Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 14, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-39678 | |
Entity Registrant Name | SANARA MEDTECH INC. | |
Entity Central Index Key | 0000714256 | |
Entity Tax Identification Number | 59-2219994 | |
Entity Incorporation, State or Country Code | TX | |
Entity Address, Address Line One | 1200 Summit Ave | |
Entity Address, Address Line Two | Suite 414 | |
Entity Address, City or Town | Fort Worth | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 76102 | |
City Area Code | (817) | |
Local Phone Number | 529-2300 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | SMTI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,521,872 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 6,060,228 | $ 8,958,995 |
Royalty receivable | 49,344 | 99,594 |
Inventory, net | 4,420,864 | 3,549,000 |
Prepaid and other assets | 485,734 | 1,104,611 |
Total current assets | 18,177,937 | 20,616,509 |
Long-term assets | ||
Property and equipment, net | 1,240,269 | 1,416,436 |
Right of use assets – operating leases | 2,030,938 | 806,402 |
Goodwill | 3,601,781 | 3,601,781 |
Intangible assets, net | 30,143,578 | 31,509,980 |
Investment in equity securities | 3,084,278 | 3,084,278 |
Total long-term assets | 40,100,844 | 40,418,877 |
Total assets | 58,278,781 | 61,035,386 |
Current liabilities | ||
Accrued royalties and expenses | 1,895,706 | 2,144,475 |
Accrued bonuses and commissions | 5,899,255 | 7,758,284 |
Earnout liabilities – current | 700,000 | 1,162,880 |
Operating lease liabilities – current | 273,539 | 313,933 |
Total current liabilities | 9,881,336 | 12,806,309 |
Long-term liabilities | ||
Earnout liabilities – long-term | 5,653,534 | 6,003,811 |
Operating lease liabilities – long-term | 1,779,413 | 505,291 |
Total long-term liabilities | 7,432,947 | 6,509,102 |
Total liabilities | 17,314,283 | 19,315,411 |
Commitments and contingencies (Note 8) | ||
Shareholders’ equity | ||
Common Stock: $0.001 par value, 20,000,000 shares authorized; 8,439,745 issued and outstanding as of June 30, 2023 and 8,299,957 issued and outstanding as of December 31, 2022 | 8,440 | 8,300 |
Additional paid-in capital | 67,881,419 | 65,213,987 |
Accumulated deficit | (26,740,930) | (23,394,757) |
Total Sanara MedTech shareholders’ equity | 41,148,929 | 41,827,530 |
Equity attributable to noncontrolling interest | (184,431) | (107,555) |
Total shareholders’ equity | 40,964,498 | 41,719,975 |
Total liabilities and shareholders’ equity | 58,278,781 | 61,035,386 |
Nonrelated Party [Member] | ||
Current assets | ||
Accounts receivable | 7,141,105 | 6,805,761 |
Current liabilities | ||
Accounts payable | 1,016,180 | 1,392,701 |
Related Party [Member] | ||
Current assets | ||
Accounts receivable | 20,662 | 98,548 |
Current liabilities | ||
Accounts payable | $ 96,656 | $ 34,036 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 8,439,745 | 8,299,957 |
Common stock, shares outstanding | 8,439,745 | 8,299,957 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Net Revenue | $ 15,753,164 | $ 9,670,778 | $ 31,275,081 | $ 17,482,001 |
Cost of goods sold | 2,187,516 | 958,086 | 4,313,175 | 1,763,167 |
Gross profit | 13,565,648 | 8,712,692 | 26,961,906 | 15,718,834 |
Operating expenses | ||||
Selling, general and administrative expenses | 13,811,476 | 10,428,133 | 26,780,545 | 19,803,763 |
Research and development | 1,177,128 | 1,067,000 | 2,494,452 | 1,271,637 |
Depreciation and amortization | 803,694 | 539,124 | 1,582,569 | 741,871 |
Change in fair value of earnout liabilities | (360,470) | 63,427 | (813,157) | 63,427 |
Total operating expenses | 15,431,828 | 12,097,684 | 30,044,409 | 21,880,698 |
Operating loss | (1,866,180) | (3,384,992) | (3,082,503) | (6,161,864) |
Other expense | ||||
Interest expense and other | (6) | |||
Share of losses from equity method investment | (379,633) | |||
Total other expense | (6) | (379,633) | ||
Loss before income taxes | (1,866,180) | (3,384,992) | (3,082,509) | (6,541,497) |
Income tax benefit | 4,141,906 | 4,141,906 | ||
Net income (loss) | (1,866,180) | 756,914 | (3,082,509) | (2,399,591) |
Less: Net loss attributable to noncontrolling interest | (38,447) | (12,512) | (76,876) | (39,693) |
Net income (loss) attributable to Sanara MedTech shareholders | $ (1,827,733) | $ 769,426 | $ (3,005,633) | $ (2,359,898) |
Net income (loss) per share: | ||||
Basic | $ (0.22) | $ 0.10 | $ (0.37) | $ (0.31) |
Diluted | $ (0.22) | $ 0.09 | $ (0.37) | $ (0.31) |
Weighted average common shares outstanding: | ||||
Basic | 8,226,271 | 7,791,431 | 8,200,173 | 7,699,422 |
Diluted | 8,226,271 | 8,162,983 | 8,200,173 | 7,699,422 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2021 | $ 7,677 | $ 45,867,768 | $ (15,235,044) | $ (488,397) | $ 30,152,004 |
Balance, shares at Dec. 31, 2021 | 7,676,662 | ||||
Share-based compensation | $ 136 | 1,622,982 | 1,623,118 | ||
Share-based compensation, shares | 137,076 | ||||
Net settlement and retirement of equity-based awards | $ (3) | (52,284) | (50,644) | (102,931) | |
Net settlement and retirement of equity-based awards, shares | (3,343) | ||||
Net income (loss) | (3,129,324) | (27,181) | (3,156,505) | ||
Balance at Mar. 31, 2022 | $ 7,810 | 47,438,466 | (18,415,012) | (515,578) | 28,515,686 |
Balance, shares at Mar. 31, 2022 | 7,810,395 | ||||
Balance at Dec. 31, 2021 | $ 7,677 | 45,867,768 | (15,235,044) | (488,397) | 30,152,004 |
Balance, shares at Dec. 31, 2021 | 7,676,662 | ||||
Net income (loss) | (2,399,591) | ||||
Balance at Jun. 30, 2022 | $ 8,015 | 57,850,750 | (17,645,586) | (748,090) | 39,465,089 |
Balance, shares at Jun. 30, 2022 | 8,015,401 | ||||
Balance at Mar. 31, 2022 | $ 7,810 | 47,438,466 | (18,415,012) | (515,578) | 28,515,686 |
Balance, shares at Mar. 31, 2022 | 7,810,395 | ||||
Share-based compensation | $ 39 | 703,361 | 703,400 | ||
Share-based compensation, shares | 39,268 | ||||
Net income (loss) | 769,426 | (12,512) | 756,914 | ||
Issuance of common stock for asset acquisitions | $ 166 | 5,096,278 | 5,096,444 | ||
Issuance of common stock for acquisitions, shares | 165,738 | ||||
Issuance of common stock options and warrants for acquisitions | 4,612,645 | 4,612,645 | |||
Distribution to noncontrolling interest member | (220,000) | (220,000) | |||
Balance at Jun. 30, 2022 | $ 8,015 | 57,850,750 | (17,645,586) | (748,090) | 39,465,089 |
Balance, shares at Jun. 30, 2022 | 8,015,401 | ||||
Balance at Dec. 31, 2022 | $ 8,300 | 65,213,987 | (23,394,757) | (107,555) | 41,719,975 |
Balance, shares at Dec. 31, 2022 | 8,299,957 | ||||
Share-based compensation | $ 75 | 597,230 | 597,305 | ||
Share-based compensation, shares | 74,781 | ||||
Net settlement and retirement of equity-based awards | $ (16) | (315,572) | (340,354) | (655,942) | |
Net settlement and retirement of equity-based awards, shares | (15,854) | ||||
Net income (loss) | (1,177,900) | (38,429) | (1,216,329) | ||
Issuance of common stock in equity offering | $ 26 | 1,033,735 | 1,033,761 | ||
Issuance of common stock in equity offering, shares | 26,143 | ||||
Balance at Mar. 31, 2023 | $ 8,385 | 66,529,380 | (24,913,011) | (145,984) | 41,478,770 |
Balance, shares at Mar. 31, 2023 | 8,385,027 | ||||
Balance at Dec. 31, 2022 | $ 8,300 | 65,213,987 | (23,394,757) | (107,555) | 41,719,975 |
Balance, shares at Dec. 31, 2022 | 8,299,957 | ||||
Net income (loss) | (3,082,509) | ||||
