Cover
Cover - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | May 04, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
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 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 Common Stock, Shares Outstanding | 45,613,150 | |
Entity Listing, Par Value Per Share | $ 0.01 | |
Treasury stock, common, shares | 3,420,502 |
BALANCE SHEETS (UNAUDITED)
BALANCE SHEETS (UNAUDITED) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 12,224,865 | $ 17,408,257 |
Accounts receivable less allowance for doubtful accounts of $21,459 for March 31, 2023, and for December 31, 2022 | 4,164,513 | 3,558,884 |
Inventory | 6,638,418 | 6,404,867 |
Other Receivables | 1,014,761 | 972,396 |
Prepaid expenses | 1,172,101 | 1,457,232 |
TOTAL CURRENT ASSETS | 25,214,658 | 29,801,636 |
Property and equipment, net | 3,906,067 | 3,886,975 |
Intangible assets, net of accumulated amortization of $341,755 and $325,872 at March 31, 2023 and December 31, 2022, respectively | 782,531 | 787,182 |
Operating lease right-of-use assets | 3,706,874 | 3,786,545 |
Deferred income tax assets, net | 4,544,880 | 3,967,480 |
Other assets | 98,970 | 102,625 |
TOTAL ASSETS | 38,253,980 | 42,332,443 |
CURRENT LIABILITIES | ||
Accounts payable | 1,503,120 | 2,391,799 |
Accrued expenses | 1,591,737 | 2,889,941 |
Note Payable | 218,403 | 433,295 |
Other Liabilities | 261,544 | 257,337 |
Accrued payroll and related taxes | 500,415 | 542,399 |
Financing lease liability – current | 99,694 | 98,335 |
Operating lease liability – current | 349,304 | 345,834 |
TOTAL CURRENT LIABILITIES | 4,524,217 | 6,958,940 |
Financing lease liability, net of current portion | 368,844 | 394,283 |
Operating lease liability, net of current portion | 3,564,619 | 3,653,257 |
TOTAL LIABILITIES | 8,457,680 | 11,006,480 |
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.01 par value, 75,000,000 shares authorized, 48,960,766 and 48,861,891 shares issued 45,540,264 and 45,441,389 shares outstanding at March 31, 2023, and December 31, 2022, respectively | 489,608 | 488,619 |
Additional paid-in capital | 45,132,350 | 44,252,117 |
Treasury stock, 3,420,502 shares at March 31, 2023 and December 31, 2022, at cost | (3,843,562) | (3,843,562) |
Retained deficit | (11,982,096) | (9,571,211) |
TOTAL STOCKHOLDERS’ EQUITY | 29,796,300 | 31,325,963 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 38,253,980 | $ 42,332,443 |
BALANCE SHEETS (UNAUDITED) (Par
BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss, current | $ 21,459 | $ 21,459 |
Finite-lived intangible assets, accumulated amortization | $ 341,755 | $ 325,872 |
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 | 48,960,766 | 48,861,891 |
Common stock, shares, outstanding | 45,540,264 | 45,441,389 |
Treasury stock, shares | 3,420,502 | 3,420,502 |
STATEMENTS OF OPERATIONS (Unaud
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
NET SALES | $ 7,392,605 | $ 6,244,330 |
Cost of goods sold | 3,245,570 | 2,622,025 |
Gross Profit | 4,147,035 | 3,622,305 |
OPERATING EXPENSES | ||
Selling, general and administrative | 5,425,877 | 5,491,213 |
Research and development | 1,564,869 | 1,148,355 |
Depreciation and amortization | 213,117 | 109,252 |
Total Operating Expenses | 7,203,863 | 6,748,820 |
Net Operating Loss | (3,056,828) | (3,126,515) |
Non-Operating Income/(Expense) | ||
Loss on currency exchange | (680) | (7,135) |
Loss on disposal of fixed assets, net | (56,279) | |
Interest income (expense), net | 125,502 | (1,463) |
TOTAL OTHER INCOME/(EXPENSE) | 68,543 | (8,598) |
LOSS BEFORE INCOME TAXES | (2,988,285) | (3,135,113) |
Income Tax Benefit | 577,400 | 597,599 |
NET LOSS | $ (2,410,885) | $ (2,537,514) |
NET LOSS PER SHARE | ||
Basic | $ (0.05) | $ (0.06) |
Diluted | $ (0.05) | $ (0.06) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||
Basic | 45,487,593 | 44,667,977 |
Diluted | 45,487,593 | 44,667,977 |
STATEMENTS OF CASH FLOWS (UNAUD
STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (2,410,885) | $ (2,537,514) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 881,222 | 837,556 |
Depreciation and amortization | 213,117 | 109,252 |
Deferred income taxes | (577,400) | (597,599) |
Loss on disposal of fixed assets | 56,279 | |
ROU landlord credit | (5,497) | |
Changes in operating assets and liabilities: | ||
(Increase)/Decrease in accounts receivable | (647,994) | 447,489 |
Decrease in other receivables | 38,145 | |
(Increase)/Decrease in inventory | (233,551) | 88,601 |
Decrease/(Increase) in prepaid expenses and other assets | 288,786 | (11,805) |
Increase in other Liabilities | 4,207 | 25,625 |
(Decrease)/Increase in accounts payable | (888,679) | 40,447 |
(Decrease)/Increase in accrued payroll and related taxes | (41,984) | 345,712 |
Decrease in accrued expenses | (1,298,204) | (537,981) |
NET CASH USED IN OPERATING ACTIVITIES | (4,660,583) | (1,752,072) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (272,605) | (750,908) |
Purchases of intangible assets | (11,232) | (1,694) |
NET CASH USED IN INVESTING ACTIVITIES | (283,837) | (752,602) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments on indebtedness | (214,892) | (252,968) |
Payments on finance lease liability | (24,080) | |
NET CASH USED IN FINANCING ACTIVITIES | (238,972) | (252,968) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (5,183,392) | (2,757,642) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 17,408,257 | 25,334,889 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 12,224,865 | 22,577,247 |
Cash paid during the periods for: | ||
Interest | 12,326 | 4,425 |
Income Taxes | ||
