Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 23, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | REPRO MED SYSTEMS INC | ||
Entity Central Index Key | 0000704440 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 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 a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity 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 Public Float | $ 211,688,692 | ||
Entity Common Stock, Shares Outstanding | 44,475,559 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 27,315,286 | $ 5,870,929 |
Accounts receivable less allowance for doubtful accounts of $24,469 and $32,645 for December 31, 2020, and December 31, 2019, respectively | 2,572,954 | 3,234,521 |
Inventory | 6,829,772 | 2,388,477 |
Prepaid expenses | 807,780 | 387,396 |
TOTAL CURRENT ASSETS | 37,525,792 | 11,881,323 |
Property and equipment, net | 1,167,623 | 611,846 |
Intangible assets, net of accumulated amortization of $199,899 and $288,967 at December 31, 2020 and December 31, 2019, respectively | 843,587 | 807,135 |
Operating lease right-of-use assets | 236,846 | 373,734 |
Deferred income tax assets, net | 125,274 | 188,241 |
Other assets | 19,812 | 19,582 |
TOTAL ASSETS | 39,918,934 | 13,881,861 |
CURRENT LIABILITIES | ||
Accounts payable | 624,920 | 572,656 |
Accrued expenses | 2,610,413 | 1,296,612 |
Accrued payroll and related taxes | 287,130 | 190,265 |
Accrued tax liability | 204,572 | |
Finance lease liability - current | 2,646 | 5,296 |
Operating lease liability - current | 141,293 | 136,888 |
TOTAL CURRENT LIABILITIES | 3,666,402 | 2,406,289 |
Finance lease liability, net of current portion | 2,646 | |
Operating lease liability, net of current portion | 95,553 | 236,846 |
TOTAL LIABILITIES | 3,761,955 | 2,645,781 |
Commitments and contingencies (Refer to Note 9) | ||
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value, 75,000,000 shares authorized, 46,680,119 and 42,239,788 shares issued; 43,259,617 and 39,502,557 shares outstanding at December 31, 2020, and December 31, 2019, respectively | 466,801 | 422,398 |
Additional paid-in capital | 35,880,986 | 6,293,069 |
Treasury stock, 3,420,502 shares and 2,737,231 shares at December 31, 2020 and December 31, 2019, respectively, at cost | (3,843,562) | (344,204) |
Retained earnings | 3,652,754 | 4,864,817 |
TOTAL STOCKHOLDERS' EQUITY | 36,156,979 | 11,236,080 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 39,918,934 | $ 13,881,861 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 24,469 | $ 32,645 |
Patents, accumulated amortization | $ 199,899 | $ 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 | 46,680,119 | 42,239,788 |
Common stock, outstanding | 43,259,617 | 39,502,557 |
Treasury stock | 3,420,502 | 2,737,231 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
NET SALES | $ 24,176,448 | $ 23,162,621 |
Cost of goods sold | 9,240,362 | 8,308,811 |
Gross Profit | 14,936,086 | 14,853,810 |
OPERATING EXPENSES | ||
Selling, general and administrative | 12,028,309 | 9,771,744 |
Litigation | 2,447,213 | 3,415,683 |
Research and development | 1,296,754 | 740,475 |
Depreciation and amortization | 418,595 | 340,229 |
Total Operating Expenses | 16,190,871 | 14,268,131 |
Net Operating (Loss)/Profit | (1,254,785) | 585,679 |
Non-Operating Income | ||
Gain/(Loss) on foreign currency exchange | 1,536 | (17,754) |
Gain on disposal of fixed assets | 16,591 | 47,830 |
Interest income, net | 42,395 | 80,663 |
TOTAL OTHER INCOME | 60,522 | 110,739 |
(LOSS)/INCOME BEFORE TAXES | (1,194,263) | 696,418 |
Income Tax Expense | (17,800) | (132,069) |
NET (LOSS)/INCOME | $ (1,212,063) | $ 564,349 |
NET (LOSS)/INCOME PER SHARE | ||
Basic (in dollars per share) | $ (0.03) | $ 0.01 |
Diluted (in dollars per share) | $ (0.03) | $ 0.01 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||
Basic (in shares) | 41,929,736 | 38,778,074 |
Diluted (in shares) | 41,929,736 | 39,061,310 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - 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 | $ 1,489 | 315,036 | 316,525 | ||
Issuance of stock-based compensation (in shares) | 148,877 | ||||
Compensation expense related to stock options | 888,319 | 888,319 | |||
Cancellation of common stock | $ (20) | (2,800) | (2,820) | ||
Cancellation of common stock (in shares) | (2,000) | ||||
Issuance of warrants exercised | $ 10,000 | 440,000 | 450,000 | ||
Issuance of warrants exercised (in shares) | 1,000,000 | ||||
Issuance upon options exercised | $ 1,600 | 57,300 | 58,900 | ||
Issuance upon options exercised (in shares) | 160,000 | ||||
Net income (loss) | 564,349 | 564,349 | |||
Balance ending at Dec. 31, 2019 | $ 422,398 | 6,293,069 | 4,864,817 | (344,204) | 11,236,080 |
Balance ending (in shares) at Dec. 31, 2019 | 42,239,788 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock-based compensation | $ 322 | 240,638 | 240,960 | ||
Issuance of stock-based compensation (in shares) | 32,181 | ||||
Compensation expense related to stock options | 1,377,772 | 1,377,772 | |||
Repurchase of shares | (3,499,358) | (3,499,358) | |||
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 | $ 7,191 | 88,689 | 95,880 | ||
Issuance upon options exercised (in shares) | 719,162 | ||||
Capital raise | $ 35,938 | 26,596,668 | 26,632,606 | ||
Capital raise (in shares) | 3,593,750 | ||||
Net income (loss) | (1,212,063) | (1,212,063) | |||
Balance ending at Dec. 31, 2020 | $ 466,801 | $ 35,880,986 | $ 3,652,754 | $ (3,843,562) | $ 36,156,979 |
Balance ending (in shares) at Dec. 31, 2020 | 46,680,119 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net (Loss)/Income | $ (1,212,063) | $ 564,349 |
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities: | ||
Stock-based compensation expense | 1,618,732 | 1,204,844 |
Stock-based litigation settlement expense | 1,285,102 | |
Depreciation and amortization | 418,595 | 340,229 |
Gain on disposal of fixed assets | (16,591) | (47,830) |
Deferred capital gain - building lease | (3,763) | |
Deferred income taxes | 62,967 | (186,775) |
Provision for doubtful accounts | (8,176) | (4,855) |
Abandonment of intangible assets | 41,919 | |
Changes in operating assets and liabilities: | ||
Decrease/(Increase) in accounts receivable | 669,743 | (1,803,812) |
Increase in inventory | (4,441,295) | (284,598) |
Increase in prepaid expenses and other assets | (420,614) | (140,805) |
Increase in accounts payable | 52,264 | 119,158 |
Increase/(Decrease) in accrued payroll and related taxes | 96,865 | (231,449) |
Increase in accrued expenses | 1,313,801 | 607,963 |
(Decrease)/Increase in accrued tax liability | (204,572) | 187,964 |
NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES | (743,323) | 320,620 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (920,604) | (201,174) |
Purchases of intangible assets | (140,548) | (224,365) |
Proceeds from certificates of deposit | 1,517,927 | |
Proceeds from disposal of property and equipment | 25,000 | 217,821 |
NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES | (1,036,152) | 1,310,209 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of equity | 26,728,486 | 508,900 |
Purchase of treasury stock | (3,499,358) | |
Borrowings from indebtedness | 4,976,508 | |
Payments on indebtedness | (4,976,508) | |
Payments on finance lease liability | (5,296) | (4,783) |
Payment for cancelled shares | (2,820) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 23,223,832 | 501,297 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 21,444,357 | 2,132,126 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 5,870,929 | 3,738,803 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 27,315,286 | 5,870,929 |
Cash paid during the years for: | ||
Interest | 27,736 | 342 |
Income taxes | 321,983 | 130,879 |
Schedule of Non-Cash Investing and Financing Activities: | ||
