Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 12, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | REPRO MED SYSTEMS INC | |
Entity Central Index Key | 0000704440 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 0-12305 | |
Entity Incorporation State Country Code | NY | |
Title of 12(b) Security | common stock, $0.01 par value | |
Trading Symbol | KRMD | |
Security Exchange Name | NASDAQ | |
Entity's Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 43,942,888 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
BALANCE SHEETS (Unaudited)
BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 32,433,811 | $ 5,870,929 |
Accounts receivable less allowance for doubtful accounts of $24,676 and $32,645 at September 30, 2020 and December 31, 2019, respectively | 3,736,596 | 3,234,521 |
Inventory | 5,633,139 | 2,388,477 |
Prepaid expenses | 844,496 | 387,396 |
TOTAL CURRENT ASSETS | 42,648,042 | 11,881,323 |
Property and equipment, net | 1,260,675 | 611,846 |
Patents, net of accumulated amortization of $335,686 and $288,967 at September 30, 2020 and December 31, 2019, respectively | 884,635 | 807,135 |
Right of use assets, net | 271,679 | 373,734 |
Deferred tax asset | 349,609 | 188,241 |
Other assets | 19,812 | 19,582 |
TOTAL ASSETS | 45,434,452 | 13,881,861 |
CURRENT LIABILITIES | ||
Accounts payable | 1,363,070 | 572,656 |
Accrued expenses | 3,051,582 | 1,296,612 |
Accrued payroll and related taxes | 440,144 | 190,265 |
Accrued tax liability | 363,158 | 204,572 |
Finance lease liability - current | 3,026 | 5,296 |
Operating lease liability - current | 140,450 | 136,888 |
TOTAL CURRENT LIABILITIES | 5,361,430 | 2,406,289 |
Finance lease liability, net of current portion | 414 | 2,646 |
Operating lease liability, net of current portion | 131,229 | 236,846 |
TOTAL LIABILITIES | 5,493,073 | 2,645,781 |
Commitments and contingencies (Refer to Note 3) | ||
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value; 75,000,000 shares authorized, 46,671,807 and 42,239,788 shares issued, 43,934,576 and 39,502,557 shares outstanding at September 30, 2020 and December 31, 2019, respectively | 466,718 | 422,398 |
Additional paid-in capital | 35,331,483 | 6,293,069 |
Treasury stock, 2,737,231 shares at September 30, 2020 and December 31, 2019, respectively, at cost | (344,204) | (344,204) |
Retained earnings | 4,487,382 | 4,864,817 |
TOTAL STOCKHOLDERS' EQUITY | 39,941,379 | 11,236,080 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 45,434,452 | $ 13,881,861 |
BALANCE SHEETS (Unaudited) (Par
BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 24,676 | $ 32,645 |
Patents, accumulated amortization | $ 335,686 | $ 288,967 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 75,000,000 | 75,000,000 |
Common stock, issued | 46,671,807 | 42,239,788 |
Common stock, outstanding | 43,934,576 | 39,502,557 |
Treasury stock | 2,737,231 | 2,737,231 |
STATEMENTS OF OPERATIONS (Unaud
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
NET SALES | $ 6,080,315 | $ 6,617,397 | $ 20,119,228 | $ 16,940,487 |
Cost of goods sold | 2,139,592 | 2,234,489 | 7,480,415 | 6,033,961 |
Gross Profit | 3,940,723 | 4,382,908 | 12,638,813 | 10,906,526 |
OPERATING EXPENSES | ||||
Selling, general and administrative | 3,075,169 | 2,441,381 | 9,039,980 | 6,976,684 |
Litigation | 675 | 864,009 | 2,446,747 | 2,481,471 |
Research and development | 390,416 | 170,260 | 944,637 | 450,454 |
Depreciation and amortization | 115,637 | 82,774 | 297,801 | 252,594 |
Total Operating Expenses | 3,581,897 | 3,558,424 | 12,729,165 | 10,161,203 |
Net Operating Profit/(Loss) | 358,826 | 824,484 | (90,352) | 745,323 |
Non-Operating Income/(Expense) | ||||
Gain/(Loss) on currency exchange | 1,927 | (9,358) | (11,164) | (20,283) |
Gain on disposal of fixed assets, net | 22,113 | 16,591 | 49,740 | |
Interest income, net | 9,662 | 23,368 | 23,690 | 59,091 |
TOTAL OTHER INCOME/(EXPENSE) | 33,702 | 14,010 | 29,117 | 88,548 |
INCOME/(LOSS) BEFORE INCOME TAXES | 392,528 | 838,494 | (61,235) | 833,871 |
Income Tax Expense | (143,353) | (186,681) | (316,200) | (189,265) |
NET INCOME/(LOSS) | $ 249,175 | $ 651,813 | $ (377,435) | $ 644,606 |
NET INCOME/(LOSS) PER SHARE | ||||
Basic (in dollars per share) | $ 0.01 | $ 0.02 | $ (0.01) | $ 0.02 |
Diluted (in dollars per share) | $ 0.01 | $ 0.02 | $ (0.01) | $ 0.02 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||
Basic (in shares) | 43,914,542 | 39,022,298 | 41,326,815 | 38,534,021 |
Diluted (in shares) | 44,119,511 | 39,298,408 | 41,326,815 | 38,734,083 |
STATEMENTS OF CASH FLOWS (Unaud
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net (Loss)/Income | $ (377,435) | $ 644,606 |
Adjustments to reconcile net (loss)/income to net cash provided by/(used in) operating activities: | ||
Stock-based compensation expense | 1,191,146 | 897,300 |
Stock-based litigation settlement expense | 1,285,102 | |
Depreciation and amortization | 297,801 | 252,594 |
Deferred capital gain - building lease | (3,763) | |
Deferred taxes | (161,368) | 134,563 |
Gain on disposal of fixed assets | (16,591) | (49,740) |
Changes in operating assets and liabilities: | ||
Increase in accounts receivable | (502,075) | (2,120,780) |
Increase in inventory | (3,244,662) | (634,803) |
Increase in prepaid expenses and other assets | (457,330) | (206,560) |
Increase in accounts payable | 790,414 | 421,479 |
Increase/(Decrease) in accrued payroll and related taxes | 249,879 | (310,355) |
Increase in accrued expenses | 1,754,970 | 490,053 |
Increase/(Decrease) in accrued tax liability | 158,586 | (16,608) |
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES | 968,437 | (502,014) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (908,323) | (158,193) |
Purchases of patents | (124,216) | (188,274) |
Proceeds from disposal of property and equipment | 25,000 | 217,821 |
Proceeds from certificate of deposit | 1,517,927 | |
NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES | (1,007,539) | 1,389,281 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of equity | 26,606,486 | 508,900 |
Payments for cancelled shares | (2,820) | |
Borrowings from indebtedness | 4,976,508 | |
Payments on indebtedness | (4,976,508) | |
Payments on finance lease liability | (4,502) | (3,122) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 26,601,984 | 502,958 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 26,562,882 | 1,390,225 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 5,870,929 | 3,738,803 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 32,433,811 | 5,129,028 |
Cash paid during the periods for: | ||
Interest | 27,698 | 280 |
Income taxes | $ 318,983 | $ 103,465 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Balance beginning at Dec. 31, 2018 | $ 409,329 | $ 4,595,214 | $ 4,300,468 | $ (344,204) | $ 8,960,807 |
Balance beginning (in shares) at Dec. 31, 2018 | 40,932,911 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock-based compensation | $ 89 | 176,161 | 176,250 | ||
Issuance of stock-based compensation (in shares) | 8,914 | ||||
Compensation expense related to stock options | 121,875 | 121,875 | |||
Repurchase of shares | $ (20) | (2,800) | (2,820) | ||
Repurchase of shares (in shares) | (2,000) | ||||
Net income (loss) | (85,390) | (85,390) | |||
Balance ending at Mar. 31, 2019 | $ 409,398 | 4,890,450 | 4,215,078 | (344,204) | 9,170,722 |
Balance ending (in shares) at Mar. 31, 2019 | 40,939,825 | ||||
Balance beginning at Dec. 31, 2018 | $ 409,329 | 4,595,214 | 4,300,468 | (344,204) | 8,960,807 |
Balance beginning (in shares) at Dec. 31, 2018 | 40,932,911 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 644,606 | ||||
Balance ending at Sep. 30, 2019 | $ 422,286 | 5,985,636 | 4,945,074 | (344,204) | 11,008,792 |
Balance ending (in shares) at Sep. 30, 2019 | 42,228,658 | ||||
Balance beginning at Mar. 31, 2019 | $ 409,398 | 4,890,450 | 4,215,078 | (344,204) | 9,170,722 |
Balance beginning (in shares) at Mar. 31, 2019 | 40,939,825 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock-based compensation | $ 1,164 | 35,484 | 36,648 | ||