Schedule of Non-Cash Operating, Investing and Financing Activities: | ||
Issuance of common stock as compensation | $ 175,776 | $ 142,500 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Beginning balance, value at Dec. 31, 2021 | $ 480,441 | $ 40,774,245 | $ (910,069) | $ (3,843,562) | $ 36,501,055 |
Beginning balance (in shares) at Dec. 31, 2021 | 48,044,162 | ||||
Issuance of stock-based compensation | $ 475 | 142,025 | 142,500 | ||
Issuance of stock-based compensation (in shares) | 47,500 | ||||
Compensation expense related to stock options | 524,670 | 524,670 | |||
Compensation related to Restricted Stock | 170,386 | 170,386 | |||
Net loss | (2,537,514) | (2,537,514) | |||
Issuance upon options exercised | $ 296 | (296) | |||
Issuance upon options exercised (in shares) | 29,627 | ||||
Ending balance, value at Mar. 31, 2022 | $ 481,212 | 41,611,030 | (3,447,583) | (3,843,562) | 34,801,097 |
Ending balance (in shares) at Mar. 31, 2022 | 48,121,289 | ||||
Beginning balance, value at Dec. 31, 2022 | $ 488,619 | 44,252,117 | (9,571,211) | (3,843,562) | 31,325,963 |
Beginning balance (in shares) at Dec. 31, 2022 | 48,861,891 | ||||
Issuance of stock-based compensation | $ 489 | 175,287 | 175,776 | ||
Issuance of stock-based compensation (in shares) | 48,875 | ||||
Compensation expense related to stock options | 535,059 | 535,059 | |||
Compensation related to Restricted Stock | $ 500 | 169,887 | 170,387 | ||
Compensation related to Restricted Stock (in shares) | 50,000 | ||||
Net loss | (2,410,885) | (2,410,885) | |||
Ending balance, value at Mar. 31, 2023 | $ 489,608 | $ 45,132,350 | $ (11,982,096) | $ (3,843,562) | $ 29,796,300 |
Ending balance (in shares) at Mar. 31, 2023 | 48,960,766 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
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,” “we,” “us” or “our”) designs, manufactures and markets proprietary portable and innovative medical devices primarily for the subcutaneous drug delivery 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 The accompanying financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2022 (“Annual Report”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted from the accompanying financial statements. The accompanying year-end balance sheet was derived from the audited financial statements included in the Annual Report. The accompanying interim financial statements are unaudited and reflect all adjustments which are in the opinion of management necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the periods presented. All such adjustments are of a normal, recurring nature. The Company’s results of operations and cash flows for the interim periods are not necessarily indicative of the results of operations and cash flows that it may achieve in future periods. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company holds cash in excess of $ 250,000 INVENTORY Inventories of raw materials are stated at the lower of standard cost, which approximates average cost, or market value including allocable overhead. Work-in-process and finished goods are stated at the lower of standard cost or market value and include direct labor and allocable overhead. PATENTS Costs incurred in obtaining patents have been capitalized and are being amortized over the legal life of the patents. INCOME TAXES Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. The Company believes that it has no uncertain tax positions requiring disclosure or adjustment. Generally, tax years starting with 2019 are subject to examination by income tax authorities. PROPERTY, EQUIPMENT, AND DEPRECIATION Property and equipment is stated at cost and is depreciated using the straight-line method over the estimated useful lives of the respective assets. STOCK-BASED COMPENSATION The Company maintains a stock option plan and an 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. The Company also maintains a non-employee director compensation plan. Shares of stock granted for director fees 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 include only an increase in the weighted average shares by the common shares issuable upon exercise of employee and consultant stock options. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. Schedule of net income per common share Three Months Ended March 31, 2023 2022 Net loss $ (2,410,885 ) $ (2,537,514 ) Weighted Average Outstanding Shares: Outstanding shares 45,487,593 44,667,977 Option shares includable — (a) — (a) Restricted stock includable — (b) — (b) Total 45,487,593 44,667,977 Net loss per share Basic $ (0.05 ) $ (0.06 ) Diluted $ (0.05 ) $ (0.06 ) (a) For the three months ended March 31, 2023, and 2022, option shares of 14,626 346,020 (b) For the three months ended March 31, 2023, and 2022, Linda Tharby’s 900,000 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 Our revenues are derived from three business sources: (i) domestic core, (ii) international core, and (iii) novel therapies. Our core domestic and international revenues consist of sales of our syringe drivers, tubing and needles (“Product Revenue”) for the delivery of subcutaneous drugs that are FDA cleared for use with the KORU Medical infusion system, with the primary delivery for immunoglobulin to treat PIDD and CIDP. Novel therapies consist of Product Revenue for feasibility/clinical trials (pre-clinical studies, Phase I, Phase II, Phase III) of biopharmaceutical companies in the drug development process as well as non-recurring engineering services (“NRE”) revenues (including testing and registration services) received from biopharmaceutical companies to ready or customize the FREEDOM System for clinical and commercial use across multiple drug categories. For Product Revenues, 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 revenues. 