Non-cash equity issuance for the EMED Settlement | $ 938,094 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 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,” “KORU,” “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 We prepare our financial statements and accompanying notes in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain prior year amounts have been reclassified to conform to the current year presentation in our Financial Statements. 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. CERTIFICATES 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. We maintain reserves for excess and obsolete inventory resulting from the potential inability to sell certain products at prices in excess of current carrying costs. We make estimates regarding the future recoverability of the costs of these products and record provisions based on historical experience, expiration of sterilization dates and expected future trends. If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results. INTANGIBLE ASSETS Certain of our identifiable intangible assets, including patents and trademarks, are amortized using the straight-line method over their estimated useful lives which range from 6 to 20 years. All of our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Our management is responsible for determining if impairment exists and considers various factors when making these determinations. Amortization expense related to intangible assets for the years ended December 31, 2020 and 2019 was $62,177 and $49,388, respectively. The estimated amortization expense for the succeeding years for the intangible assets is approximately: Year Ending December 31, 2021 $ 59,724 2022 59,679 2024 58,886 2024 58,722 2025 58,138 Thereafter 548,438 Total amortization expense $ 843,587 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. PROPERTY AND EQUIPMENT Property and equipment are stated at original acquisition cost less accumulated depreciation. Additions and improvements are capitalized which increase the value or extend the life of an asset, while maintenance and repair costs are expensed as incurred. When assets are retired or otherwise disposed, the cost and related accumulated depreciation or amortization is removed from the respective accounts and any resulting gain or loss is included in income. Depreciation and amortization are calculated on the straight-line basis over the estimated useful lives of the assets which generally range from 3-10 years for furniture and office equipment, 3-12 years for manufacturing equipment and tooling and shorter of the lease term or their estimated useful lives for leasehold improvements. Depreciation and amortization expense related to property and equipment for the years ended December 31, 2020 and 2019 was $356,418 and $290,841, respectively. 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 includes only an increase in the weighted average shares by the common shares issuable upon exercise of stock options. See “NOTE 5 — STOCK-BASED COMPENSATION” for further detail. Years Ended December 31, 2020 December 31, 2019 Net (loss)/income $ (1,212,063 ) $ 564,349 Weighted Average Outstanding Shares: Outstanding shares 41,929,736 38,778,074 Option shares includable — (a) 283,236 41,929,736 39,061,310 Net (loss)/income per share Basic $ (0.03 ) $ 0.01 Diluted $ (0.03 ) $ 0.01 (a) Option shares of 239,935 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 Company established an allowance for charging off uncollectible trade accounts receivable that have both of the following characteristics: (a) They have a contractual maturity of one year or less, (b) They arose from the sale of goods or services. The following table summarizes net sales by geography for the years ended December 31, 2020 and 2019: Years Ended December 31, 2020 2019 Sales Domestic $ 20,678,453 $ 19,467,788 International 3,497,995 3,694,833 Total $ 24,176,448 $ 23,162,621 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 — LEASES” for further detail. 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 year ended December 31, 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 December 31, 2020. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 2 — INVENTORY Inventory consists of: December 31, 2020 December 31, 2019 Raw materials and work-in-process $ 2,279,054 $ 1,863,978 Finished goods 4,562,315 552,989 Total 6,841,369 2,416,967 Less: reserve for obsolete inventory (11,597 ) (28,490 ) Inventory, net $ 6,829,772 $ 2,388,477 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 — PROPERTY AND EQUIPMENT Property and equipment consists of the following at: December 31, 2020 December 31, 2019 Furniture and office equipment $ 753,536 $ 679,032 Leasehold improvements 542,796 456,075 Manufacturing equipment and tooling 1,856,909 1,295,978 Total property and equipment 3,153,241 2,431,085 Less: accumulated depreciation and amortization (1,985,618 ) (1,819,239 ) Property and equipment, net $ 1,167,623 $ 611,846 On May 21, 2019, the Company sold the house it owned for $0.2 million. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 4 — 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 $145,056 and $142,964 for the years ended December 31, 2020 and 2019, respectively. The Company also paid property taxes in the amount of $52,092 and $52,195 for years ended December 31, 2020 and 2019, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 5 — 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 with EMED Technologies Corporation (“EMED”) to settle all claims in connection with all pending litigation matters between them (the “Claims”) as described in “NOTE 9 — Effective January 1, 2021, each non-employee director of the Company (other than the Chairman of the Board) and Board advisor are eligible to receive of $75,000 annually, to be paid quarterly $12,500 in cash and $6,250 in common stock. In addition, for chairing the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee, each non-employee director is eligible to receive annually $15,000, $11,500 and $7,500 respectively, to be paid quarterly in cash and subject to proration for partial quarter service. The Chairman of the Board is eligible to receive $100,000 annually, to be paid quarterly $12,500 in cash and $12,500 in common stock. Prior to January 1, 2021, each non-employee director of the Company was eligible to receive $50,000 annually (effective January 1, 2019), plus $10,000 for chairing a Board committee (effective February 20, 2019), all to be paid quarterly half in cash and half in common stock. The Chairman of the Board was eligible to receive an additional $50,000 annually (effective October 1, 2019), all to be paid in common stock. All payments were pro-rated for partial service. The Company issued an aggregate 32,181 shares of common stock to its non-employee directors during the year ended December 31, 2020, respectively. 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 years ended December 31, 2020 and December 31, 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 years ended December 31, 2020 and December 31, 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. These assumptions are subjective and generally require significant analysis and judgment to develop. We have recognized tax benefits associated with stock-based compensation of $62,393 and $61,333 for the years ended December 31, 2020 and 2019, respectively. December 31, 2020 December 31, 2019 Dividend yield 0.00% 0.00% Expected volatility 62.11 - 62.18% 56.10 - 60.30% 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 Company’s stock option plan: December 31, 2020 December 31, 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 884,506 $ 0.71 160,000 $ 0.37 Forfeited 200,000 $ 2.09 262,000 $ 2.74 Outstanding at year end 2,922,494 $ 2.46 3,647,000 $ 1.32 Options exercisable 906,244 $ 1.40 1,078,510 $ 0.82 Weighted average fair value of options granted during the period — $ 6.53 — $ 1.33 Stock-based compensation expense — $ 874,869 — $ 594,956 Total stock-based compensation expense, net of forfeitures, for stock option awards totaled $874,869 and $594,956 for the years ended December 31, 2020 and 2019, respectively. Cash received from option exercises for the years ended December 31, 2020 and 2019 was $95,880 and $58,900, respectively. The weighted-average grant-date fair value of options granted during the years ended December 31, 2020, and 2019, was $2,350,264 and $2,202,678, respectively. The total intrinsic value of options exercised during the years ended December 31, 2020 and 2019, was $397,962 and $58,900, respectively. The following table presents information pertaining to options outstanding as of December 31, 2020: Range of Exercise Price Number Weighted Weighted Number Weighted $0.50 - 9.76 2,922,494 7.3 years $ 2.46 906,244 $ 1.40 As of December 31, 2020, there was $3,376,990 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 