Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 13, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Fiscal Period Focus | FY | ||
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 | DE | ||
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 | $ 111,191,841 | ||
Entity Common Stock, Shares Outstanding | 45,710,500 | ||
Document Financial Statement Error Correction [Flag] | false | ||
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, 2023 | Dec. 31, 2022 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 11,482,240 | $ 17,408,257 |
Accounts receivable less allowance for doubtful accounts of $24,777 and $21,459 for December 31, 2023, and December 31, 2022, respectively | 4,045,211 | 3,558,884 |
Inventory | 3,481,301 | 6,404,867 |
Other receivables | 28,889 | 972,396 |
Prepaid expenses and other | 1,218,288 | 1,457,232 |
TOTAL CURRENT ASSETS | 20,255,929 | 29,801,636 |
Property and equipment, net | 3,837,657 | 3,886,975 |
Intangible assets, net of accumulated amortization of $390,341 and $325,872 at December 31, 2023 and December 31, 2022, respectively | 754,361 | 787,182 |
Operating lease right-of-use assets | 3,514,055 | 3,786,545 |
Deferred income tax assets, net allowance for non-realization of deferred tax assets of $6,002,777 and zero for December 31, 2023 and December 31, 2022, respectively | 3,967,480 | |
Other assets | 98,970 | 102,625 |
TOTAL ASSETS | 28,460,972 | 42,332,443 |
CURRENT LIABILITIES | ||
Accounts payable | 975,193 | 2,391,799 |
Accrued expenses | 1,711,427 | 2,889,941 |
Note Payable | 314,344 | 433,295 |
Other liabilities | 512,520 | 257,337 |
Accrued payroll and related taxes | 462,941 | 542,399 |
Finance lease liability – current | 109,540 | 98,335 |
Operating lease liability – current | 368,313 | 345,834 |
TOTAL CURRENT LIABILITIES | 4,454,278 | 6,958,940 |
Finance lease liability, net current portion | 316,623 | 394,283 |
Operating lease liability, net of current portion | 3,336,300 | 3,653,257 |
TOTAL LIABILITIES | 8,107,201 | 11,006,480 |
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.01 par value, 75,000,000 shares authorized, 49,089,864 and 48,861,891 shares issued; 45,669,362 and 45,441,389 shares outstanding at December 31, 2023, and December 31, 2022, respectively | 490,899 | 488,619 |
Additional paid-in capital | 47,018,707 | 44,252,117 |
Treasury stock, 3,420,502 shares at December 31, 2023 and December 31, 2022, at cost | (3,843,562) | (3,843,562) |
Retained Deficit | (23,312,273) | (9,571,211) |
TOTAL STOCKHOLDERS’ EQUITY | 20,353,771 | 31,325,963 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 28,460,972 | $ 42,332,443 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss, current | $ 24,777 | $ 21,459 |
Finite-lived intangible assets, accumulated amortization | 390,341 | 325,872 |
Deferred Rent Receivables, Net, Noncurrent | $ 6,002,777 | $ 0 |
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 | 49,089,864 | 48,861,891 |
Common stock, shares, outstanding | 45,669,362 | 45,441,389 |
Treasury stock, shares | 3,420,502 | 3,420,502 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Statement [Abstract] | ||
NET REVENUES | $ 28,517,666 | $ 27,896,037 |
Cost of goods sold | 11,809,384 | 12,527,051 |
Gross Profit | 16,708,282 | 15,368,986 |
OPERATING EXPENSES | ||
Selling, general and administrative | 20,365,617 | 20,606,507 |
Research and development | 5,742,254 | 4,956,215 |
Depreciation and amortization | 870,390 | 587,137 |
Total Operating Expenses | 26,978,261 | 26,149,859 |
Net Operating Loss | (10,269,979) | (10,780,873) |
Non-Operating Income | ||
Loss on foreign currency exchange | (5,124) | (39,874) |
Loss on disposal of fixed assets | (59,807) | |
Interest income, net | 561,328 | 145,587 |
TOTAL OTHER INCOME | 496,397 | 105,713 |
LOSS BEFORE TAXES | (9,773,582) | (10,675,160) |
Income (tax)/benefit | (3,967,480) | 2,014,018 |
NET LOSS | $ (13,741,062) | $ (8,661,142) |
NET LOSS PER SHARE | ||
Basic | $ (0.30) | $ (0.19) |
Diluted | $ (0.30) | $ (0.19) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||
Basic | 45,601,346 | 45,002,074 |
Diluted | 45,601,346 | 45,002,074 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock, Common [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 | ||||
Accrued compensation paid in shares | $ 2,066 | 511,016 | 513,082 | ||
Accrued compensation paid in shares (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 | ||
Compensation expense related to restricted stock awards (in shares) | 50,000 | ||||
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) | |||
Ending balance, value at Dec. 31, 2022 | $ 488,619 | 44,252,117 | (9,571,211) | (3,843,562) | 31,325,963 |
Ending balance (in shares) at Dec. 31, 2022 | 48,861,891 | ||||
Accrued compensation paid in shares | $ 1,280 | 445,069 | 446,349 | ||
Accrued compensation paid in shares (in shares) | 127,973 | ||||
Compensation expense related to stock options | 1,940,720 | 1,940,720 | |||
Compensation expense related to restricted stock awards | $ 1,000 | 380,801 | 381,801 | ||
Compensation expense related to restricted stock awards (in shares) | 100,000 | ||||
Issuance upon options exercised | |||||
Net loss | (13,741,062) | (13,741,062) | |||
Ending balance, value at Dec. 31, 2023 | $ 490,899 | $ 47,018,707 | $ (23,312,273) | $ (3,843,562) | $ 20,353,771 |
Ending balance (in shares) at Dec. 31, 2023 | 49,089,864 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (13,741,062) | $ (8,661,142) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 2,768,870 | 3,079,427 |
Depreciation and amortization | 870,390 | 587,137 |
Loss on disposal of fixed assets | 59,807 | |
Deferred income taxes | (2,035,297) | (2,026,226) |
Allowance for non-realization of deferred tax asset | 6,002,777 | |
ROU landlord credit | (21,988) | 212,546 |
Changes in operating assets and liabilities: | ||
(Increase)/Decrease in accounts receivable | (486,327) | 34,002 |
Decrease/(Increase) in inventory | 2,923,566 | (298,529) |
Decrease/(Increase) in other receivables | 943,507 | (254,176) |
Decrease in prepaid expenses and other assets | 242,599 | 28,776 |
(Decrease)/Increase in accounts payable | (1,416,606) | 1,164,266 |
(Decrease)/Increase in accrued payroll and related taxes | (79,458) | 381,796 |
Increase in other liabilities | 255,183 | 167,337 |
(Decrease)/Increase in accrued expenses | (1,178,514) | 180,237 |
NET CASH USED IN OPERATING ACTIVITIES | (4,892,553) | (5,404,549) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (782,949) | (2,761,056) |
Purchases of intangible assets | (31,648) | (40,512) |
NET CASH USED IN INVESTING ACTIVITIES | (814,597) | (2,801,568) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of equity | 406,623 | |
