
Maxim Surgical, LLC [Member] | |
Acquisition | Note 4. Maxim Acquisition On August 1, 2018, the Company, completed the Maxim Acquisition pursuant to the Maxim Purchase Agreement between the Company, Maxim, RMI, Mr. Amir David Tahernia, an individual (“ Tahernia Sellers Maxim Interests The Company issued 4,210,526 restricted shares of its Common Stock, to the Sellers in exchange for one-hundred percent (100%) of the outstanding Maxim Interests, at an agreed-upon value of $0.76 per share of Common Stock, which was equal to the 30-day volume-weighted average price (“ VWAP The Company accounted for the Maxim Acquisition as a business combination and recorded the assets acquired and liabilities assumed at their respective estimated fair values as of the Maxim Closing Date. The assets acquired and liabilities assumed were recorded as of the Maxim Closing Date at their respective fair values and consolidated with those of the Company. The Maxim Purchase Agreement provided for a working capital post-closing adjustment (“ Maxim Post-Closing Adjustment To finalize the Maxim Post-Closing Adjustment, the Company issued an aggregate of 120,231 restricted shares of Common Stock to the Sellers on October 4, 2018 at an agreed-upon value of $0.68 per share of Common Stock, which was equal to the 30-day VWAP of the Company’s Common Stock as of October 1, 2018. The Company recorded the excess of the aggregate purchase price over the estimated fair values of the identifiable assets acquired as goodwill, which is not deductible for tax purposes. Goodwill is primarily attributable to the benefits the Company expects to realize by expanding its product offerings and addressable markets, thereby contributing to an expanded revenue base. The results of Maxim operations are included in the Company’s unaudited condensed consolidated statements of operations subsequent to the Maxim Closing Date. The following unaudited pro forma summary financial information presents the consolidated results of operations for the Company as if the Maxim Acquisition had occurred on January 1, 2018. The pro forma results are shown for illustrative purposes only and do not purport to be indicative of the results that would have been reported if the Maxim Acquisition had occurred on the date indicated or indicative of the results that may occur in the future. Unaudited pro forma information for the three months ended September 30, 2018 is as follows: Three Months Ended September 30, 2018 - Unaudited Historical Fuse Medical, Inc. Historical Maxim Surgical Pro forma Adjustments Pro forma Combined Revenue $ 6,784,304 $ 161,442 $ (116,577 ) $ 6,829,169 Net (loss) income $ 277,182 $ (456,874 ) $ - $ (179,692 ) Net loss per common share - basic $ - $ - $ - $ - The supplemental pro forma revenue was adjusted to exclude $116,577 of intercompany transactions for the three months ended September 30, 2018. The number of shares outstanding used in calculating the net loss per common share – basic was 70,211,566 for the three months ended September 30, 2018. Unaudited pro forma information for the nine months ended September 30, 2018 is as follows: Nine Months Ended September 30, 2018 - Unaudited Historical Fuse Medical, Inc. Historical Maxim Surgical Pro forma Adjustments Pro forma Combined Revenue $ 18,506,810 $ 796,014 $ (459,074 ) $ 18,843,750 Net loss $ (2,073,082 ) $ (374,137 ) $ - $ (2,447,219 ) Net loss per common share - basic $ (0.03 ) $ - $ - $ (0.04 ) The supplemental pro forma revenue was adjusted to exclude $459,074 of intercompany transactions for the nine months ended September 30, 2018. The number of shares outstanding used in calculating the net loss per common share – basic was 70,211,566 for the nine months ended September 30, 2018. The Company is managed and operates in one operating and reporting segment, as Maxim Surgical integrated into the Company’s existing operations. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | Note 5. Property and Equipment Property and equipment consisted of the following at September 30, 2019 and December 31, 2018: September 30, 2019 December 31, 2018 Computer equipment and software $ 41,840 $ 41,840 Furniture and fixtures 1,198 5,047 Office equipment 20,333 21,913 Property and equipment costs 63,371 68,800 Less: accumulated depreciation (36,248 ) (25,826 ) Property and equipment, net $ 27,123 $ 42,974 Depreciation expense for the three months ended September 30, 2019 and September 30, 2018 was $5,241 and $4,829, respectively. Depreciation expense for the nine months ended September 30, 2019 and September 30, 2018 was $15,851 and $10,650, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 6. Goodwill and Intangible Assets The following table summarizes the Company’s goodwill and other intangible assets: September 30, 2019 December 31, 2018 Amortization period (years) Intangible assets: Non-compete agreements $ 61,766 $ 61,766 2 510k product technology 704,380 704,380 Indefinite Customer relationships 555,819 555,819 11 Total intangible assets 1,321,965 1,321,965 Less: accumulated amortization (94,990 ) (33,925 ) Intangible assets, net 1,226,975 1,288,040 Goodwill $ 2,905,089 $ 2,905,089 Indefinite Amortization expense for the three and nine months ended September 30, 2019, was $20,355 and $61,065. There was no amortization expense for the three and nine months ended September 30, 2018. |
Senior Secured Revolving Credit
Senior Secured Revolving Credit Facility | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Senior Secured Revolving Credit Facility | Note 7. Senior Secured Revolving Credit Facility On December 29, 2017, the Company became party to the RLOC with Amegy Bank. The RLOC established an asset-based senior secured revolving credit facility in the amount of $5,000,000. The RLOC contains customary representation, warranties, covenants, events of default, and is collateralized by substantially all of the Company’s assets. The Company’s Chairman of the Board and President personally guarantees fifty percent (50%) of the outstanding RLOC amount. On November 19, 2018, the Company executed the Second Amendment to the RLOC with Amegy Bank (the “ Second Amendment On May 9, 2019, the Company executed the Third Amendment to the RLOC with Amegy Bank (the “ Third Amendment The Company was not in compliance with the minimum quarterly EBITDA requirement of $500,000 for the three months ended September 30, 2019 and had requested a waiver for this event of default from Amegy Bank. (See Note 13, Subsequent Events.”) The outstanding balance of the RLOC was $1,752,501 and $1,477,448 at September 30, 2019 and December 31, 2018, respectively. Interest expense incurred on the RLOC was $28,095 and $19,115 for the three months ended September 30, 2019 and September 30, 2018, respectively, and is reflected in interest expense on the Company’s accompanying unaudited condensed consolidated statements of operations. Interest expense incurred on the RLOC was $68,168 and $81,641 for the nine months ended September 30, 2019 and September 30, 2018, respectively. Accrued interest on the RLOC at September 30, 2019 and December 31, 2018 was $3,261 and $4,350, respectively, and is reflected in accrued expenses on the Company’s accompanying unaudited condensed consolidated balance sheets. At September 30, 2019, the effective interest rate was calculated to be 6.42%. |
Notes Payable - Related Parties
Notes Payable - Related Parties | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Parties | Note 8. Notes Payable – Related Parties During July 2016 through October 2016, the Company obtained three working capital loans from NC 143 and RMI in the form of convertible promissory notes (“ Notes Maturity Date During the three months ended September 30, 2019 and September 30, 2018, interest expense of $6,805 and $6,805, respectively, is reflected in interest expense on the Company’s accompanying unaudited condensed consolidated statements of operations. During the nine months ended September 30, 2019 and September 30, 2018, interest expense of $20,195 and $20,195, respectively, is reflected in interest expense on the Company’s accompanying unaudited condensed consolidated statements of operations. As of September 30, 2019, and December 31, 2018, accrued interest was $79,290 and $59,096, respectively, which is reflected in accrued expenses on the Company’s accompanying unaudited condensed consolidated balance sheets. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders Equity Deficit [Abstract] | |