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. Rebates are provided to distributors for the difference in selling price to distributor and pricing specified to select customers. In addition, rebates are provided to customers for meeting growth targets. Provisions for both distributor pricing and 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 growth target will be achieved. Our novel therapies revenues can fluctuate and may not be consistent from period to period. Engineering work performed on our product may be specialized and tailored to the specific needs of each independent clinical trial and not uniform in nature. The clinical trial size and scope of protocols may also range greatly from customer to customer, and there is no expectation of repeat customers on a consistent basis compared to our core business. We recognize NRE revenue under an input method, which recognizes revenue on the basis of our efforts or inputs (for example, resources consumed, labor hours expended, costs incurred, or time elapsed) to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation (ie completion milestone). The input method that we use is based on costs incurred. The following table summarizes net revenues by geography for the three months ended March 31, 2023, and 2022: Schedule of net sales by geography Three Months Ended March 31, % of Total Revenues 2023 2022 2023 2022 Revenues Domestic $ 6,283,965 $ 5,301,388 85% 85% International 1,108,640 942,942 15% 15% Total $ 7,392,605 $ 6,244,330 LEASES 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. The standard requires 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. See “NOTE 6 — ACCOUNTING PRONOUNCEMENTS RECENTLY 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 three months ended March 31, 2023. 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. The Company did not record any impairment losses through March 31, 2023. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 2 — PROPERTY AND EQUIPMENT Property and equipment consists of the following at: Schedule of property and equipment March 31, 2023 December 31, 2022 Furniture and office equipment $ 1,325,908 $ 1,456,745 Leasehold improvements 1,888,245 2,413,820 Manufacturing equipment and tooling 2,916,577 2,810,813 Total property and equipment 6,130,730 6,681,378 Less: accumulated depreciation and amortization (2,224,663 ) (2,794,403 ) Property and equipment, net $ 3,906,067 $ 3,886,975 Leasehold improvements decrease of $ 0.5 million Depreciation expense was $ 197,233 94,085 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 3 — COMMITMENTS AND CONTINGENCIES LEGAL PROCEEDINGS The Company has been and may again become involved in legal proceedings, claims and litigation arising in the ordinary course of business. KORU Medical is not presently a party to any litigation or other legal proceeding that is believed to be material to its financial condition. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023, there were options to purchase 2,600,000 40,000 6,000,000 The 2021 Plan provides for the grant of up to 1,000,000 156,758 475,000 Each non-employee director of the Company (other than the Chairman of the Board) is eligible to receive $ 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. 2015 STOCK OPTION PLAN, as amended Time Based Stock Options The per share weighted average fair value of stock options granted during the three months ended March 31, 2023 and March 31, 2022 was $ 2.83 2.45 49,817 49,406 Schedule of time based stock options March 31, 2023 2022 Dividend yield 0.00 0.00 Expected Volatility 61.3 76.1 77.5 Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 10 Risk-free rate 3.53 1.81 1.87 The following table summarizes the status of the 2015 Plan with respect to time based stock options: Schedule of status of time based stock options Three Months Ended March 31, 2023 2022 Shares Weighted Shares Weighted Outstanding at January 1 2,560,000 $ 4.15 3,672,500 $ 3.42 Granted 40,000 $ 3.91 135,000 $ 3.07 Exercised — $ — 75,000 $ 1.60 Forfeited — $ — 93,750 $ 1.57 Outstanding at March 31 2,600,000 $ 4.15 3,638,750 $ 3.49 Options exercisable at March 31 1,010,000 $ 4.63 1,358,750 $ 2.83 Weighted average fair value of options granted during the period — $ 2.83 — $ 2.45 Stock-based compensation expense — $ 475,983 — $ 524,670 Total stock-based compensation expense was $ 475,983 524,670 The weighted-average grant-date fair value of options granted during the three months ended March 31, 2023, and 2022 was $ 0.1 million 0.3 million no 75,000 The following table presents information pertaining to options outstanding at March 31, 2023: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.25-$9.49 2,600,000 8.6 $ 4.15 1,010,000 $ 4.63 As of March 31, 2023, there was $ 3,936,268 45 3,511,874 2,815,943 2021 STOCK OPTION PLAN, as amended Time Based Stock Options The per share weighted average fair value of stock options granted during the three months ended March 31, 2023 and March 31, 2022 was zero zero 12,406 zero Schedule of time based stock options March 31, 2023 2022 Dividend yield 0.00 0.00 Expected Volatility 0.00 0.00 Weighted-average volatility — — Expected dividends — — Expected term (in years) 0 0 Risk-free rate 0.00 0.00 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 Three Months Ended March 31, 2023 2022 Shares Weighted Shares Weighted Outstanding at January 1 475,000 $ 2.67 — $ — Granted — $ — — $ — Exercised — $ — — $ — Forfeited — $ — — $ — Outstanding at March 31 475,000 $ 2.67 — $ — Options exercisable at March 31 — $ — — $ — Weighted average fair value of options granted during the period — $ — — $ — Stock-based compensation expense — $ 59,076 — $ — Total stock-based compensation expense was $ 59,076 zero no The weighted-average grant-date fair value of options granted during the three months ended March 31, 2023, and 2022 was zero zero The following table presents information pertaining to options outstanding at March 31, 2023: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.67 475,000 9.1 $ 2.67 — $ — As of March 31, 2023, there was $ 728,603 zero zero RESTRICTED STOCK AWARDS The following table summarizes the activities for our restricted stock awards for the three months ended March 31, 2023, and 2022. Three Months Ended March 31, 2023 2022 Shares Weighted Shares Weighted Unvested at January 1 950,000 $ 3.04 1,000,000 $ 3.01 Granted — $ — — $ — Vested 50,000 $ 3.31 — $ — Forfeited/canceled — $ — — $ — Unvested at March 31 900,000 $ 2.93 1,000,000 $ 3.01 As of March 31, 2023, and 2022, there was $ 1,447,790 2,129,339 35,781 35,781 |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT OBLIGATIONS | NOTE 5 — 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 (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 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 Monthly payments are due on the first of each month beginning August 1, 2022 through June 1, 2023. 433,295 218,403 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
LEASES | NOTE 6 — LEASES We have an operating lease for our corporate office, and 2 Our operating lease has remaining lease term of nine years and 4 months. 4.2 4.5 The components of lease expense were as follows: Schedule of components of lease expense Three Months Ended March 31, 2023 2022 Operating lease cost $ 112,522 $ 78,442 Short-term lease cost 52,894 49,709 Total lease cost $ 165,416 $ 128,151 Finance lease cost: Amortization of right-of-use assets $ 27,223 $ — Interest on lease liabilities 6,720 — Total finance lease cost $ 33,943 $ — Supplemental cash flow information related to leases was as follows: Schedule of cash flow information related to leases Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 113,813 $ 63,193 Financing cash flows from finance leases 30,800 — Supplemental balance sheet information related to leases was as follows: Schdeule of balance sheet information related to leases March 31, December 31, Operating Leases Operating lease right-of-use assets $ 3,706,874 $ 3,786,545 Operating lease current liabilities 349,304 345,834 Operating lease long term liabilities 3,564,619 3,653,257 Total operating lease liabilities $ 3,913,923 $ 3,999,091 Finance Leases Property and equipment, at cost $ 544,468 $ 544,468 Accumulated depreciation (78,118) (50,895 ) Property and equipment, net $ 466,350 $ 493,573 Finance lease current liabilities 99,694 98,335 Finance lease long term liabilities 368,844 394,283 Total finance lease liabilities $ 468,538 $ 492,618 March 31, December 31, Weighted Average Remaining Lease Term Operating leases 9.4 9.7 Finance leases 4.3 4.6 Weighted Average Discount Rate Operating leases 4.00 4.0 Finance leases 4.25 4.25 Maturities of lease liabilities are as follows: Schedule of maturities of lease liabilities Year Ending December 31, Operating Leases Finance Leases 2023 (excluding the three months ended March 31, 2023) 374,627 92,400 2024 499,503 123,200 2025 499,503 123,200 2026 499,503 123,200 2027 499,503 65,957 Thereafter 2,331,014 — Total undiscounted lease payments 4,703,653 527,957 Less: imputed interest (789,730 ) (59,419 ) Total lease liabilities $ 3,913,923 $ 468,538 |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS KORU MEDICAL SYSTEMS, INC. (the “Company,” “KORU Medical,” “we,” “us” or “our”) designs, manufactures and markets proprietary portable and innovative medical devices primarily for the subcutaneous drug delivery 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 The accompanying financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2022 (“Annual Report”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted from the accompanying financial statements. The accompanying year-end balance sheet was derived from the audited financial statements included in the Annual Report. The accompanying interim financial statements are unaudited and reflect all adjustments which are in the opinion of management necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the periods presented. All such adjustments are of a normal, recurring nature. The Company’s results of operations and cash flows for the interim periods are not necessarily indicative of the results of operations and cash flows that it may achieve in future periods. |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company holds cash in excess of $ 250,000 |
INVENTORY | INVENTORY Inventories of raw materials are stated at the lower of standard cost, which approximates average cost, or market value including allocable overhead. Work-in-process and finished goods are stated at the lower of standard cost or market value and include direct labor and allocable overhead. |
PATENTS | PATENTS Costs incurred in obtaining patents have been capitalized and are being amortized over the legal life of the patents. |
INCOME TAXES | INCOME TAXES Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. The Company believes that it has no uncertain tax positions requiring disclosure or adjustment. Generally, tax years starting with 2019 are subject to examination by income tax authorities. |