was $803,171 and $539,553 at December 31, 2020, and December 31, 2019, respectively. Performance-Based Stock Options The per share weighted average fair value of stock options granted during the years ended December 31, 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 years ended December 31, 2020 and December 31, 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. December 31, 2020 2019 Dividend yield — 0.00% Expected Volatility — 58.9% 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: December 31, 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 year end 1,000,000 $ 1.70 1,000,000 $ 1.70 Options exercisable 333,333 $ 1.70 — $ — Weighted average fair value of options granted during the period — $ — — $ 1.16 Stock-based compensation expense — $ 502,904 — $ 293,363 Total performance stock-based compensation expense totaled $502,904 and $293,363 for the years ended December 2020 and 2019, respectively. The weighted-average grant-date fair value of options granted during the years ended December 31, 2020 and 2019 was zero and $1,162,561, respectively. The following table presents information pertaining to performance-based options outstanding as of December 31, 2020: Range of Exercise Price Number Weighted Weighted Number Weighted $1.70 1,000,000 8.4 years $ 1.70 333,333 $ 1.70 As of December 31, 2020, there was $366,294 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 25 months. The total fair value of shares vested as of December 31, 2020 and 2019 was $387,520 and zero, respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 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. At contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time). Operating leases are accounted for on the balance sheets with ROU assets being recognized in “Operating lease right-of-use assets” and lease liabilities recognized in “Operating lease liability – current” and “Operating lease liability, net of current portion.” Finance leases are accounted for on the balance sheets recognized in “Property and equipment, net” and lease liabilities recognized in “Finance lease liability – current” and “Finance lease liability, net of current portion.” Operating lease expenses are recognized on a straight-line basis over the lease term. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability. We have elected to combine lease and non-lease components for all lease contracts where we are the lessee. Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred. ROU assets are measured for impairment when a triggering event occurs. The components of lease expense were as follows: Years Ended December 31, 2020 2019 Operating lease cost $ 151,686 $ 149,594 Short-term lease cost 65,227 21,362 Total lease cost $ 216,913 $ 170,956 Finance lease cost: Amortization of right-of-use assets $ 5,302 $ 4,837 Interest on lease liabilities 237 239 Total finance lease cost $ 5,539 $ 5,076 Supplemental cash flow information related to leases was as follows: Years Ended December 31, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 136,888 $ 110,120 Financing cash flows from finance leases $ 5,296 $ 4,783 Supplemental balance sheet information related to leases was as follows: December 31, December 31, Operating Leases Operating lease right-of-use assets $ 236,846 $ 373,734 Operating lease liability - current 141,293 136,888 Operating lease liability, net of current portion 95,553 236,846 Total operating lease liabilities $ 236,846 $ 373,734 Finance Leases Property and equipment, at cost $ 12,725 $ 12,725 Accumulated depreciation (10,139 ) (4,837 ) Property and equipment, net $ 2,586 $ 7,888 Finance lease liability – current 2,646 5,296 Finance lease liability, net of current portion — 2,646 Total finance lease liabilities $ 2,646 $ 7,942 December 31, December 31, Weighted Average Remaining Lease Term Operating leases 1.4 Years 2.4 Years Finance leases 0.7 Years 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 2021 $ 149,476 $ 2,705 2022 97,256 — 2023 — — 2024 — — 2025 — — Thereafter — — Total undiscounted lease payments 246,732 2,705 Less: imputed interest (9,886 ) (59 ) Total lease liabilities $ 236,846 $ 2,646 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
FEDERAL AND STATE INCOME TAXES | NOTE 7 — FEDERAL AND STATE INCOME TAXES Income tax expense consisted of the following: Year Ended Year Ended State income tax: Current, net of refund $ 17,800 $ 22,514 Federal income tax: Deferred 62,967 (186,775 ) Current (62,967 ) 296,330 Income tax expense $ 17,800 $ 132,069 The reconciliation of income taxes shown in the financial statements and amounts computed by applying the Federal expected tax rate of 21% for year 2020 and 2019 is as follows: Year Ended Year Ended (Loss)/income before taxes $ (1,194,263 ) $ 696,418 Income taxes computed at the federal statutory rate $ (250,795 ) $ 146,248 State income and franchise tax 17,800 22,514 Permanent differences and other 250,795 (36,693 ) Income tax expense $ 17,800 $ 132,069 The significant components of deferred income tax assets, net are as follows: December 31, December 31, Deferred compensation cost $ 239,036 $ 259,068 Depreciation and amortization (135,092 ) (71,331 ) Allowance for bad debts and other 21,330 504 Deferred income tax assets, net $ 125,274 $ 188,241 Our U.S. federal and state income tax returns remain open to examination for the tax years 2017 through 2020. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | NOTE 8 — MAJOR CUSTOMERS For the years ended December 31, 2020 and December 31, 2019, approximately 51% and 53%, respectively, of the Company’s net product revenues were derived from one major customer. As of December 31, 2020 and December 31, 2019, accounts receivable due from this customer was $1.4 million and $1.9 million, respectively. The largest customer in both years is a domestic medical products and supplies distributor. Although, a number of larger infusion customers have elected to consolidate their purchases through one or more distributors in recent years, we continue to maintain strong direct relationships with them. We do not believe that their continued purchase of FREEDOM System products and related supplies is contingent upon the distributor. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 — 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 From 2013 until May 2020, we were involved in several lawsuits with our principal competitor, EMED. EMED alleged that our needle sets infringed various patents controlled by EMED. Certain of these lawsuits also alleged antitrust violations, unfair business practices, and various other business tort claims. On May 26, 2020, the parties announced the settlement of all of the litigation between KORU Medical and EMED. The settlement agreement provides KORU Medical with freedom to operate under EMED’s existing patent portfolio, dismissal of all litigation with prejudice (including the claims against Andrew Sealfon, our former President and Chief Executive Officer), and an equity payment by KORU Medical to EMED. Refer to Form 10-Q for the quarterly period ended June 30, 2020 regarding the dismissed case with our principal competitor, EMED. OTHER 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 was made on November 17, 2020 (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. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFITS | NOTE 10 — EMPLOYEE BENEFITS We provide a safe harbor 401(k) plan for our employees that allows for employee elective contributions, Company matching contributions and discretionary profit-sharing contributions. Employee elective contributions are funded through voluntary payroll deductions. The Company makes safe harbor matching contributions in an amount equal to 100% of the employee’s contribution, not to exceed 3% of employee’s compensation plus 50% of employee’s pay contributed between 3% and 5% of employee’s compensation. Company matching expense for the years ended December 31, 2020 and December 31, 2019 was $156,789 and $118,632, respectively. The Company has not provided for a discretionary profit-sharing contribution. |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