Borrowings from indebtedness | 565,172 | 783,799 |
Payments on indebtedness | (684,123) | (859,087) |
Finance lease ROU asset | (33,461) | |
Payments on finance lease liability | (66,455) | (51,850) |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (218,867) | 279,485 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (5,926,017) | (7,926,632) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 17,408,257 | 25,334,889 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 11,482,240 | 17,408,257 |
Cash paid during the years for: | ||
Interest | 50,832 | 28,490 |
Income taxes | 3,160 | |
Schedule of Non-Cash Operating, Investing and Financing Activities: | ||
Issuance of common stock as compensation | $ 446,349 | $ 513,082 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 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,” “KORU,” “we,” “us” or “our”) develops, manufactures and commercializes innovative and patient-centric large volume subcutaneous infusion solutions 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 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 statements 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 has historically held cash balances in excess of $ 250,000 10.2 million 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 64,469 62,143 The estimated amortization expense for the succeeding years for the intangible assets is approximately: Year Ending December 31, 2024 $ 65,869 2025 65,729 2026 64,674 2027 64,242 2028 64,242 Thereafter 429,605 Total amortization expense $ 754,361 INCOME TAXES For interim income tax reporting, the Company estimates its annual effective tax rate and applies it to fiscal year-to-date pretax loss, excluding unusual or infrequently occurring discrete items. Tax jurisdictions with losses for which tax benefits cannot be realized are excluded. The Company reported an income tax expense of $ 4.0 2.0 We evaluate our deferred tax assets to determine if they are more likely than not to be realized by assessing both positive and negative evidence in accordance with ASC Topic 740, Income Taxes. After considering our cumulative pretax loss (the three-year period ending with the current year), as well as analyzing all available evidence, we have recorded a valuation allowance of $ 6.0 million Recurring items cause our effective tax rate to differ from the U.S. federal statutory rate of 21 Beginning in 2022, certain research and development costs are required to be capitalized and amortized over a five-year period under the Tax Cuts and Jobs Act enacted in December 2017. This change will impact the expected U.S. federal and state income tax expense and cash taxes to be paid for our fiscal 2023. The Company files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. Income tax returns for years prior to fiscal 2019 are no longer subject to examination by tax authorities. 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 12 805,921 524,994 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. It also has granted stock options outside of the plans as inducement awards. 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 and under its omnibus equity incentive plan are recorded at the fair value of the shares at the grant date. The Company issues restricted stock awards under its omnibus equity incentive plan and outside the plan as incentive 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 other restricted stock awards 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 net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and common equivalent shares outstanding during the period. The Company’s potentially dilutive common shares are those that result from diluted common stock options and unvested restricted stock awards. The calculation of diluted loss per share excluded stock options of 12,335 zero The calculation of diluted loss per share excluded performance-based restricted stock and time-based restricted stock of 904,496 950,000 The following securities were not included in the computation of diluted shares outstanding for the years ended December 31, 2023, and 2022 because the effect would be anti-dilutive: Years Ended December 31, 2023 2022 Stock options $ 12,335 $ — Restricted stock 904,496 950,000 Total $ 916,831 $ 950,000 Schedule of net income per common share Years Ended December 31, 2023 December 31, 2022 Net loss $ (13,741,062 ) $ (8,661,142 ) Weighted Average Outstanding Shares: Basic weighted average shares outstanding 45,601,346 45,002,074 Dilutive effect of outstanding stock options and unvested restricted stock — — Diluted weighted average shares outstanding 45,601,346 45,020,074 Net loss per share Basic $ (0.30 ) $ (0.19 ) Diluted $ (0.30 ) $ (0.19 ) Therefore, diluted weighted average number of shares outstanding and diluted net loss per share were the same as basic weighted average number of shares outstanding and net loss per share for the years ended December 31, 2023 and 2022. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. 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 Our revenues are derived from three business sources: (i) domestic core (which consists of US and Canada), (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 Primary Immunodeficiency Diseases (“PIDD”) and Chronic Inflammatory Demyelinating Polyneuropathy (“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 Revenue, 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 Product Revenue. 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. 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 (i.e. completion milestone). The input method that we use is based on costs incurred. Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications exist when the modification either creates new, or changes existing, enforceable rights and obligations. Generally, when contract modifications create new performance obligations, the modification is considered to be a separate contract and revenue is recognized prospectively. When contract modifications change existing performance obligations, the impact on the existing transaction price and measure of progress for the performance obligation to which it relates is generally recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Contract assets primarily represent revenue earnings over time that are not yet billable based on the terms of the contracts. Contract liabilities (i.e., deferred revenue) consist of fees invoiced or paid by the Company’s customers for which the associated performance obligations have not been satisfied and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of December 31, 2023, the Company has recognized a contract asset of zero which is included in other accounts receivable in the accompanying balance sheet. 