Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 08, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 0-12305 | ||
Entity Registrant Name | KORU MEDICAL SYSTEMS, INC | ||
Entity Central Index Key | 0000704440 | ||
Entity Tax Identification Number | 13-3044880 | ||
Entity Incorporation, State or Country Code | NY | ||
Entity Address, Address Line One | 100 Corporate Drive | ||
Entity Address, City or Town | Mahwah | ||
Entity Address, State or Province | NJ | ||
Entity Address, Postal Zip Code | 07430 | ||
City Area Code | 845 | ||
Local Phone Number | 469-2042 | ||
Title of 12(b) Security | common stock, $0.01 par value | ||
Trading Symbol | KRMD | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 71,872,771 | ||
Entity Common Stock, Shares Outstanding | 45,519,164 | ||
Treasury Stock, Common, Shares | 3,420,502 | ||
Auditor Firm ID | 256 | ||
Auditor Name | McGrail Merkel Quinn & Associates, P.C. | ||
Auditor Location | Scranton, Pennsylvania |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 17,408,257 | $ 25,334,889 |
Accounts receivable less allowance for doubtful accounts of $21,459 and $24,271 for December 31, 2022, and December 31, 2021, respectively | 3,558,884 | 3,592,886 |
Inventory | 6,404,867 | 6,106,338 |
Other receivables | 972,396 | 718,220 |
Prepaid expenses and other | 1,457,232 | 1,568,821 |
TOTAL CURRENT ASSETS | 29,801,636 | 37,321,154 |
Property and equipment, net | 3,886,975 | 1,106,445 |
Intangible assets, net of accumulated amortization of $325,872 and $263,729 at December 31, 2022 and December 31, 2021, respectively | 787,182 | 808,813 |
Operating lease right-of-use assets | 3,786,545 | 95,553 |
Deferred income tax assets, net | 3,967,480 | 1,941,254 |
Other assets | 102,625 | 19,812 |
TOTAL ASSETS | 42,332,443 | 41,293,031 |
CURRENT LIABILITIES | ||
Accounts payable | 2,391,799 | 1,227,533 |
Accrued expenses | 2,889,941 | 2,709,704 |
Note Payable | 433,295 | 508,583 |
Other liabilities | 257,337 | 90,000 |
Accrued payroll and related taxes | 542,399 | 160,603 |
Finance lease liability – current | 98,335 | |
Operating lease liability – current | 345,834 | 95,553 |
TOTAL CURRENT LIABILITIES | 6,958,940 | 4,791,976 |
Finance lease liability, net current portion | 394,283 | |
Operating lease liability, net of current portion | 3,653,257 | |
TOTAL LIABILITIES | 11,006,480 | 4,791,976 |
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.01 par value, 75,000,000 shares authorized, 48,861,891 and 48,044,162 shares issued; 45,441,389 and 44,623,660 shares outstanding at December 31, 2022, and December 31, 2021, respectively | 488,619 | 480,441 |
Additional paid-in capital | 44,252,117 | 40,774,245 |
Treasury stock, 3,420,502 shares at December 31, 2022 and December 31, 2021, at cost | (3,843,562) | (3,843,562) |
Retained Deficit | (9,571,211) | (910,069) |
TOTAL STOCKHOLDERS’ EQUITY | 31,325,963 | 36,501,055 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 42,332,443 | $ 41,293,031 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss, current | $ 21,459 | $ 24,271 |
Finite-lived intangible assets, accumulated amortization | $ 325,872 | $ 263,729 |
Common stock, par or stated value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares, issued | 48,861,891 | 48,044,162 |
Common stock, shares, outstanding | 45,441,389 | 44,623,660 |
Treasury stock, shares | 3,420,502 | 3,420,502 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
NET REVENUES | $ 27,896,037 | $ 23,490,175 |
Cost of goods sold | 12,527,051 | 9,720,597 |
Gross Profit | 15,368,986 | 13,769,578 |
OPERATING EXPENSES | ||
Selling, general and administrative | 20,606,507 | 17,862,314 |
Research and development | 4,956,215 | 2,473,669 |
Depreciation and amortization | 587,137 | 463,130 |
Total Operating Expenses | 26,149,859 | 20,799,113 |
Net Operating Loss | (10,780,873) | (7,029,535) |
Non-Operating Income | ||
Loss on foreign currency exchange | (39,874) | (28,905) |
Gain on disposal of fixed assets | 1,009 | |
Other Income | 679,907 | |
Interest income, net | 145,587 | 13,083 |
TOTAL OTHER INCOME | 105,713 | 665,094 |
LOSS BEFORE TAXES | (10,675,160) | (6,364,441) |
Income tax benefit | 2,014,018 | 1,801,618 |
NET LOSS | $ (8,661,142) | $ (4,562,823) |
NET LOSS PER SHARE | ||
Basic | $ (0.19) | $ (0.10) |
Diluted | $ (0.19) | $ (0.10) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||
Basic | 45,002,074 | 44,385,032 |
Diluted | 45,002,074 | 44,385,032 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 466,801 | $ 35,880,986 | $ 3,652,754 | $ (3,843,562) | $ 36,156,979 |
Balance beginning (in shares) at Dec. 31, 2020 | 46,680,119 | ||||
Issuance of stock-based compensation | $ 958 | 432,696 | 433,654 | ||
Issuance of stock-based compensation (in shares) | 95,725 | ||||
Compensation expense related to stock options | 2,049,041 | 2,049,041 | |||
Compensation expense related to restricted stock awards | 224,859 | 224,859 | |||
Litigation settlement share issuance | $ 952 | 937,142 | 938,094 | ||
Litigation settlement share issuance (in shares) | 95,238 | ||||
Issuance upon options exercised | $ 11,730 | 1,249,521 | 1,261,251 | ||
Issuance upon options exercised (in shares) | 1,173,080 | ||||
Net loss | (4,562,823) | (4,562,823) | |||
Ending balance, value at Dec. 31, 2021 | $ 480,441 | 40,774,245 | (910,069) | (3,843,562) | 36,501,055 |
Balance ending (in shares) at Dec. 31, 2021 | 48,044,162 | ||||
Issuance of stock-based compensation | $ 2,066 | 511,016 | 513,082 | ||
Issuance of stock-based compensation (in shares) | 206,570 | ||||
Compensation expense related to stock options | 2,083,396 | 2,083,396 | |||
Compensation expense related to restricted stock awards | 500 | 482,449 | 482,949 | ||
Issuance upon options exercised | $ 5,612 | 401,011 | 406,623 | ||
Issuance upon options exercised (in shares) | 561,159 | ||||
Net loss | (8,661,142) | (8,661,142) | |||
Compensation expense related to restricted stock awards (in shares) | 50,000 | ||||
Ending balance, value at Dec. 31, 2022 | $ 488,619 | $ 44,252,117 | $ (9,571,211) | $ (3,843,562) | $ 31,325,963 |
Balance ending (in shares) at Dec. 31, 2022 | 48,861,891 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (8,661,142) | $ (4,562,823) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 3,079,427 | 2,707,554 |
Depreciation and amortization | 587,137 | 463,130 |
Loss on disposal of fixed assets | (1,009) | |
Deferred income taxes | (2,026,226) | (1,815,980) |
ROU landlord credit | 212,546 | |
Changes in operating assets and liabilities: | ||