Issuance of stock-based compensation (in shares) | 116,386 | ||||
Compensation expense related to stock options | 194,765 | 194,765 | |||
Issuance upon options exercised | $ 650 | 24,050 | 24,700 | ||
Issuance upon options exercised (in shares) | 65,000 | ||||
Net income (loss) | 78,183 | 78,183 | |||
Balance ending at Jun. 30, 2019 | $ 411,212 | 5,144,749 | 4,293,261 | (344,204) | 9,505,018 |
Balance ending (in shares) at Jun. 30, 2019 | 41,121,211 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock-based compensation | $ 124 | 43,502 | 43,626 | ||
Issuance of stock-based compensation (in shares) | 12,447 | ||||
Compensation expense related to stock options | 324,135 | 324,135 | |||
Issuance of warrants exercised | $ 10,000 | 440,000 | 450,000 | ||
Issuance of warrants exercised (in shares) | 1,000,000 | ||||
Issuance upon options exercised | $ 950 | 33,250 | 34,200 | ||
Issuance upon options exercised (in shares) | 95,000 | ||||
Net income (loss) | 651,813 | 651,813 | |||
Balance ending at Sep. 30, 2019 | $ 422,286 | 5,985,636 | 4,945,074 | (344,204) | 11,008,792 |
Balance ending (in shares) at Sep. 30, 2019 | 42,228,658 | ||||
Balance beginning at Dec. 31, 2019 | $ 422,398 | 6,293,069 | 4,864,817 | (344,204) | 11,236,080 |
Balance beginning (in shares) at Dec. 31, 2019 | 42,239,788 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock-based compensation | $ 92 | 59,910 | 60,002 | ||
Issuance of stock-based compensation (in shares) | 9,189 | ||||
Compensation expense related to stock options | 300,966 | 300,966 | |||
Repurchase of shares | |||||
Issuance upon options exercised | $ 1,750 | 83,750 | 85,500 | ||
Issuance upon options exercised (in shares) | 175,000 | ||||
Net income (loss) | 449,428 | 449,428 | |||
Balance ending at Mar. 31, 2020 | $ 424,240 | 6,737,695 | 5,314,245 | (344,204) | 12,131,976 |
Balance ending (in shares) at Mar. 31, 2020 | 42,423,977 | ||||
Balance beginning at Dec. 31, 2019 | $ 422,398 | 6,293,069 | 4,864,817 | (344,204) | 11,236,080 |
Balance beginning (in shares) at Dec. 31, 2019 | 42,239,788 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (377,435) | ||||
Balance ending at Sep. 30, 2020 | $ 466,718 | 35,331,483 | 4,487,382 | (344,204) | 39,941,379 |
Balance ending (in shares) at Sep. 30, 2020 | 46,671,807 | ||||
Balance beginning at Mar. 31, 2020 | $ 424,240 | 6,737,695 | 5,314,245 | (344,204) | 12,131,976 |
Balance beginning (in shares) at Mar. 31, 2020 | 42,423,977 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock-based compensation | $ 80 | 59,922 | 60,002 | ||
Issuance of stock-based compensation (in shares) | 7,999 | ||||
Compensation expense related to stock options | 363,851 | 363,851 | |||
Litigation settlement options | 347,008 | 347,008 | |||
Litigation settlement share issuance | $ 952 | 937,142 | 938,094 | ||
Litigation settlement share issuance (in shares) | 95,238 | ||||
Issuance upon options exercised | $ 5,192 | 5,189 | 10,381 | ||
Issuance upon options exercised (in shares) | 519,156 | ||||
Capital raise | $ 35,937 | 26,436,043 | 26,471,980 | ||
Capital raise (in shares) | 3,593,750 | ||||
Net income (loss) | (1,076,038) | (1,076,038) | |||
Balance ending at Jun. 30, 2020 | $ 466,401 | 34,886,850 | 4,238,207 | (344,204) | 39,247,254 |
Balance ending (in shares) at Jun. 30, 2020 | 46,640,120 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock-based compensation | $ 67 | 59,935 | 60,002 | ||
Issuance of stock-based compensation (in shares) | 6,681 | ||||
Compensation expense related to stock options | 346,323 | 346,323 | |||
Issuance upon options exercised | $ 250 | (250) | |||
Issuance upon options exercised (in shares) | 25,006 | ||||
Capital raise | 38,625 | 38,625 | |||
Net income (loss) | 249,175 | 249,175 | |||
Balance ending at Sep. 30, 2020 | $ 466,718 | $ 35,331,483 | $ 4,487,382 | $ (344,204) | $ 39,941,379 |
Balance ending (in shares) at Sep. 30, 2020 | 46,671,807 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS REPRO MED SYSTEMS, INC. (the “Company,” “KORU Medical,” “we,” “us” or “our”) designs, manufactures and markets proprietary portable and innovative medical devices primarily for the ambulatory infusion market as governed by the United States Food and Drug Administration (the “FDA”) quality and regulatory system and international standards for quality system management. The Company operates as one segment. BASIS OF PRESENTATION The accompanying financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2019 (“Annual Report”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted from the accompanying financial statements. The accompanying year-end balance sheet was derived from the audited financial statements included in the Annual Report. The accompanying interim financial statements are unaudited and reflect all adjustments which are in the opinion of management necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the periods presented. All such adjustments are of a normal, recurring nature. The Company’s results of operations and cash flows for the interim periods are not necessarily indicative of the results of operations and cash flows that it may achieve in future periods. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company holds cash in excess of $250,000 at its depository, which exceeds the FDIC insurance limits and is, therefore, uninsured. CERTIFICATE OF DEPOSIT The certificate of deposit was recorded at cost plus accrued interest. The certificate of deposit earned interest at a rate of 1.73% and matured in May 2019. INVENTORY Inventories of raw materials are stated at the lower of standard cost, which approximates average cost, or market value including allocable overhead. Work-in-process and finished goods are stated at the lower of standard cost or market value and include direct labor and allocable overhead. PATENTS Costs incurred in obtaining patents have been capitalized and are being amortized over the legal life of the patents. INCOME TAXES Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. The Company believes that it has no uncertain tax positions requiring disclosure or adjustment. Generally, tax years starting with 2017 are subject to examination by income tax authorities. PROPERTY, EQUIPMENT, AND DEPRECIATION Property and equipment is stated at cost and is depreciated using the straight-line method over the estimated useful lives of the respective assets. STOCK-BASED COMPENSATION The Company maintains a stock option plan under which it grants stock options to certain executives, key employees and consultants. The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. All options are charged against income at their fair value. The entire compensation expense of the award is recognized over the vesting period. Shares of stock granted for director fees are recorded at the fair value of the shares at the grant date. NET INCOME PER COMMON SHARE Basic earnings per share are computed on the weighted average of common shares outstanding during each year. Diluted earnings per share include only an increase in the weighted average shares by the common shares issuable upon exercise of employee and consultant stock options. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. Three Months Ended September 30, 2020 September 30, 2019 Net income $ 249,175 $ 651,813 Weighted Average Outstanding Shares: Outstanding shares 43,914,542 39,022,298 Option shares includable 204,969 276,110 44,119,511 39,298,408 Net income per share Basic $ 0.01 $ 0.02 Diluted $ 0.01 $ 0.02 Nine Months Ended September 30, 2020 September 30, 2019 Net (loss)/income $ (377,435 ) $ 644,606 Weighted Average Outstanding Shares: Outstanding shares 41,326,815 38,534,021 Option shares includable — (a) 200,062 41,326,815 38,734,083 Net income per share Basic $ (0.01 ) $ 0.02 Diluted $ (0.01 ) $ 0.02 __________ (a) Option shares of 203,121 were not included as the impact is anti-dilutive. USE OF ESTIMATES IN THE FINANCIAL STATEMENTS The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Important estimates include but are not limited to asset lives, valuation allowances, inventory valuation, and accruals. REVENUE RECOGNITION The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers The Company’s revenues result from the sale of assembled products. We recognize revenues when shipment occurs, and at which point the customer obtains control and ownership of the goods. Shipping costs generally are billed to customers and are included in sales. The Company generally does not accept return of goods shipped unless it is a Company error. The only credits provided to customers are for defective merchandise. The Company warrants the syringe driver from defects in materials and workmanship under normal use and the warranty does not include a performance obligation. The costs under the warranty are expensed as incurred. Provisions for distributor pricing and annual customer growth rebates are variable consideration and are recorded as a reduction of revenue in the same period the related sales are recorded or when it is probable the annual growth target will be achieved. Rebates are provided to distributors for the difference in selling price to distributor and pricing specified to select customers. The following table summarizes net sales by geography for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Sales Domestic $ 5,372,536 $ 5,856,203 $ 17,459,212 $ 14,308,994 International 707,779 761,194 2,660,016 2,631,493 Total $ 6,080,315 $ 6,617,397 $ 20,119,228 $ 16,940,487 LEASES In February 2016, the FASB issued a standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by the Company for those leases classified as operating leases under current GAAP, while our accounting for capital leases remains substantially unchanged. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard became effective for us on January 1, 2019. The standard had a material impact on our balance sheets but did not have a material impact on our statements of operations. See “NOTE 6 — ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure for Fair Value Measurement In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations. FAIR VALUE MEASUREMENTS Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable: • Level 1 – Quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. • Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and includes instruments for which the determination of fair value requires significant judgment or estimation. The carrying amounts of cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable and accrued expenses are considered to be representative of their fair values because of the short-term nature of those instruments. There were no transfers between levels in the fair value hierarchy during the nine months ended September 30, 2020. IMPAIRMENT OF LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount. The impairment loss, if recognized, would be based on the excess of the carrying value of the impaired asset over its respective fair value. No impairment losses have been recorded through September 30, 2020. RECLASSIFICATION Certain reclassifications have been made to conform prior period data to the current presentation. These reclassifications had no effect on reported net income. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 2 — PROPERTY AND EQUIPMENT Property and equipment consists of the following at: September 30, 2020 December 31, 2019 Furniture, office equipment, and leasehold improvements $ 1,291,985 $ 1,135,107 Manufacturing equipment and tooling 1,856,881 1,295,978 Total property and equipment 3,148,866 2,431,085 Less: accumulated depreciation (1,888,191 ) (1,819,239 ) Property and equipment, net $ 1,260,675 $ 611,846 Depreciation expense was $99,071 and $69,740 for the three months ended September 30, 2020 and 2019, respectively, and $251,084 and $218,328 for the nine months ended September 30, 2020 and 2019, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 3 — COMMITMENTS AND CONTINGENCIES LEGAL PROCEEDINGS The Company has been and may again become involved in legal proceedings, claims and litigation arising in the ordinary course of business. Except as described below, KORU Medical is not presently a party to any litigation or other legal proceeding that is believed to be material to its financial condition. Litigation Refer to Form 10-Q for the quarterly period ended June 30, 2020 regarding the dismissed case with our principal competitor, EMED Technologies Corporation (“EMED”). |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 4 — STOCK-BASED COMPENSATION On June 29, 2016, the Board of Directors amended the Company’s 2015 Stock Option Plan (as amended, the “Plan”) authorizing the Company to grant awards to certain executives, key employees, and consultants under the Plan, which was approved by shareholders at the Annual Meeting of Shareholders held on September 6, 2016. The total number of shares of Common Stock, with respect to which awards may be granted pursuant to the Plan, may not exceed 6,000,000 pursuant to an amendment to the Plan approved by shareholders on April 23, 2019, at the 2019 Annual Meeting of Shareholders. On May 20, 2020, the Company entered into a Settlement Agreement related to its litigation with EMED as described above in “NOTE 3 — On February 20, 2019, the Board of Directors of the Company approved an increase in compensation for each non-employee director from $25,000 to $50,000 annually effective January 1, 2019, and an additional $10,000 annually for the chair of each Board committee effective February 20, 2019, in each case to be paid quarterly half in cash and half in common stock at the end of each fiscal quarter. On September 30, 2019, the Board of Directors of the Company named R. John Fletcher, a current KORU Medical director, as Chairman, replacing Executive Chairman, Daniel S. Goldberger, who remains a non-executive member of KORU Medical’s Board of Directors. In Mr. Fletcher’s role as Chairman, he receives an additional $50,000 in annual compensation, to be paid quarterly in shares of KORU Medical common stock based on the closing price of the stock on the last day of each quarter. Pursuant to Daniel S. Goldberger’s employment agreement dated October 12, 2018, on February 1, 2019, when Donald B. Pettigrew was appointed to President and Chief Executive Officer, Mr. Goldberger was awarded a performance bonus in the amount of $270,000 to be paid half in cash and half in stock. The number of shares that were issued totaled 90,604 and was based upon the closing price of the Common Stock of the Company on February 1, 2019, as reported by the OTCQX. These shares were issued on April 3, 2019. 2015 STOCK OPTION PLAN, as amended Time Based Stock Options The per share weighted average fair value of stock options granted during the nine months ended September 30, 2020 and September 30, 2019 was $6.53 and $1.33, respectively. The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the nine months ended September 30, 2020 and September 30, 2019. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued. September 30, 2020 2019 Dividend yield 0.00% 0.00% Expected Volatility 62.11 – 62.18% 56.10 – 60.70% Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 Years 10 Years Risk-free rate 0.63 – 0.64% 1.60 – 2.72% The following table summarizes the status of the Plan with respect to time based stock options: Nine Months Ended September 30, 2020 2019 Shares Weighted Shares Weighted Outstanding at January 1 3,647,000 $ 1.32 2,419,000 $ 1.00 Granted 360,000 $ 9.54 1,650,000 $ 1.92 Exercised 747,006 $ 0.65 160,000 $ 0.37 Forfeited 200,000 $ 2.09 12,000 $ 0.87 Outstanding at September 30 3,059,994 $ 2.40 3,897,000 $ 1.41 Options exercisable at September 30 1,009,629 $ 1.36 1,037,885 $ 0.81 Weighted average fair value of options granted during the period — $ 6.53 — $ 1.33 Stock-based compensation expense — $ 572,775 — $ 473,139 Total stock-based compensation expense totaled $572,775 and $473,139 for the nine months ended September 30, 2020 and 2019, respectively. Cash received from option exercises for the nine months ended September 30, 2020 and 2019 was $95,880 and $58,900, respectively. The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2020 and 2019 was $6.53 and $1.33, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2020 and 2019 was $296,226 and $30,022, respectively. The following table presents information pertaining to options outstanding at September 30, 2020: Range of Exercise Price Number Weighted Weighted Number Weighted $0.50 – 9.76 3,059,994 7.5 years $ 2.40 1,009,629 $ 1.36 As of September 30, 2020, there was $3,679,084 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 48 months. The total fair value of shares vested as of September 30, 2020 and 2019, was $874,041 and $506,729, respectively. Performance Based Stock Options The per share weighted average fair value of stock options granted during the nine months ended September 30, 2020 and 2019 was zero and $1.16, respectively. The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the nine months ended September 30, 2020 and September 30, 2019. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued. September 30, 2020 2019 Dividend yield — 0.00% Expected Volatility — 58.90% Weighted-average volatility — — Expected dividends — — Expected term (in years) — 10 Years Risk-free rate — 2.07% The following table summarizes the status of the Plan with respect to performance based stock options: Nine Months Ended September 30, 2020 2019 Shares Weighted Shares Weighted Outstanding at January 1 1,000,000 $ 1.70 — $ — Granted — $ — 1,000,000 $ 1.70 Exercised — $ — — $ — Forfeited — $ — — $ — Outstanding at September 30 1,000,000 $ 1.70 1,000,000 $ 1.70 Options exercisable at September 30 333,333 $ 1.70 — $ — Weighted average fair value of options granted during the period — $ — — $ 1.16 Stock-based compensation expense — $ 438,365 — $ 167,636 Total performance stock-based compensation expense totaled $438,365 and $167,636 for the nine months ended September 30, 2020 and 2019, respectively. The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2020 and 2019, was zero and $1.16, respectively. The following table presents information pertaining to performance based options outstanding at September 30, 2020. Range of Exercise Price Number Weighted Weighted Number Weighted $1.70 1,000,000 8.7 years $ 1.70 333,333 $ 1.70 As of September 30, 2020, there was $430,833 of total unrecognized compensation cost related to non-vested performance share option based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 31 months. The total fair value of shares vested as of September 30, 2020 and 2019 was $387,520 and zero, respectively. |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
DEBT OBLIGATIONS | NOTE 5 — DEBT OBLIGATIONS On February 8, 2018, the Company issued a promissory note (the “Original Note”) to KeyBank National Association (“KeyBank”) in the amount of $1.5 million as a variable rate revolving line of credit loan due on demand with an interest rate of LIBOR plus 2.25%, collateralized with a certificate of deposit in the amount of $1.5 million. On September 25, 2018, KeyBank released the certificate of deposit as collateral for the loan and the Company executed a Commercial Security Agreement as collateral for the loan. On April 14, 2020, the Company issued a promissory note to KeyBank in the aggregate principal amount of $3.5 million (the “Note”) as an extension of its line of credit, replacing its current line of credit agreement and Original Note. The Company drew on the additional $2.0 million on April 23, 2020. The Original Note was in the form of a variable rate revolving line of credit with an interest rate of LIBOR plus 2.25%. The $3.5 million Note is in the form of a variable rate non-disclosable revolving line of credit with an interest rate of Prime Rate announced by the Bank minus 0.75%. Interest is due monthly, and all principal and unpaid interest is due on June 1, 2021. The $3.5 million Note may be prepaid at any time prior to maturity with no prepayment penalties. The $3.5 million Note contains events of default and other provisions customary for a loan of this type. In connection with the Note, the Company entered into a Commercial Security Agreement with the Bank dated April 14, 2020 (the “Security Agreement”), pursuant to which the Company granted a security interest in substantially all assets of the Company to secure the obligations of the Company under the Note. The Security Agreement contains terms and conditions typical for the granting of security interests of this kind. The Company had no amount outstanding against the line of credit as of September 30, 2020. On April 20, 2020, the Company entered into a Loan Agreement with the Bank (the “PPP Loan Agreement”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), providing for a loan in the principal amount of $1,476,508 (the “PPP Loan”). The PPP Loan was funded on April 27, 2020. On May 13, 2020, the Company returned the funds it received. On April 27, 2020, the Company entered into a Progress Payment Loan and Security Agreement (“PPLSA”) and a Master Security Agreement (the “MSA”), each dated as of April 20, 2020, with Key Equipment Finance, a division of the Bank (“KEF”), to provide up to $2.5 million in financing for equipment purchases from third party vendors. The PPLSA allows the Company to make draws with KEF to make certain payments to the equipment suppliers prior to the commencement of periodic payments under a term loan. Each draw under the PPLSA will bear interest at a variable rate equal to the then-current Prime Rate and will be secured by the financed equipment under the MSA. At the end of each calendar quarter or year, the advances made under the PPLSA will be converted to term loans, subject to KEF’s approval of the equipment and certain other closing conditions being met. Once the draws under the PPLSA are converted into a term loan, each promissory note will bear interest at a fixed rate of 4.07% per annum, subject to adjustment based on KEF’s cost of funds, with principal and interest payable in 84 equal consecutive monthly installments. Each fixed rate installment promissory note may be prepaid, subject to a penalty if prepaid before the fifth anniversary of its issuance. As of September 30, 2020, the Company had no amount outstanding against the PPLSA. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
LEASES | NOTE 6 — LEASES We have finance and operating leases for our corporate office and certain office and computer equipment. Our leases have remaining lease terms of 1 to 3 years, some of which include options to extend the leases annually and some with options to terminate the leases within 1 year. The components of lease expense were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Operating lease cost $ 37,921 $ 37,922 $ 113,764 $ 111,672 Short-term lease cost 19,846 5,535 33,535 18,196 Total lease cost $ 57,767 $ 43,457 $ 147,299 $ 129,868 Finance lease cost: Amortization of right-of-use assets $ 791 $ 1,061 $ 4,502 $ 3,182 Interest on lease liabilities 47 47 199 178 Total finance lease cost $ 838 $ 1,108 $ 4,701 $ 3,360 Supplemental cash flow information related to leases was as follows: Nine Months Ended September 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 113,764 $ 111,672 Financing cash flows from finance leases 4,502 3,122 Supplemental balance sheet information related to leases was as follows: September 30, December 31, Operating Leases Operating lease right-of-use assets $ 271,679 $ 373,734 Operating lease current liabilities 140,450 136,888 Operating lease long term liabilities 131,229 236,846 Total operating lease liabilities $ 271,679 $ 373,734 Finance Leases Property and equipment, at cost $ 12,725 $ 12,725 Accumulated depreciation (9,344 ) (4,837 ) Property and equipment, net $ 3,381 $ 7,888 Finance lease current liabilities 3,026 5,296 Finance lease long term liabilities 414 2,646 Total finance lease liabilities $ 3,440 $ 7,942 September 30, December 31, Weighted Average