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, 2023 and 2022: Years Ended December 31, 2023 2022 Net Revenues Domestic $ 23,676,039 $ 23,586,254 International 4,841,627 4,309,783 Total $ 28,517,666 $ 27,896,037 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 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, 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. No impairment losses have been recorded through December 31, 2023. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 2 — INVENTORY Inventory consists of: December 31, 2023 December 31, 2022 Raw materials and work-in-process $ 1,869,356 $ 3,853,034 Finished goods 1,862,525 2,611,951 Total 3,731,881 6,464,985 Less: reserve for obsolete inventory (250,580 ) (60,118 ) Inventory, net $ 3,481,301 $ 6,404,867 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 — PROPERTY AND EQUIPMENT Property and equipment consists of the following at: December 31, 2023 December 31, 2022 Furniture and office equipment $ 1,412,164 $ 1,456,745 Leasehold improvements 1,953,653 2,413,820 Manufacturing equipment and tooling 3,193,113 2,810,813 Total property and equipment 6,558,930 6,681,378 Less: accumulated depreciation and amortization (2,721,273 ) (2,794,403 ) Property and equipment, net $ 3,837,657 $ 3,886,975 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 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 and stock options as employment inducement awards to its Chief Executive Officer and Chief Commercial Officer, respectively. The 2015 plan provides for the grant of up to 6,000,000 2,436,250 85,000 445,000 2,724,250 The 2021 Plan provides for the grant of up to 1,000,000 21,100 97,100 822,142 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. The per share weighted average fair value of stock options granted during the year ended December 31, 2023 and December 31, 2022 was $ 1.84 1.98 256,315 231,341 Time Based Stock Options The following table summarizes the activities for our stock options with time based vesting for the years ended December 31, 2023, and 2022. Schedule of time based stock options December 31, 2023 2022 Dividend yield 0.00 0.00 Expected Volatility 51.9 61.3 65.29 77.5 Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 10 Risk-free rate 3.50 4.53 1.81 4.02 The following table summarizes the status of the time-based stock options: Schedule of status of time based stock options Years Ended December 31, 2023 2022 Shares Weighted Shares Weighted Outstanding at January 1 3,035,000 $ 3.93 3,672,500 $ 3.42 Granted 430,000 $ 2.66 920,000 $ 2.62 Exercised — $ — 1,031,250 $ 1.57 Forfeited 208,750 $ 5.45 526,250 $ 2.73 Outstanding at December 31 3,256,250 $ 3.66 3,035,000 $ 3.93 Options exercisable at December 31 1,458,750 $ 4.42 737,500 $ 4.93 Weighted average fair value of options granted during the period — $ 1.84 — $ 1.99 Stock-based compensation expense — $ 1,940,720 — $ 2,083,397 Total stock-based compensation expense was $ 1,940,720 2,083,397 zero 406,623 The weighted-average grant-date fair value of options granted during the years ended December 31, 2023, and 2022 was $ 0.8 million 1.8 million no 1,031,250 The following table presents information pertaining to time- based stock options outstanding at December 31, 2023: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.18-$9.49 3,256,250 8.3 $ 3.66 1,458,750 $ 4.42 As of December 31, 2023, there was $ 3,145,616 46 4,819,658 2,703,002 Performance Based Stock Options Pursuant to an employment agreement entered into on November 6, 2023, with the Company’s Chief Commercial Officer, and as an inducement to his employment, the Company issued a non-qualified option to purchase 200,000 shares of common stock that vest upon achievement of sales growth milestones. The following table summarizes the activities for our unvested performance stock option awards for the twelve months ended December 31, 2023, and 2022. Twelve Months Ended December 31, 2023 2022 Shares Weighted Shares Weighted Unvested at January 1 — $ — — $ — Granted 200,000 $ 1.48 — $ — Vested — $ — — $ — Forfeited/canceled — $ — — $ — Unvested at December 31 200,000 $ 1.48 — $ — As of December 31, 2023, there was $ 176,345 36 1,137 zero RESTRICTED STOCK AWARDS The following table summarizes the activities for our unvested restricted stock awards for the twelve months ended December 31, 2023, and 2022. Twelve Months Ended December 31, 2023 2022 Shares Weighted Shares Weighted Unvested at January 1 950,000 $ 3.04 1,000,000 $ 3.01 Granted 54,496 $ 3.68 — $ — Vested 100,000 $ 3.31 50,000 $ 3.31 Forfeited/canceled — $ — — $ — Unvested at December 31 904,496 $ 2.77 950,000 $ 3.04 As of December 31, 2023, there was $ 1,076,664 79,326 101,419 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
LEASES | NOTE 5 — LEASES We have finance and operating leases for our corporate office and certain office and computer equipment. Our two operating leases have remaining lease terms of 8.6 5 3.4 3 4.75 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 expenses Years Ended December 31, 2023 2022 Operating lease cost $ 448,630 $ 514,294 Short-term lease cost 130,483 131,490 Total lease cost $ 579,113 $ 645,784 Finance lease cost: Amortization of right-of-use assets $ 110,566 $ 50,895 Interest on lease liabilities 25,343 5,393 Total finance lease cost $ 135,909 $ 56,288 Supplemental cash flow information related to leases was as follows: Schedule of cash flow information related to leases Years Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 464,104 $ 247,504 Financing cash flows from finance leases $ 125,259 $ 57,243 Supplemental balance sheet information related to leases was as follows: Schedule of balance sheet information related to leases December 31, December 31, Operating Leases Operating lease right-of-use assets $ 3,514,055 $ 3,786,545 Operating lease liability – current 368,313 345,834 Operating lease liability, net of current portion 3,336,300 3,653,257 Total operating lease liabilities $ 3,704,613 $ 3,999,091 Finance Leases Property and equipment, at cost $ 577,929 $ 544,468 Accumulated depreciation (161,461 ) (50,895 ) Property and equipment, net $ 416,468 $ 493,573 Finance lease liability – current 109,540 98,335 Finance lease liability, net of current portion 316,623 394,283 Total finance lease liabilities $ 426,163 $ 492,618 December 31, December 31, Weighted Average Remaining Lease Term Operating leases 6.9 9.7 Finance leases 3.7 4.6 Weighted Average Discount Rate Operating leases 5.76 4.00 Finance leases 6.19 4.25 Maturities of lease liabilities are as follows: Schedule of maturities of lease liabilities Year Ending December 31, Operating Leases Finance Leases 2024 512,055 131,437 2025 512,055 131,437 2026 512,055 131,437 2027 512,055 74,194 2028 512,055 6,181 Thereafter 1,832,557 — Total undiscounted lease payments 4,392,832 474,686 Less: imputed interest (688,220 ) (48,523 ) Total lease liabilities $ 3,704,613 $ 426,163 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