Stockholders' Equity | Note 9. Stockholders’ Equity Stock Incentive Plans The 2018 Amended and Restated Equity Incentive Plan of Fuse Medical, Inc. (“ 2018 Equity Plan The Company’s management estimates the fair value of stock-based compensation utilizing the Black-Scholes option pricing model. Black-Scholes option pricing is calculated using several variables, including the expected option term, expected volatility of the Company’s stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company’s management believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. The Company’s management estimates of fair value may not be reflective of actual future values or amounts ultimately realized by recipients of these grants. The Company recognizes stock compensation expense on a straight-line basis over the requisite service period for each award. The Company’s management utilizes the simplified method to estimate the expected life for stock options granted to employees, as the Company does not have sufficient historical data regarding stock option exercises. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company’s management believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased. For the three and nine months ended September 30, 2019, the Board granted 150,000 and 1,350,000 Non-qualified Stock Options (“ NQSO A summary of the Company’s stock option activity for the nine months ended September 30, 2019, is presented below: No. of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Balance outstanding at December 31, 2018 3,915,000 $ 0.78 7.0 $ 443,000 Granted 1,350,000 0.69 - - Exercised - - - - Forfeited (1,210,000 ) 1.07 - - Expired - - - - Balance outstanding at September 30, 2019 4,055,000 $ 0.67 6.6 $ 222,000 Exercisable at September 30, 2019 1,984,999 $ 0.50 4.0 $ 222,000 The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2019 was $0.64. Restricted Common Stock For the three and nine months ended September 30, 2019, the Company did not have restricted stock awards (“ RSAs The following table summarizes RSAs activity: Number of Shares Fair Value Weighted Average Grant Date Fair Value Non-vested, December 31, 2018 4,378,615 $ 2,060,000 $ 0.47 Granted - - - Vested - - - Forfeited - - - Non-vested, September 30, 2019 4,378,615 $ 2,060,000 $ 0.47 The non-vested RSAs, as of September 30, 2019, were granted to the Company’s Board members as compensation. These awards vest only upon: (i) the occurrence of a Change in Control or listing of the Company’s Common Stock on a national exchange, and (ii) the director’s notification to the Company of such accelerating events, within a specified period (“ Triggering Events |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10. Income Taxes The Company is subject to U.S. federal income taxes, in addition to state and local income taxes. The components of income tax benefit are as follows: For the Nine Months Ended September 30, 2019 For the Nine Months Ended September 30, 2018 Current: Federal $ - $ - State 10,589 32,121 10,589 32,121 Deferred: Federal 760,993 (537,863 ) State - - 760,993 (537,863 ) Total income tax expense (benefit) $ 771,582 $ (505,742 ) Significant components of the Company's deferred income tax assets and liabilities are as follows: September 30, 2019 December 31, 2018 Deferred tax assets: Net operating loss carryover $ 191,319 $ 216,793 Accounts receivable 366,996 140,272 Compensation 335,173 232,793 Inventory 893,231 383,744 Other 28,129 28,128 Total deferred tax assets 1,814,848 1,001,730 Deferred tax liabilities: Intangibles (222,029 ) (232,835 ) Property and equipment (4,950 ) (7,902 ) Total deferred tax liabilities (226,979 ) (240,737 ) Deferred tax assets, net 1,587,869 760,993 Valuation allowance: Beginning of year - - (Increase) decrease during year (1,587,869 ) - Ending balance (1,587,869 ) - Net deferred tax asset $ - $ 760,993 A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company recorded a valuation allowance in 2019 due to the uncertainty of realization. Management believes that based upon the history of losses that the Company has incurred to date and its projection of future taxable operating income for the foreseeable future, it is more likely than not that the Company will not be able to realize the tax benefit associated with deferred tax assets. The valuation allowance established during the nine months ended September 30, 2019 was $1,587,869. At September 30, 2019, the Company estimates it has approximately $911,042 of net operating loss carryforwards, of which $713,036 will expire from 2019 to 2037. The remaining $198,006 of net operating carryforwards is subject to the limitations of the Tax Cuts and Jobs Act of 2018. The Company’s management believes its tax positions are more likely than not of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax positions. As of September 30, 2019, tax years 2016 through 2018 remain open for Internal Revenue Service (“ IRS A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows: Nine Months Ended September 30, 2019 September 30, 2018 Expected U.S. federal incomes as statutory rate 21.0% 21.0% Deferred tax asset valuation allowance -40.2% 0.0% State and local income taxes, net of federal benefit -0.2% -1.0% Permanent differences -0.2% -0.4% Other 0.0% 0.0% -19.6% 19.6% |
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2019 | |
Nature Of Operations And Going Concern [Abstract] | |
Concentrations | Note 11. Concentrations Concentration of Revenues, Accounts Receivable and Suppliers For the nine months ended September 30, 2019 and September 30, 2018, the following significant customers had an individual percentage of total revenues equaling ten percent (10%) or greater: For the Nine Months Ended September 30, 2019 September 30, 2018 Customer 1 9.77 % 18.20 % Totals 9.77 % 18.20 % At September 30, 2019 and December 31, 2018, the following significant customers had a concentration of accounts receivable representing ten percent (10%) or greater of accounts receivable: September 30, 2019 December 31, 2018 Customer 1 - related party 11.12 % 6.71 % Customer 2 5.12 % 15.03 % Totals 16.24 % 21.74 % For the nine months ended September 30, 2019 and September 30, 2018, the following significant suppliers represented ten percent (10%) or greater of goods purchased: For the Nine Months Ended September 30, 2019 September 30, 2018 Supplier 1 21.90 % 11.40 % Supplier 2 - related party 10.30 % 0.50 % Totals 32.20 % 11.90 % |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12. Related Party Transactions Lease with 1565 North Central Expressway, LP For its principal executive office, the Company leases an aggregate of approximately 11,500 square-foot space at 1565 North Central Expressway, Suite 220, Richardson, Texas 75080 from 1565 North Central Expressway, LP, a real estate investment company that is owned and controlled by Mr. Brooks. The Company’s lease arrangement includes (a) the lease acquired pursuant to the CPM Acquisition effective January 1, 2013 and (b) a lease effective July 14, 2017 entered-into to support the Company’s relocation of its Fort Worth, Texas corporate offices to CPM’s executive offices. Both leases terminated December 31, 2017, with month-to-month renewals. For the nine months ended September 30, 2019 and September 30, 2018, the Company paid approximately $126,000 and $126,000 in rent expense, which is reflected in selling, general, administrative, and other expenses in the Company’s accompanying unaudited condensed consolidated statements of operations. AmBio Contract The Company engaged AmBio Staffing, LLC (“ AmBio FTE As of September 30, 2019 and December 31, 2018, the Company owed amounts to AmBio of approximately zero and $180,000, respectively, which are reflected in accounts payable on the Company’s unaudited condensed consolidated balance sheets. For the nine months ended September 30, 2019 and September 30, 2018, approximately $154,000 and $152,000 of administrative fees were paid to AmBio, respectively, and are reflected in selling, general, administrative, and other expenses in the Company’s accompanying unaudited condensed consolidated statements of operations. Operations Historically, the Company conducts various