Decrease/(Increase) in accounts receivable | 34,002 | (1,019,932) |
(Increase)/Decrease in inventory | (298,529) | 723,434 |
Increase in other receivables | (254,176) | (718,220) |
Decrease/(Increase) in prepaid expenses and other assets | 28,776 | (761,041) |
Increase in accounts payable | 1,164,266 | 602,613 |
Increase/(Decrease) in accrued payroll and related taxes | 381,796 | (126,527) |
Increase in other liabilities | 167,337 | 90,000 |
Increase in accrued expenses | 180,237 | 99,291 |
NET CASH USED IN OPERATING ACTIVITIES | (5,404,549) | (4,319,510) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (2,761,056) | (346,178) |
Purchases of intangible assets | (40,512) | (29,056) |
Proceeds from disposal of property and equipment | 9,065 | |
NET CASH USED IN INVESTING ACTIVITIES | (2,801,568) | (366,169) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of equity | 406,623 | 1,261,251 |
Common stock issuance settlement of litigation | 938,094 | |
Borrowings from indebtedness | 783,799 | 924,389 |
Payments on indebtedness | (859,087) | (415,806) |
Payments on finance lease liability | (51,850) | (2,646) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 279,485 | 2,705,282 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (7,926,632) | (1,980,397) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 25,334,889 | 27,315,286 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 17,408,257 | 25,334,889 |
Cash paid during the years for: | ||
Interest | 28,490 | 13,241 |
Income taxes | 1,903 | |
Schedule of Non-Cash Operating, Investing and Financing Activities: | ||
Issuance of common stock as compensation | 513,082 | 433,654 |
Issuance of common stock as settlement for litigation | $ 938,094 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
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 KORU MEDICAL SYSTEMS, INC. (the “Company,” “KORU Medical,” “KORU,” “we,” “us” or “our”) develops, 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 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 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 20 62,143 63,830 The estimated amortization expense for the succeeding years for the intangible assets is approximately: Schedule of amortization expense Year Ending December 31, 2023 $ 62,982 2024 62,982 2025 62,842 2026 61,787 2027 61,356 Thereafter 475,233 Total amortization expense $ 787,182 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 3 12 524,994 399,300 STOCK-BASED COMPENSATION The Company maintains a stock option plan and omnibus equity incentive 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 under the non-employee director compensation plan are recorded at the fair value of the shares at the grant date. The Company has also issued shares of stock for director fees under its omnibus equity incentive plan. Those shares of stock granted are recorded at the fair value of the shares at the grant date. The Company issues restricted stock awards. Restricted stock awards are equity classified and measured at the fair market value of the underlying stock at the grant date. The fair value of restricted stock awards vesting at certain market capitalization thresholds were estimated on the date of grant using the Brownian Motion Monte Carlo lattice model. The fair value of restricted stock awards with time-based vesting were estimated on the date of grant at the current stock price. We recognize restricted stock expense using the straight-line attribution method over the requisite service period and account for forfeitures as they occur. NET LOSS 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 4 — STOCK-BASED COMPENSATION” for further detail. Schedule of net income per common share Years Ended December 31, 2022 December 31, 2021 Net loss $ (8,661,142 ) $ (4,562,823 ) Weighted Average Outstanding Shares: Outstanding shares 45,002,074 44,385,032 Option shares includable — (a) — (a) Restricted stock includable — (b) — (b) Total 45,002,074 44,385,032 Net loss per share Basic $ (0.19 ) $ (0.10 ) Diluted $ (0.19 ) $ (0.10 ) __________ (a) Option shares of zero 273,110 (b) Linda Tharby's Restricted Stock award shares of 950,000 1,000,000 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 revenues by geography for the years ended December 31, 2022 and 2021: Schedule of net revenues by geography Years Ended December 31, 2022 2021 Net Revenues Domestic $ 23,586,254 $ 19,488,685 International 4,309,783 4,001,490 Total $ 27,896,037 $ 23,490,175 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 5 — ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes 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 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, 2022. 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, 2022. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 2 — INVENTORY Inventory consists of: December 31, 2022 December 31, 2021 Raw materials and work-in-process $ 3,853,034 $ 2,997,807 Finished goods 2,611,951 3,176,836 Total 6,464,985 6,174,643 Less: reserve for obsolete inventory (60,118 ) (68,305 ) Inventory, net $ 6,404,867 $ 6,106,338 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 — PROPERTY AND EQUIPMENT Property and equipment consists of the following at: Schedule of property and equipment December 31, 2022 December 31, 2021 Furniture and office equipment $ 1,456,745 $ 818,897 Leasehold improvements 2,413,820 556,907 Manufacturing equipment and tooling 2,810,813 2,042,675 Total property and equipment 6,681,378 3,418,479 Less: accumulated depreciation and amortization (2,794,403 ) (2,312,034 ) Property and equipment, net $ 3,886,975 $ 1,106,445 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 4 — STOCK-BASED COMPENSATION The Company has three equity incentive plans: the 2015 Stock Option Plan, as amended (the “2015 Plan”), the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), and the Non-Employee Director Compensation Plan. The Company has also issued restricted stock as employment inducement awards to its Chief Executive Officer. As of December 31, 2022, there were options to purchase 2,560,000 445,000 6,000,000 The 2021 Plan provides for the grant of up to 1,000,000 97,100 475,000 Effective January 1, 2021, each non-employee director of the Company (other than the Chairman of the Board) and Board advisor were eligible to receive of $ 75,000 to be paid quarterly $12,500 in cash and $6,250 in common stock 100,000 to be paid quarterly $12,500 in cash and $12,500 in common