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 $ 0 Federal income tax: Deferred 2,035,297 2,014,018 Current — — Write-off of deferred tax asset (6,002,777 ) — Income tax benefit/(expense) $ (3,967,480 ) $ 2,014,018 The reconciliation of income taxes shown in the financial statements and amounts computed by applying the Federal expected tax rate of 21% for year 2023 and 2022 is as follows: Schedule of reconciliation of income taxes Year Ended Year Ended Loss before taxes $ (9,773,582 ) $ (10,675,160 ) Income taxes computed at the federal statutory rate $ 2,052,452 $ 2,241,784 State income and franchise tax — — Permanent differences and other (17,155 ) (227,766 ) Write-off of deferred tax asset (6,002,777 ) — Income tax benefit/(expense) $ (3,967,480 ) $ 2,014,018 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 $ 1,047,608 $ 557,931 Depreciation and amortization (913,671 ) (624,184 ) R&D credit 142,030 142,030 NOL 3,566,630 2,956,685 Allowance for bad debts and other 2,160,180 935,018 Allowance for non-realization of deferred tax asset (6,002,777 ) — Deferred income tax assets, net $ — $ 3,967,480 Our U.S. federal and state income tax returns remain open to examination for the tax years 2020 through 2022. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended |
Dec. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | NOTE 7 — MAJOR CUSTOMERS For the years ended December 31, 2023 and December 31, 2022, approximately 66 64 2.6 million 2.2 million 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, 2023 | |
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. 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, 2023 | |
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. 227,447 214,931 |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT OBLIGATIONS | NOTE 10 — DEBT OBLIGATIONS On July 28, 2023, the Company entered into a commercial insurance premium finance and security agreement with AON Premium Finance, LLC in the aggregate principal amount of $ 0.57 million 9.5 Monthly payments are due on the first of each month beginning August 1, 2023 through June 1, 2024. 314,344 433,295 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 11 — SUBSEQUENT EVENT On March 8, 2024, the Company entered into a loan and security agreement with HSBC Ventures USA Inc., as lender, providing for a $ 5,000,000 5,000,000 Borrowings under the revolving credit facility will bear interest at the greater of Prime or 6.50 Borrowings under the term loan will bear interest at the greater of Prime minus 0.50% or 6.50% and will be interest-only through December 31, 2025, followed by 24 equal monthly payments of principal plus interest. The loan and security agreement contains customary affirmative covenants a financial maintenance covenant that requires the Company to maintain a minimum Adjusted Quick Ratio (defined as the ratio of the Company’s (i) unrestricted and unencumbered cash and cash equivalents maintained with the lender and its affiliates, plus eligible accounts receivable, to (ii) current liabilities) of not less than 1.50 to 1.00 tested on the last day of each month. There are no outstanding borrowings under the facility as of March 13, 2024. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
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 commercializes innovative and patient-centric large volume subcutaneous infusion solutions 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 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 statements 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 has historically held cash balances in excess of $ 250,000 10.2 million |
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 64,469 62,143 The estimated amortization expense for the succeeding years for the intangible assets is approximately: Year Ending December 31, 2024 $ 65,869 2025 65,729 2026 64,674 2027 64,242 2028 64,242 Thereafter 429,605 Total amortization expense $ 754,361 |
INCOME TAXES | INCOME TAXES For interim income tax reporting, the Company estimates its annual effective tax rate and applies it to fiscal year-to-date pretax loss, excluding unusual or infrequently occurring discrete items. Tax jurisdictions with losses for which tax benefits cannot be realized are excluded. The Company reported an income tax expense of $ 4.0 2.0 We evaluate our deferred tax assets to determine if they are more likely than not to be realized by assessing both positive and negative evidence in accordance with ASC Topic 740, Income Taxes. After considering our cumulative pretax loss (the three-year period ending with the current year), as well as analyzing all available evidence, we have recorded a valuation allowance of $ 6.0 million Recurring items cause our effective tax rate to differ from the U.S. federal statutory rate of 21 Beginning in 2022, certain research and development costs are required to be capitalized and amortized over a five-year period under the Tax Cuts and Jobs Act enacted in December 2017. This change will impact the expected U.S. federal and state income tax expense and cash taxes to be paid for our fiscal 2023. The Company files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. Income tax returns for years prior to fiscal 2019 are no longer subject to examination by tax authorities. |
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 12 805,921 524,994 |
