Cover
Cover - $ / shares | 6 Months Ended | |
Jun. 30, 2024 | Aug. 07, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2024 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2024 | |
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 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 | 45,855,328 | |
Entity Listing, Par Value Per Share | $ 0.01 | |
Treasury Stock, Common, Shares | 3,438,526 |
BALANCE SHEETS (UNAUDITED)
BALANCE SHEETS (UNAUDITED) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 10,458,001 | $ 11,482,240 |
Accounts receivable less allowance for credit losses of $24,777 as of June 30, 2024 and December 31, 2023 | 5,846,082 | 4,045,211 |
Inventory | 2,588,750 | 3,481,301 |
Other receivables | 28,889 | |
Prepaid expenses | 472,864 | 1,218,288 |
TOTAL CURRENT ASSETS | 19,365,697 | 20,255,929 |
Property and equipment, net | 3,678,984 | 3,837,657 |
Intangible assets, net of accumulated amortization of $423,834 and $390,341 as of June 30, 2024 and December 31, 2023, respectively | 745,084 | 754,361 |
Operating lease right-of-use assets | 3,414,831 | 3,514,055 |
Deferred income tax assets, net of allowance for non-realization of deferred tax assets of $6,581,206 and $6,002,777 as of June 30, 2024 and December 31, 2023, respectively | ||
Other assets | 98,970 | 98,970 |
TOTAL ASSETS | 27,303,566 | 28,460,972 |
CURRENT LIABILITIES | ||
Accounts payable | 1,595,691 | 975,193 |
Accrued expenses | 2,144,722 | 1,711,427 |
Note payable | 314,344 | |
Other liabilities | 447,788 | 512,520 |
Accrued payroll and related taxes | 444,251 | 462,941 |
Financing lease liability – current | 112,689 | 109,540 |
Operating lease liability – current | 391,699 | 368,313 |
TOTAL CURRENT LIABILITIES | 5,136,840 | 4,454,278 |
Financing lease liability, net of current portion | 259,479 | 316,623 |
Operating lease liability, net of current portion | 3,202,697 | 3,336,300 |
TOTAL LIABILITIES | 8,599,016 | 8,107,201 |
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.01 par value, 75,000,000 shares authorized, 49,257,812 and 49,089,864 shares issued 45,819,286 and 45,669,362 shares outstanding as of June 30, 2024, and December 31, 2023, respectively | 492,398 | 490,899 |
Additional paid-in capital | 48,331,591 | 47,018,707 |
Treasury stock, 3,438,526 shares as of June 30, 2024 and December 31, 2023, at cost | (3,882,493) | (3,843,562) |
Accumulated deficit | (26,236,946) | (23,312,273) |
TOTAL STOCKHOLDERS’ EQUITY | 18,704,550 | 20,353,771 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 27,303,566 | $ 28,460,972 |
BALANCE SHEETS (UNAUDITED) (Par
BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss, current | $ 24,777 | $ 24,777 |
Finite-lived intangible assets, accumulated amortization | 423,834 | 390,341 |
Deferred Rent Receivables, Net, Noncurrent | $ 6,581,206 | $ 6,002,777 |
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 | 49,257,812 | 49,089,864 |
Common Stock, Shares, Outstanding | 45,819,286 | 45,669,362 |
Treasury stock, shares | 3,438,526 | 3,438,526 |
STATEMENTS OF OPERATIONS (UNAUD
STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Income Statement [Abstract] | ||||
NET REVENUES | $ 8,430,089 | $ 6,935,931 | $ 16,627,887 | $ 14,328,536 |
Cost of goods sold | 2,950,339 | 3,047,807 | 6,044,839 | 6,293,377 |
Gross Profit | 5,479,750 | 3,888,124 | 10,583,048 | 8,035,159 |
OPERATING EXPENSES | ||||
Selling, general and administrative | 5,319,688 | 5,303,167 | 10,677,308 | 10,729,044 |
Research and development | 1,134,232 | 1,596,614 | 2,609,907 | 3,161,483 |
Depreciation and amortization | 217,864 | 212,919 | 449,233 | 426,036 |
Total Operating Expenses | 6,671,784 | 7,112,700 | 13,736,448 | 14,316,563 |
Net Operating Loss | (1,192,034) | (3,224,576) | (3,153,400) | (6,281,404) |
Non-Operating Income/(Expense) | ||||
Loss on currency exchange | (10,680) | (2,472) | (22,159) | (3,152) |
Loss on disposal of fixed assets, net | (300) | (56,279) | ||
Interest income, net | 213,999 | 131,167 | 251,186 | 256,669 |
TOTAL OTHER INCOME | 203,319 | 128,695 | 228,727 | 197,238 |
LOSS BEFORE INCOME TAXES | (988,715) | (3,095,881) | (2,924,673) | (6,084,166) |
Income Tax Benefit | 599,995 | 1,177,395 | ||
NET LOSS | $ (988,715) | $ (2,495,886) | $ (2,924,673) | $ (4,906,771) |
NET LOSS PER SHARE | ||||
Basic | $ (0.02) | $ (0.05) | $ (0.06) | $ (0.11) |
Diluted | $ (0.02) | $ (0.05) | $ (0.06) | $ (0.11) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||
Basic | 45,811,373 | 45,606,603 | 45,761,799 | 45,547,427 |
Diluted | 45,811,373 | 45,606,603 | 45,761,799 | 45,547,427 |
STATEMENTS OF CASH FLOWS (UNAUD
STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (2,924,673) | $ (4,906,771) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense and warrant expense | 1,314,384 | 1,681,955 |
Depreciation and amortization | 449,233 | 426,036 |
Deferred income taxes | (1,177,395) | |
Loss on disposal of fixed assets | 300 | 56,279 |
Non-cash lease adjustments | (10,994) | (10,994) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,800,871) | (239,590) |
Inventory | 892,551 | 1,126,643 |
Prepaid expenses and other assets | 774,313 | 687,994 |
Other liabilities | (64,731) | 5,916 |
Accounts payable | 620,498 | (817,169) |
Accrued payroll and related taxes | (18,691) | (119,776) |
Accrued expenses | 433,296 | (1,527,648) |
NET CASH USED IN OPERATING ACTIVITIES | (335,385) | (4,814,520) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (257,367) | (375,246) |