Balance at Jun. 30, 2023 | $ 8,440 | 67,881,419 | (26,740,930) | (184,431) | 40,964,498 |
Balance, shares at Jun. 30, 2023 | 8,439,745 | ||||
Balance at Mar. 31, 2023 | $ 8,385 | 66,529,380 | (24,913,011) | (145,984) | 41,478,770 |
Balance, shares at Mar. 31, 2023 | 8,385,027 | ||||
Share-based compensation | $ 33 | 1,127,299 | 1,127,332 | ||
Share-based compensation, shares | 33,355 | ||||
Net settlement and retirement of equity-based awards | $ 22 | 224,740 | (186) | 224,576 | |
Net settlement and retirement of equity-based awards, shares | 21,363 | ||||
Net income (loss) | (1,827,733) | (38,447) | (1,866,180) | ||
Balance at Jun. 30, 2023 | $ 8,440 | $ 67,881,419 | $ (26,740,930) | $ (184,431) | $ 40,964,498 |
Balance, shares at Jun. 30, 2023 | 8,439,745 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (3,082,509) | $ (2,399,591) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,582,569 | 741,871 |
Loss on disposal of property and equipment | 2,500 | |
Bad debt expense | 86,000 | 195,000 |
Inventory obsolescence | 69,990 | 159,717 |
Share-based compensation | 1,724,637 | 1,288,335 |
Noncash lease expense | 144,628 | 116,143 |
Loss on equity method investment | 379,633 | |
Benefit from deferred income taxes | (4,141,906) | |
Change in fair value of earnout liabilities | (813,157) | 63,427 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (371,094) | (1,170,829) |
Accounts receivable – related party | 77,886 | (130,797) |
Inventory, net | (941,854) | (423,764) |
Prepaid and other assets | 618,877 | 177,861 |
Accounts payable | (376,521) | 294,772 |
Accounts payable – related parties | 62,620 | 589,675 |
Accrued royalties and expenses | (248,769) | 761,377 |
Accrued bonuses and commissions | (1,859,029) | 346,887 |
Operating lease liabilities | (135,436) | (117,106) |
Net cash used in operating activities | (3,461,162) | (3,266,795) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (40,650) | (80,892) |
Proceeds from disposal of assets | 650 | 345 |
Purchases of intangible assets | (2,053,722) | |
Investment in equity securities | (250,000) | |
Net cash used in investing activities | (40,000) | (2,384,269) |
Cash flows from financing activities: | ||
Equity offering net proceeds | 1,033,761 | |
Net settlement of equity-based awards | (431,366) | (102,931) |
Distribution to noncontrolling interest member | (220,000) | |
Net cash provided by (used in) financing activities | 602,395 | (322,931) |
Net decrease in cash | (2,898,767) | (5,973,995) |
Cash, beginning of period | 8,958,995 | 18,652,841 |
Cash, end of period | 6,060,228 | 12,678,846 |
Cash paid during the period for: | ||
Interest | 6 | |
Supplemental noncash investing and financing activities: | ||
Right of use assets obtained in exchange for lease obligations | 1,369,164 | |
Equity issued for acquisitions | 9,709,089 | |
Earnout liabilities generated by acquisitions | 3,882,151 | |
Investment in equity securities converted in asset acquisition | $ 1,803,440 |
NATURE OF BUSINESS AND BACKGROU
NATURE OF BUSINESS AND BACKGROUND | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND BACKGROUND | NOTE 1 – NATURE OF BUSINESS AND BACKGROUND Sanara MedTech Inc. (together with its wholly owned and majority-owned subsidiaries on a consolidated basis, the “Company”) is a medical technology company focused on developing and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the surgical, chronic wound and skincare markets. Each of the Company’s products, services and technologies contributes to the Company’s overall goal of achieving better clinical outcomes at a lower overall cost for patients regardless of where they receive care. The Company strives to be one of the most innovative and comprehensive providers of effective surgical, wound and skincare solutions and is continually seeking to expand its offerings for patients requiring treatments across the entire continuum of care in the United States. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The accompanying unaudited consolidated financial statements include the accounts of Sanara MedTech Inc. and its wholly owned and majority-owned subsidiaries, as well as other entities in which the Company has a controlling financial interest. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of the Company, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period. These financial statements and notes should be read in conjunction with the financial statements for each of the two years ended December 31, 2022 and 2021, which are included in the Company’s most recent Annual Report on Form 10-K. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported revenue and expenses during the reporting period. However, actual results could differ from those estimates and there may be changes to the Company’s estimates in future periods. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Income/Loss Per Share The Company computes income/loss per share in accordance with Accounting Standards Codification (“ASC”) Topic 260, Earnings per Share, which requires the Company to present basic and diluted income per share when the effect is dilutive. Basic income per share is computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding. Diluted income per share is computed similarly to basic income per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive. The following table summarizes the shares of common stock that were potentially issuable but were excluded from the computation of diluted net loss per share for the six months ended June 30, 2023 and 2022, as such shares would have had an anti-dilutive effect: SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER SHARE 2023 2022 As of June 30, 2023 2022 Stock options (a) 124,191 155,691 Warrants (b) 16,725 16,725 Unvested restricted stock 164,755 199,136 Anti-dilutive securities 164,755 199,136 (a) Shares underlying stock options assumed pursuant to the merger agreement with Precision Healing, Inc. (“Precision Healing”) in April 2022. See Note 3 for more information regarding the Precision Healing merger. (b) Shares underlying warrants assumed pursuant to the merger agreement with Precision Healing in April 2022. See Note 3 for more information regarding the Precision Healing merger. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when a purchase order is received from the customer and control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for transferring those goods or services. Revenue is recognized based on the following five-step model: - Identification of the contract with a customer - Identification of the performance obligations in the contract - Determination of the transaction price - Allocation of the transaction price to the performance obligations in the contract - Recognition of revenue when, or as, the Company satisfies a performance obligation Details of this five-step process are as follows: Identification of the contract with a customer Customer purchase orders are generally considered to be contracts under ASC 606. Purchase orders typically identify the specific terms of products to be delivered, create the enforceable rights and obligations of both parties and result in commercial substance. No other forms of contract revenue recognition, such as the completed contract or percentage of completion methods, were utilized by the Company in