related-party transactions with entities that are owned by or affiliated with Mr. Brooks and Mr. Reeg. As described more fully below, these transactions include: selling and purchasing of inventory on wholesale basis, commissions earned and paid. MedUSA Group, LLC MedUSA Group, LLC (“ MedUSA During the nine months ended September 30, 2019 and September 30, 2018, the Company: • sold Orthopedic Implants and Biologics products to MedUSA in the amounts of approximately $751,000 and $1,692,000, respectively, which is reflected in net revenues in the Company’s accompanying unaudited condensed consolidated statements of operations; • purchased approximately zero and $650,000, respectively, of Orthopedic Implants, medical instruments, and Biologics from MedUSA, which is reflected in inventories, net of allowance in the Company’s accompanying unaudited condensed consolidating balance sheets; and • incurred approximately $1,457,000 and $1,584,000, respectively, in commission costs, which are reflected in commissions in the Company’s accompanying unaudited condensed consolidated statements of operations. As of September 30, 2019, and December 31, 2018, the Company had outstanding balances due from MedUSA of approximately $614,000 and $389,000, respectively. These amounts are reflected in accounts receivable, net of allowance in the Company’s accompanying unaudited condensed consolidated balance sheets. As filed with the 2018 Annual Report on March 21, 2019 as Exhibit 10.48, payment terms per the stocking and distribution agreement are 30 days from receipt of invoice. As of September 30, 2019 MedUSA has a past due balance of approximately $601,000. Texas Overlord, LLC Texas Overlord, LLC (“ Overlord During the nine months ended September 30, 2019 and September 30, 2018, the Company: • purchased approximately $25,000 and $545,000, respectively, in Orthopedic Implants and medical instruments, and Biologics from Overlord, which are reflected within inventories, net of allowance on the Company’s accompanying unaudited condensed consolidated balance sheets; and • incurred approximately $90,000 and $590,000, respectively, in commission costs to Overlord, which is reflected in commissions in the Company’s accompanying unaudited condensed consolidated statements of operations. As of September 30, 2019, and December 31, 2018, the Company had outstanding balances owed to Overlord of approximately zero and $2,000, respectively. These amounts are reflected in accounts payable in the Company’s accompanying unaudited condensed consolidated balance sheets. NBMJ, Inc. d/b/a Incare Technology NBMJ, Inc. d/b/a Incare Technology (“ NBMJ During the nine months ended September 30, 2019 and September 30, 2018, the Company sold Biologics products to NBMJ in the amounts of approximately $412,000, and $197,000, respectively, which are reflected in net revenues in the Company’s accompanying unaudited condensed consolidated statements of operations. As of September 30, 2019, and December 31, 2018 the Company had outstanding balances due from NBMJ of approximately $275,000 and $155,000, respectively. These amounts are reflected in accounts receivable, net of allowance in the Company’s accompanying unaudited condensed consolidated balance sheets. As filed with the 2018 Annual Report on March 21, 2019 as Exhibit 10.52, payment terms per the stocking and distribution agreement are 30 days from receipt of invoice. As of September 30, 2019 NBMJ has a past due balance of approximately $258,000. Bass Bone and Spine Specialists Bass Bone & Spine Specialists (“ Bass During the nine months ended September 30, 2019 and September 30, 2018, the Company: • sold Orthopedic Implants and Biologics products to Bass in the amounts of approximately $106,000 and $558,000, respectively, which is reflected in net revenues in the Company’s accompanying unaudited condensed consolidated statements of operations; • incurred approximately $16,000 and zero, respectively, in commission costs to Bass, which is reflected in commissions in the Company’s accompanying unaudited condensed consolidated statements of operations. As of September 30, 2019, and December 31, 2018, the Company had outstanding balances due from Bass of approximately $5,000 and $179,000, respectively. These amounts are reflected in accounts receivable, net of allowance in the Company’s accompanying unaudited condensed consolidated balance sheets. As filed with the 2018 Annual Report on March 21, 2019 as Exhibit 10.56, payment terms per the stocking and distribution agreement are 30 days from receipt of invoice. Sintu, LLC Sintu, LLC (“ Sintu During the nine months ended September 30, 2019 and September 30, 2018, the Company incurred approximately $269,000 and $581,000, respectively, in commission costs to Sintu, which is reflected in commissions on the Company’s accompanying unaudited condensed consolidated statements of operations. Tiger Orthopedics, LLC Tiger Orthopedics, LLC (“ Tiger During the nine months ended September 30, 2019 and September 30, 2018, the Company sold Orthopedic Implants and Biologics products to Tiger in the amounts of approximately $189,000 and $109,000, respectively, which is reflected in net revenues in the Company’s accompanying unaudited condensed consolidated statements of operations. As of September 30, 2019, and December 31, 2018, the Company had outstanding balances due from Tiger of approximately $32,000 and $5,000, respectively. These amounts are reflected in accounts receivable, net of allowance in the Company’s accompanying unaudited condensed consolidated balance sheets. As filed with the 2018 Annual Report on March 21, 2019 as Exhibit 10.57, payment terms per the stocking and distribution agreement are 30 days from receipt of invoice. As of September 30, 2019 Tiger has a past due balance of approximately $5,000. Modal Manufacturing, LLC Modal Manufacturing, LLC (“ Modal During the nine months ended September 30, 2019 and September 30, 2018, the Company purchased approximately $624,000 and $46,000, respectively, in Orthopedic Implants and medical instruments from Modal, which is reflected within inventories, net of allowance on the Company’s accompanying unaudited condensed consolidated balance sheets. As of September 30, 2019, and December 31, 2018, the Company had outstanding balances owed to Modal of approximately $142,000 and zero, respectively. These amounts are reflected in accounts payable in the Company’s accompanying unaudited condensed consolidated balance sheets. As filed with the 2018 Annual Report on March 21, 2019 as Exhibit 10.64, payment terms per the stocking and distribution agreement are 30 days from receipt of invoice. As of September 30, 2019 the Company owes a past due balance of approximately $95,000. Recon Orthopedics, LLC Recon Orthopedics, LLC (“ Recon During the nine months ended September 30, 2018, the Company incurred commissions costs of approximately $209,000, which are reflected in commissions expense on the Company’s accompanying condensed consolidated statements of operations. The Company had no such commission costs for the nine months ended September 30, 2019. During the nine months ended September 30, 2019 and 2018, the Company earned approximately zero and $4,000, respectively, pursuant to the Company’s shared services agreement which are reflected in selling, general, administrative, and other expenses in the Company’s accompanying condensed consolidated statements of operations. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through November 14, 2019. On November 13, 2019, the Company’s management obtained a waiver from Amegy Bank with respect to the event of default for the three months ended September 30, 2019. The Company’s management expects to execute a Fourth Amendment to the RLOC with Amegy Bank during the fourth quarter of 2019. (See Note 7, “Senior Secured Revolving Credit Facility.”) The Company’s Management concluded there are no other material events or transactions for potential recognition or disclosure. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements consolidate the accounts of CPM and Maxim, the Company’s wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation. |