Purchases of intangible assets | (24,216) | (17,298) |
NET CASH USED IN INVESTING ACTIVITIES | (281,583) | (392,544) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments on insurance finance indebtedness | (314,344) | (433,295) |
Payments on finance lease liability | (53,995) | (48,493) |
Payments for taxes related to net share settlement of equity awards | (38,932) | |
NET CASH USED IN FINANCING ACTIVITIES | (407,271) | (481,788) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (1,024,239) | (5,688,852) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 11,482,240 | 17,408,257 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 10,458,001 | 11,719,405 |
Cash paid during the periods for: | ||
Interest | 20,491 | 20,165 |
Income taxes | 3,160 | |
Schedule of Non-Cash Operating, Investing and Financing Activities: | ||
Issuance of common stock as compensation | $ 221,182 | $ 266,023 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock, Common [Member] | Total |
Beginning 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 | $ 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 expense related to restricted stock awards | $ 500 | 169,887 | 170,387 | ||
Ending balance (in shares) at Mar. 31, 2023 | 48,960,766 | ||||
Ending balance, value at Mar. 31, 2023 | $ 489,608 | 45,132,350 | (11,982,096) | (3,843,562) | 29,796,300 |
Compensation expense related to restricted stock (in shares) | 50,000 | ||||
Net loss | (2,410,885) | (2,410,885) | |||
Beginning 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 | ||||
Ending balance (in shares) at Jun. 30, 2023 | 49,033,652 | ||||
Ending balance, value at Jun. 30, 2023 | $ 490,337 | 45,932,354 | (14,477,982) | (3,843,562) | 28,101,147 |
Net loss | (4,906,771) | ||||
Beginning 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 | ||||
Accrued compensation paid in shares | $ 229 | 90,018 | 90,247 | ||
Issuance of stock-based compensation (in shares) | 22,886 | ||||
Compensation expense related to stock options | 540,099 | 540,099 | |||
Compensation expense related to restricted stock awards | $ 500 | 169,887 | 170,387 | ||
Ending balance (in shares) at Jun. 30, 2023 | 49,033,652 | ||||
Ending balance, value at Jun. 30, 2023 | $ 490,337 | 45,932,354 | (14,477,982) | (3,843,562) | 28,101,147 |
Compensation expense related to restricted stock (in shares) | 50,000 | ||||
Net loss | (2,495,886) | (2,495,886) | |||
Beginning 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 | ||||
Accrued compensation paid in shares | $ 537 | 123,267 | 123,804 | ||
Issuance of stock-based compensation (in shares) | 53,725 | ||||
Compensation expense related to stock options | 393,113 | 393,113 | |||
Compensation expense related to restricted stock awards | 130,676 | 130,676 | |||
Ending balance (in shares) at Mar. 31, 2024 | 49,143,589 | ||||
Ending balance, value at Mar. 31, 2024 | $ 491,436 | 47,717,888 | (25,248,231) | (3,843,562) | 19,117,531 |
Issuance of warrants | 52,125 | 52,125 | |||
Net loss | (1,935,958) | (1,935,958) | |||
Beginning 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 | ||||
Ending balance (in shares) at Jun. 30, 2024 | 49,239,788 | ||||
Ending balance, value at Jun. 30, 2024 | $ 492,398 | 48,331,591 | (26,236,946) | (3,882,493) | 18,704,550 |
Net loss | (2,924,673) | ||||
Beginning balance, value at Mar. 31, 2024 | $ 491,436 | 47,717,888 | (25,248,231) | (3,843,562) | 19,117,531 |
Ending balance (in shares) at Mar. 31, 2024 | 49,143,589 | ||||
Accrued compensation paid in shares | $ 411 | 136,020 | (38,932) | 97,500 | |
Issuance of stock-based compensation (in shares) | 41,138 | ||||
Compensation expense related to stock options | 401,218 | 401,218 | |||
Compensation expense related to restricted stock awards | $ 551 | 63,434 | 63,984 | ||
Ending balance (in shares) at Jun. 30, 2024 | 49,239,788 | ||||
Ending balance, value at Jun. 30, 2024 | $ 492,398 | 48,331,591 | (26,236,946) | (3,882,493) | 18,704,550 |
Compensation expense related to restricted stock (in shares) | 55,061 | ||||
Issuance of warrants | 13,032 | 13,032 | |||
Net loss | $ (988,715) | $ (988,715) |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2024 | |
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 regulations and 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, 2023 (“Annual Report”). In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited financial statements of the Company. 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 statements of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. As of June 30, 2024 the Company held cash and cash-equivalents of $ 10.5 million PATENTS Costs incurred in obtaining patents have been capitalized and are being amortized over the legal life of the patents. STOCK-BASED COMPENSATION The Company maintains an omnibus equity incentive plan under which it grants options and other equity incentive awards to certain executives, key employees and consultants, as well as shares of common stock to non-employee directors. The fair value of each stock option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. All options are charged against income at their fair value. The entire compensation expense of the award is recognized over the vesting period. Shares of stock granted for director fees are recorded at the fair value of the shares at the grant date. 