either 2023 or 2022. Performance obligations The Company’s performance obligation is generally limited to delivery of the requested items to its customers at the agreed upon quantities and prices. Determination and allocation of the transaction price The Company has established prices for its products. These prices are effectively agreed to when customers place purchase orders with the Company. Rebates and discounts, if any, are recognized in full at the time of sale as a reduction of net revenue. Allocation of transaction prices is not necessary where only one performance obligation exists. Recognition of revenue as performance obligations are satisfied Product revenues are recognized when a purchase order is received from the customer, the products are delivered and control of the goods and services passes to the customer. Disaggregation of Revenue Revenue streams from product sales and royalties are summarized below for the three and six months ended June 30, 2023 and 2022. SCHEDULE OF REVENUE FROM PRODUCT SALES AND ROYALTIES 2023 2022 2023 2022 Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Soft tissue repair products $ 13,249,742 $ 9,569,441 $ 26,122,223 $ 17,327,648 Bone fusion products 2,453,172 51,087 5,052,358 53,853 Royalty revenue 50,250 50,250 100,500 100,500 Total Net Revenue $ 15,753,164 $ 9,670,778 $ 31,275,081 $ 17,482,001 The Company recognizes royalty revenue from a development and license agreement with BioStructures, LLC. The Company records revenue each calendar quarter as earned per the terms of the agreement, which stipulates the Company will receive quarterly royalty payments of at least $ 50,250 2.0 201,000 50,250 201,000 50,250 Accounts Receivable Allowances Accounts receivable are typically due within 30 days of invoicing. The Company establishes an allowance for doubtful accounts to provide for an estimate of accounts receivable which are not expected to be collectible. The Company recorded bad debt expense of $ 50,000 180,000 86,000 195,000 354,189 269,850 3,100 4,761 Inventories Inventories are stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis. Inventories consist of finished goods and related packaging components. The Company recorded inventory obsolescence expense of $ 39,479 87,898 69,990 159,717 349,405 523,832 Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets, ranging from two to ten years. Below is a summary of property and equipment for the periods presented: SCHEDULE OF PROPERTY AND EQUIPMENT Useful June 30, December 31, Life 2023 2022 Computers 3 5 $ 191,611 $ 172,154 Office equipment 3 7 97,097 87,225 Furniture and fixtures 5 10 265,584 258,414 Leasehold improvements 2 5 23,131 19,631 Internal use software 5 1,618,999 1,618,998 Property and equipment, gross 2,196,422 2,156,422 Less accumulated depreciation (956,153 ) (739,986 ) Property and equipment, net $ 1,240,269 $ 1,416,436 Depreciation expense related to property and equipment was $ 108,492 101,584 216,166 194,308 Internal Use Software The Company accounts for costs incurred to develop or acquire computer software for internal use in accordance with ASC Topic 350-40, Intangibles – Goodwill and Other. The Company capitalizes the costs incurred during the application development stage, which generally includes third-party developer fees to design the software configuration and interfaces, coding, installation and testing. The Company begins capitalization of qualifying costs when both the preliminary project stage is completed and management has authorized further funding for the completion of the project. Costs incurred during the preliminary project stage along with post implementation stages of internal-use computer software are expensed as incurred. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized development costs are classified as “Property and equipment, net” in the Consolidated Balance Sheets and are amortized over the estimated useful life of the software, which is generally five years. Goodwill The excess of purchase price over the fair value of identifiable net assets acquired in business combinations is recorded as goodwill. As of June 30, 2023, all the Company’s goodwill relates to the acquisition of Scendia Biologics, LLC (“Scendia”) (see Note 4). Goodwill has an indefinite useful life and is not amortized. Goodwill is tested annually as of December 31 for impairment, or more frequently if circumstances indicate impairment may have occurred. The Company may first perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than the respective carrying value. If it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying value, then the Company will determine the fair value of the reporting unit and record an impairment charge for the difference between fair value and carrying value (not to exceed the carrying amount of goodwill). No impairment was recorded during the six months ended June 30, 2023. Intangible Assets Intangible assets are stated at cost of acquisition less accumulated amortization and impairment loss, if any. Cost of acquisition includes the purchase price and any cost directly attributable to bringing the asset to its working condition for the intended use. The Company amortizes its finite-lived intangible assets on a straight-line basis over the estimated useful life of the respective assets which is generally the life of the related patents or licenses, seven years for customer relationships and five years for assembled workforces. See Note 5 for more information on intangible assets. Impairment of Long-Lived Assets Long-lived assets, including certain identifiable intangibles held and to be used by the Company, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company continuously evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated liquidation value of such long-lived assets and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, undiscounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated fair value less cost to sell. No impairment was recorded during the six months ended June 30, 2023 and 2022. Investments in Equity Securities The Company’s equity investments consist of nonmarketable equity securities in privately held companies without readily determinable fair values. Unless accounted for under the equity method of accounting, the investments are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The Company applies the equity method of accounting to investments when it has significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “Share of losses from equity method investment” in the Company’s Consolidated Statements of Operations. The Company’s equity method investment is adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company classifies distributions received from its equity method investment using the cumulative earnings approach in the Company’s Consolidated Statements of Cash Flows. As a result of the Precision Healing merger in April 2022 (see Note 3), the Company does not have any investments which are recorded applying the equity method of accounting as of June 30, 2023. The Company has reviewed the carrying value of its investments and has determined there was no impairment or observable price changes as of and for the six months ended June 30, 2023 or 2022. Fair Value Measurement As defined in ASC Topic 820, Fair Value Measurement (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement. The three levels of the fair value hierarchy defined by ASC 820 are as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include nonexchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of the contingent earnout consideration and the acquisition date fair value of goodwill and intangibles related to the acquisitions discussed in Notes 3 and 4 are based on Level 3 inputs. Liabilities for contingent consideration are measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration transferred. Subsequent changes in fair value are reported under the line item captioned “Change in fair value of earnout liabilities” in the Company’s Consolidated Statements of Operations. The following table sets forth a summary of the changes in fair value for the Level 3 contingent earnout consideration. SCHEDULE OF CHANGES IN FAIR VALUE FOR CONTINGENT EARNOUT CONSIDERATION Additions - Balance at December 31, 2022 $ 7,166,691 Additions - Changes in fair value of earnout liabilities (813,157 ) Settlements - Balance at June 30, 2023 $ 6,353,534 Income Taxes Income taxes are accounted for under the asset and liability method, whereby deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all the deferred tax asset will not be realized. Stock-based Compensation The Company accounts for stock-based compensation to employees and nonemployees in accordance with Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718). Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as expense over the stipulated vesting period, if any. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants, and the closing price of the Company’s common stock for grants of common stock, including restricted stock awards. Research and Development Costs Research and development (“R&D”) expenses consist of personnel-related expenses, including salaries and benefits for all personnel directly engaged in R&D activities, contracted services, materials, prototype expenses and allocated overhead which is comprised of lease expense and other facilities-related costs. R&D expenses include costs related to enhancements to the Company’s currently available products and additional investments in the product, services and technologies development pipeline. The Company expenses R&D costs as incurred. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This update amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The Company adopted the new guidance effective January 1, 2023. The adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows. Recently Issued Accounting Pronouncements There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a material effect on the Company’s consolidated financial condition, results of operations or cash flows. |
PRECISION HEALING MERGER
PRECISION HEALING MERGER | 6 Months Ended |
Jun. 30, 2023 | |
Precision Healing Merger | |
PRECISION HEALING MERGER | NOTE 3 – PRECISION HEALING MERGER In April 2022, the Company entered into a merger agreement by and among the Company, United Wound and Skin Solutions, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, Precision Healing, PH Merger Sub I, Inc., a Delaware corporation, PH Merger Sub II, LLC, a Delaware limited liability company, and Furneaux Capital Holdco, LLC (d/b/a BlueIO), solely in its capacity as the representative of the securityholders of Precision Healing. On April 4, 2022 (the “Closing Date”), the merger parties closed the transactions contemplated by the merger agreement and Precision Healing became a wholly owned subsidiary of the Company. Precision Healing is developing a diagnostic imager and lateral flow assay for assessing a patient’s wound and skin conditions. This comprehensive skin and wound assessment technology is designed to quantify biochemical markers to determine the trajectory of a wound’s condition to enable better diagnosis and treatment protocol. To date, Precision Healing has not generated revenues. Pursuant to the terms of the merger agreement, holders of Precision Healing common stock and preferred stock, other than the Company, were entitled to receive closing consideration, consisting of $ 125,966 165,738 0.6 165,738 30.75 On the Closing Date, the outstanding Precision Healing options previously granted under the Precision Healing Inc. 2020 Stock Option and Grant Plan (the “Precision Healing Plan”) converted, pursuant to their terms, into options to acquire an aggregate of 144,191 10.71 4,424 7.32 April 22, 2031 12,301 12.05 August 10, 2030 Pursuant to the merger agreement, the Company assumed sponsorship of the Precision Healing Plan, effective as of the Closing Date, as well as the outstanding awards granted thereunder, the award agreements evidencing the grants of such awards and the remaining shares available under the Precision Healing Plan, in each case adjusted in the manner set forth in the merger agreement. Concurrent with the assumption of the Precision Healing Plan, the Company terminated the ability to offer future awards under the Precision Healing Plan. Pursuant to the merger agreement, upon the achievement of certain performance thresholds, the securityholders of Precision Healing, including the holders of options and warrants to purchase Precision Healing common stock and certain persons promised options to purchase Precision Healing common stock, are also entitled to receive payments of up to $ 10.0 27.13 As the contingent earnout payments are not subject to any specific individual performance by the shareholders, the contingent shares are not subject to ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Further, as the contingent consideration was negotiated as part of the transfer of assets, the obligation was measured at fair value and included in the total purchase consideration transferred. Additionally, the contingent earnout payments meet the criteria under ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) as the monetary value of the shares to be issued is predominantly based on the exercise contingency (i.e., revenue targets). Accordingly, the contingent consideration is classified as a liability at its estimated fair value at each reporting period with the subsequent change in fair value recognized as a gain or loss in accordance with ASC 480. The total purchase consideration as determined by the Company was as follows: SCHEDULE OF PURCHASE CONSIDERATIONS Consideration Equity Shares Dollar Value Fair value of Sanara common shares issued 165,738 $ 5,096,444 Fair value of assumed options 144,191 4,109,750 Fair value of assumed warrants 16,725 502,895 Cash paid to nonaccredited investors 125,370 Cash paid for fractional shares 596 Carrying value of equity method investment in Precision Healing 1,803,440 Fair value of contingent earnout consideration 3,882,151 Direct transaction costs 1,061,137 Total purchase consideration $ 16,581,783 Based on guidance provided by ASC 805, the Company recorded the Precision Healing merger as an asset acquisition due to the determination that substantially all the fair value of the assets acquired was concentrated in a group of similar identifiable assets. The Company believes the “substantially all” criterion was met with respect to the acquired intellectual property based on the Company’s valuation models. These models assigned value to the acquired intellectual property