Remaining Lease Term Operating leases 1.6 Years 2.4 Years Finance leases 1 Year 1.3 Years Weighted Average Discount Rate Operating leases 4.75% 4.75% Finance leases 4.75% 4.75% Maturities of lease liabilities are as follows: Year Ending December 31, Operating Leases Finance Leases 2020 (excluding the nine months ended September 30, 2020) $ 37,922 $ 832 2021 149,476 2,705 2022 97,256 — 2023 — — 2024 — — 2025 — — Thereafter — — Total undiscounted lease payments 284,654 3,537 Less: imputed interest (12,975 ) (97 ) Total lease liabilities $ 271,679 $ 3,440 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 — RELATED PARTY TRANSACTIONS BUILDING LEASE Mark Pastreich, a former director through April 2019, is a principal in the entity that owns the building leased by us for our corporate headquarters and manufacturing facility at 24 Carpenter Road, Chester, New York 10918. On February 28, 2019, we completed year twenty of a twenty-year lease with monthly lease payments of $11,042. On November 14, 2017, we executed a lease extension, which calls for six-month extensions beginning March 1, 2019 with the option to renew six times at a monthly lease amount of $12,088. The Company exercised four of the six additional renewal options for September 1, 2019 through August 31, 2021. The lease payments were $36,264 for both three months ended September 30, 2020 and 2019, and $108,792 and $106,700 for the nine months ended September 30, 2020 and 2019, respectively. The Company also paid property taxes in the amount of $12,546 and $13,749 for three months ended September 30, 2020 and 2019, respectively and $39,205 and $39,165 for the nine months ended September 30, 2020 and 2019, respectively. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
EQUITY | NOTE 8 — EQUITY On June 18, 2020, the Company entered into a Purchase Agreement with Piper Sandler & Co. and Canaccord Genuity LLC, as representatives of the several underwriters named therein (the “Underwriters”), pursuant to which the Company agreed to issue and sell 3,125,000 shares of its common stock. Under the terms of the Purchase Agreement, the Company granted to the Underwriters an option, exercisable for a period of 30 days, to purchase up to an additional 468,750 shares of the Company’s common stock, which the Underwriters exercised in full on June 19, 2020. The Underwriters purchased the shares pursuant to the Purchase Agreement, including the shares subject to the option, at a price of $7.52 per share. Proceeds to the Company, net of discounts, commissions, fees and expenses, were $26.5 million. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 9 — SUBSEQUENT EVENT On November 11, 2020, the Company entered into a Manufacturing and Supply Agreement with Command Medical Products, Inc. (“Command”), pursuant to which Command has agreed to manufacture and supply the Company’s subassemblies, needle sets and tubing products pursuant to the Company’s specifications and purchase orders. The first binding purchase order pursuant to the Manufacturing and Supply Agreement is expected to be made within the next ten days (the “Effective Date”). The Manufacturing and Supply Agreement provides for a term of five years from the Effective Date. Either party may terminate the Manufacturing and Supply Agreement upon a material breach by the other Party that has not been cured within 90 days, upon the bankruptcy or insolvency of the other Party or as expressly set forth elsewhere in the Agreement. If the Company terminates the Manufacturing and Supply Agreement other than for those reasons within the first three years from the Effective Date, the Company is obligated to pay an early termination fee to Command. The Manufacturing and Supply Agreement also includes customary provisions relating to, among other things, delivery, inspection procedures, warranties, quality management, business continuity plans, handling and transport, intellectual property, confidentiality and indemnification. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS REPRO MED SYSTEMS, INC. (the “Company,” “KORU Medical,” “we,” “us” or “our”) designs, manufactures and markets proprietary portable and innovative medical devices primarily for the ambulatory infusion market as governed by the United States Food and Drug Administration (the “FDA”) quality and regulatory system and international standards for quality system management. The Company operates as one segment. |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2019 (“Annual Report”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted from the accompanying financial statements. The accompanying year-end balance sheet was derived from the audited financial statements included in the Annual Report. The accompanying interim financial statements are unaudited and reflect all adjustments which are in the opinion of management necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the periods presented. All such adjustments are of a normal, recurring nature. The Company’s results of operations and cash flows for the interim periods are not necessarily indicative of the results of operations and cash flows that it may achieve in future periods. |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company holds cash in excess of $250,000 at its depository, which exceeds the FDIC insurance limits and is, therefore, uninsured. |
CERTIFICATE OF DEPOSIT | CERTIFICATE OF DEPOSIT The certificate of deposit was recorded at cost plus accrued interest. The certificate of deposit earned interest at a rate of 1.73% and matured in May 2019. |
INVENTORY | INVENTORY Inventories of raw materials are stated at the lower of standard cost, which approximates average cost, or market value including allocable overhead. Work-in-process and finished goods are stated at the lower of standard cost or market value and include direct labor and allocable overhead. |
PATENTS | PATENTS Costs incurred in obtaining patents have been capitalized and are being amortized over the legal life of the patents. |
INCOME TAXES | INCOME TAXES Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. The Company believes that it has no uncertain tax positions requiring disclosure or adjustment. Generally, tax years starting with 2017 are subject to examination by income tax authorities. |
PROPERTY, EQUIPMENT, AND DEPRECIATION | PROPERTY, EQUIPMENT, AND DEPRECIATION Property and equipment is stated at cost and is depreciated using the straight-line method over the estimated useful lives of the respective assets. |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company maintains a stock option plan under which it grants stock options to certain executives, key employees and consultants. The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. All options are charged against income at their fair value. The entire compensation expense of the award is recognized over the vesting period. Shares of stock granted for director fees are recorded at the fair value of the shares at the grant date. |
NET INCOME PER COMMON SHARE | NET INCOME PER COMMON SHARE Basic earnings per share are computed on the weighted average of common shares outstanding during each year. Diluted earnings per share include only an increase in the weighted average shares by the common shares issuable upon exercise of employee and consultant stock options. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. Three Months Ended September 30, 2020 September 30, 2019 Net income $ 249,175 $ 651,813 Weighted Average Outstanding Shares: Outstanding shares 43,914,542 39,022,298 Option shares includable 204,969 276,110 44,119,511 39,298,408 Net income per share Basic $ 0.01 $ 0.02 Diluted $ 0.01 $ 0.02 Nine Months Ended September 30, 2020 September 30, 2019 Net (loss)/income $ (377,435 ) $ 644,606 Weighted Average Outstanding Shares: Outstanding shares 41,326,815 38,534,021 Option shares includable — (a) 200,062 41,326,815 38,734,083 Net income per share Basic $ (0.01 ) $ 0.02 Diluted $ (0.01 ) $ 0.02 __________ (a) Option shares of 203,121 were not included as the impact is anti-dilutive. |