PROPERTY, EQUIPMENT, AND DEPRECIATION | PROPERTY, EQUIPMENT, AND DEPRECIATION Property and equipment is stated at cost and is depreciated using the straight-line method over the estimated useful lives of the respective assets. |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company maintains a stock option plan and an 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. The Company also maintains a non-employee director compensation plan. Shares of stock granted for director fees 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 include only an increase in the weighted average shares by the common shares issuable upon exercise of employee and consultant stock options. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. Schedule of net income per common share Three Months Ended March 31, 2023 2022 Net loss $ (2,410,885 ) $ (2,537,514 ) Weighted Average Outstanding Shares: Outstanding shares 45,487,593 44,667,977 Option shares includable — (a) — (a) Restricted stock includable — (b) — (b) Total 45,487,593 44,667,977 Net loss per share Basic $ (0.05 ) $ (0.06 ) Diluted $ (0.05 ) $ (0.06 ) (a) For the three months ended March 31, 2023, and 2022, option shares of 14,626 346,020 (b) For the three months ended March 31, 2023, and 2022, Linda Tharby’s 900,000 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 Our revenues are derived from three business sources: (i) domestic core, (ii) international core, and (iii) novel therapies. Our core domestic and international revenues consist of sales of our syringe drivers, tubing and needles (“Product Revenue”) for the delivery of subcutaneous drugs that are FDA cleared for use with the KORU Medical infusion system, with the primary delivery for immunoglobulin to treat PIDD and CIDP. Novel therapies consist of Product Revenue for feasibility/clinical trials (pre-clinical studies, Phase I, Phase II, Phase III) of biopharmaceutical companies in the drug development process as well as non-recurring engineering services (“NRE”) revenues (including testing and registration services) received from biopharmaceutical companies to ready or customize the FREEDOM System for clinical and commercial use across multiple drug categories. For Product Revenues, 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 revenues. 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. Rebates are provided to distributors for the difference in selling price to distributor and pricing specified to select customers. In addition, rebates are provided to customers for meeting growth targets. Provisions for both distributor pricing and 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 growth target will be achieved. Our novel therapies revenues can fluctuate and may not be consistent from period to period. Engineering work performed on our product may be specialized and tailored to the specific needs of each independent clinical trial and not uniform in nature. The clinical trial size and scope of protocols may also range greatly from customer to customer, and there is no expectation of repeat customers on a consistent basis compared to our core business. We recognize NRE revenue under an input method, which recognizes revenue on the basis of our efforts or inputs (for example, resources consumed, labor hours expended, costs incurred, or time elapsed) to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation (ie completion milestone). The input method that we use is based on costs incurred. The following table summarizes net revenues by geography for the three months ended March 31, 2023, and 2022: Schedule of net sales by geography Three Months Ended March 31, % of Total Revenues 2023 2022 2023 2022 Revenues Domestic $ 6,283,965 $ 5,301,388 85% 85% International 1,108,640 942,942 15% 15% Total $ 7,392,605 $ 6,244,330 |
LEASES | LEASES 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. The standard requires 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. See “NOTE 6 — |
ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED | ACCOUNTING PRONOUNCEMENTS RECENTLY 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 three months ended March 31, 2023. |
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. The Company did not record any impairment losses through March 31, 2023. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of net income per common share | Basic earnings per share are computed on the weighted average of common shares outstanding during each year. Diluted earnings per share include only an increase in the weighted average shares by the common shares issuable upon exercise of employee and consultant stock options. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. Schedule of net income per common share Three Months Ended March 31, 2023 2022 Net loss $ (2,410,885 ) $ (2,537,514 ) Weighted Average Outstanding Shares: Outstanding shares 45,487,593 44,667,977 Option shares includable — (a) — (a) Restricted stock includable — (b) — (b) Total 45,487,593 44,667,977 Net loss per share Basic $ (0.05 ) $ (0.06 ) Diluted $ (0.05 ) $ (0.06 ) (a) For the three months ended March 31, 2023, and 2022, option shares of 14,626 346,020 (b) For the three months ended March 31, 2023, and 2022, Linda Tharby’s 900,000 1,000,000 |