based on estimated future cash flows. Accordingly, the Company accounted for the merger as an asset acquisition. The purchase consideration, plus transaction costs, was allocated to the individual assets according to their fair values as a percentage of the total fair value of the assets purchased, with no goodwill recognized. Based on the estimated fair value of the gross assets acquired, the total fair value of the net assets acquired was primarily attributable to, and classified as, finite-lived intellectual property and assembled workforce in the second quarter of 2022. The total purchase consideration was allocated based on the relative estimated fair value of such assets as follows: SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED Description Amount Cash $ 32,202 Net working capital (excluding cash) (308,049 ) Fixed assets, net 9,228 Noncontrolling interest in Sanara Biologics, LLC Customer relationships Deferred tax assets 278,661 Intellectual property 20,325,469 Assembled workforce 664,839 Deferred tax liabilities (4,420,567 ) Goodwill Net assets acquired $ 16,581,783 |
SCENDIA PURCHASE AGREEMENT
SCENDIA PURCHASE AGREEMENT | 6 Months Ended |
Jun. 30, 2023 | |
Scendia Purchase Agreement | |
SCENDIA PURCHASE AGREEMENT | NOTE 4 – SCENDIA PURCHASE AGREEMENT In July 2022, the Company entered into a membership interest purchase agreement by and among the Company, Scendia, a Delaware limited liability company, and Ryan Phillips (“Phillips”) pursuant to which, and in accordance with the terms and conditions set forth therein, the Company acquired 100 Scendia provides clinicians and surgeons with a full line of regenerative and orthobiologic technologies for their patients through certain customer accounts. Beginning in early 2022, the Company began co-promoting certain products with Scendia, including: (i) TEXAGEN Amniotic Membrane Allograft, (ii) BiFORM Bioactive Moldable Matrix, (iii) AMPLIFY Verified Inductive Bone Matrix and (iv) ALLOCYTE Advanced Cellular Bone Matrix. Prior to the acquisition, Scendia owned 50 50 100 Pursuant to the purchase agreement, Phillips was entitled to receive closing consideration consisting of (i) approximately $ 1.6 291,686 94,798 1.95 In addition to the cash consideration and the stock consideration, the purchase agreement provides that Phillips is entitled to receive two potential earnout payments, payable on an annual basis, not to exceed $ 10.0 486,145 As the contingent earnout payments are not subject to any specific individual performance by Phillips, the contingent shares are not subject to ASC 718. Further, as the contingent consideration was negotiated as part of the transfer of assets, the obligation was measured at fair value and included in the total purchase consideration transferred. Additionally, the contingent earnout payments meet the criteria under ASC 480, as the monetary value of the shares to be issued is predominantly based on the exercise contingency (i.e., revenue targets). Accordingly, the contingent consideration is classified as a liability at its estimated fair value at each reporting period with the subsequent change in fair value recognized as a gain or loss in accordance with ASC 480. The total purchase consideration, subject to typical post-closing adjustments, as determined by the Company was as follows: SCHEDULE OF PURCHASE CONSIDERATIONS Consideration Equity Shares Dollar Value Fair value of Sanara common shares issued 291,686 $ 6,032,066 Cash consideration 1,562,668 Fair value of contingent earnout consideration 3,000,000 Total purchase consideration $ 10,594,734 Based on guidance provided by ASC 805, the Company recorded the Scendia acquisition as a business combination. The purchase consideration was allocated to the individual assets according to their fair values as a percentage of the total fair value of the net assets purchased. The excess of the purchase consideration over the net assets purchased was recorded as goodwill. The total purchase consideration was allocated as follows: SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED Description Amount Cash $ 201,406 Net working capital (excluding cash) 1,294,499 Fixed assets, net 42,300 Noncontrolling interest in Sanara Biologics, LLC 2,638 Customer relationships 7,155,000 Deferred tax liabilities (1,702,890 ) Goodwill 3,601,781 Net assets acquired $ 10,594,734 The goodwill acquired consists of expected synergies from the acquisition to the Company’s overall corporate strategy. The Company does not expect any of the goodwill to be deductible for income tax purposes. The Company incurred acquisition costs of approximately $ 187,000 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5 – INTANGIBLE ASSETS The carrying values of the Company’s intangible assets were as follows for the periods presented: SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS June 30, 2023 December 31, 2022 Accumulated Accumulated Cost Amortization Net Cost Amortization Net Amortizable Intangible Assets: Product Licenses $ 4,793,879 $ (1,149,604 ) $ 3,644,275 $ 4,793,879 $ (980,583 ) $ 3,813,296 Patents and Other IP 21,935,580 (2,105,580 ) 19,830,000 21,935,580 (1,492,057 ) 20,443,523 Customer relationships and other 7,947,332 (1,278,029 ) 6,669,303 7,947,332 (694,171 ) 7,253,161 Total $ 34,676,791 $ (4,533,213 ) $ 30,143,578 $ 34,676,791 $ (3,166,811 ) $ 31,509,980 As of June 30, 2023, the weighted-average amortization period for finite-lived intangible assets was 14.3 695,202 437,540 1,366,403 547,563 SCHEDULE OF FUTURE AMORTIZATION EXPENSE Remainder of 2023 $ 1,390,403 2024 2,780,806 2025 2,780,806 2026 2,763,550 2027 2,649,698 2028 2,616,456 Thereafter 15,161,859 Total $ 30,143,578 The Company has reviewed the carrying value of intangible assets and has determined there was no impairment during either of the six months ended June 30, 2023 or 2022. |
INVESTMENTS IN EQUITY SECURITIE
INVESTMENTS IN EQUITY SECURITIES | 6 Months Ended |
Jun. 30, 2023 | |
Schedule of Investments [Abstract] | |
INVESTMENTS IN EQUITY SECURITIES | NOTE 6 – INVESTMENTS IN EQUITY SECURITIES The Company’s equity investments consist of nonmarketable equity securities in privately held companies without readily determinable fair values. Unless accounted for under the equity method of accounting, the investments are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. In July 2020, the Company made a $ 500,000 7,142,857 2.9 3,571,430 250,000 3,571,429 250,000 8.1 In November 2020, the Company entered into agreements to purchase certain nonmarketable securities consisting of 150,000 600,000 150,000 12.6 600,000 150,000 150,000 22.4 500,000 125,000 29.0 125,000 150,000 500,000 600,000 As discussed above, in April 2022, the Company closed a merger transaction with Precision Healing pursuant to which Precision Healing became a wholly owned subsidiary of the Company (see Note 3 for more information). As a result of the merger, the Company’s equity method investment in Precision Healing ceased in April 2022. The Company has recorded $ 379,633 In June 2021, the Company invested $ 2,084,278 278,587 27.3 27.3 93,879 The Company has reviewed the characteristics of the Shares in accordance with ASC Topic 323, Investments – Equity Method and Joint Ventures. Due to the substantive liquidation preferences of the Shares over Pixalere’s common stock, the