DEBT OBLIGATIONS | NOTE 11 — 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. In response to concerns about the potential impact of COVID-19, the Company elected to draw the additional $2.0 million on April 23, 2020 available under the line, drawing the full amount available of $3.5 million on its line of credit. 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. On July 29, 2020, the Company paid the balance of $3.5 million in full. 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 December 31, 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 December 31, 2020, the Company had no amount outstanding against the PPLSA. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
EQUITY | NOTE 12 — 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 $26.6 million. On November 16, 2020, the Company announced that its Board of Directors had authorized a stock repurchase program under which the Company may purchase up to $10.0 million of its outstanding common stock through December 31, 2021. As of December 31, 2020, the Company had purchased 683,271shares since inception of this plan. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 13 — SUBSEQUENT EVENT On January 22, 2021, Donald B. Pettigrew, President and Chief Executive Officer, resigned his employment effective immediately. Also, on January 22, 2021, James M. Beck, currently serving as a director, was appointed as Chief Executive Officer on an interim basis. Mr. Beck has remained a director, and Robert Allen, also currently a director, replaced Mr. Beck as Chairman of the Compensation Committee. In connection with Mr. Pettigrew’s resignation, he entered into a Separation and General Release Agreement with the Company wherein the parties agreed that the Company will continue to pay Mr. Pettigrew his base salary and healthcare benefits for twelve months, and Mr. Pettigrew has forfeited all right to exercise his vested performance-based stock options. Mr. Pettigrew will have the right to exercise 1,000,000 of his non-qualified stock options for a period of 90 days. On February 16, 2021, Mr. Pettigrew exercised 1,000,000 shares of vested options at a strike price of $1.23 totaling $1,230,000 pursuant to his option agreements dated September 4, 2018 and January 22, 2021. On February 5, 2021, the Company entered into an employment agreement dated as of January 22, 2021 with Mr. Beck, the Company’s interim Chief Executive Officer. The following is a summary of Mr. Beck’s employment agreement. • Mr. Beck’s monthly base compensation will be $40,000, pro-rated for any partial month and with a minimum guaranteed two months. • Mr. Beck will receive a bonus based upon amounts payable to the person who first succeeds Mr. Beck as chief executive officer of the Company, which bonus will equal the initial annual base salary payable to such successor, prorated for Mr. Beck’s term of employment and with a minimum guaranteed two months (the “Bonus”). The Bonus will be paid in cash sixty (60) days following Mr. Beck’s termination of employment under the employment agreement. Notwithstanding the above, no Bonus will be paid to Mr. Beck in the event he becomes the chief executive officer of the Company following his tenure under the Employment Agreement, he resigns his employment prior to the appointment of his successor to the position of chief executive officer of the Company, he is terminated by the Company for “Cause” (as defined in the Employment Agreement), or he fails to use his best efforts in assisting in the orderly transition of his successor to the position of chief executive officer of the Company (as determined by the Board). • Mr. Beck’s employment with the Company is “at-will” at the discretion of the Board, subject to a 30-day notice of termination (except where termination is by the Company for Cause). • Pursuant to the Company’s 2015 Stock Option Plan, as amended, on February 15, 2021, Mr. Beck received a 10-year nonqualified option to purchase up to 150,000 shares of the Company’s common stock at a per share exercise price equal to the fair market value of the common stock on the date of grant. Of these options, 100,000 were fully vested on the date of grant, and 50,000 will vest on March 22, 2021. The aforementioned options may be exercised for cash or by “cashless” or “net” exercise. On March 15, 2021, Linda Tharby entered into an employment agreement with the Company providing for her appointment as President and Chief Executive Officer of KORU Medical Systems, effective April 12, 2021. Mr. Beck will resign from that position upon the appointment of Ms. Tharby, and will continue as a member of the Board of Directors. Pursuant to this agreement, Ms. Tharby will receive an annual base salary of $550,000 and be eligible to earn an annual bonus, paid 70% in cash and 30% in shares of the Company’s common stock, with a target of 80% of her base salary, based on achievement of objectives set in accordance with the Company’s management incentive compensation plan for executives, payable by March 15 of the following year. Under the agreement, Ms. Tharby received non-qualified stock options pursuant to the Company’s 2015 Stock Option Plan, as amended, to purchase up to 1,000,000 shares of the Company’s common stock at an exercise price of $3.875 per share, subject to vesting as follows, provided she is then employed by the Company: 25% on March 15, 2021 and 25% each twelve months thereafter. In addition, Ms. Tharby will receive three restricted stock awards on April 12, 2021 as follows, each vesting subject to employment on the respective vesting date: (1) 600,000 shares of common stock to vest vesting as follows: if the Company’s Net Sales Growth (defined below) for any of the fiscal years ended December 31, 2022, 2023, 2024 or 2025 (each, a “Target Year”) is at least the applicable Net Sales Target set forth on the schedule to the restricted stock award agreement, then, on the applicable Vesting Date, a corresponding portion of the restricted stock award will vest as set forth on such schedule. Additionally, if Net Sales Growth is less than any of the Net Sales Targets set forth in such schedule in any Target Year (a “Miss Year”), vesting of the restricted stock award in the following Target Years (each such subsequent Target Year, a “Catch-up Year”) shall be further subject to the following catch-up vesting provisions: if the Net Sales Growth in the Miss Year(s) when averaged with the Net Sales in each Catch-up Year(s) equals or exceeds a Net Sales Target in any single Miss Year that has not previously been obtained, then on the applicable Vesting Date, an additional portion of the Award shall vest as if the applicable Net Sales Target had been met in the Miss Year(s). Notwithstanding the foregoing, the restricted stock award shall automatically vest in full upon the Company maintaining, for a period of at least two consecutive fiscal quarters after January 1, 2022, at least a specified run rate over the previous four fiscal quarters, as reported in the Company’s filings pursuant to the Securities Exchange Act of 1934, as amended. (2) 200,000 shares of common stock vesting 25% on April 12, 2022 and 25% on each twelve months thereafter. (3) 200,000 shares of common stock, vesting as follows: (i) 50,000 shares on the first date on which the Company’s Market Capitalization for a period of 90 consecutive days has been, or there has been a Change of Control (as defined in the employment agreement) of the Company with an enterprise value of, at least $500,000,000 but less than $600,000,000; (ii) 50,000 shares on the first date on which the Company’s Market Capitalization for a period of 90 consecutive days has been, or there has been a Change of Control of the Company with an enterprise value of, at least $600,000,000 but less than $750,000,000; and (iii) 100,000 shares on the date on which the Company’s Market Capitalization for a period of 90 consecutive days has been, or there has been a Change of Control of the Company with an enterprise value of, at least $750,000,000. “Market Capitalization” shall be determined by (A) multiplying the number of shares reported as outstanding on the cover of the Company’s most recent Form 10-K or 10-Q, as applicable, as filed with the Securities and Exchange Commission, by (B) the Fair Market Value of the Common Stock (as defined in the Company’s 2015 Stock Option Plan, as amended) on each day. Notwithstanding the foregoing, no portion of the restricted stock award shall vest on or following the fifth anniversary of the award date. Upon