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. It also has granted stock options outside of the plans as inducement awards. 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 and under its omnibus equity incentive plan are recorded at the fair value of the shares at the grant date. The Company issues restricted stock awards under its omnibus equity incentive plan and outside the plan as incentive 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 other restricted stock awards 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 net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and common equivalent shares outstanding during the period. The Company’s potentially dilutive common shares are those that result from diluted common stock options and unvested restricted stock awards. The calculation of diluted loss per share excluded stock options of 12,335 zero The calculation of diluted loss per share excluded performance-based restricted stock and time-based restricted stock of 904,496 950,000 The following securities were not included in the computation of diluted shares outstanding for the years ended December 31, 2023, and 2022 because the effect would be anti-dilutive: Years Ended December 31, 2023 2022 Stock options $ 12,335 $ — Restricted stock 904,496 950,000 Total $ 916,831 $ 950,000 Schedule of net income per common share Years Ended December 31, 2023 December 31, 2022 Net loss $ (13,741,062 ) $ (8,661,142 ) Weighted Average Outstanding Shares: Basic weighted average shares outstanding 45,601,346 45,002,074 Dilutive effect of outstanding stock options and unvested restricted stock — — Diluted weighted average shares outstanding 45,601,346 45,020,074 Net loss per share Basic $ (0.30 ) $ (0.19 ) Diluted $ (0.30 ) $ (0.19 ) Therefore, diluted weighted average number of shares outstanding and diluted net loss per share were the same as basic weighted average number of shares outstanding and net loss per share for the years ended December 31, 2023 and 2022. See “NOTE 4 — STOCK-BASED COMPENSATION” for further detail. |
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 Our revenues are derived from three business sources: (i) domestic core (which consists of US and Canada), (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 Primary Immunodeficiency Diseases (“PIDD”) and Chronic Inflammatory Demyelinating Polyneuropathy (“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 Revenue, 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 Product Revenue. 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. 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 (i.e. completion milestone). The input method that we use is based on costs incurred. Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications exist when the modification either creates new, or changes existing, enforceable rights and obligations. Generally, when contract modifications create new performance obligations, the modification is considered to be a separate contract and revenue is recognized prospectively. When contract modifications change existing performance obligations, the impact on the existing transaction price and measure of progress for the performance obligation to which it relates is generally recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Contract assets primarily represent revenue earnings over time that are not yet billable based on the terms of the contracts. Contract liabilities (i.e., deferred revenue) consist of fees invoiced or paid by the Company’s customers for which the associated performance obligations have not been satisfied and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of December 31, 2023, the Company has recognized a contract asset of zero which is included in other accounts receivable in the accompanying balance sheet. 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, 2023 and 2022: Years Ended December 31, 2023 2022 Net Revenues Domestic $ 23,676,039 $ 23,586,254 International 4,841,627 4,309,783 Total $ 28,517,666 $ 27,896,037 |
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 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, 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. No impairment losses have been recorded through December 31, 2023. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
The estimated amortization expense for the succeeding years for the intangible assets is approximately: | The estimated amortization expense for the succeeding years for the intangible assets is approximately: Year Ending December 31, 2024 $ 65,869 2025 65,729 2026 64,674 2027 64,242 2028 64,242 Thereafter 429,605 Total amortization expense $ 754,361 |
The following securities were not included in the computation of diluted shares outstanding for the years ended December 31, 2023, and 2022 because the effect would be anti-dilutive: | The following securities were not included in the computation of diluted shares outstanding for the years ended December 31, 2023, and 2022 because the effect would be anti-dilutive: Years Ended December 31, 2023 2022 Stock options $ 12,335 $ — Restricted stock 904,496 950,000 Total $ 916,831 $ 950,000 |
Schedule of net income per common share | Schedule of net income per common share Years Ended December 31, 2023 December 31, 2022 Net loss $ (13,741,062 ) $ (8,661,142 ) Weighted Average Outstanding Shares: Basic weighted average shares outstanding 45,601,346 45,002,074 Dilutive effect of outstanding stock options and unvested restricted stock — — Diluted weighted average shares outstanding 45,601,346 45,020,074 Net loss per share Basic $ (0.30 ) $ (0.19 ) Diluted $ (0.30 ) $ (0.19 ) |
The following table summarizes net revenues by geography for the years ended December 31, 2023 and 2022: | The following table summarizes net revenues by geography for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 2022 Net Revenues Domestic $ 23,676,039 $ 23,586,254 International 4,841,627 4,309,783 Total $ 28,517,666 $ 27,896,037 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventory consists of: | Inventory consists of: December 31, 2023 December 31, 2022 Raw materials and work-in-process $ 1,869,356 $ 3,853,034 Finished goods 1,862,525 2,611,951 Total 3,731,881 6,464,985 Less: reserve for obsolete inventory (250,580 ) (60,118 ) Inventory, net $ 3,481,301 $ 6,404,867 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment consists of the following at: | Property and equipment consists of the following at: December 31, 2023 December 31, 2022 Furniture and office equipment $ 1,412,164 $ 1,456,745 Leasehold improvements 1,953,653 2,413,820 Manufacturing equipment and tooling 3,193,113 2,810,813 Total property and equipment 6,558,930 6,681,378 Less: accumulated depreciation and amortization (2,721,273 ) (2,794,403 ) Property and equipment, net $ 3,837,657 $ 3,886,975 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of time based stock options | The following table summarizes the activities for our stock options with time based vesting for the years ended December 31, 2023, and 2022. Schedule of time based stock options December 31, 2023 2022 Dividend yield 0.00 0.00 Expected Volatility 51.9 61.3 65.29 77.5 Weighted-average volatility — — Expected dividends — — Expected term (in years) 10 10 Risk-free rate 3.50 4.53 1.81 4.02 |