stock 110,000 to be paid quarterly $12,500 in cash and $15,000 in common stock 140,000 to be paid quarterly $12,500 in cash and $22,500 in common stock On April 12, 2021, pursuant to an employment agreement entered into on March 15, 2021, with Linda Tharby, the Company’s President and Chief Executive Officer, the Company issued three restricted stock awards for an aggregate 1,000,000 3,310,000 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, 2022, and December 31, 2021 was $ 1.98 2.85 198,258 175,257 Schedule of time based stock options December 31, 2022 December 31, 2021 Dividend yield 0.00 0.00 Expected volatility 65.29 77.5 74.01 77.91 Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 10 Risk-free rate 1.81 4.02 1.20 1.62 The following table summarizes the status of the Company’s stock option plan: Schedule of status of time based stock options December 31, 2022 December 31, 2021 Shares Weighted Shares Weighted Outstanding at January 1 3,672,500 $ 3.42 2,922,494 $ 2.46 Granted 445,000 $ 2.57 2,000,000 $ 3.64 Exercised 1,031,250 $ 1.57 1,062,500 $ 1.19 Forfeited 526,250 $ 2.73 187,494 $ 3.36 Outstanding at year end 2,560,000 $ 4.15 3,672,500 $ 3.42 Options exercisable 737,500 $ 4.93 983,750 $ 2.73 Weighted average fair value of options granted during the period — $ 1.98 — $ 2.85 Stock-based compensation expense — $ 1,925,861 — $ 2,457,788 Total stock-based compensation expense, net of forfeitures, for stock option awards totaled $ 1,925,861 2,457,788 406,623 1,261,251 103,319 665,700 The weighted-average grant-date fair value of options granted during the years ended December 31, 2022, and 2021, was $ 881,428 5,699,986 1,150,203 697,920 The following table presents information pertaining to options outstanding as of December 31, 2022: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.25 - $9.49 2,560,000 8.8 $ 4.15 737,500 $ 4.93 As of December 31, 2022, there was $ 4,299,070 45 2,703,002 1,923,179 2021 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, 2022 and December 31, 2021 was $ 1.99 0 33,083 0 Schedule of time based stock options December 31, 2022 2021 Dividend yield 0.00 0.00 Expected Volatility 65.9 0 0 Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 0 Risk-free rate 2.99 0 0 The following table summarizes the status of the 2021 Plan with respect to time based stock options: Schedule of status of time based stock options Year Ended December 31, 2022 2021 Shares Weighted Shares Weighted Outstanding at January 1 0 $ 0 — $ — Granted 475,000 $ 2.67 — $ — Exercised 0 $ — — $ — Forfeited 0 $ — — $ — Outstanding at year end 475,000 $ 2.67 — $ — Options exercisable 0 $ — — $ — Weighted average fair value of options granted during the period — $ 1.99 — $ — Stock-based compensation expense — $ 157,536 — $ — Total stock-based compensation expense was $ 157,536 0 The weighted-average grant-date fair value of options granted during the years ended December 31, 2022, and 2021 was $ 945,215 0 The following table presents information pertaining to options outstanding at December 31, 2022: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.67 475,000 9.3 $ 2.67 0 $ 0 As of December 31, 2022, there was $ 787,679 48 zero zero Performance-Based Stock Options There were no performance-based stock options granted during the twelve months ended December 31, 2022, and 2021. The following table summarizes the status of the 2015 Plan with respect to performance-based stock options as of December 31, 2022 and 2021: Schedule of performance base options outstanding December 31, 2022 December 31, 2021 Shares Weighted Shares Weighted Outstanding at January 1 — $ — 1,000,000 $ 1.70 Granted — $ — — $ — Exercised — $ — — $ — Forfeited — $ — — $ — Outstanding at year end — $ — 1,000,000 $ 1.70 Options exercisable — $ — — $ — Weighted average fair value of options granted during the period — $ — — $ — Stock-based compensation expense — $ — — $ (408,747 ) Total performance stock-based compensation expense totaled zero (408,747) RESTRICTED STOCK AWARDS On April 12, 2021, pursuant to an employment agreement entered into on March 15, 2021, with Linda Tharby, the Company’s President and Chief Executive Officer and as an inducement to her employment, the Company issued three restricted stock awards for an aggregate 1,000,000 3,310,000 The following table summarizes the activities for our unvested restricted stock awards for the twelve months ended December 31, 2022, and 2021. Twelve Months Ended December 31, 2022 2021 Shares Weighted Shares Weighted Unvested at January 1 1,000,000 $ 3.01 — $ — Granted — $ — 1,000,000 $ 3.01 Vested 50,000 $ 3.31 — $ — Forfeited/canceled — $ — — $ — Unvested at December 31 950,000 $ 3.04 1,000,000 $ 3.01 As of December 31, 2022, there was $ 1,618,177 21 101,419 47,220 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 5 — LEASES We have finance and operating leases for our corporate office and certain office and computer equipment. Our leases have remaining lease terms of 10, 5 years, and 3 months. 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: Schedule of components of lease expense Years Ended December 31, 2022 2021 Operating lease cost $ 514,294 $ 149,476 Short-term lease cost 131,490 146,604 Total lease cost $ 645,784 $ 296,080 Finance lease cost: Amortization of right-of-use assets $ 50,895 $ 2,586 Interest on lease liabilities 5,393 60 Total finance lease cost $ 56,288 $ 2,646 Supplemental cash flow information related to leases was as follows: Schedule of cash flow information related to leases Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 247,504 $ 141,293 Financing cash flows from finance leases $ 57,243 $ 2,646 Supplemental balance sheet information related to leases was as follows: Schdeule of balance sheet information related to leases December 31, December 31, Operating Leases Operating lease right-of-use assets $ 3,786,545 $ 95,553 Operating lease liability – current 345,834 95,553 Operating lease liability, net of current portion 3,653,257 — Total operating lease liabilities $ 3,999,091 $ 95,553 Finance Leases Property and equipment, at cost $ 544,468 $ 12,725 Accumulated depreciation (50,895 ) (12,725 ) Property and equipment, net $ 493,573 $ — Finance lease liability – current 98,335 — Finance lease liability, net of current portion 394,283 — Total finance lease liabilities $ 492,618 $ — December 31, December 31, Weighted Average Remaining Lease Term Operating leases 9.7 0.6 Finance leases 4.6 0 Weighted Average Discount Rate Operating leases 4.00 4.75 Finance leases 4.25 4.75 Maturities of lease liabilities are as follows: Schedule of maturities of lease liabilities Year Ending December 31, Operating Leases Finance Leases 2023 499,503 123,200 2024 499,503 123,200 2025 499,503 123,200 2026 499,503 123,200 2027 499,503 65,957 Thereafter 2,331,015 — Total undiscounted lease payments 4,828,530 558,757 Less: imputed interest (829,439 ) (66,139 ) Total lease liabilities $ 3,999,091 $ 492,618 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