termination of Ms. Tharby’s employment by the Company without “cause” or by Ms. Tharby for “good reason” (as defined in the employment agreement) within 3 months prior to or 12 months following a “change of control” (as defined in the employment agreement) of the Company, all equity awards pursuant to the employment agreement will become fully vested. Should the Company terminate Ms. Tharby’s employment without “cause” or should she leave the Company for “good reason,” she will be eligible for a severance package comprised of (i) base salary for 12 months, calculated at the rate of her then base salary, to be paid in accordance with the Company’s normal payroll practices; (ii) her Annual Bonus as if earned for the year of termination; and (iii) if termination occurs on or after January 1, 2022, acceleration of her stock options and restricted stock award set forth under (2) above for the year of termination (i.e., 25% of total award), if not then vested. For the same period, the Company will also cover the cost of health insurance, which is continued by Ms. Tharby through COBRA election. The employment agreement contains customary confidentiality and assignment of invention provisions and mutual non-disparagement covenant, as well as one-year non-competition and non-solicitation covenants. The Company has agreed to reimburse Ms. Tharby up to $12,500 in legal fees associated with the employment agreement. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS REPRO MED SYSTEMS, INC. (the “Company,” “KORU Medical,” “KORU,” “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 We prepare our financial statements and accompanying notes in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain prior year amounts have been reclassified to conform to the current year presentation in our Financial Statements. |
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 | CERTIFICATES 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. We maintain reserves for excess and obsolete inventory resulting from the potential inability to sell certain products at prices in excess of current carrying costs. We make estimates regarding the future recoverability of the costs of these products and record provisions based on historical experience, expiration of sterilization dates and expected future trends. If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results. |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Certain of our identifiable intangible assets, including patents and trademarks, are amortized using the straight-line method over their estimated useful lives which range from 6 to 20 years. All of our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Our management is responsible for determining if impairment exists and considers various factors when making these determinations. Amortization expense related to intangible assets for the years ended December 31, 2020 and 2019 was $62,177 and $49,388, respectively. The estimated amortization expense for the succeeding years for the intangible assets is approximately: Year Ending December 31, 2021 $ 59,724 2022 59,679 2024 58,886 2024 58,722 2025 58,138 Thereafter 548,438 Total amortization expense $ 843,587 |
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. |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment are stated at original acquisition cost less accumulated depreciation. Additions and improvements are capitalized which increase the value or extend the life of an asset, while maintenance and repair costs are expensed as incurred. When assets are retired or otherwise disposed, the cost and related accumulated depreciation or amortization is removed from the respective accounts and any resulting gain or loss is included in income. Depreciation and amortization are calculated on the straight-line basis over the estimated useful lives of the assets which generally range from 3-10 years for furniture and office equipment, 3-12 years for manufacturing equipment and tooling and shorter of the lease term or their estimated useful lives for leasehold improvements. Depreciation and amortization expense related to property and equipment for the years ended December 31, 2020 and 2019 was $356,418 and $290,841, respectively. |
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 includes only an increase in the weighted average shares by the common shares issuable upon exercise of stock options. See “NOTE 5 — STOCK-BASED COMPENSATION” for further detail. Years Ended December 31, 2020 December 31, 2019 Net (loss)/income $ (1,212,063 ) $ 564,349 Weighted Average Outstanding Shares: Outstanding shares 41,929,736 38,778,074 Option shares includable — (a) 283,236 41,929,736 39,061,310 Net (loss)/income per share Basic $ (0.03 ) $ 0.01 Diluted $ (0.03 ) $ 0.01 (a) Option shares of 239,935 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 Company established an allowance for charging off uncollectible trade accounts receivable that have both of the following characteristics: (a) They have a contractual maturity of one year or less, (b) They arose from the sale of goods or services. The following table summarizes net sales by geography for the years ended December 31, 2020 and 2019: Years Ended December 31, 2020 2019 Sales Domestic $ 20,678,453 $ 19,467,788 International 3,497,995 3,694,833 Total $ 24,176,448 $ 23,162,621 |
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 — LEASES” for further detail. |
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 year ended December 31, 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 December 31, 2020. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of amortization expense | The estimated amortization expense for the succeeding years for the intangible assets is approximately: Year Ending December 31, 2021 $ 59,724 2022 59,679 2024 58,886 2024 58,722 2025 58,138 Thereafter 548,438 Total amortization expense $ 843,587 |
Schedule of net income per common share | Diluted earnings per share includes only an increase in the weighted average shares by the common shares issuable upon exercise of stock options. Years Ended December 31, 2020 December 31, 2019 Net (loss)/income $ (1,212,063 ) $ 564,349 Weighted Average Outstanding Shares: Outstanding shares 41,929,736 38,778,074 Option shares includable — (a) 283,236 41,929,736 39,061,310 Net (loss)/income per share Basic $ (0.03 ) $ 0.01 Diluted $ (0.03 ) $ 0.01 (a) Option shares of 239,935 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 years ended December 31, 2020 and 2019: Years Ended December 31, 2020 2019 Sales Domestic $ 20,678,453 $ 19,467,788 International 3,497,995 3,694,833 Total $ 24,176,448 $ 23,162,621 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory consists of: December 31, 2020 December 31, 2019 Raw materials and work-in-process $ 2,279,054 $ 1,863,978 Finished goods 4,562,315 552,989 Total 6,841,369 2,416,967 Less: reserve for obsolete inventory (11,597 ) (28,490 ) Inventory, net $ 6,829,772 $ 2,388,477 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consists of the following at: December 31, 2020 December 31, 2019 Furniture and office equipment $ 753,536 $ 679,032 Leasehold improvements 542,796 456,075 Manufacturing equipment and tooling 1,856,909 1,295,978 Total property and equipment 3,153,241 2,431,085 Less: accumulated depreciation and amortization (1,985,618 ) (1,819,239 ) Property and equipment, net $ 1,167,623 $ 611,846 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of fair value of the stock options granted Black-Scholes option valuation model | We have recognized tax benefits associated with stock-based compensation of $62,393 and $61,333 for the years ended December 31, 2020 and 2019, respectively. December 31, 2020 December 31, 2019 Dividend yield 0.00% 0.00% Expected volatility 62.11 - 62.18% 56.10 - 60.30% 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 Company’s stock option plan: December 31, 2020 December 31, 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 884,506 $ 0.71 160,000 $ 0.37 Forfeited 200,000 $ 2.09 262,000 $ 2.74 Outstanding at year end 2,922,494 $ 2.46 3,647,000 $ 1.32 Options exercisable 906,244 $ 1.40 1,078,510 $ 0.82 Weighted average fair value of options granted during the period — $ 6.53 — $ 1.33 Stock-based compensation expense — $ 874,869 — $ 594,956 |