Schedule of status of time based stock options | The following table summarizes the status of the time-based stock options: Schedule of status of time based stock options Years Ended December 31, 2023 2022 Shares Weighted Shares Weighted Outstanding at January 1 3,035,000 $ 3.93 3,672,500 $ 3.42 Granted 430,000 $ 2.66 920,000 $ 2.62 Exercised — $ — 1,031,250 $ 1.57 Forfeited 208,750 $ 5.45 526,250 $ 2.73 Outstanding at December 31 3,256,250 $ 3.66 3,035,000 $ 3.93 Options exercisable at December 31 1,458,750 $ 4.42 737,500 $ 4.93 Weighted average fair value of options granted during the period — $ 1.84 — $ 1.99 Stock-based compensation expense — $ 1,940,720 — $ 2,083,397 |
Schedule of information pertaining to options outstanding | The following table presents information pertaining to time- based stock options outstanding at December 31, 2023: Schedule of information pertaining to options outstanding Range of Exercise Price Number Weighted Weighted Number Weighted $2.18-$9.49 3,256,250 8.3 $ 3.66 1,458,750 $ 4.42 |
The following table summarizes the activities for our unvested performance stock option awards for the twelve months ended December 31, 2023, and 2022. | Pursuant to an employment agreement entered into on November 6, 2023, with the Company’s Chief Commercial Officer, and as an inducement to his employment, the Company issued a non-qualified option to purchase 200,000 shares of common stock that vest upon achievement of sales growth milestones. The following table summarizes the activities for our unvested performance stock option awards for the twelve months ended December 31, 2023, and 2022. Twelve Months Ended December 31, 2023 2022 Shares Weighted Shares Weighted Unvested at January 1 — $ — — $ — Granted 200,000 $ 1.48 — $ — Vested — $ — — $ — Forfeited/canceled — $ — — $ — Unvested at December 31 200,000 $ 1.48 — $ — |
The following table summarizes the activities for our unvested restricted stock awards for the twelve months ended December 31, 2023, and 2022. | The following table summarizes the activities for our unvested restricted stock awards for the twelve months ended December 31, 2023, and 2022. Twelve Months Ended December 31, 2023 2022 Shares Weighted Shares Weighted Unvested at January 1 950,000 $ 3.04 1,000,000 $ 3.01 Granted 54,496 $ 3.68 — $ — Vested 100,000 $ 3.31 50,000 $ 3.31 Forfeited/canceled — $ — — $ — Unvested at December 31 904,496 $ 2.77 950,000 $ 3.04 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Schedule of components of lease expenses | The components of lease expense were as follows: Schedule of components of lease expenses Years Ended December 31, 2023 2022 Operating lease cost $ 448,630 $ 514,294 Short-term lease cost 130,483 131,490 Total lease cost $ 579,113 $ 645,784 Finance lease cost: Amortization of right-of-use assets $ 110,566 $ 50,895 Interest on lease liabilities 25,343 5,393 Total finance lease cost $ 135,909 $ 56,288 |
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, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 464,104 $ 247,504 Financing cash flows from finance leases $ 125,259 $ 57,243 |
Schedule of balance sheet information related to leases | Supplemental balance sheet information related to leases was as follows: Schedule of balance sheet information related to leases December 31, December 31, Operating Leases Operating lease right-of-use assets $ 3,514,055 $ 3,786,545 Operating lease liability – current 368,313 345,834 Operating lease liability, net of current portion 3,336,300 3,653,257 Total operating lease liabilities $ 3,704,613 $ 3,999,091 Finance Leases Property and equipment, at cost $ 577,929 $ 544,468 Accumulated depreciation (161,461 ) (50,895 ) Property and equipment, net $ 416,468 $ 493,573 Finance lease liability – current 109,540 98,335 Finance lease liability, net of current portion 316,623 394,283 Total finance lease liabilities $ 426,163 $ 492,618 December 31, December 31, Weighted Average Remaining Lease Term Operating leases 6.9 9.7 Finance leases 3.7 4.6 Weighted Average Discount Rate Operating leases 5.76 4.00 Finance leases 6.19 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 2024 512,055 131,437 2025 512,055 131,437 2026 512,055 131,437 2027 512,055 74,194 2028 512,055 6,181 Thereafter 1,832,557 — Total undiscounted lease payments 4,392,832 474,686 Less: imputed interest (688,220 ) (48,523 ) Total lease liabilities $ 3,704,613 $ 426,163 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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 $ 0 Federal income tax: Deferred 2,035,297 2,014,018 Current — — Write-off of deferred tax asset (6,002,777 ) — Income tax benefit/(expense) $ (3,967,480 ) $ 2,014,018 |
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 2023 and 2022 is as follows: Schedule of reconciliation of income taxes Year Ended Year Ended Loss before taxes $ (9,773,582 ) $ (10,675,160 ) Income taxes computed at the federal statutory rate $ 2,052,452 $ 2,241,784 State income and franchise tax — — Permanent differences and other (17,155 ) (227,766 ) Write-off of deferred tax asset (6,002,777 ) — Income tax benefit/(expense) $ (3,967,480 ) $ 2,014,018 |
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 $ 1,047,608 $ 557,931 Depreciation and amortization (913,671 ) (624,184 ) R&D credit 142,030 142,030 NOL 3,566,630 2,956,685 Allowance for bad debts and other 2,160,180 935,018 Allowance for non-realization of deferred tax asset (6,002,777 ) — Deferred income tax assets, net $ — $ 3,967,480 |
The estimated amortization expe
The estimated amortization expense for the succeeding years for the intangible assets is approximately: (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | ||
2024 | $ 65,869 | |
2025 | 65,729 | |
2026 | 64,674 | |
2027 | 64,242 | |
2028 | 64,242 | |
Thereafter | 429,605 | |
Total amortization expense | $ 754,361 | $ 787,182 |
The following securities were n
The following securities were not included in the computation of diluted shares outstanding for the years ended December 31, 2023, and 2022 because the effect would be anti-dilutive: (Details) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Stock options | 12,335 | |
Restricted stock | 904,496 | 950,000 |
Total | 916,831 | 950,000 |
Schedule of net income per comm
Schedule of net income per common share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Net loss | $ (13,741,062) | $ (8,661,142) |
Weighted Average Outstanding Shares: | ||
Basic weighted average shares outstanding | 45,601,346 | 45,002,074 |
Dilutive effect of outstanding stock options and unvested restricted stock | ||
Diluted weighted average shares outstanding | 45,601,346 | 45,002,074 |
Net loss per share | ||
Basic | $ (0.30) | $ (0.19) |
Diluted | $ (0.30) | $ (0.19) |
Common Stock [Member] | ||
Net loss | ||
Weighted Average Outstanding Shares: | ||
Basic weighted average shares outstanding | 45,601,346 | 45,002,074 |
Diluted weighted average shares outstanding | 45,601,346 | 45,020,074 |
The following table summarizes