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. The fair value of restricted stock awards vesting at certain annual sales growth thresholds were estimated as of the date of Board acknowledgement of the achievement, 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. Performance share units are equity classified and measured at the fair market value of the underlying stock at the grant date. NET LOSS PER SHARE The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the Company’s outstanding common stock options, unvested restricted stock units, performance stock units and warrants, would be anti-dilutive, due to the reporting of a net loss for each of the periods in the accompanying statements of operations. USE OF ESTIMATES IN THE FINANCIAL STATEMENTS The preparation of financial statements in conformity with United States generally accepted accounting principles (“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, deferred tax valuation allowances, inventory valuation, expected credit losses, and customer rebate and incentive accruals. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the entire 2024 fiscal year. REVENUE RECOGNITION 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 domestic and international core 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 TM 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 June 30, 2024, the Company does not have a contract asset or a contract liability in the accompanying balance sheet. The following table summarizes net revenues by geography for the three and six months ended June 30, 2024, and 2023. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues Domestic $ 6,779,298 $ 5,686,427 $ 13,163,381 $ 11,970,392 International 1,650,791 1,249,504 3,464,506 2,358,144 Total $ 8,430,089 $ 6,935,931 $ 16,627,887 $ 14,328,536 ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED 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. 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 June 30, 2024. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2024 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 2 — PROPERTY AND EQUIPMENT Property and equipment consists of the following at: June 30, 2024 December 31, 2023 Furniture and office equipment $ 1,435,083 $ 1,412,164 Leasehold improvements 1,953,653 1,953,653 Manufacturing equipment and tooling 3,424,129 3,193,113 Total property and equipment 6,812,865 6,558,930 Less: accumulated depreciation and amortization (3,133,881 ) (2,721,273 ) Property and equipment, net $ 3,678,984 $ 3,837,657 Depreciation and amortization expense was $ 217,864 212,919 449,233 426,036 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 3 — STOCK-BASED COMPENSATION Prior to May 9, 2024, the Company maintained a stock option plan and an omnibus equity incentive plan under which it granted options and other equity incentive awards to certain executives, key employees and consultants, as well as a non-employee director compensation plan under which it granted shares of common stock to non-employee directors. As of May 9, 2024, a new omnibus equity incentive plan replaced these plans with respect to awards made after that date to employees, consultants and directors. The Company has also made inducement awards of equity-based compensation outside of the plans. The fair value of each option and warrant grant is estimated on the date of the grant using the Black-Scholes option-pricing model. All options and warrants are charged against income at their fair value. The entire compensation expense of the grant is recognized over the vesting period. Performance share units are equity classified and measured at the fair value of the underlying stock at the grant date. Shares of stock granted for director fees are recorded at the fair value of the shares at the grant date. Restricted stock awards are equity classified and measured at the fair 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. The Company has four equity incentive plans: the 2015 Stock Option Plan, as amended (the “2015 Plan”), the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), the 2024 Omnibus Equity Incentive Plan (the “2024 Plan”), and the Non-Employee Director Compensation Plan (the “Director Plan”). No new awards have been or will be issued pursuant to the 2015 Plan, the 2021 Plan or the Director Plan from and after May 9, 2024. The Company has also issued employment inducement awards to certain key executives. The 2015 Plan provides for the grant of incentive stock options and nonqualified stock options. As of June 30, 2024, there were 2,270,000 The 2021 Plan provides for the grant of incentive stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, consultants and directors. As of June 30, 2024, there were 656,744 The 2024 Plan provides for the grant of incentive stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, consultants and directors. As of June 30, 2024, there were no 2,907,061 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. Time-Vesting Stock Options The following table summarizes the inputs into the Black-Scholes model for all time-vesting stock options granted during the six months ended June 30, 2024 and 2023: June 30, 2024 2023 Dividend yield 0.00 % 0.00 % Expected Volatility 46.18 47.83 % 56.83 61.29 % Expected dividends — — Expected term (in years) 6.25 10 Risk-free rate 4.24 4.63 % 3.50 3.53 % The following table summarizes the status of the stock options: Six Months Ended June 30, 2024 2023 Shares Weighted Shares Weighted Outstanding at January 1 3,256,250 $ 