Reclassification | Reclassification The provision for slow moving and obsolete inventory for the prior period unaudited condensed consolidated statement of cash flows has been reclassified to conform to the presentation of the current period unaudited condensed consolidated financial statements. This reclassification had no effect on the previously reported unaudited condensed consolidated balance sheets, statement of operations, and changes in stockholders’ equity. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in accordance with GAAP, requires the Company’s management to make estimates and assumptions that affect the Company’s reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying unaudited condensed consolidated financial statements include the valuation of inventories, the Company’s effective income tax rate, and the recoverability of deferred tax assets, which are based upon the Company’s expectation of future taxable income and allowable deductions and the fair value calculations of stock-based compensation and earn-out liability. (See Note 3, “CPM Acquisition”) |
Segment Reporting | Segment Reporting In accordance with Accounting Standards Update (“ ASU |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Shares of restricted stock are included in the basic weighted-average number of common shares outstanding from the time they vest. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. For the three and nine month periods ended September 30, 2019 and 2018, the Company excluded the effects of outstanding stock options as their effects were antidilutive due to the Company’s net loss during these periods. During the preparation of the unaudited condensed consolidated financial statements for the quarter ended September 30, 2019, the Company identified an error in the weighted average number of shares used in its calculation of earnings per share for the three and nine month periods ended September 30, 2018. Three Months Ended September 30, 2018 As Previously Reported As Revised Weighted average number of common shares outstanding 54,118,506 68,658,304 Net loss per share - basic $ (0.01 ) $ - Nine Months Ended September 30, 2018 As Previously Reported As Revised Weighted average number of common shares outstanding 54,118,506 66,816,698 Net loss per share - basic $ (0.04 ) $ (0.03 ) The Company performed a quantitative and qualitative analysis and determined that the error was not material to the previously reported results for the three and nine month periods ended September 30, 2018. |
Fair Value Measurements | Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. In connection with the CPM Acquisition, the Company recorded a $13,581,529 liability related to the earn-out (“ Earn-Out The fair value of the Earn-Out liability was calculated using the Monte Carlo simulation, which was then applied to estimated Earn-Out payments with a discount rate of four percent (4%). To determine the fair value of the Earn-Out liability, the Company’s management evaluates assumptions that require significant judgement. Significant assumptions used for estimating the Earn-Out liability included gross margins of approximately forty-eight percent (48%), net income margins averaging nine percent (9%) per year, revenue growth of approximately five percent (5%) over a forecast horizon period of 11 years. For the year ended December 31, 2018, the Company determined the earnings threshold as detailed in the CPM Acquisition Agreement were not met and therefore no payments for either the base or bonus Earn-Out tranches were achieved, based on the Company’s 2018 financial performance. The Earn-Out was re-measured to fair value under the probability weighted income approach. As a result, the initial fair value of the Earn-Out liability was reduced by $5,663,014 from $19,244,543 to $13,581,529, with the offset reflected as “Change in fair value of contingent purchase consideration” on the Company’s 2018 Annual Report. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded values of notes payable approximate their respective fair values based upon their effective interest rates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at September 30, 2019 and December 31, 2018. The Company’s cash is concentrated in large financial institutions that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any financial institution losses from the Change-in-Control Date through September 30, 2019. As of September 30, 2019, and December 31, 2018, there were deposits of $574,868 and $322,693 , respectively , |
Accounts Receivable and Allowances | Accounts Receivable and Allowances Accounts receivable are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable and an allowance for contractual discount pricing. Credit is extended to customers based on an evaluation of their financial condition, industry reputation, and other judgment factors considered by the Company’s management. The Company generally does not require collateral or other security interest to support accounts receivable. Based on trends and specific factors, the customer’s credit terms may be modified, including required payment upon delivery. The Company performs regular on-going credit evaluations of its customers as deemed relevant. As events, trends, and circumstances warrant, the Company’s management estimates the amounts that are uncollectible. These amounts are recognized as bad debt expense and are reflected within selling, general, administrative and other expenses on the Company’s accompanying unaudited condensed consolidated statements of operations. When accounts are deemed uncollectible, they are often referred to the Company’s outside legal firm for litigation. Accounts deemed uncollectible are written-off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Accounts deemed uncollectible are removed from the Company’s accounts receivable portfolio, with a corresponding offset to the allowance for doubtful accounts receivable. The Company may record additional allowances for doubtful accounts based on known trends and expectations to ensure the Company’s accounts receivable portfolio is recorded at net realizable value. Specific allowances are re-evaluated and adjusted as additional facts and information become available. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received. The Company’s management estimates its allowance for contractual discount pricing, by evaluating specific accounts where information indicates the customer is offered contractual pricing and discount allowances. In these arrangements, the Company’s management uses assumptions and judgement, based on the best available facts and circumstances to record a specific allowance for the amounts due from those customers. The allowance is offset by a corresponding reduction to revenue. These specific allowances are re-evaluated, analyzed, and adjusted as additional information becomes available to determine the total amount of the allowance. The Company may record additional allowances based on trends and expectations to ensure the Company’s accounts receivable portfolio is recorded at net realizable value. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value (first-in, first-out) less an allowance for slow-moving inventory, expired inventory, and inventory obsolescence. Inventories consist entirely of finished goods and include internal and external fixation products; upper and lower extremity plating and total joint reconstruction; soft tissue fixation and augmentation for sports medicine procedures; spinal implants for trauma, degenerative disc disease, and deformity indications (collectively, “ Orthopedic Implants Biologics During the three and nine months ended September 30, 2019 the Company revised its estimate for slow moving and obsolete inventory. As a result, the Company’s management increased the inventory reserve for slow moving and obsolescence by approximately $2.4 million, which is reflected in Inventory and Cost of Revenues on the Company’s unaudited condensed consolidated balance sheets and statements of operations, respectively. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets per the following table. Expenditures for additions and improvements are capitalized, while repairs and maintenance are expensed as incurred. Category Useful Life Computer equipment and software 3 years Furniture and fixtures 3 years Office equipment 3 years Software 3 years Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation is removed. A gain is recorded when consideration received is more than the disposed asset’s cost, net of depreciation, and a loss is recorded when consideration received is less than the disposed asset’s cost, net of depreciation. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets quarterly or whenever changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which generally represents furniture and fixtures. Earnings before interest, taxes, depreciation and amortization (“ EBITDA |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill is determined based on an acquisition purchase price in excess of the fair value of identified net assets acquired. Intangible assets with lives restricted by contractual, legal or other means are amortized over their useful lives. Goodwill is not amortized, but is tested at least annually for impairment, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. The Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company’s intangible assets subject to amortization consist primarily of acquired non-compete agreements, product technology, and customer relationships. Amortization expense is calculated using the straight-line method over the asset’s expected useful life. (See Note 4, “Maxim Acquisition” for Goodwill and Other Intangibles for additional related disclosures.) |
Revenue Recognition | Revenue Recognition The Company’s revenues are generated from the sales of Orthopedic Implants and Biologics to support orthopedic surgeries. The Company obtains purchase orders from its customers for the sale of its products which sets forth the general terms and conditions including line item pricing and payment terms (generally due upon receipt). The Company recognizes revenue when its customers obtain control over the assets (generally when the title passes upon shipment or when a product is utilized in a surgery) and it is probable that the Company will collect substantially all the amounts due. Individual promised goods are the Company’s only performance obligation. Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are probable and reasonably estimable. The Company’s management reduces revenue to account for estimates of the Company’s credits and refunds. The Company includes shipping and handling fees in net revenues. Shipping and handling costs are associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold. Revenue Differentiation The Company measures sales volume based on medical procedures in which the Company’s products are sold and used (“ Cases Retail Cases Wholesale Cases Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Category Retail $ 5,050,785 $ 5,227,442 $ 12,425,874 $ 13,661,292 Wholesale 665,559 1,556,862 3,137,054 4,845,518 Total $ 5,716,344 $ 6,784,304 $ 15,562,928 $ 18,506,810 |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the pro-rata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all ASUs issued, both effective and not yet effective. In February 2016, the Financial Accounting Standards Board (the “ FASB In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. The Company adopted ASU 2017-04 for the three months ended September 30, 2019 on a prospective basis. The adoption of ASU 2017-04 had no impact on the condensed consolidated financial position, results of operations or cash flows for the period ended September 30, 2019. The Company adopted provisions of ASU 2017-04 as it simplified the goodwill impairment testing process resulting in reductions of costs and time associated with the goodwill impairment testing. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by the Company’s management to have a material impact on the Company's present or future consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Error Identified in Weighted Average Number of Shares Used in Calculation of Earnings per Share | During the preparation of the unaudited condensed consolidated financial statements for the quarter ended September 30, 2019, the Company identified an error in the weighted average number of shares used in its calculation of earnings per share for the three and nine month periods ended September 30, 2018. Three Months Ended September 30, 2018 As Previously Reported As Revised Weighted average number of common shares outstanding 54,118,506 68,658,304 Net loss per share - basic $ (0.01 ) $ - Nine Months Ended September 30, 2018 As Previously Reported As Revised Weighted average number of common shares outstanding 54,118,506 66,816,698 Net loss per share - basic $ (0.04 ) $ (0.03 ) |
Estimated Useful Lives of Assets | Category Useful Life Computer equipment and software 3 years Furniture and fixtures 3 years Office equipment 3 years Software 3 years |
Schedule of Revenue Differentiation | The Company measures sales volume based on medical procedures in which the Company’s products are sold and used (“ Cases Retail Cases Wholesale Cases Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Category Retail $ 5,050,785 $ 5,227,442 $ 12,425,874 $ 13,661,292 Wholesale 665,559 1,556,862 3,137,054 4,845,518 Total $ 5,716,344 $ 6,784,304 $ 15,562,928 $ 18,506,810 |
Maxim Acquisition (Tables)
Maxim Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Unaudited Pro Forma Information | Unaudited pro forma information for the three months ended September 30, 2018 is as follows: Three Months Ended September 30, 2018 - Unaudited Historical Fuse Medical, Inc. Historical Maxim Surgical Pro forma Adjustments Pro forma Combined Revenue $ 6,784,304 $ 161,442 $ (116,577 ) $ 6,829,169 Net (loss) income $ 277,182 $ (456,874 ) $ - $ (179,692 ) Net loss per common share - basic $ - $ - $ - $ - Unaudited pro forma information for the nine months ended September 30, 2018 is as follows: Nine Months Ended September 30, 2018 - Unaudited Historical Fuse Medical, Inc. Historical Maxim Surgical Pro forma Adjustments Pro forma Combined Revenue $ 18,506,810 $ 796,014 $ (459,074 ) $ 18,843,750 Net loss $ (2,073,082 ) $ (374,137 ) $ - $ (2,447,219 ) Net loss per common share - basic $ (0.03 ) $ - $ - $ (0.04 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | Property and equipment consisted of the following at September 30, 2019 and December 31, 2018: September 30, 2019 December 31, 2018 Computer equipment and software $ 41,840 $ 41,840 Furniture and fixtures 1,198 5,047 Office equipment 20,333 21,913 Property and equipment costs 63,371 68,800 Less: accumulated depreciation (36,248 ) (25,826 ) Property and equipment, net $ 27,123 $ 42,974 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill and Other Intangible Assets | The following table summarizes the Company’s goodwill and other intangible assets: September 30, 2019 December 31, 2018 Amortization period (years) Intangible assets: Non-compete agreements $ 61,766 $ 61,766 2 510k product technology 704,380 704,380 Indefinite Customer relationships 555,819 555,819 11 Total intangible assets 1,321,965 1,321,965 Less: accumulated amortization (94,990 ) (33,925 ) Intangible assets, net 1,226,975 1,288,040 Goodwill $ 2,905,089 $ 2,905,089 Indefinite |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders Equity Deficit Tables [Abstract] | |
Summary of Stock Option Activity | A summary of the Company’s stock option activity for the nine months ended September 30, 2019, is presented below: No. of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Balance outstanding at December 31, 2018 3,915,000 $ 0.78 7.0 $ 443,000 Granted 1,350,000 0.69 - - Exercised - - - - Forfeited (1,210,000 ) 1.07 - - Expired - - - - Balance outstanding at September 30, 2019 4,055,000 $ 0.67 6.6 $ 222,000 Exercisable at September 30, 2019 1,984,999 $ 0.50 4.0 $ 222,000 |
Summary of Restricted Stock Awards Activity | The following table summarizes RSAs activity: Number of Shares Fair Value Weighted Average Grant Date Fair Value Non-vested, December 31, 2018 4,378,615 $ 2,060,000 $ 0.47 Granted - - - Vested - - - Forfeited - - - Non-vested, September 30, 2019 4,378,615 $ 2,060,000 $ 0.47 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Benefit | The components of income tax benefit are as follows: For the Nine Months Ended September 30, 2019 For the Nine Months Ended September 30, 2018 Current: Federal $ - $ - State 10,589 32,121 10,589 32,121 Deferred: Federal 760,993 (537,863 ) State - - 760,993 (537,863 ) Total income tax expense (benefit) $ 771,582 $ (505,742 ) |