FEDERAL AND STATE INCOME TAXES | NOTE 6 — FEDERAL AND STATE INCOME TAXES Income tax expense consisted of the following: Schedule of provision for income taxes Year Ended Year Ended State income tax: Current, net of refund $ 0 $ (12,800 ) Federal income tax: Deferred 2,014,018 1,814,418 Current — — Income tax benefit/(expense) $ 2,014,018 $ 1,801,618 The reconciliation of income taxes shown in the financial statements and amounts computed by applying the Federal expected tax rate of 21% for year 2022 and 2021 is as follows: Schedule of reconciliation of income taxes Year Ended Year Ended Loss before taxes $ (10,675,160 ) $ (6,364,441 ) Income taxes computed at the federal statutory rate $ 2,241,784 $ 1,336,533 State income and franchise tax (0 ) (12,800 ) Permanent differences and other (227,766 ) 477,885 Income tax benefit/(expense) $ 2,014,018 $ 1,801,618 The significant components of deferred income tax assets, net are as follows: Schedule of components of deferred tax assets December 31, December 31, Deferred compensation cost $ 557,931 $ 389,981 Depreciation and amortization (624,184 ) (116,911 ) R&D credit 142,030 142,538 NOL 2,956,685 1,507,982 Allowance for bad debts and other 935,018 17,664 Deferred income tax assets, net $ 3,967,480 $ 1,941,254 Our U.S. federal and state income tax returns remain open to examination for the tax years 2019 through 2021. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended |
Dec. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | NOTE 7 — MAJOR CUSTOMERS For the years ended December 31, 2022 and December 31, 2021, approximately 64 64 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, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 — 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. KORU Medical is not presently a party to any litigation or other legal proceeding that is believed to be material to its financial condition. 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, 2022 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFITS | NOTE 9 — 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 214,931 166,014 |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT OBLIGATIONS | NOTE 10 — DEBT OBLIGATIONS On June 29, 2022, the Company entered into a Loan Modification Extension Agreement (the “Modification Agreement”) with Keybank National Association (“Lender”) to modify its revolving line of credit with Lender in the amount of $3,500,000 (the “Loan”) that was originally made available on April 14, 2020 and renewed on June 24, 2021. Among other things, the Modification Agreement: (i) extends the maturity date of the Loan from June 1, 2022 to June 1, 2023; (ii) changes the interest rate applicable to the Loan from Prime – 1.50% to Prime + 0%; (iii) releases the Company from its obligations under a certain security agreement dated June 24, 2021 pursuant to which the Company had previously granted the Lender a first priority security interest in all equipment, inventory, accounts, instruments, chattel paper and general intangibles of the Company (the “Security Agreement”); and (iv) replaces the Security Agreement with a new pledge security agreement dated June 29, 2022 by and between the Company and Lender (the “Pledge Agreement”), which Pledge Agreement grants Lender a first priority security interest in certain of the Company’s bank accounts as collateral security for the Loan. The Company had zero outstanding against the line of credit as of December 31, 2022. On August 5, 2022, the Company entered into a commercial insurance premium finance and security agreement with AON Premium Finance, LLC in the aggregate principal amount of $ 0.8 million 6.5 |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS KORU MEDICAL SYSTEMS, INC. (the “Company,” “KORU Medical,” “KORU,” “we,” “us” or “our”) develops, 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 |
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 |
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 20 62,143 63,830 The estimated amortization expense for the succeeding years for the intangible assets is approximately: Schedule of amortization expense Year Ending December 31, 2023 $ 62,982 2024 62,982 2025 62,842 2026 61,787 2027 61,356 Thereafter 475,233 Total amortization expense $ 787,182 |
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 3 12 524,994 399,300 |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company maintains a stock option plan and omnibus equity incentive 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 under the non-employee director compensation plan are recorded at the fair value of the shares at the grant date. The Company has also issued shares of stock for director fees under its omnibus equity incentive plan. Those shares of stock granted are recorded at the fair value of the shares at the grant date. The Company issues restricted stock awards. Restricted stock awards are equity classified and measured at the fair market value of the underlying stock at the grant date. The fair value of restricted stock awards vesting at certain market capitalization thresholds were estimated on the date of grant using the Brownian Motion Monte Carlo lattice model. The fair value of restricted stock awards with time-based vesting were estimated on the date of grant at the current stock price. We recognize restricted stock expense using the straight-line attribution method over the requisite service period and account for forfeitures as they occur. |
NET LOSS PER COMMON SHARE | NET LOSS 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 4 — STOCK-BASED COMPENSATION” for further detail. Schedule of net income per common share Years Ended December 31, 2022 December 31, 2021 Net loss $ (8,661,142 ) $ (4,562,823 ) Weighted Average Outstanding Shares: Outstanding shares 45,002,074 44,385,032 Option shares includable — (a) — (a) Restricted stock includable — (b) — (b) Total 45,002,074 44,385,032 Net loss per share Basic $ (0.19 ) $ (0.10 ) Diluted $ (0.19 ) $ (0.10 ) __________ (a) Option shares of zero 273,110 (b) Linda Tharby's Restricted Stock award shares of 950,000 1,000,000 |