USE OF ESTIMATES IN THE FINANCIAL STATEMENTS | USE OF ESTIMATES IN THE FINANCIAL STATEMENTS The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Important estimates include but are not limited to asset lives, valuation allowances, inventory valuation, and accruals. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers The Company’s revenues result from the sale of assembled products. We recognize revenues when shipment occurs, and at which point the customer obtains control and ownership of the goods. Shipping costs generally are billed to customers and are included in sales. The Company generally does not accept return of goods shipped unless it is a Company error. The only credits provided to customers are for defective merchandise. The Company warrants the syringe driver from defects in materials and workmanship under normal use and the warranty does not include a performance obligation. The costs under the warranty are expensed as incurred. Provisions for distributor pricing and annual customer growth rebates are variable consideration and are recorded as a reduction of revenue in the same period the related sales are recorded or when it is probable the annual growth target will be achieved. Rebates are provided to distributors for the difference in selling price to distributor and pricing specified to select customers. The following table summarizes net sales by geography for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Sales Domestic $ 5,372,536 $ 5,856,203 $ 17,459,212 $ 14,308,994 International 707,779 761,194 2,660,016 2,631,493 Total $ 6,080,315 $ 6,617,397 $ 20,119,228 $ 16,940,487 |
LEASES | LEASES In February 2016, the FASB issued a standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by the Company for those leases classified as operating leases under current GAAP, while our accounting for capital leases remains substantially unchanged. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard became effective for us on January 1, 2019. The standard had a material impact on our balance sheets but did not have a material impact on our statements of operations. See “NOTE 6 — |
ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED | ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure for Fair Value Measurement In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract |
ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED | ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations. |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable: • Level 1 – Quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. • Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and includes instruments for which the determination of fair value requires significant judgment or estimation. The carrying amounts of cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable and accrued expenses are considered to be representative of their fair values because of the short-term nature of those instruments. There were no transfers between levels in the fair value hierarchy during the nine months ended September 30, 2020. |
IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount. The impairment loss, if recognized, would be based on the excess of the carrying value of the impaired asset over its respective fair value. No impairment losses have been recorded through September 30, 2020. |
RECLASSIFICATION | RECLASSIFICATION Certain reclassifications have been made to conform prior period data to the current presentation. These reclassifications had no effect on reported net income. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Nature Of Operations And Summary Of Significant Accounting Policies | |
Schedule of net income per common share | Basic earnings per share are computed on the weighted average of common shares outstanding during each year. Diluted earnings per share include only an increase in the weighted average shares by the common shares issuable upon exercise of employee and consultant stock options. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. Three Months Ended September 30, 2020 September 30, 2019 Net income $ 249,175 $ 651,813 Weighted Average Outstanding Shares: Outstanding shares 43,914,542 39,022,298 Option shares includable 204,969 276,110 44,119,511 39,298,408 Net income per share Basic $ 0.01 $ 0.02 Diluted $ 0.01 $ 0.02 Nine Months Ended September 30, 2020 September 30, 2019 Net (loss)/income $ (377,435 ) $ 644,606 Weighted Average Outstanding Shares: Outstanding shares 41,326,815 38,534,021 Option shares includable — (a) 200,062 41,326,815 38,734,083 Net income per share Basic $ (0.01 ) $ 0.02 Diluted $ (0.01 ) $ 0.02 __________ (a) Option shares of 203,121 were not included as the impact is anti-dilutive. |
Schedule of net sales by geography | The following table summarizes net sales by geography for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Sales Domestic $ 5,372,536 $ 5,856,203 $ 17,459,212 $ 14,308,994 International 707,779 761,194 2,660,016 2,631,493 Total $ 6,080,315 $ 6,617,397 $ 20,119,228 $ 16,940,487 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consists of the following at: September 30, 2020 December 31, 2019 Furniture, office equipment, and leasehold improvements $ 1,291,985 $ 1,135,107 Manufacturing equipment and tooling 1,856,881 1,295,978 Total property and equipment 3,148,866 2,431,085 Less: accumulated depreciation (1,888,191 ) (1,819,239 ) Property and equipment, net $ 1,260,675 $ 611,846 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of fair value of the stock options granted Black-Scholes option valuation model | The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued. September 30, 2020 2019 Dividend yield 0.00% 0.00% Expected Volatility 62.11 – 62.18% 56.10 – 60.70% Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 Years 10 Years Risk-free rate 0.63 – 0.64% 1.60 – 2.72% |
Schedule of stock option plan | The following table summarizes the status of the Plan with respect to time based stock options: Nine Months Ended September 30, 2020 2019 Shares Weighted Shares Weighted Outstanding at January 1 3,647,000 $ 1.32 2,419,000 $ 1.00 Granted 360,000 $ 9.54 1,650,000 $ 1.92 Exercised 747,006 $ 0.65 160,000 $ 0.37 Forfeited 200,000 $ 2.09 12,000 $ 0.87 Outstanding at September 30 3,059,994 $ 2.40 3,897,000 $ 1.41 Options exercisable at September 30 1,009,629 $ 1.36 1,037,885 $ 0.81 Weighted average fair value of options granted during the period — $ 6.53 — $ 1.33 Stock-based compensation expense — $ 572,775 — $ 473,139 |
Schedule of information pertaining to options outstanding | The following table presents information pertaining to options outstanding at September 30, 2020: Range of Exercise Price Number Weighted Weighted Number Weighted $0.50 – 9.76 3,059,994 7.5 years $ 2.40 1,009,629 $ 1.36 |
Schedule of performance base share options | The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued. September 30, 2020 2019 Dividend yield — 0.00% Expected Volatility — 58.90% Weighted-average volatility — — Expected dividends — — Expected term (in years) — 10 Years Risk-free rate — 2.07% |
Schedule of performance base options outstanding | The following table summarizes the status of the Plan with respect to performance based stock options: Nine Months Ended September 30, 2020 2019 Shares Weighted Shares Weighted Outstanding at January 1 1,000,000 $ 1.70 — $ — Granted — $ — 1,000,000 $ 1.70 Exercised — $ — — $ — Forfeited — $ — — $ — Outstanding at September 30 1,000,000 $ 1.70 1,000,000 $ 1.70 Options exercisable at September 30 333,333 $ 1.70 — $ — Weighted average fair value of options granted during the period — $ — — $ 1.16 Stock-based compensation expense — $ 438,365 — $ 167,636 |