The following table summarizes net revenues by geography for the years ended December 31, 2023 and 2022: (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues | $ 28,517,666 | $ 27,896,037 |
UNITED STATES | ||
Revenues | 23,676,039 | 23,586,254 |
Non-US [Member] | ||
Revenues | $ 4,841,627 | $ 4,309,783 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Dec. 31, 2023 USD ($) Number shares | Dec. 31, 2022 USD ($) shares | |
Property, Plant and Equipment [Line Items] | ||
Number of segments | Number | 1 | |
FDIC cash insurance limit | $ 250,000 | |
Investment securities treasury bill | 10,200,000 | |
Amortization expense of intangible assets | 64,469 | $ 62,143 |
Income tax benefit | 3,967,480 | (2,014,018) |
Valuation allowance | $ 6,000,000 | |
Statutory rate | 21% | |
Depreciation and amortization, property and equipment | $ 805,921 | $ 524,994 |
Anti-dilutive stock options | shares | 12,335 | 0 |
Anti-dilutive restricted stock | shares | 904,496 | 950,000 |
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, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials and work-in-process | $ 1,869,356 | $ 3,853,034 |
Finished goods | 1,862,525 | 2,611,951 |
Inventory, Gross | 3,731,881 | 6,464,985 |
Less: reserve for obsolete inventory | (250,580) | (60,118) |
Inventory | $ 3,481,301 | $ 6,404,867 |
Property and equipment consists
Property and equipment consists of the following at: (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6,558,930 | $ 6,681,378 |
Less: accumulated depreciation and amortization | (2,721,273) | (2,794,403) |
Property and equipment, net | 3,837,657 | 3,886,975 |
Furniture and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,412,164 | 1,456,745 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,953,653 | 2,413,820 |
Manufacturing Equipment and Tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 3,193,113 | $ 2,810,813 |
Schedule of time based stock op
Schedule of time based stock options (Details) - Stock Option Plan 2015 [Member] - Time Based Shares Options [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Dividend yield | 0% | 0% |
Weighted-average volatility | 0% | 0% |
Expected dividends | $ 0 | $ 0 |
Expected term (in years) | 10 years | 10 years |
Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 51.90% | 65.29% |
Risk-free rate | 3.50% | 1.81% |
Maximum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 61.30% | 77.50% |
Risk-free rate | 4.53% | 4.02% |
Schedule of status of time base
Schedule of status of time based stock options (Details) - Stock Option Plan 2015 [Member] - Time Based Shares Options [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning (in shares) | 3,035,000 | 3,672,500 |
Outstanding at beginning | $ 3.93 | $ 3.42 |
Granted (in shares) | 430,000 | 920,000 |
Granted | $ 2.66 | $ 2.62 |
Exercised (in shares) | 1,031,250 | |
Exercised | $ 1.57 | |
Forfeited (in shares) | 208,750 | 526,250 |
Forfeited | $ 5.45 | $ 2.73 |
Outstanding at ending (in shares) | 3,256,250 | 3,035,000 |
Outstanding at ending | $ 3.66 | $ 3.93 |
Options exercisable (in shares) | 1,458,750 | 737,500 |
Options exercisable | $ 4.42 | $ 4.93 |
Weighted average fair value of options granted during the period | $ 1.84 | $ 1.99 |
Stock-based compensation expense | $ 1,940,720 | $ 2,083,397 |
Schedule of information pertain
Schedule of information pertaining to options outstanding (Details) - Stock Option Plan 2015 [Member] - Time Based Shares Options [Member] - Exercise Price1 [Member] | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number outstanding | shares | 3,256,250 |
Weighted average remaining contractual life | 8 years 3 months 19 days |
Weighted average exercise price | $ / shares | $ 3.66 |
Number exercisable | shares | 1,458,750 |
Weighted average exercise price | $ / shares | $ 4.42 |
The following table summarize_2
The following table summarizes the activities for our unvested performance stock option awards for the twelve months ended December 31, 2023, and 2022. (Details) - Performance Based Shares Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Unvested at beginning (in shares) | ||
Unvested at beginning | ||
Granted (in shares) | 200,000 | 0 |
Granted | $ 1.48 | $ 0 |
Vested (in shares) | 0 | 0 |
Vested | $ 0 | $ 0 |
Forfeited/canceled (in shares) | 0 | 0 |
Forfeited/canceled | $ 0 | $ 0 |
Unvested at ending (in shares) | 200,000 | |
Unvested at ending | $ 1.48 |
The following table summarize_3
The following table summarizes the activities for our unvested restricted stock awards for the twelve months ended December 31, 2023, and 2022. (Details) - Restricted Stock Awards [Member] - Stock Option Plan 2021 [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning (in shares) | 950,000 | 1,000,000 |
Outstanding at beginning | $ 3.04 | $ 3.01 |
Granted (in shares) | 54,496 | |
Granted | $ 3.68 | |
Vested (in shares) | 100,000 | 50,000 |
Vested | $ 3.31 | $ 3.31 |
Forfeited/canceled | ||
Forfeited/canceled | ||
Outstanding at ending (in shares) | 904,496 | 950,000 |
Outstanding at ending | $ 2.77 | $ 3.04 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restricted Stock Awards [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Unrecognized compensation cost | $ 1,076,664 | |
Tax benefit from restricted stock compensation | $ 79,326 | $ 101,419 |
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 non-employee 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 non-employee 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] | ||
Stock issuable under plan (in shares) | 6,000,000 | |
Shares available for issuance | 2,724,250 | |
Stock Option Plan 2015 [Member] | Executives Employees Consultants [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Common stock outstanding | 2,436,250 | |
Shares issued under plan | 85,000 | 445,000 |
Stock Option Plan 2021 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock issuable under plan (in shares) | 1,000,000 | |
Shares available for issuance | 822,142 | |
Issuance of common stock awards (in shares) | 21,100 | 97,100 |
Stock Option Plans 2015 and 2021 Combined [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Per share weighted average fair value of stock options granted | $ 1.84 | $ 1.98 |
Tax benefit from stock-based compensation | $ 256,315 | $ 231,341 |
Stock Option Plans 2015 and 2021 Combined [Member] | Time Based Shares Options [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation expense | 1,940,720 | 2,083,397 |
Cash received from option exercise | 0 | 406,623 |
Weighted-average grant-date fair value options granted | $ 800,000 | $ 1,800,000 |
Number of options exercised | 0 | 1,031,250 |
Unrecognized compensation cost | $ 3,145,616 | |