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 revenues by geography for the years ended December 31, 2022 and 2021: Schedule of net revenues by geography Years Ended December 31, 2022 2021 Net Revenues Domestic $ 23,586,254 $ 19,488,685 International 4,309,783 4,001,490 Total $ 27,896,037 $ 23,490,175 |
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 5 — |
ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED | ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
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 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, 2022. |
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, 2022. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of amortization expense | The estimated amortization expense for the succeeding years for the intangible assets is approximately: Schedule of amortization expense Year Ending December 31, 2023 $ 62,982 2024 62,982 2025 62,842 2026 61,787 2027 61,356 Thereafter 475,233 Total amortization expense $ 787,182 |
Schedule of net income per common share | Basic earnings per share are computed on the weighted average of common shares outstanding during each year. Diluted earnings per share includes only an increase in the weighted average shares by the common shares issuable upon exercise of stock options. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. Schedule of net income per common share Years Ended December 31, 2022 December 31, 2021 Net loss $ (8,661,142 ) $ (4,562,823 ) Weighted Average Outstanding Shares: Outstanding shares 45,002,074 44,385,032 Option shares includable — (a) — (a) Restricted stock includable — (b) — (b) Total 45,002,074 44,385,032 Net loss per share Basic $ (0.19 ) $ (0.10 ) Diluted $ (0.19 ) $ (0.10 ) __________ (a) Option shares of zero 273,110 (b) Linda Tharby's Restricted Stock award shares of 950,000 1,000,000 |
Schedule of net revenues by geography | The following table summarizes net revenues by geography for the years ended December 31, 2022 and 2021: Schedule of net revenues by geography Years Ended December 31, 2022 2021 Net Revenues Domestic $ 23,586,254 $ 19,488,685 International 4,309,783 4,001,490 Total $ 27,896,037 $ 23,490,175 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventory consists of: | Inventory consists of: December 31, 2022 December 31, 2021 Raw materials and work-in-process $ 3,853,034 $ 2,997,807 Finished goods 2,611,951 3,176,836 Total 6,464,985 6,174,643 Less: reserve for obsolete inventory (60,118 ) (68,305 ) Inventory, net $ 6,404,867 $ 6,106,338 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consists of the following at: Schedule of property and equipment December 31, 2022 December 31, 2021 Furniture and office equipment $ 1,456,745 $ 818,897 Leasehold improvements 2,413,820 556,907 Manufacturing equipment and tooling 2,810,813 2,042,675 Total property and equipment 6,681,378 3,418,479 Less: accumulated depreciation and amortization (2,794,403 ) (2,312,034 ) Property and equipment, net $ 3,886,975 $ 1,106,445 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of time based stock options | Schedule of time based stock options December 31, 2022 December 31, 2021 Dividend yield 0.00 0.00 Expected volatility 65.29 77.5 74.01 77.91 Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 10 Risk-free rate 1.81 4.02 1.20 1.62 |
Schedule of status of time based stock options | The following table summarizes the status of the Company’s stock option plan: Schedule of status of time based stock options December 31, 2022 December 31, 2021 Shares Weighted Shares Weighted Outstanding at January 1 3,672,500 $ 3.42 2,922,494 $ 2.46 Granted 445,000 $ 2.57 2,000,000 $ 3.64 Exercised 1,031,250 $ 1.57 1,062,500 $ 1.19 Forfeited 526,250 $ 2.73 187,494 $ 3.36 Outstanding at year end 2,560,000 $ 4.15 3,672,500 $ 3.42 Options exercisable 737,500 $ 4.93 983,750 $ 2.73 Weighted average fair value of options granted during the period — $ 1.98 — $ 2.85 Stock-based compensation expense — $ 1,925,861 — $ 2,457,788 |
Schedule of information pertaining to options outstanding | The following table presents information pertaining to options outstanding as of December 31, 2022: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.25 - $9.49 2,560,000 8.8 $ 4.15 737,500 $ 4.93 |
Schedule of time based stock options | Schedule of time based stock options December 31, 2022 2021 Dividend yield 0.00 0.00 Expected Volatility 65.9 0 0 Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 0 Risk-free rate 2.99 0 0 |
Schedule of status of time based stock options | The following table summarizes the status of the 2021 Plan with respect to time based stock options: Schedule of status of time based stock options Year Ended December 31, 2022 2021 Shares Weighted Shares Weighted Outstanding at January 1 0 $ 0 — $ — Granted 475,000 $ 2.67 — $ — Exercised 0 $ — — $ — Forfeited 0 $ — — $ — Outstanding at year end 475,000 $ 2.67 — $ — Options exercisable 0 $ — — $ — Weighted average fair value of options granted during the period — $ 1.99 — $ — Stock-based compensation expense — $ 157,536 — $ — |
Schedule of information pertaining to options outstanding | The following table presents information pertaining to options outstanding at December 31, 2022: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.67 475,000 9.3 $ 2.67 0 $ 0 |
Schedule of performance base options outstanding | The following table summarizes the status of the 2015 Plan with respect to performance-based stock options as of December 31, 2022 and 2021: Schedule of performance base options outstanding December 31, 2022 December 31, 2021 Shares Weighted Shares Weighted Outstanding at January 1 — $ — 1,000,000 $ 1.70 Granted — $ — — $ — Exercised — $ — — $ — Forfeited — $ — — $ — Outstanding at year end — $ — 1,000,000 $ 1.70 Options exercisable — $ — — $ — Weighted average fair value of options granted during the period — $ — — $ — Stock-based compensation expense — $ — — $ (408,747 ) |