Shares are not “in-substance” common stock, and therefore, the Company does not utilize the equity method of accounting for this investment. In accordance with ASC Topic 321, Investments - Equity Securities, this investment was reported at cost as of June 30, 2023. The following summarizes the Company’s investments for the periods presented: SCHEDULE OF INVESTMENTS June 30, 2023 December 31, 2022 Carrying Amount Economic Interest Carrying Amount Economic Interest Equity Method Investment Precision Healing Inc. $ - - % $ - - % Cost Method Investments Direct Dermatology, Inc. 1,000,000 1,000,000 Pixalere Healthcare Inc. 2,084,278 2,084,278 Total Cost Method Investments 3,084,278 3,084,278 Total Investments $ 3,084,278 $ 3,084,278 The following summarizes the loss from the equity method investment reflected in the Consolidated Statements of Operations: SCHEDULE OF LOSS FROM EQUITY METHOD INVESTMENT 2023 2022 2023 2022 Three Months ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Investment Precision Healing Inc. $ - $ - $ - $ (379,633 ) Total $ - $ - $ - $ (379,633 ) Loss from equity method investment $ - $ - $ - $ (379,633 ) |
OPERATING LEASES
OPERATING LEASES | 6 Months Ended |
Jun. 30, 2023 | |
Operating Leases | |
OPERATING LEASES | NOTE 7 - OPERATING LEASES The Company periodically enters operating lease contracts for office space and equipment. Arrangements are evaluated at inception to determine whether such arrangements constitute a lease. Right of use assets (“ROU assets”) represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities were recognized on the transition date based on the present value of lease payments over the respective lease term, with the office space ROU asset adjusted for deferred rent liability. The Company has three material operating leases for office space. In March 2023, the Company amended its primary office lease to obtain additional space, as well as extend the term. The leases have remaining lease terms of 90 43 26 In accordance with ASC Topic 842, Leases, the Company has recorded ROU assets of $ 2,030,938 2,052,952 184,575 126,815 175,382 127,777 Maturity of Operating Lease Liabilities SCHEDULE OF OPERATING LEASE LIABILITY June 30, 2023 Remainder of 2023 $ 178,783 2024 424,753 2025 450,551 2026 365,911 2027 297,947 2028 295,689 Thereafter 604,050 Total lease payments 2,617,684 Less imputed interest (564,732 ) Present Value of Lease Liabilities $ 2,052,952 Operating lease liabilities – current 273,539 Operating lease liabilities – long-term 1,779,413 As of June 30, 2023, the Company’s operating leases had a weighted average remaining lease term of 6.4 7.51 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 - COMMITMENTS AND CONTINGENCIES License Agreements and Royalties CellerateRX Surgical Activated Collagen In August 2018, the Company entered an exclusive, world-wide sublicense agreement (the “Sublicense Agreement”) with CGI Cellerate RX, LLC (“CGI Cellerate RX”) to distribute CellerateRX Surgical Activated Collagen (Powder and Gel) (“CellerateRX Surgical”) and HYCOL Hydrolyzed Collagen (Powder and Gel) (“HYCOL”) products into the surgical and wound care markets. Pursuant to the Sublicense Agreement, the Company pays royalties of 3-5% of annual collected net sales of CellerateRX Surgical and HYCOL. As amended in January 2021, the term of the sublicense extends through May 2050, with automatic successive year-to-year renewal terms thereafter so long as the Company’s Net Sales (as defined in the Sublicense Agreement) each year are equal to or in excess of $1,000,000. If the Company’s Net Sales fall below $1,000,000 for any year after the initial expiration date, CGI Cellerate RX will have the right to terminate the Sublicense Agreement upon written notice. Under this agreement, royalty expense, which is recorded in “Cost of goods sold” in the accompanying Consolidated Statements of Operations, totaled $ 1,069,244 812,966 As discussed further in Note 12, on August 1, 2023, the Company purchased certain assets from Applied Nutritionals, LLC (“Applied”), including the rights to manufacture and sell CellerateRX Surgical and HYCOL products. In connection with the purchase of such assets, Applied assigned its license agreement with CGI Cellerate RX to a wholly owned subsidiary of the Company, and no further royalties will be due to Applied thereunder. BIAKŌS Antimicrobial Wound Gel and BIAKŌS Antimicrobial Skin and Wound Cleanser In July 2019, the Company executed a license agreement with Rochal Industries, LLC (“Rochal”), a related party, pursuant to which the Company acquired an exclusive world-wide license to market, sell and further develop antimicrobial products for the prevention and treatment of microbes on the human body utilizing certain Rochal patents and pending patent applications (the “BIAKŌS License Agreement”). Currently, the products covered by the BIAKŌS License Agreement are BIAKŌS Antimicrobial Wound Gel and BIAKŌS Antimicrobial Skin and Wound Cleanser. Both products are 510(k) cleared. Future commitments under the terms of the BIAKŌS License Agreement include: ● The Company pays Rochal a royalty of 2 4 120,000 10,000 150,000 ● The Company pays additional royalty annually based on specific net profit targets from sales of the licensed products, subject to a maximum of $ 1,000,000 Unless previously terminated by the parties, the BIAKŌS License Agreement expires with the related patents in December 2031. Under this agreement, royalty expense, which is recorded in “Cost of goods sold” in the accompanying Consolidated Statements of Operations, was $ 65,000 60,000 CuraShield Antimicrobial Barrier Film and No Sting Skin Protectant In October 2019, the Company executed a license agreement with Rochal pursuant to which the Company acquired an exclusive world-wide license to market, sell and further develop certain antimicrobial barrier film and skin protectant products for use in the human health care market utilizing certain Rochal patents and pending patent applications (the “ABF License Agreement”). Currently, the products covered by the ABF License Agreement are CuraShield Antimicrobial Barrier Film and a no sting skin protectant product. Future commitments under the terms of the ABF License Agreement include: ● The Company will pay Rochal a royalty of 2 4 50,000 10 75,000 ● The Company will pay additional royalties annually based on specific net profit targets from sales of the licensed products, subject to a maximum of $ 500,000 Unless previously terminated or extended by the parties, the ABF License Agreement will terminate upon expiration of the last U.S. patent in October 2033. No commercial sales or royalties had been recognized under this agreement as of June 30, 2023. Debrider License Agreement In May 2020, the Company executed a product license agreement with Rochal, pursuant to which the Company acquired an exclusive world-wide license to market, sell and further develop a debrider for human medical use to enhance skin condition or treat or relieve skin disorders, excluding uses primarily for beauty, cosmetic, or toiletry purposes (the “Debrider License Agreement”). Future commitments under the terms of the Debrider License Agreement include: ● Upon FDA clearance of the licensed products, the Company will pay Rochal $ 500,000 1,000,000 ● The Company will pay Rochal a