3.66 3,035,000 $ 3.92 Granted 215,000 $ 2.12 85,000 $ 3.91 Exercised — $ — — $ — Forfeited 433,750 $ 6.58 — $ — Outstanding at June 30 3,037,500 $ 3.36 3,120,000 $ 3.92 Options exercisable at June 30 1,392,500 $ 3.40 1,158,750 $ 4.37 Weighted average fair value of options granted during the period — $ 1.37 — $ 2.78 Stock-based compensation expense — $ 791,792 — $ 1,075,158 Total stock-based compensation expense for time-vested stock options was $ 791,792 1,075,158 The following table presents information pertaining to options outstanding at June 30, 2024: Range of Exercise Price Number Weighted Weighted Number Weighted $2.08 - $3.96 3,037,500 6.64 $ 3.36 1,392,500 $ 3.40 As of June 30, 2024, there was $ 2,383,087 3,665,166 3,798,884 Performance-Vesting Stock Options The following table summarizes the activities for our unvested performance-vesting stock option awards for the six months ended June 30, 2024, and 2023. Six Months Ended June 30, 2024 2023 Shares Weighted Shares Weighted Unvested at January 1 200,000 $ 1.48 — $ — Granted — $ — — $ — Vested — $ — — $ — Forfeited/canceled — $ — — $ — Unvested/outstanding at June 30 200,000 $ 1.48 — $ — Total stock-based compensation expense for performance-vesting stock options was $ 16,244 zero As of June 30, 2024, there was $ 160,223 Restricted Stock Awards and PSUs The following table summarizes the activities for our restricted stock awards and PSUs for the six months ended June 30, 2024, and 2023. Six Months Ended June 30, 2024 2023 Shares Weighted Shares Weighted Unvested at January 1 904,496 $ 1.80 950,000 $ 3.04 Granted — $ — 54,496 $ 3.68 Vested 81,789 $ 3.38 100,000 $ 3.31 Forfeited/canceled — $ — — $ — Unvested at June 30 822,707 $ 1.98 904,496 $ 2.97 Total stock-based compensation expense for restricted stock awards and PSUs was $ 236,933 340,774 As of June 30, 2024, and 2023, there was $ 641,132 1,447,790 Common Stock Warrants The following table summarizes the activities for our common stock warrants issued in connection with our loan financing agreement with our lender for the six months ended June 30, 2024, and 2023. Six Months Ended June 30, 2024 2023 Shares Weighted Shares Weighted Unvested at January 1 — $ — — $ — Granted 76,104 $ 1.37 — $ — Vested 38,052 $ 1.37 — $ — Forfeited/canceled — $ — — $ — Unvested at June 30 38,052 $ 1.37 — $ — As of June 30, 2024, and 2023, there was $ 39,096 zero |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
DEBT OBLIGATIONS | NOTE 4 — DEBT OBLIGATIONS On July 28, 2023, the Company entered into a commercial insurance premium finance and security agreement with an insurance provider in the aggregate principal amount of $ 565,172 9.5 Monthly payments were due on the first of each month beginning August 1, 2023 through June 1, 2024. 314,344 zero On March 8, 2024, the Company entered into a loan and security agreement with a large domestic banking institution, as lender, providing for a $ 5,000,000 5,000,000 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
LEASES | NOTE 5 — LEASES We have finance and operating leases for our corporate office, vehicles, and certain office and computer equipment. Our three operating leases have remaining lease terms of 8.17 4.58 3.92 2.92 3.25 4.25 The components of lease expense were as follows: Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Operating lease cost $ 112,806 $ 112,279 $ 224,354 $ 224,801 Short-term lease cost 556 25,143 4,016 78,037 Total lease cost $ 113,362 $ 137,422 $ 228,370 $ 302,838 Finance lease cost: Amortization of right-of-use assets $ 28,896 $ 27,224 $ 57,793 $ 54,447 Interest on lease liabilities 5,671 6,387 11,724 13,107 Total finance lease cost $ 34,567 $ 33,611 $ 69,517 $ 67,554 Supplemental cash flow information related to leases was as follows: Six Months Ended June 30, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 244,879 $ 229,879 Financing cash flows from finance leases 65,718 61,600 Supplemental balance sheet information related to leases was as follows: June 30, December 31, Operating Leases Operating lease right-of-use assets $ 3,414,831 $ 3,514,055 Operating lease current liabilities 391,699 368,313 Operating lease long term liabilities 3,202,697 3,336,300 Total operating lease liabilities $ 3,594,396 $ 3,704,613 Finance Leases Property and equipment, at cost $ 577,929 $ 577,929 Accumulated depreciation (219,254 ) (161,461 ) Property and equipment, net $ 358,675 $ 416,468 Finance lease current liabilities 112,689 109,540 Finance lease long term liabilities 259,479 316,623 Total finance lease liabilities $ 372,168 $ 426,163 June 30, December 31, Weighted Average Remaining Lease Term Operating leases 5.56 6.88 Finance leases 3.22 3.72 Weighted Average Discount Rate Operating leases 6.60 5.76 Finance leases 6.25 6.19 Maturities of lease liabilities are as follows: Year Ending December 31, Operating Leases Finance Leases Remainder of 2024 $ 266,990 65,718 2025 533,979 131,437 2026 533,979 131,437 2027 533,979 74,194 2028 520,985 6,180 Thereafter 1,833,603 — Total undiscounted lease payments 4,223,515 408,966 Less: imputed interest (629,119 ) (36,799 ) Total lease liabilities $ 3,594,396 $ 372,168 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 6 — 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 zero 599,995 zero 1,177,395 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 $ 6,002,777 6,581,206 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 2024. 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 2020 are no longer subject to examination by tax authorities. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 — 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. The Company is not presently a party to any litigation or other legal proceeding that is believed to be material to its financial condition. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 — SUBSEQUENT EVENTS The Company renewed its commercial insurance premium finance and security agreement with its insurance provider on August 1, 2024, for the insurance period covering July 1, 2024 – June 30, 2025. The aggregate principal amount of the note is $ 487,516 |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