The following table summarizes the activities for our unvested restricted stock awards for the twelve months ended December 31, 2022, and 2021. | The following table summarizes the activities for our unvested restricted stock awards for the twelve months ended December 31, 2022, and 2021. Twelve Months Ended December 31, 2022 2021 Shares Weighted Shares Weighted Unvested at January 1 1,000,000 $ 3.01 — $ — Granted — $ — 1,000,000 $ 3.01 Vested 50,000 $ 3.31 — $ — Forfeited/canceled — $ — — $ — Unvested at December 31 950,000 $ 3.04 1,000,000 $ 3.01 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of components of lease expense | The components of lease expense were as follows: Schedule of components of lease expense Years Ended December 31, 2022 2021 Operating lease cost $ 514,294 $ 149,476 Short-term lease cost 131,490 146,604 Total lease cost $ 645,784 $ 296,080 Finance lease cost: Amortization of right-of-use assets $ 50,895 $ 2,586 Interest on lease liabilities 5,393 60 Total finance lease cost $ 56,288 $ 2,646 |
Schedule of cash flow information related to leases | Supplemental cash flow information related to leases was as follows: Schedule of cash flow information related to leases Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 247,504 $ 141,293 Financing cash flows from finance leases $ 57,243 $ 2,646 |
Schdeule of balance sheet information related to leases | Supplemental balance sheet information related to leases was as follows: Schdeule of balance sheet information related to leases December 31, December 31, Operating Leases Operating lease right-of-use assets $ 3,786,545 $ 95,553 Operating lease liability – current 345,834 95,553 Operating lease liability, net of current portion 3,653,257 — Total operating lease liabilities $ 3,999,091 $ 95,553 Finance Leases Property and equipment, at cost $ 544,468 $ 12,725 Accumulated depreciation (50,895 ) (12,725 ) Property and equipment, net $ 493,573 $ — Finance lease liability – current 98,335 — Finance lease liability, net of current portion 394,283 — Total finance lease liabilities $ 492,618 $ — December 31, December 31, Weighted Average Remaining Lease Term Operating leases 9.7 0.6 Finance leases 4.6 0 Weighted Average Discount Rate Operating leases 4.00 4.75 Finance leases 4.25 4.75 |
Schedule of maturities of lease liabilities | Maturities of lease liabilities are as follows: Schedule of maturities of lease liabilities Year Ending December 31, Operating Leases Finance Leases 2023 499,503 123,200 2024 499,503 123,200 2025 499,503 123,200 2026 499,503 123,200 2027 499,503 65,957 Thereafter 2,331,015 — Total undiscounted lease payments 4,828,530 558,757 Less: imputed interest (829,439 ) (66,139 ) Total lease liabilities $ 3,999,091 $ 492,618 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | Income tax expense consisted of the following: Schedule of provision for income taxes Year Ended Year Ended State income tax: Current, net of refund $ 0 $ (12,800 ) Federal income tax: Deferred 2,014,018 1,814,418 Current — — Income tax benefit/(expense) $ 2,014,018 $ 1,801,618 |
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 2022 and 2021 is as follows: Schedule of reconciliation of income taxes Year Ended Year Ended Loss before taxes $ (10,675,160 ) $ (6,364,441 ) Income taxes computed at the federal statutory rate $ 2,241,784 $ 1,336,533 State income and franchise tax (0 ) (12,800 ) Permanent differences and other (227,766 ) 477,885 Income tax benefit/(expense) $ 2,014,018 $ 1,801,618 |
Schedule of components of deferred tax assets | The significant components of deferred income tax assets, net are as follows: Schedule of components of deferred tax assets December 31, December 31, Deferred compensation cost $ 557,931 $ 389,981 Depreciation and amortization (624,184 ) (116,911 ) R&D credit 142,030 142,538 NOL 2,956,685 1,507,982 Allowance for bad debts and other 935,018 17,664 Deferred income tax assets, net $ 3,967,480 $ 1,941,254 |
Schedule of amortization expens
Schedule of amortization expense (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
2023 | $ 62,982 | |
2024 | 62,982 | |
2025 | 62,842 | |
2026 | 61,787 | |
2027 | 61,356 | |
Thereafter | 475,233 | |
Total amortization expense | $ 787,182 | $ 808,813 |
Schedule of net income per comm
Schedule of net income per common share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net loss | $ (8,661,142) | $ (4,562,823) |
Weighted Average Outstanding Shares: | ||
Outstanding shares | 45,002,074 | 44,385,032 |
Option shares includable | ||
Restricted stock includable | ||
Total | 45,002,074 | 44,385,032 |
Net loss per share | ||
Basic | $ (0.19) | $ (0.10) |
Diluted | $ (0.19) | $ (0.10) |
Employee Stock [Member] | ||
Net loss per share | ||
Option shares excluded | 0 | 273,110 |
Restricted stock shares excluded | 950,000 | 1,000,000 |
Common Stock [Member] | ||
Net loss | ||
Weighted Average Outstanding Shares: | ||
Outstanding shares | 45,002,074 | 44,385,032 |
Schedule of net revenues by geo
Schedule of net revenues by geography (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | $ 27,896,037 | $ 23,490,175 |
UNITED STATES | ||
Revenues | 23,586,254 | 19,488,685 |
Non-US [Member] | ||
Revenues | $ 4,309,783 | $ 4,001,490 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Dec. 31, 2022 USD ($) Number | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | ||
Number of segments | Number | 1 | |
FDIC cash uninsured amount | $ 250,000 | |
AmortizationOfIntangibleAssets1 | 62,143 | $ 63,830 |
Depreciation and amortization | 587,137 | 463,130 |
Property, Plant and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization | $ 524,994 | $ 399,300 |
Minimum [Member] | Furniture And Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property and equipment | 3 years | |
Minimum [Member] | Equipment and tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property and equipment | 3 years | |
Maximum [Member] | Furniture And Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property and equipment | 10 years | |
Maximum [Member] | Equipment and tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property and equipment | 12 years | |
Patents And Trademarks [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | 6 years | |
Patents And Trademarks [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | 20 years |
Inventory consists of_ (Details
Inventory consists of: (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials and work-in-process | $ 3,853,034 | $ 2,997,807 |
Finished goods | 2,611,951 | 3,176,836 |
Inventory, Gross | 6,464,985 | 6,174,643 |
Less: reserve for obsolete inventory | (60,118) | (68,305) |
Inventory | $ 6,404,867 | $ 6,106,338 |
Schedule of property and equipm
Schedule of property and equipment (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6,681,378 | $ 3,418,479 |
Less: accumulated depreciation and amortization | (2,794,403) | (2,312,034) |