Schedule of information pertaining to options outstanding | The following table presents information pertaining to options outstanding as of December 31, 2020: Range of Exercise Price Number Weighted Weighted Number Weighted $0.50 - 9.76 2,922,494 7.3 years $ 2.46 906,244 $ 1.40 |
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. December 31, 2020 2019 Dividend yield — 0.00% Expected Volatility — 58.9% 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: December 31, 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 year end 1,000,000 $ 1.70 1,000,000 $ 1.70 Options exercisable 333,333 $ 1.70 — $ — Weighted average fair value of options granted during the period — $ — — $ 1.16 Stock-based compensation expense — $ 502,904 — $ 293,363 |
Schedule of information pertaining to performance base options outstanding | The following table presents information pertaining to performance-based options outstanding as of December 31, 2020: Range of Exercise Price Number Weighted Weighted Number Weighted $1.70 1,000,000 8.4 years $ 1.70 333,333 $ 1.70 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of components of lease expense | The components of lease expense were as follows: Years Ended December 31, 2020 2019 Operating lease cost $ 151,686 $ 149,594 Short-term lease cost 65,227 21,362 Total lease cost $ 216,913 $ 170,956 Finance lease cost: Amortization of right-of-use assets $ 5,302 $ 4,837 Interest on lease liabilities 237 239 Total finance lease cost $ 5,539 $ 5,076 |
Schedule of cash flow information related to leases | Supplemental cash flow information related to leases was as follows: Years Ended December 31, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 136,888 $ 110,120 Financing cash flows from finance leases $ 5,296 $ 4,783 |
Schdeule of balance sheet information related to leases | Supplemental balance sheet information related to leases was as follows: December 31, December 31, Operating Leases Operating lease right-of-use assets $ 236,846 $ 373,734 Operating lease liability - current 141,293 136,888 Operating lease liability, net of current portion 95,553 236,846 Total operating lease liabilities $ 236,846 $ 373,734 Finance Leases Property and equipment, at cost $ 12,725 $ 12,725 Accumulated depreciation (10,139 ) (4,837 ) Property and equipment, net $ 2,586 $ 7,888 Finance lease liability – current 2,646 5,296 Finance lease liability, net of current portion — 2,646 Total finance lease liabilities $ 2,646 $ 7,942 December 31, December 31, Weighted Average Remaining Lease Term Operating leases 1.4 Years 2.4 Years Finance leases 0.7 Years 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 2021 $ 149,476 $ 2,705 2022 97,256 — 2023 — — 2024 — — 2025 — — Thereafter — — Total undiscounted lease payments 246,732 2,705 Less: imputed interest (9,886 ) (59 ) Total lease liabilities $ 236,846 $ 2,646 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | Income tax expense consisted of the following: Year Ended Year Ended State income tax: Current, net of refund $ 17,800 $ 22,514 Federal income tax: Deferred 62,967 (186,775 ) Current (62,967 ) 296,330 Income tax expense $ 17,800 $ 132,069 |
Schedule of reconciliation of income taxes | The reconciliation of income taxes shown in the financial statements and amounts computed by applying the Federal expected tax rate of 21% for year 2020 and 2019 is as follows: Year Ended Year Ended (Loss)/income before taxes $ (1,194,263 ) $ 696,418 Income taxes computed at the federal statutory rate $ (250,795 ) $ 146,248 State income and franchise tax 17,800 22,514 Permanent differences and other 250,795 (36,693 ) Income tax expense $ 17,800 $ 132,069 |
Schedule of components of deferred tax assets | The significant components of deferred income tax assets, net are as follows: December 31, December 31, Deferred compensation cost $ 239,036 $ 259,068 Depreciation and amortization (135,092 ) (71,331 ) Allowance for bad debts and other 21,330 504 Deferred income tax assets, net $ 125,274 $ 188,241 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
2021 | $ 59,724 | |
2022 | 59,679 | |
2023 | 58,886 | |
2024 | 58,722 | |
2025 | 58,138 | |
Thereafter | 548,438 | |
Total amortization expense | $ 843,587 | $ 807,135 |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | ||
Accounting Policies [Abstract] | |||
Net (loss)/income | $ (1,212,063) | $ 564,349 | |
Weighted Average Outstanding Shares: | |||
Outstanding shares | 41,929,736 | 38,778,074 | |
Option shares includable | [1] | 283,236 | |
Total | 41,929,736 | 39,061,310 | |
Net (loss)/income per share | |||
Basic (in dollars per share) | $ (0.03) | $ 0.01 | |
Diluted (in dollars per share) | $ (0.03) | $ 0.01 | |
[1] | Option shares of 239,935 were not included as the impact is anti-dilutive. |
NATURE OF OPERATIONS AND SUMM_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Net sales | $ 24,176,448 | $ 23,162,621 |
Domestic [Member] | ||
Net sales | 20,678,453 | 19,467,788 |
International [Member] | ||
Net sales | $ 3,497,995 | $ 3,694,833 |
NATURE OF OPERATIONS AND SUMM_7
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Dec. 31, 2020USD ($)Segmentshares | Dec. 31, 2019USD ($) | |
Number of segments | Segment | 1 | |
FDIC cash uninsured amount | $ 250,000 | |
Amortization expense of intangible assets | 62,177 | $ 49,388 |
Depreciation and amortization expense | $ 418,595 | $ 340,229 |
Minimum [Member] | Furniture and Office Equipment [Member] | ||
Estimated useful lives of property and equipment | 3 years | |
Minimum [Member] | Equipment and Tooling [Member] | ||
Estimated useful lives of property and equipment | 3 years | |
Maximum [Member] | Furniture and Office Equipment [Member] | ||
Estimated useful lives of property and equipment | 10 years | |
Maximum [Member] | Equipment and Tooling [Member] | ||
Estimated useful lives of property and equipment | 12 years | |
Patents And Trademarks [Member] | Minimum [Member] | ||
Estimated useful lives | 6 years | |
Patents And Trademarks [Member] | Maximum [Member] | ||
Estimated useful lives | 20 years | |
Option [Member] | ||
Anti-dilutive shares | shares | 239,935 | |
Certificates Of Deposit [Member] | ||
Interest rate | 1.73% | |
Certificate of deposit, matured date | May 31, 2019 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials and work-in-process | $ 2,279,054 | $ 1,863,978 |
Finished goods | 4,562,315 | 552,989 |
Total | 6,841,369 | 2,416,967 |
Less: reserve for obsolete inventory | (11,597) | (28,490) |
Inventory, net | $ 6,829,772 | $ 2,388,477 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Total property and equipment | $ 3,153,241 | $ 2,431,085 |
Less: accumulated depreciation and amortization | (1,985,618) | (1,819,239) |
Property and equipment, net | 1,167,623 | 611,846 |
Furniture and Office Equipment [Member] | ||
Total property and equipment | 753,536 | 679,032 |
Leasehold Improvements [Member] | ||
Total property and equipment | 542,796 | 456,075 |
Manufacturing Equipment And Tooling [Member] | ||
Total property and equipment | $ 1,856,909 | $ 1,295,978 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) | May 21, 2019USD ($) |
Property, Plant and Equipment [Abstract] | |
Sale of house owned | $ 200,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - Lease Agreement [Member] - Building [Member] - Mr. Mark Pastreich [Member] - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Mar. 01, 2019 | Feb. 28, 2019 | |
Monthly lease payments | $ 12,088 | $ 11,042 | ||
Lease payments | $ 145,056 | $ 142,964 | ||
Property taxes paid | $ 52,092 | $ 52,195 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - 2015 Stock Option Plan [Member] - Time Based Shares Options [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Dividend yield | 0.00% | 0.00% |
Weighted-average volatility | ||
Expected dividends | ||
Expected term (in years) | 10 years | 10 years |
Minimum [Member] | ||
Expected volatility | 62.11% | 56.10% |
Risk-free rate | 0.63% | 1.60% |
Maximum [Member] | ||
Expected volatility | 62.18% | 60.30% |
Risk-free rate | 0.64% | 2.72% |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details 1) - 2015 Stock Option Plan [Member] - Time Based Shares Options [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 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 | 884,506 | 160,000 |
Forfeited | 200,000 | 262,000 |
Outstanding at ending | 2,922,494 | 3,647,000 |
Options exercisable at ending | 906,244 | 1,078,510 |