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 regulations and 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, 2023 (“Annual Report”). In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited financial statements of the Company. 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 statements of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. As of June 30, 2024 the Company held cash and cash-equivalents of $ 10.5 million |
PATENTS | PATENTS Costs incurred in obtaining patents have been capitalized and are being amortized over the legal life of the patents. |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company maintains an omnibus equity incentive plan under which it grants options and other equity incentive awards to certain executives, key employees and consultants, as well as shares of common stock to non-employee directors. The fair value of each stock option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. All options are charged against income at their fair value. The entire compensation expense of the award is recognized over the vesting period. Shares of stock granted for director fees are recorded at the fair value of the shares at the grant date. 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. The fair value of restricted stock awards vesting at certain annual sales growth thresholds were estimated as of the date of Board acknowledgement of the achievement, 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. Performance share units are equity classified and measured at the fair market value of the underlying stock at the grant date. |
NET LOSS PER SHARE | NET LOSS PER SHARE The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the Company’s outstanding common stock options, unvested restricted stock units, performance stock units and warrants, would be anti-dilutive, due to the reporting of a net loss for each of the periods in the accompanying statements of operations. |
USE OF ESTIMATES IN THE FINANCIAL STATEMENTS | USE OF ESTIMATES IN THE FINANCIAL STATEMENTS The preparation of financial statements in conformity with United States generally accepted accounting principles (“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, deferred tax valuation allowances, inventory valuation, expected credit losses, and customer rebate and incentive accruals. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the entire 2024 fiscal year. |
REVENUE RECOGNITION | REVENUE RECOGNITION 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 domestic and international core 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 TM 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 June 30, 2024, the Company does not have a contract asset or a contract liability in the accompanying balance sheet. The following table summarizes net revenues by geography for the three and six months ended June 30, 2024, and 2023. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues Domestic $ 6,779,298 $ 5,686,427 $ 13,163,381 $ 11,970,392 International 1,650,791 1,249,504 3,464,506 2,358,144 Total $ 8,430,089 $ 6,935,931 $ 16,627,887 $ 14,328,536 |
ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED | ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED 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. |
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 June 30, 2024. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
The following table summarizes net revenues by geography for the three and six months ended June 30, 2024, and 2023. | The following table summarizes net revenues by geography for the three and six months ended June 30, 2024, and 2023. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues Domestic $ 6,779,298 $ 5,686,427 $ 13,163,381 $ 11,970,392 International 1,650,791 1,249,504 3,464,506 2,358,144 Total $ 8,430,089 $ 6,935,931 $ 16,627,887 $ 14,328,536 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment consists of the following at: | Property and equipment consists of the following at: June 30, 2024 December 31, 2023 Furniture and office equipment $ 1,435,083 $ 1,412,164 Leasehold improvements 1,953,653 1,953,653 Manufacturing equipment and tooling 3,424,129 3,193,113 Total property and equipment 6,812,865 6,558,930 Less: accumulated depreciation and amortization (3,133,881 ) (2,721,273 ) Property and equipment, net $ 3,678,984 $ 3,837,657 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
The following table summarizes the inputs into the Black-Scholes model for all time-vesting stock options granted during the six months ended June 30, 2024 and 2023: | The following table summarizes the inputs into the Black-Scholes model for all time-vesting stock options granted during the six months ended June 30, 2024 and 2023: June 30, 2024 2023 Dividend yield 0.00 % 0.00 % Expected Volatility 46.18 47.83 % 56.83 61.29 % Expected dividends — — Expected term (in years) 6.25 10 Risk-free rate 4.24 4.63 % 3.50 3.53 % |