Schedule of information pertaining to performance base options outstanding | The following table presents information pertaining to performance based options outstanding at September 30, 2020. Range of Exercise Price Number Weighted Weighted Number Weighted $1.70 1,000,000 8.7 years $ 1.70 333,333 $ 1.70 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of components of lease expense | The components of lease expense were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Operating lease cost $ 37,921 $ 37,922 $ 113,764 $ 111,672 Short-term lease cost 19,846 5,535 33,535 18,196 Total lease cost $ 57,767 $ 43,457 $ 147,299 $ 129,868 Finance lease cost: Amortization of right-of-use assets $ 791 $ 1,061 $ 4,502 $ 3,182 Interest on lease liabilities 47 47 199 178 Total finance lease cost $ 838 $ 1,108 $ 4,701 $ 3,360 |
Schedule of cash flow information related to leases | Supplemental cash flow information related to leases was as follows: Nine Months Ended September 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 113,764 $ 111,672 Financing cash flows from finance leases 4,502 3,122 |
Schdeule of balance sheet information related to leases | Supplemental balance sheet information related to leases was as follows: September 30, December 31, Operating Leases Operating lease right-of-use assets $ 271,679 $ 373,734 Operating lease current liabilities 140,450 136,888 Operating lease long term liabilities 131,229 236,846 Total operating lease liabilities $ 271,679 $ 373,734 Finance Leases Property and equipment, at cost $ 12,725 $ 12,725 Accumulated depreciation (9,344 ) (4,837 ) Property and equipment, net $ 3,381 $ 7,888 Finance lease current liabilities 3,026 5,296 Finance lease long term liabilities 414 2,646 Total finance lease liabilities $ 3,440 $ 7,942 September 30, December 31, Weighted Average Remaining Lease Term Operating leases 1.6 Years 2.4 Years Finance leases 1 Year 1.3 Years Weighted Average Discount Rate Operating leases 4.75% 4.75% Finance leases 4.75% 4.75% |
Schedule of maturities of lease liabilities | Maturities of lease liabilities are as follows: Year Ending December 31, Operating Leases Finance Leases 2020 (excluding the nine months ended September 30, 2020) $ 37,922 $ 832 2021 149,476 2,705 2022 97,256 — 2023 — — 2024 — — 2025 — — Thereafter — — Total undiscounted lease payments 284,654 3,537 Less: imputed interest (12,975 ) (97 ) Total lease liabilities $ 271,679 $ 3,440 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Accounting Policies [Abstract] | |||||||||
Net income | $ 249,175 | $ (1,076,038) | $ 449,428 | $ 651,813 | $ 78,183 | $ (85,390) | $ (377,435) | $ 644,606 | |
Weighted Average Outstanding Shares: | |||||||||
Outstanding shares | 43,914,542 | 39,022,298 | 41,326,815 | 38,534,021 | |||||
Option shares includable | 204,969 | 276,110 | [1] | 200,062 | |||||
Total | 44,119,511 | 39,298,408 | 41,326,815 | 38,734,083 | |||||
Net income per share | |||||||||
Basic (in dollars per share) | $ 0.01 | $ 0.02 | $ (0.01) | $ 0.02 | |||||
Diluted (in dollars per share) | $ 0.01 | $ 0.02 | $ (0.01) | $ 0.02 | |||||
[1] | Option shares of 203,121 were not included as the impact is anti-dilutive. |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net sales | $ 6,080,315 | $ 6,617,397 | $ 20,119,228 | $ 16,940,487 |
Domestic [Member] | ||||
Net sales | 5,372,536 | 5,856,203 | 17,459,212 | 14,308,994 |
International [Member] | ||||
Net sales | $ 707,779 | $ 761,194 | $ 2,660,016 | $ 2,631,493 |
NATURE OF OPERATIONS AND SUMM_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 9 Months Ended |
Sep. 30, 2020USD ($)Segmentshares | |
Number of segments | Segment | 1 |
FDIC cash uninsured amount | $ | $ 250,000 |
Option [Member] | |
Anti-dilutive shares | shares | 203,121 |
Certificates Of Deposit [Member] | |
Interest rate | 1.73% |
Certificate of deposit, matured date | May 31, 2019 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Property and equipment, gross | $ 3,148,866 | $ 2,431,085 |
Less: accumulated depreciation | (1,888,191) | (1,819,239) |
Property and equipment, net | 1,260,675 | 611,846 |
Furniture, Office Equipment, and Leasehold Improvements [Member] | ||
Property and equipment, gross | 1,291,985 | 1,135,107 |
Manufacturing Equipment And Tooling [Member] | ||
Property and equipment, gross | $ 1,856,881 | $ 1,295,978 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 99,071 | $ 69,740 | $ 251,084 | $ 218,328 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - 2015 Stock Option Plan [Member] - Time Based Shares Options [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Dividend yield | 0.00% | 0.00% |
Weighted-average volatility | ||
Expected dividends | ||
Expected term (in years) | 10 years | 10 years |
Minimum [Member] | ||
Expected Volatility | 62.11% | 56.10% |
Risk-free rate | 0.63% | 1.60% |
Maximum [Member] | ||
Expected Volatility | 62.18% | 60.70% |
Risk-free rate | 0.64% | 2.72% |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details 1) - 2015 Stock Option Plan [Member] - Time Based Shares Options [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at beginning | 3,647,000 | 2,419,000 |
Granted | 360,000 | 1,650,000 |
Exercised | 747,006 | 160,000 |
Forfeited | 200,000 | 12,000 |
Outstanding at ending | 3,059,994 | 3,897,000 |
Options exercisable at ending | 1,009,629 | 1,037,885 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Outstanding at beginning | $ 1.32 | $ 1 |
Granted | 9.54 | 1.92 |
Exercised | 0.65 | 0.37 |
Forfeited | 2.09 | 0.87 |
Outstanding at ending | 2.4 | 1.41 |
Options exercisable at ending | 1.36 | 0.81 |
Weighted average fair value of options granted during the period | $ 6.53 | $ 1.33 |
Stock-based compensation expense | $ 572,775 | $ 473,139 |
STOCK-BASED COMPENSATION (Det_3
STOCK-BASED COMPENSATION (Details 2) - 2015 Stock Option Plan [Member] - $ 0.50 - 9.76 [Member] - Time Based Shares Options [Member] | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Number Outstanding | shares | 3,059,994 |
Weighted Average Remaining Contractual Term | 7 years 6 months |
Weighted Average Exercise Price | $ / shares | $ 2.40 |
Number Exercisable | shares | 1,009,629 |
Weighted Average Exercise Price | $ / shares | $ 1.36 |
STOCK-BASED COMPENSATION (Det_4
STOCK-BASED COMPENSATION (Details 3) - 2015 Stock Option Plan [Member] - Performance Based Share Options [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Dividend yield | 0.00% | |
Expected Volatility | 58.90% | |
Weighted-average volatility | ||
Expected dividends | ||
Expected term (in years) | 10 years | |
Risk-free rate | 2.07% |
STOCK-BASED COMPENSATION (Det_5
STOCK-BASED COMPENSATION (Details 4) - 2015 Stock Option Plan [Member] - Performance Based Share Options [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at beginning | 1,000,000 | |
Granted | 1,000,000 | |
Exercised | ||
Forfeited | ||
Outstanding at ending | 1,000,000 | 1,000,000 |
Options exercisable at ending | 333,333 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Outstanding at beginning | $ 1.70 | |
Granted | 1.70 | |
Exercised | ||
Forfeited | ||
Outstanding at ending | 1.70 | 1.70 |
Options exercisable at ending | 1.70 | |
Weighted average fair value of options granted during the period | $ 1.16 | |
Stock-based compensation expense | $ 438,365 | $ 167,636 |
STOCK-BASED COMPENSATION (Det_6
STOCK-BASED COMPENSATION (Details 5) - 2015 Stock Option Plan [Member] - Performance Based Share Options [Member] - $1.70 [Member] | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Number Outstanding | shares | 1,000,000 |
Weighted Average Remaining Contractual Term | 8 years 8 months 12 days |
Weighted Average Exercise Price | $ / shares | $ 1.70 |
Number Exercisable | shares | 333,333 |
Weighted Average Exercise Price | $ / shares | $ 1.70 |
STOCK-BASED COMPENSATION (Det_7
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | Sep. 30, 2019 | May 20, 2019 | Apr. 23, 2019 | Apr. 02, 2019 | Feb. 20, 2019 | Feb. 02, 2019 | Jan. 02, 2019 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Number of shares authorized to employees | 60,000 | |||||||||||
Settlement Agreement [Member] | EMED Technologies Corporation [Member] | ||||||||||||