Significant Components of Deferred Income Tax Assets and Liabilities | Significant components of the Company's deferred income tax assets and liabilities are as follows: September 30, 2019 December 31, 2018 Deferred tax assets: Net operating loss carryover $ 191,319 $ 216,793 Accounts receivable 366,996 140,272 Compensation 335,173 232,793 Inventory 893,231 383,744 Other 28,129 28,128 Total deferred tax assets 1,814,848 1,001,730 Deferred tax liabilities: Intangibles (222,029 ) (232,835 ) Property and equipment (4,950 ) (7,902 ) Total deferred tax liabilities (226,979 ) (240,737 ) Deferred tax assets, net 1,587,869 760,993 Valuation allowance: Beginning of year - - (Increase) decrease during year (1,587,869 ) - Ending balance (1,587,869 ) - Net deferred tax asset $ - $ 760,993 |
Reconciliation of Income Tax Computed at U.S. Statutory Rate to Effective Income Tax Rate | A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows: Nine Months Ended September 30, 2019 September 30, 2018 Expected U.S. federal incomes as statutory rate 21.0% 21.0% Deferred tax asset valuation allowance -40.2% 0.0% State and local income taxes, net of federal benefit -0.2% -1.0% Permanent differences -0.2% -0.4% Other 0.0% 0.0% -19.6% 19.6% |
Concentrations (Tables)
Concentrations (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenues [Member] | |
Concentration Risk [Line Items] | |
Concentration of Revenues, Accounts Receivable and Suppliers | For the nine months ended September 30, 2019 and September 30, 2018, the following significant customers had an individual percentage of total revenues equaling ten percent (10%) or greater: For the Nine Months Ended September 30, 2019 September 30, 2018 Customer 1 9.77 % 18.20 % Totals 9.77 % 18.20 % |
Accounts Receivable [Member] | |
Concentration Risk [Line Items] | |
Concentration of Revenues, Accounts Receivable and Suppliers | At September 30, 2019 and December 31, 2018, the following significant customers had a concentration of accounts receivable representing ten percent (10%) or greater of accounts receivable: September 30, 2019 December 31, 2018 Customer 1 - related party 11.12 % 6.71 % Customer 2 5.12 % 15.03 % Totals 16.24 % 21.74 % |
Goods Purchased [Member] | |
Concentration Risk [Line Items] | |
Concentration of Revenues, Accounts Receivable and Suppliers | For the nine months ended September 30, 2019 and September 30, 2018, the following significant suppliers represented ten percent (10%) or greater of goods purchased: For the Nine Months Ended September 30, 2019 September 30, 2018 Supplier 1 21.90 % 11.40 % Supplier 2 - related party 10.30 % 0.50 % Totals 32.20 % 11.90 % |
Nature of Operations (Details N
Nature of Operations (Details Narrative) - USD ($) | Aug. 01, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 |
Nature Of Operations And Going Concern [Line Items] | |||||||||
Accumulated losses | $ 3,965,696 | $ (751,793) | |||||||
Stockholders’ deficits | $ 7,981,509 | $ 2,763,281 | $ (1,312,644) | $ (1,200,093) | $ (1,466,684) | $ 5,007,404 | $ 8,796,947 | $ 8,578,390 | |
CPM [Member] | |||||||||
Nature Of Operations And Going Concern [Line Items] | |||||||||
Date of acquisition agreement | Dec. 31, 2017 | ||||||||
Maxim Surgical, LLC [Member] | |||||||||
Nature Of Operations And Going Concern [Line Items] | |||||||||
Date of acquisition agreement | Aug. 1, 2018 |
Significant Accounting Polici_4
Significant Accounting Policies (Details Narrative) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($)Segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Significant Accounting Policies [Line Items] | ||||
Number of operating segments | Segment | 1 | |||
Number of reportable segments | Segment | 1 | |||
Earn-out liability | $ 13,581,529 | $ 13,581,529 | $ 13,581,529 | $ 19,244,543 |
Amount of earn-out liability reduced | 5,663,014 | |||
Cash equivalents | 0 | 0 | 0 | |
FDIC insurance limit | 250,000 | 250,000 | ||
Deposits greater than federally insured limit | 574,868 | 574,868 | 322,693 | |
Cost of Revenue [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Inventory write-down | 2,400,000 | 2,400,000 | ||
Inventory [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Inventory reserve | $ 2,400,000 | $ 2,400,000 | ||
CPM [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Earn-out liability | 13,581,529 | $ 19,244,543 | ||
Discount rate on fair value earn-out liability | 4.00% | |||
Approximate gross profit margin included in earn-out liability | 48.00% | |||
Average net income margin included in earn-out liability | 9.00% | |||
Approximate growth rate used to calculate in earn-out liability | 5.00% | |||
Earn-out liability forecast horizon period | 11 years | |||
Amount of earn-out liability reduced | $ 5,663,014 |
Significant Accounting Polici_5
Significant Accounting Policies - Error Identified in Weighted Average Number of Shares Used in Calculation of Earnings per Share (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Weighted average number of common shares outstanding | 70,221,566 | 68,658,304 | 70,221,566 | 66,816,698 |
Net loss per share - basic | $ (0.06) | $ 0 | $ (0.07) | $ (0.03) |
As Previously Reported [Member] | ||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Weighted average number of common shares outstanding | 54,118,506 | 54,118,506 | ||
Net loss per share - basic | $ (0.01) | $ (0.04) |
Significant Accounting Polici_6
Significant Accounting Policies - Estimated Useful Lives of Assets (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Computer Equipment and Software [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of the assets | 3 years |
Furniture and fixtures [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of the assets | 3 years |
Office equipment [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of the assets | 3 years |
Software [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of the assets | 3 years |
Significant Accounting Polici_7
Significant Accounting Policies - Schedule of Revenue Differentiation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 5,716,344 | $ 6,784,304 | $ 15,562,928 | $ 18,506,810 |
Retail [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 5,050,785 | 5,227,442 | 12,425,874 | 13,661,292 |
Wholesale [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 665,559 | $ 1,556,862 | $ 3,137,054 | $ 4,845,518 |
CPM Acquisition (Details Narrat
CPM Acquisition (Details Narrative) - USD ($) | Jun. 27, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Sep. 30, 2019 |
Business Acquisition [Line Items] | ||||
Common Stock Par Value | $ 0.01 | $ 0.01 | ||
Earn-out liability | $ 19,244,543 | $ 13,581,529 | $ 13,581,529 | |
Decrease in earn-out liability | 5,663,014 | |||
CPM [Member] | ||||
Business Acquisition [Line Items] | ||||
Effective date of acquisition | Dec. 31, 2017 | |||
Number of shares issued for acquisition | 50,000,000 | |||
Equity interest percentage | 100.00% | |||
Share price | $ 0.20 | |||
Common Stock Par Value | $ 0.01 | |||
Business acquisition common stock value | $ 10,000,000 | |||
Business acquisition remaining purchase price | 26,000,000 | |||
Earn-out liability | 19,244,543 | 13,581,529 | ||
Fair value of earn-out liability | $ 26,000,000 | |||
Decrease in earn-out liability | $ 5,663,014 | |||
Post-closing adjustment paid in cash | $ 397,463 |
Maxim Acquisition (Details Narr
Maxim Acquisition (Details Narrative) | Oct. 04, 2018$ / sharesshares | Aug. 01, 2018USD ($)$ / sharesshares | Jul. 30, 2018USD ($) | Sep. 30, 2018USD ($)shares | Sep. 30, 2019Segment | Sep. 30, 2018USD ($)shares |
Business Acquisition [Line Items] | ||||||
Pro forma revenue amount adjusted of intercompany transactions | $ | $ 116,577 | $ 459,074 | ||||
Shares outstanding used in calculating the net (loss) per common share – basic | shares | 70,211,566 | 70,211,566 | ||||
Number of operating segments | 1 | |||||
Number of reportable segments | 1 | |||||
Maxim Surgical, LLC [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Date of acquisition agreement | Aug. 1, 2018 | |||||
Approximate aggregate purchase price of outstanding membership interests | $ | $ 3,400,000 | |||||
Percentage of outstanding equity securities acquired | 100.00% | |||||
Common stock price per share | $ / shares | $ 0.68 | $ 0.76 | ||||
Days of volume-weighted average price of common stock as of three days prior to closing to decide purchase price of common stock | 30 days | 30 days | ||||