Schedule of net sales by geography | The following table summarizes net revenues by geography for the three months ended March 31, 2023, and 2022: Schedule of net sales by geography Three Months Ended March 31, % of Total Revenues 2023 2022 2023 2022 Revenues Domestic $ 6,283,965 $ 5,301,388 85% 85% International 1,108,640 942,942 15% 15% Total $ 7,392,605 $ 6,244,330 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consists of the following at: Schedule of property and equipment March 31, 2023 December 31, 2022 Furniture and office equipment $ 1,325,908 $ 1,456,745 Leasehold improvements 1,888,245 2,413,820 Manufacturing equipment and tooling 2,916,577 2,810,813 Total property and equipment 6,130,730 6,681,378 Less: accumulated depreciation and amortization (2,224,663 ) (2,794,403 ) Property and equipment, net $ 3,906,067 $ 3,886,975 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of time based stock options | Schedule of time based stock options March 31, 2023 2022 Dividend yield 0.00 0.00 Expected Volatility 61.3 76.1 77.5 Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 10 Risk-free rate 3.53 1.81 1.87 |
Schedule of status of time based stock options | The following table summarizes the status of the 2015 Plan with respect to time based stock options: Schedule of status of time based stock options Three Months Ended March 31, 2023 2022 Shares Weighted Shares Weighted Outstanding at January 1 2,560,000 $ 4.15 3,672,500 $ 3.42 Granted 40,000 $ 3.91 135,000 $ 3.07 Exercised — $ — 75,000 $ 1.60 Forfeited — $ — 93,750 $ 1.57 Outstanding at March 31 2,600,000 $ 4.15 3,638,750 $ 3.49 Options exercisable at March 31 1,010,000 $ 4.63 1,358,750 $ 2.83 Weighted average fair value of options granted during the period — $ 2.83 — $ 2.45 Stock-based compensation expense — $ 475,983 — $ 524,670 |
Schedule of information pertaining to options outstanding | The following table presents information pertaining to options outstanding at March 31, 2023: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.25-$9.49 2,600,000 8.6 $ 4.15 1,010,000 $ 4.63 |
Schedule of time based stock options | Schedule of time based stock options March 31, 2023 2022 Dividend yield 0.00 0.00 Expected Volatility 0.00 0.00 Weighted-average volatility — — Expected dividends — — Expected term (in years) 0 0 Risk-free rate 0.00 0.00 |
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 Three Months Ended March 31, 2023 2022 Shares Weighted Shares Weighted Outstanding at January 1 475,000 $ 2.67 — $ — Granted — $ — — $ — Exercised — $ — — $ — Forfeited — $ — — $ — Outstanding at March 31 475,000 $ 2.67 — $ — Options exercisable at March 31 — $ — — $ — Weighted average fair value of options granted during the period — $ — — $ — Stock-based compensation expense — $ 59,076 — $ — |
Schedule of information pertaining to options outstanding | The following table presents information pertaining to options outstanding at March 31, 2023: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.67 475,000 9.1 $ 2.67 — $ — |
The following table summarizes the activities for our restricted stock awards for the three months ended March 31, 2023, and 2022. | The following table summarizes the activities for our restricted stock awards for the three months ended March 31, 2023, and 2022. Three Months Ended March 31, 2023 2022 Shares Weighted Shares Weighted Unvested at January 1 950,000 $ 3.04 1,000,000 $ 3.01 Granted — $ — — $ — Vested 50,000 $ 3.31 — $ — Forfeited/canceled — $ — — $ — Unvested at March 31 900,000 $ 2.93 1,000,000 $ 3.01 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Schedule of components of lease expense | The components of lease expense were as follows: Schedule of components of lease expense Three Months Ended March 31, 2023 2022 Operating lease cost $ 112,522 $ 78,442 Short-term lease cost 52,894 49,709 Total lease cost $ 165,416 $ 128,151 Finance lease cost: Amortization of right-of-use assets $ 27,223 $ — Interest on lease liabilities 6,720 — Total finance lease cost $ 33,943 $ — |
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 Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 113,813 $ 63,193 Financing cash flows from finance leases 30,800 — |
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 March 31, December 31, Operating Leases Operating lease right-of-use assets $ 3,706,874 $ 3,786,545 Operating lease current liabilities 349,304 345,834 Operating lease long term liabilities 3,564,619 3,653,257 Total operating lease liabilities $ 3,913,923 $ 3,999,091 Finance Leases Property and equipment, at cost $ 544,468 $ 544,468 Accumulated depreciation (78,118) (50,895 ) Property and equipment, net $ 466,350 $ 493,573 Finance lease current liabilities 99,694 98,335 Finance lease long term liabilities 368,844 394,283 Total finance lease liabilities $ 468,538 $ 492,618 March 31, December 31, Weighted Average Remaining Lease Term Operating leases 9.4 9.7 Finance leases 4.3 4.6 Weighted Average Discount Rate Operating leases 4.00 4.0 Finance leases 4.25 4.25 |
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 (excluding the three months ended March 31, 2023) 374,627 92,400 2024 499,503 123,200 2025 499,503 123,200 2026 499,503 123,200 2027 499,503 65,957 Thereafter 2,331,014 — Total undiscounted lease payments 4,703,653 527,957 Less: imputed interest (789,730 ) (59,419 ) Total lease liabilities $ 3,913,923 $ 468,538 |
Schedule of net income per comm
Schedule of net income per common share (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | ||
Net loss | $ (2,410,885) | $ (2,537,514) | |
Weighted Average Outstanding Shares: | |||
Outstanding shares | 45,487,593 | 44,667,977 | |
Option shares includable | [1] | ||
Restricted stock includable | [2] | ||
Total | 45,487,593 | 44,667,977 | |
Net loss per share | |||
Basic | $ (0.05) | $ (0.06) | |
Diluted | $ (0.05) | $ (0.06) | |
Restricted Stock [Member] | |||
Net loss per share | |||
Restricted stock | 900,000 | 1,000,000 | |
Employee Stock [Member] | |||
Net loss per share | |||
Restricted stock | 14,626 | 346,020 | |
Common Stock [Member] | |||
Net loss | |||
Weighted Average Outstanding Shares: | |||