Description of vesting rights | The Company issued to EMED (i) 95,238 restricted stock units, which vested on May 21, 2020 and 95,238 restricted stock units vesting on January 1, 2021, and (ii) an option to purchase up to 400,000 shares of the Company’s common stock at an exercise price of $11.21 per share prior to February 1, 2021, which can be settled in cash in lieu of common stock at the Company’s sole discretion, provided that the number of shares of common stock and/or amount of cash paid by the Company upon exercise will be capped at a value of $16.21 per share. The option was recorded at $347,008, the estimated fair value of the option using the Black-Scholes option pricing model with a volatility rate of 52.68% and a risk-free rate of 0.17%. | |||||||||||
Non-cash expense | $ 2,200,000 | |||||||||||
Independent Directors [Member] | ||||||||||||
Description of payment terms | Paid quarterly half in cash and half in common stock | |||||||||||
Annually compensation paid per director | $ 25,000 | $ 50,000 | ||||||||||
Annually additional payment for agreement | $ 10,000 | |||||||||||
Mr. R. John Fletcher [Member] | ||||||||||||
Annually compensation paid per director | $ 50,000 | |||||||||||
Chief Executive Officer, Mr. Goldberger [Member] | Employment Agreement [Member] | ||||||||||||
Number of shares authorized to employees | 90,604 | |||||||||||
Description of payment terms | A performance bonus in the amount of $270,000 to be paid half in cash and half in stock. | |||||||||||
2015 Stock Option Plan [Member] | ||||||||||||
Number of shares authorized to employees | 6,000,000 | |||||||||||
2015 Stock Option Plan [Member] | Time Based Shares Options [Member] | ||||||||||||
Weighted average grant date fair value of stock options | $ 6.53 | $ 1.33 | ||||||||||
Allocated stock-based compensation expense | $ 572,775 | $ 473,139 | ||||||||||
Total unrecognized compensation cost | $ 3,679,084 | |||||||||||
Weighted-average period (in years) | 48 months | |||||||||||
Total fair value of shares vested | $ 874,041 | $ 506,729 | ||||||||||
Number of options outstanding | 3,897,000 | 3,059,994 | 3,897,000 | 3,647,000 | 2,419,000 | |||||||
Cash received from option exercises | $ 95,880 | $ 58,900 | ||||||||||
Number of options exercised | 296,226 | 30,022 | ||||||||||
2015 Stock Option Plan [Member] | Performance Based Share Options [Member] | ||||||||||||
Weighted average grant date fair value of stock options | $ 1.16 | |||||||||||
Allocated stock-based compensation expense | $ 438,365 | $ 167,636 | ||||||||||
Weighted-average grant-date fair value options granted | 1,160,000 | |||||||||||
Total unrecognized compensation cost | $ 430,833 | |||||||||||
Weighted-average period (in years) | 31 months | |||||||||||
Total fair value of shares vested | $ 387,520 | $ 0 | ||||||||||
Number of options outstanding | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 |
DEBT OBLIGATIONS (Details Narra
DEBT OBLIGATIONS (Details Narrative) - USD ($) | Apr. 27, 2020 | Apr. 20, 2020 | Apr. 14, 2020 | Feb. 08, 2018 | Sep. 30, 2020 | Apr. 23, 2020 | Jun. 30, 2019 |
PPP Loan Agreement [Member] | |||||||
Loans, principal amount | $ 1,476,508 | ||||||
Loans, funded date | Apr. 27, 2020 | ||||||
Key Equipment Finance [Member] | Progress Payment Loan and Security Agreement And Master Security Agreement [Member] | |||||||
Interest rate terms | Fixed rate of 4.07% per annum | ||||||
Loans, principal amount | $ 2,500,000 | ||||||
Principal and interest payable terms | 84 equal consecutive monthly installments. | ||||||
Promissory Note [Member] | KeyBank National Association [Member] | |||||||
Face amount | $ 3,500,000 | $ 2,000,000 | |||||
Interest rate terms | LIBOR plus 2.25% | ||||||
Promissory Note [Member] | Non-Disclosable Revolving Line of Credit [Member] | KeyBank National Association [Member] | |||||||
Face amount | $ 3,500,000 | ||||||
Interest rate terms | Prime Rate announced by the Bank minus 0.75% | ||||||
Debt instrument, principal and unpaid interest due | Jun. 1, 2021 | ||||||
Debt instrument, prepaid terms | Any time prior to maturity with no prepayment penalties. | ||||||
KeyBank National Association [Member] | Promissory Note [Member] | Revolving Credit Facility [Member] | |||||||
Face amount | $ 1,500,000 | $ 0 | $ 0 | ||||
Interest rate terms | LIBOR plus 2.25% | ||||||
Description collateral | collateralized with a certificate of deposit | ||||||
Collateral amount | $ 1,500,000 |
LEASES (Details)
LEASES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 37,921 | $ 37,922 | $ 113,764 | $ 111,672 |
Short-term lease cost | 19,846 | 5,535 | 33,535 | 18,196 |
Total lease cost | 57,767 | 43,457 | 147,299 | 129,868 |
Finance lease cost: | ||||
Amortization of right-of-use assets | 791 | 1,061 | 4,502 | 3,182 |
Interest on lease liabilities | 47 | 47 | 199 | 178 |
Total finance lease cost | $ 838 | $ 1,108 | $ 4,701 | $ 3,360 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 113,764 | $ 111,672 |
Financing cash flows from finance leases | $ 4,502 | $ 3,122 |
LEASES (Details 2)
LEASES (Details 2) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Operating Leases | ||
Operating lease right-of-use assets | $ 271,679 | $ 373,734 |
Operating lease current liabilities | 140,450 | 136,888 |
Operating lease long term liabilities | 131,229 | 236,846 |
Total operating lease liabilities | 271,679 | 373,734 |
Finance Leases | ||
Property and equipment, at cost | 12,725 | 12,725 |
Accumulated depreciation | (9,344) | (4,837) |
Property and equipment, net | 3,381 | 7,888 |
Finance lease current liabilities | 3,026 | 5,296 |
Finance lease long term liabilities | 414 | 2,646 |
Total finance lease liabilities | $ 3,440 | $ 7,942 |
LEASES (Details 3)
LEASES (Details 3) | Sep. 30, 2020 | Jun. 30, 2019 |
Weighted Average Remaining Lease Term | ||
Operating leases | 1 year 7 months 6 days | 2 years 4 months 24 days |
Finance leases | 1 year | 1 year 3 months 18 days |
Weighted Average Discount Rate | ||
Operating leases | 4.75% | 4.75% |
Finance leases | 4.75% | 4.75% |
LEASES (Details 4)
LEASES (Details 4) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Operating Leases | ||
2020 | $ 37,922 | |
2021 | 149,476 | |
2022 | 97,256 | |
2023 | ||
2024 | ||
2025 | ||
Thereafter | ||
Total undiscounted lease payments | 284,654 | |
Less: imputed interest | (12,975) | |
Total operating lease liabilities | 271,679 | $ 373,734 |
Finance Leases | ||
2020 | 832 | |
2021 | 2,705 | |
2022 | ||
2023 | ||
2024 | ||
2025 | ||
Thereafter | ||
Total lease payments | 3,537 | |
Less: imputed interest | (97) | |
Total finance lease liabilities | $ 3,440 | $ 7,942 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 9 Months Ended |
Sep. 30, 2020 | |
Operating lease, options to terminate | 1 year |
Minimum [Member] | |
Operating lease, renewal term | 1 year |
Maximum [Member] | |
Operating lease, renewal term | 3 years |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - Lease Agreement [Member] - Building [Member] - Mr. Mark Pastreich [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Mar. 01, 2019 | Feb. 28, 2019 | |
Monthly lease payments | $ 12,088 | $ 11,042 | ||||
Lease payments | $ 36,264 | $ 36,264 | $ 108,792 | $ 106,700 | ||
Property taxes paid | $ 12,546 | $ 13,749 | $ 39,205 | $ 39,165 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - Purchase Agreement [Member] - Piper Sandler & Co. and Canaccord Genuity LLC [Member] - Common Stock [Member] | 1 Months Ended |
Jun. 18, 2020USD ($)$ / sharesshares | |
Number of shares issued (in shares) | 3,125,000 |
Additional number of shares issued (in shares) | 468,750 |
Share price (in dollars per share) | $ / shares | $ 7.52 |
Proceeds from issuance | $ | $ 26,500,000 |
Option excercise date | Jun. 19, 2020 |
Option excercise period | 30 days |
SUBSEQUENT EVENT (Details Narra
SUBSEQUENT EVENT (Details Narrative) - Manufacturing And Supply Agreement [Member] - Command Medical Products Inc [Member] - Subsequent Event [Member] | Nov. 11, 2020 |
Decription of agreement | The first binding purchase order pursuant to the Manufacturing and Supply Agreement is expected to be made within the next ten days (the “Effective Date”). |
Agreement term | 5 years |