The following table summarizes the status of the stock options: | The following table summarizes the status of the stock options: Six Months Ended June 30, 2024 2023 Shares Weighted Shares Weighted Outstanding at January 1 3,256,250 $ 3.66 3,035,000 $ 3.92 Granted 215,000 $ 2.12 85,000 $ 3.91 Exercised — $ — — $ — Forfeited 433,750 $ 6.58 — $ — Outstanding at June 30 3,037,500 $ 3.36 3,120,000 $ 3.92 Options exercisable at June 30 1,392,500 $ 3.40 1,158,750 $ 4.37 Weighted average fair value of options granted during the period — $ 1.37 — $ 2.78 Stock-based compensation expense — $ 791,792 — $ 1,075,158 |
The following table presents information pertaining to options outstanding at June 30, 2024: | The following table presents information pertaining to options outstanding at June 30, 2024: Range of Exercise Price Number Weighted Weighted Number Weighted $2.08 - $3.96 3,037,500 6.64 $ 3.36 1,392,500 $ 3.40 |
The following table summarizes the activities for our unvested performance-vesting stock option awards for the six months ended June 30, 2024, and 2023. | The following table summarizes the activities for our unvested performance-vesting stock option awards for the six months ended June 30, 2024, and 2023. Six Months Ended June 30, 2024 2023 Shares Weighted Shares Weighted Unvested at January 1 200,000 $ 1.48 — $ — Granted — $ — — $ — Vested — $ — — $ — Forfeited/canceled — $ — — $ — Unvested/outstanding at June 30 200,000 $ 1.48 — $ — |
The following table summarizes the activities for our restricted stock awards and PSUs for the six months ended June 30, 2024, and 2023. | The following table summarizes the activities for our restricted stock awards and PSUs for the six months ended June 30, 2024, and 2023. Six Months Ended June 30, 2024 2023 Shares Weighted Shares Weighted Unvested at January 1 904,496 $ 1.80 950,000 $ 3.04 Granted — $ — 54,496 $ 3.68 Vested 81,789 $ 3.38 100,000 $ 3.31 Forfeited/canceled — $ — — $ — Unvested at June 30 822,707 $ 1.98 904,496 $ 2.97 |
The following table summarizes the activities for our common stock warrants issued in connection with our loan financing agreement with our lender for the six months ended June 30, 2024, and 2023. | The following table summarizes the activities for our common stock warrants issued in connection with our loan financing agreement with our lender for the six months ended June 30, 2024, and 2023. Six Months Ended June 30, 2024 2023 Shares Weighted Shares Weighted Unvested at January 1 — $ — — $ — Granted 76,104 $ 1.37 — $ — Vested 38,052 $ 1.37 — $ — Forfeited/canceled — $ — — $ — Unvested at June 30 38,052 $ 1.37 — $ — |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
The components of lease expense were as follows: | The components of lease expense were as follows: Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Operating lease cost $ 112,806 $ 112,279 $ 224,354 $ 224,801 Short-term lease cost 556 25,143 4,016 78,037 Total lease cost $ 113,362 $ 137,422 $ 228,370 $ 302,838 Finance lease cost: Amortization of right-of-use assets $ 28,896 $ 27,224 $ 57,793 $ 54,447 Interest on lease liabilities 5,671 6,387 11,724 13,107 Total finance lease cost $ 34,567 $ 33,611 $ 69,517 $ 67,554 |
Supplemental cash flow information related to leases was as follows: | Supplemental cash flow information related to leases was as follows: Six Months Ended June 30, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 244,879 $ 229,879 Financing cash flows from finance leases 65,718 61,600 |
Supplemental balance sheet information related to leases was as follows: | Supplemental balance sheet information related to leases was as follows: June 30, December 31, Operating Leases Operating lease right-of-use assets $ 3,414,831 $ 3,514,055 Operating lease current liabilities 391,699 368,313 Operating lease long term liabilities 3,202,697 3,336,300 Total operating lease liabilities $ 3,594,396 $ 3,704,613 Finance Leases Property and equipment, at cost $ 577,929 $ 577,929 Accumulated depreciation (219,254 ) (161,461 ) Property and equipment, net $ 358,675 $ 416,468 Finance lease current liabilities 112,689 109,540 Finance lease long term liabilities 259,479 316,623 Total finance lease liabilities $ 372,168 $ 426,163 June 30, December 31, Weighted Average Remaining Lease Term Operating leases 5.56 6.88 Finance leases 3.22 3.72 Weighted Average Discount Rate Operating leases 6.60 5.76 Finance leases 6.25 6.19 |
Maturities of lease liabilities are as follows: | Maturities of lease liabilities are as follows: Year Ending December 31, Operating Leases Finance Leases Remainder of 2024 $ 266,990 65,718 2025 533,979 131,437 2026 533,979 131,437 2027 533,979 74,194 2028 520,985 6,180 Thereafter 1,833,603 — Total undiscounted lease payments 4,223,515 408,966 Less: imputed interest (629,119 ) (36,799 ) Total lease liabilities $ 3,594,396 $ 372,168 |
The following table summarizes
The following table summarizes net revenues by geography for the three and six months ended June 30, 2024, and 2023. (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Revenues | $ 8,430,089 | $ 6,935,931 | $ 16,627,887 | $ 14,328,536 |
UNITED STATES | ||||
Revenues | 6,779,298 | 5,686,427 | 13,163,381 | 11,970,392 |