Property and equipment, net | 3,886,975 | 1,106,445 |
Furniture And Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,456,745 | 818,897 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 2,413,820 | 556,907 |
Manufacturing Equipment And Tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 2,810,813 | $ 2,042,675 |
Schedule of time based stock op
Schedule of time based stock options (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Weighted-average volatility | 0% | |
Stock Option Plan 2015 [Member] | Time Based Shares Options [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Dividend yield | 0% | 0% |
Weighted-average volatility | ||
Expected dividends | $ 0 | $ 0 |
Expected term (in years) | 10 years | 10 years |
Stock Option Plan 2015 [Member] | Time Based Shares Options [Member] | Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 65.29% | 74.01% |
Risk-free rate | 1.81% | 1.20% |
Stock Option Plan 2015 [Member] | Time Based Shares Options [Member] | Maximum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 77.50% | 77.91% |
Risk-free rate | 4.02% | 1.62% |
Stock Option Plan 2021 [Member] | Time Based Shares Options [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Dividend yield | 0% | |
Expected volatility | 65.90% | |
Weighted-average volatility | ||
Expected dividends | $ 0 | |
Expected term (in years) | 10 years | 0 years |
Risk-free rate | 2.99% | |
Stock Option Plan 2021 [Member] | Time Based Shares Options [Member] | Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 0% | |
Risk-free rate | 0% | |
Stock Option Plan 2021 [Member] | Time Based Shares Options [Member] | Maximum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 0% |
Schedule of status of time base
Schedule of status of time based stock options (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 3,079,427 | $ 2,707,554 |
Stock Option Plan 2015 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning | 3,672,500 | 2,922,494 |
Outstanding at beginning | $ 3.42 | $ 2.46 |
Granted | 445,000 | 2,000,000 |
Granted | $ 2.57 | $ 3.64 |
Exercised | 1,031,250 | 1,062,500 |
Exercised | $ 1.57 | $ 1.19 |
Forfeited | 526,250 | 187,494 |
Forfeited | $ 2.73 | $ 3.36 |
Outstanding at ending | 2,560,000 | 3,672,500 |
Outstanding at ending | $ 4.15 | $ 3.42 |
Options exercisable at ending | 737,500 | 983,750 |
Options exercisable | $ 4.93 | $ 2.73 |
Weighted average fair value of options granted during the period | $ 1.98 | $ 2.85 |
Stock-based compensation expense | $ 1,925,861 | $ 2,457,788 |
Stock Option Plan 2021 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Options exercisable at ending | 0 | |
Outstanding at beginning | 0 | |
Outstanding at beginning | $ 0 | |
Granted | 475,000 | |
Granted | $ 2.67 | |
Exercised | 0 | |
Exercised | ||
Forfeited | 0 | |
Forfeited | ||
Outstanding at ending | 475,000 | 0 |
Outstanding at ending | $ 2.67 | $ 0 |
Options exercisable at ending | ||
Weighted average fair value of options granted during the period | $ 1.99 | |
Stock-based compensation expense | $ 157,536 |
Schedule of information pertain
Schedule of information pertaining to options outstanding (Details) - Time Based Shares Options [Member] - Exercise Price1 [Member] | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Stock Option Plan 2015 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number outstanding | shares | 2,560,000 |
Weighted average remaining contractual life | 8 years 9 months 18 days |
Weighted average exercise price | $ / shares | $ 4.15 |
Number exercisable | shares | 737,500 |
Weighted average exercise price | $ / shares | $ 4.93 |
Stock Option Plan 2021 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number outstanding | shares | 475,000 |
Weighted average remaining contractual life | 9 years 3 months 19 days |
Weighted average exercise price | $ / shares | $ 2.67 |
Number exercisable | shares | 0 |
Weighted average exercise price | $ / shares | $ 0 |
Schedule of performance base op
Schedule of performance base options outstanding (Details) - Performance Shares [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning | 1,000,000 | |
Outstanding at beginning | $ 1.70 | |
Options exercisable at ending | 0 | 0 |
Granted | $ 0 | $ 0 |
Exercised | 0 | 0 |
Exercised | $ 0 | $ 0 |
Forfeited | 0 | 0 |
Forfeited | $ 0 | $ 0 |
Outstanding at ending | 0 | 1,000,000 |
Outstanding at ending | $ 0 | $ 1.70 |
Options exercisable at ending | $ 0 | $ 0 |
Weighted average fair value of options granted during the period | 0 | 0 |
Weighted average fair value of options granted during the period | $ 0 | $ 0 |
Stock-based compensation expense | $ (408,747) |
The following table summarizes
The following table summarizes the activities for our unvested restricted stock awards for the twelve months ended December 31, 2022, and 2021. (Details) - Restricted Stock Awards [Member] - Stock Option Plan 2021 [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning | 1,000,000 | |
Outstanding at beginning | $ 3.01 | |
Granted | 1,000,000 | |
Granted | $ 3.01 | |
Vested | 50,000 | |
Vested | $ 3.31 | |
Forfeited/canceled | ||
Forfeited/canceled | ||
Outstanding at ending | 950,000 | 1,000,000 |
Outstanding at ending | $ 3.04 | $ 3.01 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 12 Months Ended | ||||
May 18, 2021 | Apr. 12, 2021 | Jan. 02, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Tax benefit | $ (2,014,018) | $ (1,801,618) | |||
Stock-based compensation expense | $ 3,079,427 | $ 2,707,554 | |||
Common stock issued, shares | 48,861,891 | 48,044,162 | |||
Aggregate stock price | $ 488,619 | $ 480,441 | |||
Chief Executive Officer Linda Tharby [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Common stock issued, shares | 1,000,000 | ||||
Aggregate stock price | $ 3,310,000 | ||||
Non Employee Director And Board Advisor [Member[ | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Nonemployee services transaction cost | 110,000 | 75,000 | |||
Share-based goods and nonemployee services transaction | to be paid quarterly $12,500 in cash and $15,000 in common stock | to be paid quarterly $12,500 in cash and $6,250 in common stock | |||
Board of Directors Chairman [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Nonemployee services transaction cost | 140,000 | 100,000 | |||
Share-based goods and nonemployee services transaction | to be paid quarterly $12,500 in cash and $22,500 in common stock | to be paid quarterly $12,500 in cash and $12,500 in common stock | |||