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 | 0.71 | 0.37 |
Forfeited | 2.09 | 2.74 |
Outstanding at ending | 2.46 | 1.32 |
Options exercisable at ending | 1.40 | 0.82 |
Weighted average fair value of options granted during the period | $ 6.53 | $ 1.33 |
Stock-based compensation expense | $ 874,869 | $ 594,956 |
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] | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number Outstanding | shares | 2,922,494 |
Weighted Average Remaining Contractual Term | 7 years 3 months 18 days |
Weighted Average Exercise Price | $ / shares | $ 2.46 |
Number Exercisable | shares | 906,244 |
Weighted Average Exercise Price | $ / shares | $ 1.40 |
STOCK-BASED COMPENSATION (Det_4
STOCK-BASED COMPENSATION (Details 3) - 2015 Stock Option Plan [Member] - Performance Based Share Options [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Dividend yield | 0.00% | |
Expected Volatility | 58.90% | |
Weighted-average volatility | ||
Expected dividends | ||
Expected term (in years) | 10 years | |
Risk-free rate | 2.07% |
STOCK-BASED COMPENSATION (Det_5
STOCK-BASED COMPENSATION (Details 4) - 2015 Stock Option Plan [Member] - Performance Based Share Options [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 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 | $ 502,904 | $ 293,363 |
STOCK-BASED COMPENSATION (Det_6
STOCK-BASED COMPENSATION (Details 5) - 2015 Stock Option Plan [Member] - Performance Based Share Options [Member] - $1.70 [Member] | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number Outstanding | shares | 1,000,000 |
Weighted Average Remaining Contractual Term | 8 years 4 months 24 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 ($) | Jan. 02, 2021 | May 20, 2019 | Apr. 23, 2019 | Apr. 02, 2019 | Feb. 02, 2019 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Independent Directors [Member] | ||||||||
Description of payment terms | Each non-employee director of the Company (other than the Chairman of the Board) and Board advisor are eligible to receive of $75,000 annually, to be paid quarterly $12,500 in cash and $6,250 in common stock. In addition, for chairing the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee, each non-employee director is eligible to receive annually $15,000, $11,500 and $7,500 respectively, to be paid quarterly in cash and subject to proration for partial quarter service. The Chairman of the Board is eligible to receive $100,000 annually, to be paid quarterly $12,500 in cash and $12,500 in common stock. | |||||||
Non-Employee Director [Member] | ||||||||
Description of payment terms | Each non-employee director of the Company was eligible to receive $50,000 annually (effective January 1, 2019), plus $10,000 for chairing a Board committee (effective February 20, 2019), all to be paid quarterly half in cash and half in common stock. The Chairman of the Board was eligible to receive an additional $50,000 annually (effective October 1, 2019), all to be paid in common stock. All payments were pro-rated for partial service. The Company issued an aggregate 32,181 shares of common stock to its non-employee directors during the year ended December 31, 2020, respectively. | |||||||
Employment Agreement [Member] | Chief Executive Officer, Mr. Goldberger [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. | |||||||
EMED Technologies Corporation [Member] | Settlement Agreement [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 | |||||||
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 | $ 874,869 | $ 594,956 | ||||||
Weighted-average grant-date fair value options granted | 2,350,264 | 2,202,678 | ||||||
Total unrecognized compensation cost | $ 3,376,990 | |||||||
Weighted-average period (in years) | 48 months | |||||||
Total fair value of shares vested | $ 803,171 | 539,553 | ||||||
Cash received from option exercises | $ 95,880 | $ 58,900 | ||||||
Number of options exercised | 397,962 | 58,900 | ||||||
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 | $ 502,904 | $ 293,363 | ||||||
Weighted-average grant-date fair value options granted | 0 | 1,162,561 | ||||||
Total unrecognized compensation cost | $ 366,294 | |||||||
Weighted-average period (in years) | 25 months | |||||||
Total fair value of shares vested | $ 387,520 | $ 0 |
LEASES (Details)
LEASES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 151,686 | $ 149,594 |
Short-term lease cost | 65,227 | 21,362 |
Total lease cost | 216,913 | 170,956 |
Finance lease cost: | ||
Amortization of right-of-use assets | 5,302 | 4,837 |
Interest on lease liabilities | 237 | 239 |
Total finance lease cost | $ 5,539 | $ 5,076 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 136,888 | $ 110,120 |
Financing cash flows from finance leases | $ 5,296 | $ 4,783 |
LEASES (Details 2)
LEASES (Details 2) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Operating Leases | ||
Operating lease right-of-use assets | $ 236,846 | $ 373,734 |
Operating lease liability - current | 141,293 | 136,888 |
Operating lease liability, net of current portion | 95,553 | 236,846 |
Total operating lease liabilities | 236,846 | 373,734 |
Finance Leases | ||
Property and equipment, at cost | 12,725 | 12,725 |
Accumulated depreciation | (10,139) | (4,837) |
Property and equipment, net | 2,586 | 7,888 |
Finance lease liability - current | 2,646 | 5,296 |
Finance lease liability, net of current portion | 2,646 | |
Total finance lease liabilities | $ 2,646 | $ 7,942 |
LEASES (Details 3)
LEASES (Details 3) | Dec. 31, 2020 | Dec. 31, 2019 |
Weighted Average Remaining Lease Term | ||
Operating leases | 1 year 4 months 24 days | 2 years 4 months 24 days |
Finance leases | 8 months 12 days | 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 ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Operating Leases | ||
2021 | $ 149,476 | |
2022 | 97,256 | |
2023 | ||
2024 | ||
2025 | ||
Thereafter | ||
Total undiscounted operating lease payments | 246,732 | |
Less: imputed interest | (9,886) | |
Total operating lease liabilities | 236,846 | $ 373,734 |
Finance Leases | ||
2021 | 2,705 | |
2022 | ||
2023 | ||
2024 | ||
2025 | ||
Thereafter | ||
Total undiscounted finance lease payments | 2,705 | |
Less: imputed interest | (59) | |
Total finance lease liabilities | $ 2,646 | $ 7,942 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2020 | |
Operating lease, options to terminate | 1 year | |
Minimum [Member] | ||
Operating lease, renewal term | 1 year | |
Maximum [Member] | ||
Operating lease, renewal term | 3 years |
FEDERAL AND STATE INCOME TAXE_2
FEDERAL AND STATE INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
State income tax: | ||
Current, net of refund | $ 17,800 | $ 22,514 |
Federal income tax: | ||
Deferred | 62,967 | (186,775) |
Current | (62,967) | 296,330 |
Income tax expense | $ 17,800 | $ 132,069 |
FEDERAL AND STATE INCOME TAXE_3
FEDERAL AND STATE INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
(Loss)/income before taxes | $ (1,194,263) | $ 696,418 |
Income taxes computed at the federal statutory rate | (250,795) | 146,248 |
State income and franchise tax | 17,800 | 22,514 |
Permanent differences and other | 250,795 | (36,693) |
Income tax expense | $ 17,800 | $ 132,069 |
FEDERAL AND STATE INCOME TAXE_4
FEDERAL AND STATE INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Deferred compensation cost | $ 239,036 | $ 259,068 |
Depreciation and amortization | (135,092) | (71,331) |
Allowance for bad debts and other | 21,330 | 504 |
Deferred income tax assets, net | $ 125,274 | $ 188,241 |
FEDERAL AND STATE INCOME TAXE_5
FEDERAL AND STATE INCOME TAXES (Details Narrative) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal expected tax rate | 21.00% | 21.00% |
MAJOR CUSTOMERS (Details Narrat
MAJOR CUSTOMERS (Details Narrative) - One Customer [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Sales Revenue [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of product revenues | 51.00% | 53.00% |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Accounts receivable | $ 1,400,000 | $ 1,900,000 |
EMPLOYEE BENEFITS (Details Narr
EMPLOYEE BENEFITS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Retirement Benefits [Abstract] | ||
Description of matching contribution | The Company makes safe harbor matching contributions in an amount equal to 100% of the employee’s contribution not to exceed 3% of employee’s compensation plus 50% of employee’s pay contributed between 3% and 5% of employee’s compensation. | |