Outstanding shares | 45,487,593 | 44,667,977 | |
[1]For the three months ended March 31, 2023, and 2022, option shares of 14,626 346,020 900,000 1,000,000 |
Schedule of net sales by geogra
Schedule of net sales by geography (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues | $ 7,392,605 | $ 6,244,330 |
UNITED STATES | ||
Revenues | $ 6,283,965 | $ 5,301,388 |
Net revenues (in percentage) | 85% | 85% |
Non-US [Member] | ||
Revenues | $ 1,108,640 | $ 942,942 |
Net revenues (in percentage) | 15% | 15% |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended |
Mar. 31, 2023 USD ($) Number | |
Accounting Policies [Abstract] | |
Number of segment | Number | 1 |
FDIC cash uninsured amount | $ | $ 250,000 |
Schedule of property and equipm
Schedule of property and equipment (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6,130,730 | $ 6,681,378 |
Less: accumulated depreciation and amortization | (2,224,663) | (2,794,403) |
Property and equipment, net | 3,906,067 | 3,886,975 |
Furniture And Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,325,908 | 1,456,745 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,888,245 | 2,413,820 |
Manufacturing Equipment And Tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 2,916,577 | $ 2,810,813 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Construction in progress gross | $ 500,000 | |
Depreciation expense | $ 197,233 | $ 94,085 |
Schedule of time based stock op
Schedule of time based stock options (Details) - Time Based Shares Options [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock Option Plan 2015 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Dividend yield | 0% | 0% |
Expected volatility | 61.30% | |
Weighted-average volatility | 0% | 0% |
Expected dividends | $ 0 | $ 0 |
Expected term (in years) | 10 years | 10 years |
Risk-free rate | 3.53% | |
Stock Option Plan 2015 [Member] | Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 76.10% | |
Risk-free rate | 1.81% | |
Stock Option Plan 2015 [Member] | Maximum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 77.50% | |
Risk-free rate | 1.87% | |
Stock Option Plan 2021 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Dividend yield | 0% | 0% |
Expected volatility | 0% | 0% |
Weighted-average volatility | 0% | 0% |
Expected dividends | $ 0 | $ 0 |
Expected term (in years) | 0 years | 0 years |
Risk-free rate | 0% | 0% |
Schedule of status of time base
Schedule of status of time based stock options (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 881,222 | $ 837,556 |
Stock Option Plan 2015 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning | 2,560,000 | 3,672,500 |
Outstanding at beginning | $ 4.15 | $ 3.42 |
Granted | 40,000 | 135,000 |
Granted | $ 3.91 | $ 3.07 |
Exercised | 75,000 | |
Exercised | $ 1.60 | |
Forfeited | 93,750 | |
Forfeited | $ 1.57 | |
Outstanding at ending | 2,600,000 | 3,638,750 |
Outstanding at ending | $ 4.15 | $ 3.49 |
Options exercisable at ending | 1,010,000 | 1,358,750 |
Options exercisable | $ 4.63 | $ 2.83 |
Weighted average fair value of options granted during the period | $ 2.83 | $ 2.45 |
Stock-based compensation expense | $ 475,983 | $ 524,670 |
Stock Option Plan 2021 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Options exercisable at ending | ||
Outstanding at beginning | 475,000 | |
Outstanding at beginning | $ 2.67 | |
Granted | ||
Granted | ||
Exercised | ||
Exercised | ||
Forfeited | ||
Forfeited | ||
Outstanding at ending | 475,000 | |
Outstanding at ending | $ 2.67 | |
Options exercisable at ending | ||
Weighted average fair value of options granted during the period | ||
Stock-based compensation expense | $ 59,076 | $ 0 |
Schedule of information pertain
Schedule of information pertaining to options outstanding (Details) - Time Based Shares Options [Member] - Exercise Price1 [Member] | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Stock Option Plan 2015 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number outstanding | shares | 2,600,000 |
Weighted average remaining contractual life | 8 years 7 months 6 days |
Weighted average exercise price | $ / shares | $ 4.15 |
Number exercisable | shares | 1,010,000 |
Weighted average exercise price | $ / shares | $ 4.63 |
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 1 month 6 days |
Weighted average exercise price | $ / shares | $ 2.67 |
Number exercisable | shares | |
Weighted average exercise price | $ / shares |
The following table summarizes
The following table summarizes the activities for our restricted stock awards for the three months ended March 31, 2023, and 2022. (Details) - Restricted Stock Awards [Member] - Stock Option Plan 2021 [Member] - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning | 950,000 | 1,000,000 |
Outstanding at beginning | $ 3.04 | $ 3.01 |
Granted | ||
Granted | ||
Vested | 50,000 | |
Vested | $ 3.31 | |
Forfeited/canceled | ||
Forfeited/canceled | ||
Outstanding at ending | 900,000 | 1,000,000 |
Outstanding at ending | $ 2.93 | $ 3.01 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | ||
May 18, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Tax benefit | $ (577,400) | $ (597,599) | |
Stock-based compensation expense | 881,222 | 837,556 | |
Restricted Stock Awards [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Unrecognized compensation cost | $ 1,447,790 | $ 2,129,339 | |
Non Employee Director And Board Advisor [Member[ | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Nonemployee services transaction cost | 110,000 | ||
Share-based goods and nonemployee services transaction | to be paid quarterly $12,500 in cash and $15,000 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 | ||