Non-US [Member] | ||||
Revenues | $ 1,650,791 | $ 1,249,504 | $ 3,464,506 | $ 2,358,144 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 6 Months Ended |
Jun. 30, 2024 USD ($) Number | |
Accounting Policies [Abstract] | |
Number of segment | Number | 1 |
Interest Income, Securities, US Treasury | $ | $ 10,500,000 |
Property and equipment consists
Property and equipment consists of the following at: (Details) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6,812,865 | $ 6,558,930 |
Less: accumulated depreciation and amortization | (3,133,881) | (2,721,273) |
Property and equipment, net | 3,678,984 | 3,837,657 |
Furniture and Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,435,083 | 1,412,164 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,953,653 | 1,953,653 |
Manufacturing Equipment and Tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 3,424,129 | $ 3,193,113 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 217,864 | $ 212,919 | $ 449,233 | $ 426,036 |
The following table summarize_2
The following table summarizes the inputs into the Black-Scholes model for all time-vesting stock options granted during the six months ended June 30, 2024 and 2023: (Details) - Time Vesting Stock Options [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Dividend yield | 0% | 0% |
Expected dividends | $ 0 | $ 0 |
Expected term (in years) | 6 years 2 months 30 days | 10 years |
Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 46.18% | 56.83% |
Risk-free rate | 4.24% | 3.50% |
Maximum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected volatility | 47.83% | 61.29% |
Risk-free rate | 4.63% | 3.53% |
The following table summarize_3
The following table summarizes the status of the stock options: (Details) - Time Vesting Stock Options [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning, shares | 3,256,250 | 3,035,000 |
Outstanding at beginning, price | $ 3.66 | $ 3.92 |
Granted, shares | 215,000 | 85,000 |
Granted, price | $ 2.12 | $ 3.91 |
Exercised, shares | ||
Exercised, price | ||
Forfeited, shares | 433,750 | |
Forfeited, price | $ 6.58 | |
Outstanding at ending, shares | 3,037,500 | 3,120,000 |
Outstanding at ending, price | $ 3.36 | $ 3.92 |
Options exercisable, shares | 1,392,500 | 1,158,750 |
Options exercisable, price | $ 3.40 | $ 4.37 |
Weighted average fair value of options granted during the period, price | $ 1.37 | $ 2.78 |
Stock-based compensation expense | $ 791,792 | $ 1,075,158 |
The following table presents in
The following table presents information pertaining to options outstanding at June 30, 2024: (Details) - Time Vesting Stock Options [Member] - Exercise Price1 [Member] | 6 Months Ended |
Jun. 30, 2024 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number outstanding | shares | 3,037,500 |
Weighted average remaining contractual life | 6 years 7 months 21 days |
Weighted average exercise price | $ / shares | $ 3.36 |
Number exercisable | shares | 1,392,500 |
Weighted average exercise price | $ / shares | $ 3.40 |
The following table summarize_4
The following table summarizes the activities for our unvested performance-vesting stock option awards for the six months ended June 30, 2024, and 2023. (Details) - Performance Vesting Stock Options [Member] - $ / shares | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning, shares | 200,000 | |
Unvested at beginning, price | $ 1.48 | |
Granted, shares | 0 | 0 |
Granted, price | $ 0 | $ 0 |
Forfeited, shares | 0 | 0 |
Vested, price | $ 0 | $ 0 |
Forfeited, shares | 0 | 0 |
Forfeited/canceled, price | $ 0 | $ 0 |
Unvested at ending, shares | 200,000 | |
Unvested at ending, price | $ 1.48 |
The following table summarize_5
The following table summarizes the activities for our restricted stock awards and PSUs for the six months ended June 30, 2024, and 2023. (Details) - Restricted Stock Awards [Member] - $ / shares | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning, shares | 904,496 | 950,000 |
Outstanding at beginning, price | $ 1.80 | $ 3.04 |
Granted, shares | 54,496 | |
Granted, price | $ 3.68 | |
Vested, shares | 81,789 | 100,000 |
Vested, price | $ 3.38 | $ 3.31 |
Forfeited/canceled, price | ||
Forfeited/canceled, price | ||
Outstanding at ending, shares | 822,707 | 904,496 |
Outstanding at ending, price | $ 1.98 | $ 2.97 |
The following table summarize_6
The following table summarizes the activities for our common stock warrants issued in connection with our loan financing agreement with our lender for the six months ended June 30, 2024, and 2023. (Details) - Common Stock Warrants [Member] - $ / shares | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Outstanding at beginning, shares | ||
Outstanding at beginning, price | ||
Granted, shares | 76,104 | |
Granted, price | $ 1.37 | |
Vested, shares | 38,052 | |
Vested, price | $ 1.37 | |
Forfeited/canceled, price | ||
Forfeited/canceled, price | ||
Outstanding at ending, shares | 38,052 | |
Outstanding at ending, price | $ 1.37 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Time Vesting Stock Options [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 791,792 | $ 1,075,158 |
Total unrecognized compensation cost | 2,383,087 | |
Fair value of shares | 3,665,166 | 3,798,884 |
Performance Vesting Stock Options [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Total stock-based compensation expense | 16,244 | 0 |
Unrecognized cost | 160,223 | |