Weighted-average period | 46 months | |
Total fair value of shares vested | $ 4,819,658 | $ 2,703,002 |
Stock Option Plans 2015 and 2021 Combined [Member] | Performance Based Shares Options [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Unrecognized compensation cost | $ 176,345 | |
Weighted-average period | 36 months | |
Tax benefit from restricted stock compensation | $ 1,137 | $ 0 |
Schedule of components of lease
Schedule of components of lease expenses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Operating lease cost | $ 448,630 | $ 514,294 |
Short-term lease cost | 130,483 | 131,490 |
Total lease cost | 579,113 | 645,784 |
Finance lease cost: | ||
Amortization of right-of-use assets | 110,566 | 50,895 |
Interest on lease liabilities | 25,343 | 5,393 |
Total finance lease cost | $ 135,909 | $ 56,288 |
Schedule of cash flow informati
Schedule of cash flow information related to leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 464,104 | $ 247,504 |
Financing cash flows from finance leases | $ 125,259 | $ 57,243 |
Schedule of balance sheet infor
Schedule of balance sheet information related to leases (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Operating Leases | ||
Operating lease right-of-use assets | $ 3,514,055 | $ 3,786,545 |
Operating lease liability – current | 368,313 | 345,834 |
Operating lease liability, net of current portion | 3,336,300 | 3,653,257 |
Total operating lease liabilities | 3,704,613 | 3,999,091 |
Finance Leases | ||
Property and equipment, at cost | 577,929 | 544,468 |
Accumulated depreciation | (161,461) | (50,895) |
Property and equipment, net | 416,468 | 493,573 |
Finance lease liability – current | 109,540 | 98,335 |
Finance lease liability, net of current portion | 316,623 | 394,283 |
Total finance lease liabilities | $ 426,163 | $ 492,618 |
Operating leases term | 6 years 10 months 25 days | 9 years 8 months 12 days |
Finance leases term | 3 years 8 months 12 days | 4 years 7 months 6 days |
Operating leases discount rate | 5.76% | 4% |
Finance leases discount rate | 6.19% | 4.25% |
Schedule of maturities of lease
Schedule of maturities of lease liabilities (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
2024 - Operating Leases | $ 512,055 | |
2024 - Finance Leases | 131,437 | |
2025 - Operating Leases | 512,055 | |
2025 - Finance Leases | 131,437 | |
2026 - Operating Leases | 512,055 | |
2026 - Finance Leases | 131,437 | |
2027 - Operating Leases | 512,055 | |
2027 - Finance Leases | 74,194 | |
2028 - Operating Leases | 512,055 | |
2028 - Finance Leases | 6,181 | |
Thereafter - Operating Leases | 1,832,557 | |
Thereafter - Finance Leases | ||
Total undiscounted lease payments - Operating Leases | 4,392,832 | |
Total undiscounted lease payments - Finance Leases | 474,686 | |
Less: imputed interest - Operating Leases | (688,220) | |
Less: imputed interest - Finance Leases | (48,523) | |
Total lease liabilities - Operating Leases | 3,704,613 | $ 3,999,091 |
Total lease liabilities - Finance Leases | $ 426,163 | $ 492,618 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 12 Months Ended |
Dec. 31, 2023 | |
Lease One [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease remaining term | 8 years 7 months 6 days |
Finance lease remaining term | 3 years 4 months 24 days |
Lease Two [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease remaining term | 5 years |
Finance lease remaining term | 3 years |
Lease Three [Member] | |
Lessee, Lease, Description [Line Items] | |
Finance lease remaining term | 4 years 9 months |
Schedule of provision for incom
Schedule of provision for income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
State income tax: | ||
Current, net of refund | $ 0 | $ 0 |
Federal income tax: | ||
Deferred | 2,035,297 | 2,014,018 |
Current | ||
Write-off of deferred tax asset | (6,002,777) | |
Income tax benefit/(expense) | $ (3,967,480) | $ 2,014,018 |
Schedule of reconciliation of i
Schedule of reconciliation of income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Loss before taxes | $ (9,773,582) | $ (10,675,160) |
Income taxes computed at the federal statutory rate | 2,052,452 | 2,241,784 |
State income and franchise tax | ||
Permanent differences and other | (17,155) | (227,766) |
Write-off of deferred tax asset | (6,002,777) | |
Income tax benefit/(expense) | $ (3,967,480) | $ 2,014,018 |
Schedule of components of defer
Schedule of components of deferred tax assets (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Deferred compensation cost | $ 1,047,608 | $ 557,931 |
Depreciation and amortization | (913,671) | (624,184) |
R&D credit | 142,030 | 142,030 |
NOL | 3,566,630 | 2,956,685 |
Allowance for bad debts and other | 2,160,180 | 935,018 |
Allowance for non-realization of deferred tax asset | (6,002,777) | |
Deferred income tax assets, net | $ 3,967,480 |
MAJOR CUSTOMERS (Details Narrat
MAJOR CUSTOMERS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Concentration Risk [Line Items] | ||
Account eceivable from customers | $ 2,600,000 | $ 2,200,000 |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 66% | 64% |
EMPLOYEE BENEFITS (Details Narr
EMPLOYEE BENEFITS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
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 | $ 227,447 | $ 214,931 |
DEBT OBLIGATIONS (Details Narra
DEBT OBLIGATIONS (Details Narrative) - USD ($) | Jul. 28, 2023 | Dec. 31, 2023 | Dec. 31, 2022 |
Short-Term Debt [Line Items] | |||
Description of the frequency of periodic payments | Monthly payments are due on the first of each month beginning August 1, 2023 through June 1, 2024. | ||
AON Premium Finance LLC [Member] | |||
Short-Term Debt [Line Items] | |||
Balance of AON note | $ 314,344 | $ 433,295 | |
AON Premium Finance LLC [Member] | Promissory Note [Member] | |||
Short-Term Debt [Line Items] | |||
Notes payable | $ 570,000 | ||
AON Premium Finance LLC [Member] | Promissory Note [Member] | Line of Credit [Member] | |||
Short-Term Debt [Line Items] | |||
Note payable terms | 9.50% |
SUBSEQUENT EVENT (Details Narra
SUBSEQUENT EVENT (Details Narrative) - Subsequent Event [Member] | Mar. 08, 2024 USD ($) |
Subsequent Event [Line Items] | |
Description of subsequent event | Borrowings under the term loan will bear interest at the greater of Prime minus 0.50% or 6.50% and will be interest-only through December 31, 2025, followed by 24 equal monthly payments of principal plus interest. |
Revolving Credit Facility [Member] | |
Subsequent Event [Line Items] | |
Loan provided, as lender | $ 5,000,000 |
Inteest rate on borrowings | 6.50% |
Term Loan Facility [Member] | |
Subsequent Event [Line Items] | |
Loan provided, as lender | $ 5,000,000 |