Share-based goods and nonemployee services transaction | to be paid quarterly $12,500 in cash and $22,500 in common stock. | ||
Stock Option Plan 2015 [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Issuance of stock-based compensation (in shares) | 6,000,000 | ||
Stock options granted | $ 2.83 | $ 2.45 | |
Tax benefit | $ 49,817 | $ 49,406 | |
Fair value of shares | 3,511,874 | 2,815,943 | |
Stock Option Plan 2015 [Member] | Time Based Shares Options [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Stock-based compensation expense | 475,983 | 524,670 | |
Weighted-average grant-date fair value options granted | $ 100,000 | $ 300,000 | |
Number of options exercised | 0 | 75,000 | |
Total unrecognized compensation cost | $ 3,936,268 | ||
Weighted-average period (in years) | 45 months | ||
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 | 2,600,000 | ||
Stock issued during period | 40,000 | ||
Stock Option Plan 2021 [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Issuance of stock-based compensation (in shares) | 1,000,000 | ||
Stock options granted | $ 0 | $ 0 | |
Tax benefit | $ 12,406 | $ 0 | |
Fair value of shares | 0 | 0 | |
Stock-based compensation expense | 59,076 | 0 | |
Unrecognized compensation cost | 728,603 | ||
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 | $ 0 | $ 0 | |
Number of options exercised | 0 | 0 | |
Stock Option Plan 2021 [Member] | Restricted Stock Awards [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Tax benefit | $ 35,781 | $ 35,781 | |
Stock Option Plan 2021 [Member] | Director [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Shares issued under plan in total | 156,758 | ||
Stock Option Plan 2021 [Member] | Executive [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Shares issued under plan in total | 475,000 |
DEBT OBLIGATIONS (Details Narra
DEBT OBLIGATIONS (Details Narrative) - USD ($) | 3 Months Ended | |||
Aug. 05, 2022 | Jun. 29, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Short-Term Debt [Line Items] | ||||
Description of debt obligation | (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 | |||
Description of the frequency of periodic payments | Monthly payments are due on the first of each month beginning August 1, 2022 through June 1, 2023. | |||
A O N Premium Finance L L C [Member] | ||||
Short-Term Debt [Line Items] | ||||
Balance of AON note | $ 218,403 | $ 433,295 | ||
A O N Premium Finance L L C [Member] | Promissory Note [Member] | ||||
Short-Term Debt [Line Items] | ||||
Notes payable | $ 800,000 | |||
A O N Premium Finance L L C [Member] | Promissory Note [Member] | Line of Credit [Member] | ||||
Short-Term Debt [Line Items] | ||||
Note payable terms | 6.50% | |||
Key Equipment Finance [Member] | Progress Payment Loan And Security Agreement [Member] | ||||
Short-Term Debt [Line Items] | ||||
Loans, principal amount | $ 3,500,000 |
Schedule of components of lease
Schedule of components of lease expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Operating lease cost | $ 112,522 | $ 78,442 |
Short-term lease cost | 52,894 | 49,709 |
Total lease cost | 165,416 | 128,151 |
Finance lease cost: | ||
Amortization of right-of-use assets | 27,223 | |
Interest on lease liabilities | 6,720 | |
Total finance lease cost | $ 33,943 |
Schedule of cash flow informati
Schedule of cash flow information related to leases (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 113,813 | $ 63,193 |
Financing cash flows from finance leases | $ 30,800 |
Schdeule of balance sheet infor
Schdeule of balance sheet information related to leases (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Operating Leases | ||
Operating lease right-of-use assets | $ 3,706,874 | $ 3,786,545 |
Operating lease current liabilities | 349,304 | 345,834 |
Operating lease long term liabilities | 3,564,619 | 3,653,257 |
Total operating lease liabilities | 3,913,923 | 3,999,091 |
Finance Leases | ||
Property and equipment, at cost | 544,468 | 544,468 |
Accumulated depreciation | (78,118) | (50,895) |
Property and equipment, net | 466,350 | 493,573 |
Finance lease current liabilities | 99,694 | 98,335 |
Finance lease long term liabilities | 368,844 | 394,283 |
Total finance lease liabilities | $ 468,538 | $ 492,618 |
Operating leases | 9 years 4 months 24 days | 9 years 8 months 12 days |
Finance leases | 4 years 3 months 19 days | 4 years 7 months 6 days |
Operating leases | 4% | 4% |
Finance leases | 4.25% | 4.25% |
Schedule of maturities of lease
Schedule of maturities of lease liabilities (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
2023 (excluding the three months ended March 31, 2023) | $ 374,627 | |
2023 (excluding the three months ended March 31, 2023) | 92,400 | |
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 | 2,331,014 | |
Thereafter | ||
Total undiscounted lease payments | 4,703,653 | |
Total undiscounted lease payments | 527,957 | |
Less: imputed interest | (789,730) | |
Less: imputed interest | (59,419) | |
Total lease liabilities | 3,913,923 | $ 3,999,091 |
Total lease liabilities | $ 468,538 | $ 492,618 |
LEASES (Details Narrative)
LEASES (Details Narrative) - Number | 3 Months Ended | 6 Months Ended | 10 Months Ended |
Mar. 31, 2023 | Jun. 30, 2022 | Oct. 31, 2022 | |
Lessee, Lease, Description [Line Items] | |||
Description of lease term | Our operating lease has remaining lease term of nine years and 4 months. | ||
Operating lease, options to terminate | 4 years 2 months 12 days | 4 years 6 months | |
Computer Equipment [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Number of finance leases | 2 |