royalty of 2 4 100,000 10 150,000 ● The Company will pay additional royalty annually based on specific net profit targets from sales of the licensed products, subject to a maximum of $ 1,000,000 Unless previously terminated or extended by the parties, the Debrider License Agreement will expire in October 2034. No commercial sales or royalties have been recognized under this agreement as of June 30, 2023. Resorbable Bone Hemostat The Company acquired a patent in 2009 for a resorbable bone hemostat and delivery system for orthopedic bone void fillers. In connection with the patent acquisition, the Company entered into a royalty agreement to pay 8 2 201,000 201,000 50,250 16,080 4,020 Rochal Asset Acquisition In July 2021, the Company entered into an asset purchase agreement with Rochal effective July 1, 2021, pursuant to which the Company purchased certain assets of Rochal. Pursuant to the asset purchase agreement, for the three-year period after the effective date, Rochal is entitled to receive consideration for any new product relating to the business that is directly and primarily based on an invention conceived and reduced to practice by a member or members of Rochal’s science team. For the three-year period after the effective date, Rochal is also entitled to receive an amount in cash equal to twenty-five percent of the proceeds received for any Grant (as defined in the asset purchase agreement) by either the Company or Rochal. In addition, the Company agreed to use commercially reasonable efforts to perform Minimum Development Efforts (as defined in the asset purchase agreement) with respect to certain products under development, which if obtained, will entitle the Company to intellectual property rights from Rochal in respect of such products. Precision Healing Merger Agreement In April 2022, the Company closed a merger transaction with Precision Healing pursuant to which Precision Healing became a wholly owned subsidiary of the Company. Pursuant to the terms of the merger agreement, holders of Precision Healing common stock and preferred stock, other than the Company, were entitled to receive closing consideration, consisting of $ 125,966 165,738 0.6 165,738 30.75 Upon the closing of the merger, the Precision Healing outstanding options previously granted under the Precision Healing Plan converted, pursuant to their terms, into options to acquire an aggregate of 144,191 10.71 4,424 7.32 April 22, 2031 12,301 12.05 August 10, 2030 Pursuant to the merger agreement, upon the achievement of certain performance thresholds, the securityholders of Precision Healing, including the holders of options and warrants to purchase Precision Healing common stock and certain persons promised options to purchase Precision Healing common stock, are also entitled to receive payments of up to $ 10.0 27.13 Scendia Purchase Agreement In July 2022, the Company closed the Scendia acquisition pursuant to which Scendia became a wholly owned subsidiary of the Company. Pursuant to the purchase agreement, the aggregate consideration for the acquisition at closing was approximately $ 7.6 1.6 291,686 94,798 In addition to the cash consideration and the stock consideration, the purchase agreement provides that Phillips is entitled to receive two potential earnout payments, payable on an annual basis, not to exceed $ 10.0 486,145 Other Commitments In May 2019, the Company organized Sanara Pulsar, LLC (“Sanara Pulsar”), a Texas limited liability company, which was owned 60% by the Company’s wholly owned subsidiary Cellerate, LLC, and 40% owned by Wound Care Solutions, Limited (“WCS”), an unaffiliated company registered in the United Kingdom. At the time of the formation of Sanara Pulsar, it and WCS, entered into a supply agreement whereby Sanara Pulsar became the exclusive distributor in the United States of certain wound care products that utilize intellectual property developed and owned by WCS. Pursuant to the operating agreement of Sanara Pulsar, in the event WCS’s annual Form K-l does not allocate to WCS net income of at least $ 200,000 10 220,000 242,000 |
SHAREHOLDERS_ EQUITY
SHAREHOLDERS’ EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | NOTE 9 – SHAREHOLDERS’ EQUITY Common Stock At the Company’s Annual Meeting of Shareholders held in July 2020, the Company approved the Restated 2014 Omnibus Long Term Incentive Plan (the “LTIP Plan”) in which the Company’s directors, officers, employees and consultants are eligible to participate. A total of 587,804 1,412,196 In April 2022, the Company closed a merger transaction with Precision Healing pursuant to which Precision Healing became a wholly owned subsidiary of the Company. Pursuant to the terms of the merger agreement, holders of Precision Healing common stock and preferred stock, other than the Company, were entitled to receive closing consideration, consisting of $ 125,966 165,738 0.6 165,738 30.75 Upon the closing of the merger, the Precision Healing outstanding options previously granted under the Precision Healing Plan converted, pursuant to their terms, into options to acquire an aggregate of 144,191 10.71 4,424 7.32 April 22, 2031 12,301 12.05 August 10, 2030 Pursuant to the merger agreement, upon the achievement of certain performance thresholds, the securityholders of Precision Healing, including the holders of options and warrants to purchase Precision Healing common stock and certain persons promised options to purchase Precision Healing common stock, are also entitled to receive payments of up to $ 10.0 27.13 In July 2022, the Company closed the Scendia acquisition pursuant to which Scendia became a wholly owned subsidiary of the Company. Pursuant to the purchase agreement, the aggregate consideration at closing for the acquisition was approximately $ 7.6 1.6 291,686 94,798 In addition to the cash consideration and the stock consideration, the purchase agreement provides that Phillips is entitled to receive two potential earnout payments, payable on an annual basis, not to exceed $ 10.0 486,145 In February 2023, the Company entered into a Controlled Equity Offering SM 75,000,000 Sales of the shares, if any, pursuant to the Sales Agreement, may be made in sales deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, Cantor agreed to use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of The Nasdaq Capital Market to sell the shares from time to time based upon the Company’s instructions, including any price, time period or size limits specified by the Company. The Company has no obligation to sell any of the shares under the Sales Agreement and may at any time suspend or terminate the offering of its common stock pursuant to the Sales Agreement upon notice to Cantor and subject to other conditions. Cantor’s obligations to sell the shares under the Sales Agreement are subject to satisfaction of certain conditions, including customary closing conditions. Pursuant to the Sales Agreement, the Company will pay Cantor a commission of 3.0 During the three months ended June 30, 2023, the Company did not sell any shares of common stock pursuant to the Sales Agreement. During the six months ended June 30, 2023, the Company sold an aggregate of 26,143 1,066,000 1,034,000 Restricted Stock Awards During the six months ended June 30, 2023, the Company issued restricted stock awards under the LTIP Plan