Matching expense | $ 156,789 | $ 118,632 |
DEBT OBLIGATIONS (Details Narra
DEBT OBLIGATIONS (Details Narrative) - USD ($) | Apr. 27, 2020 | Apr. 20, 2020 | Apr. 14, 2020 | Feb. 08, 2018 | Dec. 31, 2020 | Jul. 29, 2020 | Apr. 23, 2020 |
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 | $ 3,500,000 | $ 3,500,000 | ||||
Interest rate terms | LIBOR plus 2.25% | ||||||
Description collateral | collateralized with a certificate of deposit | ||||||
Collateral amount | $ 1,500,000 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | Nov. 16, 2020 | Jun. 18, 2020 | Dec. 31, 2020 |
Number of stock repurchase | $ (3,499,358) | ||
Purchase Agreement [Member] | Board of Directors [Member] | |||
Number of shares issued (in shares) | 683,271 | ||
Number of stock repurchase | $ 10,000,000 | ||
Purchase Agreement [Member] | Piper Sandler & Co. and Canaccord Genuity LLC [Member] | Common Stock [Member] | |||
Number of shares issued (in shares) | 3,125,000 | ||
Additional number of shares issued (in shares) | 468,750 | ||
Share price (in dollars per share) | $ 7.52 | ||
Proceeds from issuance | $ 26,600,000 | ||
Option excercise date | Jun. 19, 2020 | ||
Option excercise period | 30 days |
SUBSEQUENT EVENT (Details Narra
SUBSEQUENT EVENT (Details Narrative) - USD ($) | Apr. 12, 2022 | Apr. 22, 2021 | Apr. 12, 2021 | Mar. 15, 2021 | Feb. 16, 2021 | Feb. 15, 2021 | Feb. 05, 2021 | Jan. 22, 2021 | Dec. 31, 2020 | Mar. 22, 2021 |
Subsequent Event [Line Items] | ||||||||||
Legal fees | $ 12,500 | |||||||||
Subsequent Event [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Vested options, shares | 50,000 | |||||||||
Annual base salary | $ 550,000 | |||||||||
Subsequent Event [Member] | Restricted Stock Award [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Vested restricted common stock, shares | 200,000 | 600,000 | ||||||||
Description of vesting of shares | (2) 200,000 shares of common stock vesting 25% on April 12, 2022 and 25% on each twelve months thereafter. | (1) 600,000 shares of common stock to vest vesting as follows: if the Company’s Net Sales Growth (defined below) for any of the fiscal years ended December 31, 2022, 2023, 2024 or 2025 (each, a “Target Year”) is at least the applicable Net Sales Target set forth on the schedule to the restricted stock award agreement, then, on the applicable Vesting Date, a corresponding portion of the restricted stock award will vest as set forth on such schedule. Additionally, if Net Sales Growth is less than any of the Net Sales Targets set forth in such schedule in any Target Year (a “Miss Year”), vesting of the restricted stock award in the following Target Years (each such subsequent Target Year, a “Catch-up Year”) shall be further subject to the following catch-up vesting provisions: if the Net Sales Growth in the Miss Year(s) when averaged with the Net Sales in each Catch-up Year(s) equals or exceeds a Net Sales Target in any single Miss Year that has not previously been obtained, then on the applicable Vesting Date, an additional portion of the Award shall vest as if the applicable Net Sales Target had been met in the Miss Year(s). Notwithstanding the foregoing, the restricted stock award shall automatically vest in full upon the Company maintaining, for a period of at least two consecutive fiscal quarters after January 1, 2022, at least a specified run rate over the previous four fiscal quarters, as reported in the Company’s filings pursuant to the Securities Exchange Act of 1934, as amended. | ||||||||
Subsequent Event [Member] | Restricted Stock Award [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Description of vesting of shares | (3) 200,000 shares of common stock, vesting as follows: (i) 50,000 shares on the first date on which the Company’s Market Capitalization for a period of 90 consecutive days has been, or there has been a Change of Control (as defined in the employment agreement) of the Company with an enterprise value of, at least $500,000,000 but less than $600,000,000; (ii) 50,000 shares on the first date on which the Company’s Market Capitalization for a period of 90 consecutive days has been, or there has been a Change of Control of the Company with an enterprise value of, at least $600,000,000 but less than $750,000,000; and (iii) 100,000 shares on the date on which the Company’s Market Capitalization for a period of 90 consecutive days has been, or there has been a Change of Control of the Company with an enterprise value of, at least $750,000,000. “Market Capitalization” shall be determined by (A) multiplying the number of shares reported as outstanding on the cover of the Company’s most recent Form 10-K or 10-Q, as applicable, as filed with the Securities and Exchange Commission, by (B) the Fair Market Value of the Common Stock (as defined in the Company’s 2015 Stock Option Plan, as amended) on each day. Notwithstanding the foregoing, no portion of the restricted stock award shall vest on or following the fifth anniversary of the award date. | |||||||||
Subsequent Event [Member] | 2015 Stock Option Plan [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Non qualified stock options period | 10 years | |||||||||
Common stock purchase exercise price (in dollars per shares) | $ 3.875 | |||||||||
Vested options, shares | 100,000 | 50,000 | ||||||||
Description of vesting of shares | Purchase up to 1,000,000 shares of the Company’s common stock at an exercise price of $3.875 per share, subject to vesting as follows, provided she is then employed by the Company: 25% on March 15, 2021 and 25% each twelve months thereafter. | |||||||||
Non qualified options to purchase, shares | 150,000 | 1,000,000 | 150,000 | |||||||
Mr. Pettigrew [Member] | Subsequent Event [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Right to exercise | 1,000,000 | |||||||||
Non qualified stock options period | 90 days | |||||||||
Strike price | $ 1.23 | |||||||||
Vested options, value | $ 1,230,000 | |||||||||
Mr. Beck's [Member] | Subsequent Event [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Monthly base compensation | $ 40,000 | |||||||||
Minimum guaranteed duration | 2 months | |||||||||
Ms. Tharby [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Description of annual bonus target | Pursuant to this agreement, Ms. Tharby will receive an annual base salary of $550,000 and be eligible to earn an annual bonus, paid 70% in cash and 30% in shares of the Company’s common stock, with a target of 80% of her base salary, based on achievement of objectives set in accordance with the Company’s management incentive compensation plan for executives, payable by March 15 of the following year. | |||||||||
Ms. Tharby's [Member] | Subsequent Event [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Description of termination | Should the Company terminate Ms. Tharby’s employment without “cause” or should she leave the Company for “good reason,” she will be eligible for a severance package comprised of (i) base salary for 12 months, calculated at the rate of her then base salary, to be paid in accordance with the Company’s normal payroll practices; (ii) her Annual Bonus as if earned for the year of termination; and (iii) if termination occurs on or after January 1, 2022, acceleration of her stock options and restricted stock award set forth under (2) above for the year of termination (i.e., 25% of total award), if not then vested. For the same period, the Company will also cover the cost of health insurance, which is continued by Ms. Tharby through COBRA election. | |||||||||
Mr. Beck [Member] | Subsequent Event [Member] | Employment agreement [member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Description of agreement | Pursuant to the Company’s 2015 Stock Option Plan, as amended, on February 15, 2021, Mr. Beck received a 10-year nonqualified option to purchase up to 150,000 shares of the Company’s common stock at a per share exercise price equal to the fair market value of the common stock on the date of grant. Of these options, 100,000 were fully vested on the date of grant, and 50,000 will vest on March 22, 2021. The aforementioned options may be exercised for cash or by “cashless” or “net” exercise. | |||||||||
Agreement term | 10 years |