Restricted Stock Awards [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Total stock-based compensation expense | 236,933 | 340,774 |
Unrecognized cost | 641,132 | 1,447,790 |
Common Stock Warrants [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Unrecognized cost | $ 39,096 | $ 0 |
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 $22,500 in common stock. | |
Stock Option Plan 2015 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares reserved for outstanding awards | 2,270,000 | |
Omnibus Equity Incentive Plan 2021 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares reserved for outstanding awards | 656,744 | |
Omnibus Equity Incentive Plan 2024 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares reserved for outstanding awards | 0 | |
Shares available for issuance | 2,907,061 |
DEBT OBLIGATIONS (Details Narra
DEBT OBLIGATIONS (Details Narrative) - USD ($) | Jul. 28, 2023 | Jun. 30, 2024 | Mar. 08, 2024 | Dec. 31, 2023 |
Insurance Provider [Member] | Promissory Note [Member] | ||||
Short-Term Debt [Line Items] | ||||
Notes payable | $ 565,172 | |||
Note payable terms | 9.50% | |||
Description of the frequency of periodic payments | Monthly payments were due on the first of each month beginning August 1, 2023 through June 1, 2024. | |||
Balance of note | $ 0 | $ 314,344 | ||
Domestic Bank Lender [Member] | Revolving Credit Facility [Member] | ||||
Short-Term Debt [Line Items] | ||||
Revolving credit facility | $ 5,000,000 | |||
Domestic Bank Lender [Member] | Term Loan Facility [Member] | ||||
Short-Term Debt [Line Items] | ||||
Term loan facility | $ 5,000,000 |
The components of lease expense
The components of lease expense were as follows: (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Leases [Abstract] | ||||
Operating lease cost | $ 112,806 | $ 112,279 | $ 224,354 | $ 224,801 |
Short-term lease cost | 556 | 25,143 | 4,016 | 78,037 |
Total lease cost | 113,362 | 137,422 | 228,370 | 302,838 |
Finance lease cost: | ||||
Amortization of right-of-use assets | 28,896 | 27,224 | 57,793 | 54,447 |
Interest on lease liabilities | 5,671 | 6,387 | 11,724 | 13,107 |
Total finance lease cost | $ 34,567 | $ 33,611 | $ 69,517 | $ 67,554 |
Supplemental cash flow informat
Supplemental cash flow information related to leases was as follows: (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 244,879 | $ 229,879 |
Financing cash flows from finance leases | $ 65,718 | $ 61,600 |
Supplemental balance sheet info
Supplemental balance sheet information related to leases was as follows: (Details) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
Operating Leases | ||
Operating lease right-of-use assets | $ 3,414,831 | $ 3,514,055 |
Operating lease current liabilities | 391,699 | 368,313 |
Operating lease long term liabilities | 3,202,697 | 3,336,300 |
Total operating lease liabilities | 3,594,396 | 3,704,613 |
Finance Leases | ||
Property and equipment, at cost | 577,929 | 577,929 |
Accumulated depreciation | (219,254) | (161,461) |
Property and equipment, net | 358,675 | 416,468 |
Finance lease current liabilities | 112,689 | 109,540 |
Finance lease long term liabilities | 259,479 | 316,623 |
Total finance lease liabilities | $ 372,168 | $ 426,163 |
Operating leases term | 5 years 6 months 21 days | 6 years 10 months 17 days |
Finance leases term | 3 years 2 months 19 days | 3 years 8 months 19 days |
Operating leases discount rate | 6.60% | 5.76% |
Finance leases discount rate | 6.25% | 6.19% |
Maturities of lease liabilities
Maturities of lease liabilities are as follows: (Details) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
Leases [Abstract] | ||
2024 - Operating Leases | $ 266,990 | |
2024 - Finance Leases | 65,718 | |
2025 - Operating Leases | 533,979 | |
2025 - Finance Leases | 131,437 | |
2026 - Operating Leases | 533,979 | |
2026 - Finance Leases | 131,437 | |
2027 - Operating Leases | 533,979 | |
2027 - Finance Leases | 74,194 | |
2028 - Operating Leases | 520,985 | |
2028 - Finance Leases | 6,180 | |
Thereafter - Operating Leases | 1,833,603 | |
Thereafter - Finance Leases | ||
Total undiscounted lease payments - Operating Leases | 4,223,515 | |
Total undiscounted lease payments - Finance Leases | 408,966 | |
Less: imputed interest - Operating Leases | (629,119) | |
Less: imputed interest - Finance Leases | (36,799) | |
Total lease liabilities - Operating Leases | 3,594,396 | $ 3,704,613 |
Total lease liabilities - Finance Leases | $ 372,168 | $ 426,163 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 6 Months Ended |
Jun. 30, 2024 | |
Lease One [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease remaining term | 8 years 2 months 1 day |
Finance lease remaining term | 2 years 11 months 1 day |
Lease Two [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease remaining term | 4 years 6 months 29 days |
Finance lease remaining term | 3 years 2 months 30 days |
Lease Three [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease remaining term | 3 years 11 months 1 day |
Finance lease remaining term | 4 years 2 months 30 days |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |||||
Income tax benefit | $ 0 | $ 599,995 | $ 0 | $ 1,177,395 | |
Valuation Allowance | $ 6,581,206 | $ 6,581,206 | $ 6,002,777 | ||
Statutory rate | 21% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Aug. 01, 2024 USD ($) |
Subsequent Event [Member] | Security Agreement [Member] | |
Subsequent Event [Line Items] | |
Debt Instrument, Issued, Principal | $ 487,516 |