Post-closing working capital adjustment | $ | $ 81,757 | |||||
Number of operating segments | 1 | |||||
Number of reportable segments | 1 | |||||
Maxim Surgical, LLC [Member] | Restricted Common Stock [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | shares | 120,231 | 4,210,526 |
Maxim Acquisition - Schedule of
Maxim Acquisition - Schedule of Unaudited Pro Forma Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Business Acquisition [Line Items] | ||
Revenue | $ 6,829,169 | $ 18,843,750 |
Net (loss) income | (179,692) | $ (2,447,219) |
Net loss per common share - basic | $ (0.04) | |
Revenue | (116,577) | $ (459,074) |
Historical Fuse Medical, Inc. [Member] | ||
Business Acquisition [Line Items] | ||
Revenue | 6,784,304 | 18,506,810 |
Net (loss) income | 277,182 | $ (2,073,082) |
Net loss per common share - basic | $ (0.03) | |
Historical Maxim Surgical [Member] | ||
Business Acquisition [Line Items] | ||
Revenue | 161,442 | $ 796,014 |
Net (loss) income | $ (456,874) | $ (374,137) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property Plant And Equipment [Line Items] | ||
Property and equipment costs | $ 63,371 | $ 68,800 |
Less: accumulated depreciation | (36,248) | (25,826) |
Property and equipment, net | 27,123 | 42,974 |
Computer Equipment and Software [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment costs | 41,840 | 41,840 |
Furniture and fixtures [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment costs | 1,198 | 5,047 |
Office equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment costs | $ 20,333 | $ 21,913 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property Plant And Equipment [Abstract] | ||||
Depreciation expense | $ 5,241 | $ 4,829 | $ 15,851 | $ 10,650 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Intangible assets: | ||
Total intangible assets | $ 1,321,965 | $ 1,321,965 |
Less: accumulated amortization | 94,990 | 33,925 |
Intangible assets, net | 1,226,975 | 1,288,040 |
Goodwill | 2,905,089 | 2,905,089 |
510K Product Technology [Member] | ||
Intangible assets: | ||
Indefinite lived intangible assets | $ 704,380 | 704,380 |
Intangible assets, amortization period | Indefinite | |
Goodwill [Member] | ||
Intangible assets: | ||
Intangible assets, amortization period | Indefinite | |
Non-Compete Agreements [Member] | ||
Intangible assets: | ||
Finite lived intangible assets | $ 61,766 | 61,766 |
Intangible assets, amortization period | 2 years | |
Customer Relationships [Member] | ||
Intangible assets: | ||
Finite lived intangible assets | $ 555,819 | $ 555,819 |
Intangible assets, amortization period | 11 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 20,355 | $ 0 | $ 61,065 | $ 0 |
Senior Secured Revolving Cred_2
Senior Secured Revolving Credit Facility (Details Narrative) - CPM [Member] - USD ($) | May 09, 2019 | Nov. 19, 2018 | Dec. 31, 2017 | Dec. 29, 2017 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Debt Instrument [Line Items] | |||||||||||
Date of acquisition agreement | Dec. 31, 2017 | ||||||||||
RLOC [Member] | ZB, N.A. (d/b/a Amegy Bank) [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Date of acquisition agreement | Dec. 29, 2017 | ||||||||||
Line of credit maximum borrowing capacity | $ 5,000,000 | ||||||||||
Percentage of guarantees of outstanding loan amount | 50.00% | ||||||||||
Line of credit outstanding balance amount | $ 1,752,501 | $ 1,752,501 | $ 1,477,448 | ||||||||
Interest expense | 28,095 | $ 19,115 | 68,168 | $ 81,641 | |||||||
Accrued interest | $ 3,261 | $ 3,261 | $ 4,350 | ||||||||
Effective interest rate | 6.42% | 6.42% | |||||||||
RLOC [Member] | ZB, N.A. (d/b/a Amegy Bank) [Member] | Second Amendment [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit maximum borrowing capacity | $ 4,000,000 | ||||||||||
Line of credit facility, expiration date | Nov. 4, 2019 | ||||||||||
Variable rate, description | the one-month LIBOR rate plus four percent | ||||||||||
Variable rate | 4.00% | ||||||||||
Minimum fixed charge coverage ratio | 1.25% | ||||||||||
Description of financial covenants | the Fixed Charge Coverage Ratio of any calendar quarter end from and after the quarter ending June 30, 2019, to be less than 1.25 to 1.00; EBITDA to be less than $700,000 for the fiscal quarter ending December 31, 2018, and $100,000 for the fiscal quarter ending March 31, 2019 | ||||||||||
Minimum net profit required for compliance | $ 100,000 | ||||||||||
RLOC [Member] | ZB, N.A. (d/b/a Amegy Bank) [Member] | Third Amendment [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit maximum borrowing capacity | $ 3,500,000 | ||||||||||
Line of credit facility, expiration date | May 9, 2019 | ||||||||||
Description of financial covenants | amended the financial covenants to state that the Company will not permit EBITDA to be less than $100,000 for the fiscal quarter ending June 30, 2019 and $500,000 for the fiscal quarter ending September 30, 2019 | ||||||||||
Minimum net profit required for compliance | $ 500,000 | $ 100,000 | |||||||||
Line of credit component of Inventory percentage | 30.00% | ||||||||||
Description of possible effect of non-compliance | The Company was not in compliance with the minimum quarterly EBITDA requirement of $500,000 | ||||||||||
Credit Card Exposure [Member] | ZB, N.A. (d/b/a Amegy Bank) [Member] | Third Amendment [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit maximum borrowing capacity | $ 500,000 |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Details Narrative) - USD ($) | 3 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Oct. 31, 2016 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||||||
Interest expense on notes payable | $ 6,805 | $ 6,805 | $ 20,195 | $ 20,195 | |||
Accrued expenses [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Accrued interest | $ 79,290 | $ 79,290 | $ 59,096 | ||||
10% Promissory Notes [Member] | NC 143 Family Holdings, LP and RMI [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Convertible notes payable - related parties | $ 150,000 | ||||||
Interest rate of promissory notes | 10.00% | 18.00% | |||||
Debt Instrument, description | principal and interest balance into shares of the Company’s Common Stock at a conversion price of $0.08 per share. | ||||||
Conversion price of common stock | $ 0.08 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Class Of Stock [Line Items] | ||||
Stock options, granted | 1,350,000 | |||
Weighted-average grant-date fair value of options, granted | $ 0.64 | |||
Non-qualified Stock Options [Member] | ||||
Class Of Stock [Line Items] | ||||
Stock options, granted | 150,000 | 1,350,000 | ||
Unrecognized compensation expense on stock options | $ 1,276,256 | $ 1,276,256 | ||
Non-qualified Stock Options [Member] | Selling, General, Administrative and Other Expenses [Member] | ||||
Class Of Stock [Line Items] | ||||
Share-based compensation benefit | 11,583 | |||
Share-based compensation expense | $ 259,639 | 487,524 | $ 485,955 | |
Restricted Stock Award [Member] | ||||
Class Of Stock [Line Items] | ||||
Share-based compensation expense | $ 0 | $ 52,722 | $ 0 | $ 210,888 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Stock Option Activity (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
No. of Shares, Abstract | ||
No. of Shares, Beginning Balance | shares | 3,915,000 | |
Granted, No. of Shares | shares | 1,350,000 | |
Forfeited, No. of Shares | shares | (1,210,000) | |
No. of Shares, Ending Balance | shares | 4,055,000 | 3,915,000 |
Exercisable, No. of Shares | shares | 1,984,999 | |
Weighted Average Exercise Price, Abstract | ||
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 0.78 | |
Granted, Weighted Average Exercise Price | $ / shares | 0.69 | |
Forfeited, Weighted Average Exercise Price | $ / shares | 1.07 | |
Weighted Average Exercise Price, Ending Balance | $ / shares | 0.67 | $ 0.78 |
Exercisable, Weighted Average Exercise Price | $ / shares | $ 0.50 | |
Weighted Average Remaining Contractual Term, Abstract | ||
Weighted Average Remaining Contractual Term, Balance outstanding | 6 years 7 months 6 days | 7 years |
Weighted Average Remaining Contractual Term, Exercisable | 4 years | |
Aggregate Intrinsic Value, Abstract | ||
Aggregate Intrinsic Value, Balance outstanding | $ | $ 222,000 | $ 443,000 |