Chief Executive Officer [Member] | Employment Agreement [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Common stock issued, shares | 1,000,000 | ||||
Aggregate stock price | $ 3,310,000 | ||||
Stock Option Plan 2015 [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Available for issuance | 6,000,000 | ||||
Stock options granted | $ 1.98 | $ 2.85 | |||
Tax benefit | $ 198,258 | $ 175,257 | |||
Stock Option Plan 2015 [Member] | Time Based Shares Options [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Tax benefit | 103,319 | 665,700 | |||
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | 1,925,861 | 2,457,788 | |||
Proceeds from Stock Options Exercised | $ 406,623 | $ 1,261,251 | |||
Weighted-average grant-date fair value options granted | 881,428 | 5,699,986 | |||
Options exercised | 1,150,203 | 697,920 | |||
Total unrecognized compensation cost | $ 4,299,070 | ||||
Weighted-average period | 45 months | ||||
Fair value of shares | $ 2,703,002 | $ 1,923,179 | |||
Stock Option Plan 2015 [Member] | Executiveskey Employees And Consultants [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Common stock, shares, outstanding | 2,560,000 | ||||
Stock issued during period | 445,000 | ||||
Stock Option Plan 2021 [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Available for issuance | 1,000,000 | ||||
Stock options granted | $ 1.99 | $ 0 | |||
Tax benefit | $ 33,083 | $ 0 | |||
Fair value of shares | 0 | 0 | |||
Stock-based compensation expense | 157,536 | ||||
Stock Option Plan 2021 [Member] | Equity Option [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ (408,747) | ||||
Stock Option Plan 2021 [Member] | Time Based Shares Options [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Weighted-average grant-date fair value options granted | 945,215 | 0 | |||
Unrecognized compensation cost | $ 787,679 | ||||
Weighted-average period | 48 months | ||||
Stock Option Plan 2021 [Member] | Restricted Stock Awards [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Tax benefit | $ 101,419 | $ 47,220 | |||
Unrecognized compensation cost | $ 1,618,177 | ||||
Weighted-average period | 21 months | ||||
Stock Option Plan 2021 [Member] | Director [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Common stock issued, shares | 97,100 | ||||
Stock Option Plan 2021 [Member] | Executive [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Common stock issued, shares | 475,000 |
Schedule of components of lease
Schedule of components of lease expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease cost | $ 514,294 | $ 149,476 |
Short-term lease cost | 131,490 | 146,604 |
Total lease cost | 645,784 | 296,080 |
Finance lease cost: | ||
Amortization of right-of-use assets | 50,895 | 2,586 |
Interest on lease liabilities | 5,393 | 60 |
Total finance lease cost | $ 56,288 | $ 2,646 |
Schedule of cash flow informati
Schedule of cash flow information related to leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 247,504 | $ 141,293 |
Financing cash flows from finance leases | $ 57,243 | $ 2,646 |
Schdeule of balance sheet infor
Schdeule of balance sheet information related to leases (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Leases | ||
Operating lease right-of-use assets | $ 3,786,545 | $ 95,553 |
Operating lease liability – current | 345,834 | 95,553 |
Operating lease liability, net of current portion | 3,653,257 | |
Total operating lease liabilities | 3,999,091 | 95,553 |
Finance Leases | ||
Property and equipment, at cost | 544,468 | 12,725 |
Accumulated depreciation | (50,895) | (12,725) |
Property and equipment, net | 493,573 | |
Finance lease liability – current | 98,335 | |
Finance lease liability, net of current portion | 394,283 | |
Total finance lease liabilities | $ 492,618 | |
Operating leases | 9 years 8 months 12 days | 7 months 6 days |
Finance leases | 4 years 22 days | 0 years |
Operating leases | 4% | 4.75% |
Finance leases | 4.25% | 4.75% |
Schedule of maturities of lease
Schedule of maturities of lease liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2023 | $ 499,503 | |
2023 | 123,200 | |
2024 | 499,503 | |
2024 | 123,200 | |
2025 | 499,503 | |
2025 | 123,200 | |
2026 | 499,503 | |
2026 | 123,200 | |
2027 | 499,503 | |
2027 | 65,957 | |
Thereafter | 2,331,015 | |
Thereafter | ||
Total undiscounted lease payments | 4,828,530 | |
Total undiscounted lease payments | 558,757 | |
Less: imputed interest | (829,439) | |
Less: imputed interest | (66,139) | |
Total lease liabilities | 3,999,091 | $ 95,553 |
Total lease liabilities | $ 492,618 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Description of lease term | Our leases have remaining lease terms of 10, 5 years, and 3 months. |
Schedule of provision for incom
Schedule of provision for income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
State income tax: | ||
Current, net of refund | $ 0 | $ (12,800) |
Federal income tax: | ||
Deferred | 2,014,018 | 1,814,418 |
Current | ||
Income tax benefit/(expense) | $ 2,014,018 | $ 1,801,618 |
Schedule of reconciliation of i
Schedule of reconciliation of income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Loss before taxes | $ (10,675,160) | $ (6,364,441) |
Income taxes computed at the federal statutory rate | 2,241,784 | 1,336,533 |
State income and franchise tax | 0 | (12,800) |
Permanent differences and other | (227,766) | 477,885 |
Income tax benefit/(expense) | $ 2,014,018 | $ 1,801,618 |
Schedule of components of defer
Schedule of components of deferred tax assets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Deferred compensation cost | $ 557,931 | $ 389,981 |
Depreciation and amortization | (624,184) | (116,911) |
R&D credit | 142,030 | 142,538 |
NOL | 2,956,685 | 1,507,982 |
Allowance for bad debts and other | 935,018 | 17,664 |
Deferred income tax assets, net | $ 3,967,480 | $ 1,941,254 |
MAJOR CUSTOMERS (Details Narrat
MAJOR CUSTOMERS (Details Narrative) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 64% | 64% |
EMPLOYEE BENEFITS (Details Narr
EMPLOYEE BENEFITS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
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 | $ 214,931 | $ 166,014 |
DEBT OBLIGATIONS (Details Narra
DEBT OBLIGATIONS (Details Narrative) - A O N Premium Finance L L C [Member] - Promissory Note [Member] | Aug. 05, 2022 USD ($) |
Short-Term Debt [Line Items] | |
Notes payable | $ 800,000 |
Line of Credit [Member] | |
Short-Term Debt [Line Items] | |
Note payable terms | 6.50% |