Aggregate Intrinsic Value, Exercisable | $ | $ 222,000 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Restricted Stock Awards Activity (Details) - Restricted Stock Award [Member] - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Number of Shares, Non-vested, Balance | 4,378,615 | 4,378,615 |
Share-based Compensation Arrangement by Share Based Payment Award, Equity Instruments Other than Options, Nonvested, Fair Value [Abstract] | ||
Fair Value, Non-vested, Balance | $ 2,060,000 | $ 2,060,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Weighted Average Grant Date Fair Value, Non-vested, Balance | $ 0.47 | $ 0.47 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Benefit (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Current: | ||||
Federal | $ 0 | $ 0 | ||
State | 10,589 | 32,121 | ||
Total | 10,589 | 32,121 | ||
Deferred: | ||||
Federal | 760,993 | (537,863) | ||
State | 0 | 0 | ||
Total | 760,993 | (537,863) | ||
Total income tax expense (benefit) | $ 926,517 | $ 90,985 | $ 771,582 | $ (505,742) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Deferred Income Tax Assets and Liabilities (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Deferred tax assets: | ||
Net operating loss carryover | $ 191,319 | $ 216,793 |
Accounts receivable | 366,996 | 140,272 |
Compensation | 335,173 | 232,793 |
Inventory | 893,231 | 383,744 |
Other | 28,129 | 28,128 |
Total deferred tax assets | 1,814,848 | 1,001,730 |
Deferred tax liabilities: | ||
Intangibles | (222,029) | (232,835) |
Property and equipment | (4,950) | (7,902) |
Total deferred tax liabilities | (226,979) | (240,737) |
Deferred tax assets, net | 1,587,869 | 760,993 |
Valuation allowance: | ||
Beginning of year | 0 | 0 |
(Increase) decrease during year | (1,587,869) | 0 |
Ending balance | (1,587,869) | 0 |
Net deferred tax asset | $ 0 | $ 760,993 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance | $ 1,587,869 | $ 0 | $ 0 |
Net operating loss carryforwards | 911,042 | ||
Net operating loss carryforwards subject to limitations of Tax Cuts and Jobs Act of 2018 | $ 198,006 | ||
Net operating loss carryforwards earliest expiration year | 2019 | ||
Net operating loss carryforwards latest expiration year | 2037 | ||
Open tax year | 2016 2017 2018 | ||
Operating Carryforwards Expiration Date from 2019 to 2037 [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 713,036 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Computed at U.S. Statutory Rate to Effective Income Tax Rate (Details) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Expected U.S. federal incomes as statutory rate | 21.00% | 21.00% |
Deferred tax asset valuation allowance | (40.20%) | 0.00% |
State and local income taxes, net of federal benefit | (0.20%) | (1.00%) |
Permanent differences | (0.20%) | (0.40%) |
Other | 0.00% | 0.00% |
Effective tax rate | (19.60%) | 19.60% |
Concentrations - Significant Cu
Concentrations - Significant Customers with Individual Percentage of Total Revenues Equaling Ten Percent (10%) or Greater (Details) - Revenues [Member] - Customer Concentration Risk [Member] | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 9.77% | 18.20% |
Customer 1 [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 9.77% | 18.20% |
Concentrations - Significant _2
Concentrations - Significant Customers with Concentration of Accounts Receivable Representing Ten Percent (10%) or Greater of Accounts Receivable (Details) - Accounts Receivable [Member] - Customer Concentration Risk [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 16.24% | 21.74% |
Customer 1 - Related Party [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.12% | 6.71% |
Customer 2 [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 5.12% | 15.03% |
Concentrations - Significant Su
Concentrations - Significant Suppliers Represented Ten Percent (10%) or Greater of Goods Purchased (Details) - Goods Purchased [Member] - Supplier Concentration Risk [Member] | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 32.20% | 11.90% |
Supplier 1 [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 21.90% | 11.40% |
Supplier 2 - Related Party [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 10.30% | 0.50% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 9 Months Ended | |||
Sep. 30, 2019USD ($)ft²FullTimeEquivalent | Sep. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
1565 North Central Expressway, LP [Member] | ||||
Related Party Transaction [Line Items] | ||||
Area of leased property | ft² | 11,500 | |||
Lease termination date | Dec. 31, 2017 | |||
1565 North Central Expressway, LP [Member] | Selling, General, Administrative and Other Expenses [Member] | ||||
Related Party Transaction [Line Items] | ||||
Rent expense | $ 126,000 | $ 126,000 | ||
AmBio Staffing, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of full time equivalents supporting operations | FullTimeEquivalent | 59 | |||
Number of full time equivalents directly supporting company | FullTimeEquivalent | 42 | |||
Number of full time equivalents supporting other companies | FullTimeEquivalent | 10 | |||
Number of full time equivalents shares with other companies | FullTimeEquivalent | 7 | |||
AmBio Staffing, LLC [Member] | Account Payables [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | $ 0 | $ 180,000 | ||
AmBio Staffing, LLC [Member] | Selling, General, Administrative and Other Expenses [Member] | ||||
Related Party Transaction [Line Items] | ||||
Administrative fees paid for services | $ 154,000 | 152,000 | ||
MedUSA Group, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | 601,000 | |||
Net revenues to related parties | 751,000 | 1,692,000 | ||
Purchases from related parties | 0 | 650,000 | ||
MedUSA Group, LLC [Member] | Account Receivables [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related parties | 614,000 | 389,000 | ||
MedUSA Group, LLC [Member] | Commission [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expense incurred on behalf of related parties | 1,457,000 | 1,584,000 | ||
Texas Overlord, LLC [Member] | Account Receivables [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related parties | 0 | 2,000 | ||
Texas Overlord, LLC [Member] | Inventory [Member] | ||||
Related Party Transaction [Line Items] | ||||
Purchases from related parties | 25,000 | 545,000 | ||
Texas Overlord, LLC [Member] | Commission [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expense incurred on behalf of related parties | 90,000 | 590,000 | ||
N.B.M.J., Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | 258,000 | |||
Net revenues to related parties | 412,000 | 197,000 | ||
N.B.M.J., Inc. [Member] | Account Receivables [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related parties | 275,000 | 155,000 | ||
Bass Bone And Spine Specialists [Member] | ||||
Related Party Transaction [Line Items] | ||||
Net revenues to related parties | 106,000 | 558,000 | ||
Bass Bone And Spine Specialists [Member] | Account Receivables [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related parties | 5,000 | 179,000 | ||
Bass Bone And Spine Specialists [Member] | Commission [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expense incurred on behalf of related parties | 16,000 | 0 | ||
Sintu L L C | Commission [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expense incurred on behalf of related parties | 269,000 | 581,000 | ||
Tiger Orthopedics, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | 5,000 | |||
Net revenues to related parties | 189,000 | 109,000 | ||
Tiger Orthopedics, LLC [Member] | Account Receivables [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due from related parties | 32,000 | 5,000 | ||
Modal Manufacturing, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | 95,000 | |||
Modal Manufacturing, LLC [Member] | Account Payables [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | 142,000 | $ 0 | ||
Modal Manufacturing, LLC [Member] | Inventory [Member] | ||||
Related Party Transaction [Line Items] | ||||
Purchases from related parties | 624,000 | 46,000 | ||
Recon Orthopedics, LLC [Member] | Selling, General, Administrative and Other Expenses [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expense incurred on behalf of related parties | 0 | 4,000 | ||
Recon Orthopedics, LLC [Member] | Commission [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expense incurred on behalf of related parties | $ 0 | $ 209,000 |