which are subject to certain vesting provisions and other terms and conditions set forth in each recipient’s respective restricted stock agreement. The Company granted and issued 108,136 4,293,988 Share-based compensation expense of $ 1,724,637 1,288,335 1,127,332 703,400 At June 30, 2023, there was $ 4,844,361 1.2 Below is a summary of restricted stock activity for the six months ended June 30, 2023: SUMMARY OF RESTRICTED STOCK ACTIVITY For the Six Months Ended June 30, 2023 Weighted Average Shares Grant Date Fair Value Nonvested at beginning of period 181,102 $ 22.89 Granted 114,284 39.28 Vested (124,483 ) 22.22 Forfeited (6,148 ) 31.71 Nonvested at June 30, 2023 164,755 $ 34.36 Stock Options A summary of the status of outstanding stock options at June 30, 2023 and changes during the six months then ended is presented below: SCHEDULE OF STOCK OPTION ACTIVITY For the Six Months Ended June 30, 2023 Weighted Average Weighted Average Exercise Remaining Options Price Contract Life Outstanding at beginning of period 146,191 $ 10.65 Granted or assumed - - Exercised (22,000 ) 11.47 Forfeited - - Expired - - Outstanding at June 30, 2023 124,191 $ 10.50 7.3 Exercisable at June 30, 2023 124,191 $ 10.50 7.3 Warrants A summary of the status of outstanding warrants to purchase common stock at June 30, 2023 and changes during the six months then ended is presented below: SCHEDULE OF WARRANTS TO PURCHASE COMMON STOCK For the Six Months Ended June 30, 2023 Weighted Average Weighted Average Exercise Remaining Warrants Price Contract Life Outstanding at beginning of period 16,725 $ 10.80 Granted or assumed - - Exercised - - Forfeited - - Expired - - Outstanding at June 30, 2023 16,725 $ 10.80 7.3 Exercisable at June 30, 2023 16,725 $ 10.80 7.3 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 10 – INCOME TAXES As discussed in Note 3, the Company recognized net deferred tax liabilities associated with the Precision Healing merger. Prior to consideration of these deferred tax liabilities, the Company had net deferred tax assets in excess of the deferred tax liabilities being recognized, however, a 100 4.1 |
RELATED PARTIES
RELATED PARTIES | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | NOTE 11 – RELATED PARTIES CellerateRX Surgical Sublicense Agreement The Company has an exclusive, world-wide sublicense to distribute CellerateRX Surgical and HYCOL products into the surgical and wound care markets from an affiliate of The Catalyst Group, Inc. (“Catalyst”), CGI Cellerate RX, which licenses the rights to CellerateRX Surgical from Applied. Sales of CellerateRX Surgical have comprised the substantial majority of the Company’s sales during the six months ended June 30, 2023 and 2022. In January 2021, the Company amended the term of the Sublicense Agreement to extend the term to May 17, 2050, with automatic successive one-year renewals so long as annual net sales of the licensed products exceed $ 1,000,000 The Company pays royalties based on the annual Net Sales of licensed products (as defined in the Sublicense Agreement) consisting of 3% of all collected Net Sales each year up to $12,000,000, 4% of all collected Net Sales each year that exceed $12,000,000 up to $20,000,000, and 5% of all collected Net Sales each year that exceed $20,000,000. 548,430 443,733 1,069,244 812,966 As discussed further in Note 12, on August 1, 2023, the Company purchased certain assets from Applied, including the rights to manufacture and sell CellerateRX Surgical and HYCOL products. In connection with the purchase of such assets, Applied assigned its license agreement with CGI Cellerate RX to a wholly owned subsidiary of the Company, and no further royalties will be due to Applied thereunder. Product License Agreements In July 2019, the Company executed a license agreement with Rochal, a related party, whereby the Company acquired an exclusive world-wide license to market, sell and further develop antimicrobial products for the prevention and treatment of microbes on the human body utilizing certain Rochal patents and pending patent applications. Currently, the products covered by the BIAKŌS License Agreement are BIAKŌS Antimicrobial Wound Gel and BIAKŌS Antimicrobial Skin and Wound Cleanser. Both products are 510(k) cleared. Mr. Nixon is a director of Rochal, and indirectly a significant shareholder of Rochal, and through the potential exercise of warrants, a majority shareholder of Rochal. Another one of the Company’s directors is also a significant shareholder and the current Chair of the board of directors of Rochal. In October 2019, the Company executed the ABF License Agreement with Rochal whereby the Company acquired an exclusive world-wide license to market, sell and further develop certain antimicrobial barrier film and skin protectant products for use in the human health care market utilizing certain Rochal patents and pending patent applications. Currently, the products covered by the ABF License Agreement are CuraShield Antimicrobial Barrier Film and a no sting skin protectant product. In May 2020, the Company executed a product license agreement with Rochal, whereby the Company acquired an exclusive world-wide license to market, sell and further develop a debrider for human medical use to enhance skin condition or treat or relieve skin disorders, excluding uses primarily for beauty, cosmetic, or toiletry purposes. See Note 8 for more information on these product license agreements. Consulting Agreement Concurrent with the Rochal asset purchase, in July 2021, the Company entered into a consulting agreement with Ann Beal Salamone pursuant to which Ms. Salamone agreed to provide the Company with consulting services with respect to, among other things, writing new patents, conducting patent intelligence, and participating in certain grant and contract reporting. In consideration for the consulting services to be provided to the Company, Ms. Salamone is entitled to receive an annual consulting fee of $ 177,697 Catalyst Transaction Advisory Services Agreement In March 2023, the Company entered into a Transaction Advisory Services Agreement (the “Catalyst Services Agreement”) effective March 1, 2023 with Catalyst, a related party. Pursuant to the Catalyst Services Agreement, Catalyst, by and through its directors, officers, employees and affiliates that are not simultaneously serving as directors, officers or employees of the Company (collectively, the “Covered Persons”), agreed to perform certain transaction advisory, business and organizational strategy, finance, marketing, operational and strategic planning, relationship access and corporate development services for the Company in connection with any merger, acquisition, recapitalization, divestiture, financing, refinancing, or other similar transaction in which the Company may be, or may consider becoming, involved, and any such additional services as mutually agreed upon in writing by and between Catalyst and the Company (the “Catalyst Services”). Pursuant to the Catalyst Services Agreement, the Company agreed to reimburse Catalyst for (i) compensation actually paid by Catalyst to any of the Covered Persons at a rate no more than a rate consistent with industry practice for the performance of services similar to the Catalyst Services, as documented in reasonably sufficient detail, and (ii) all reasonable out-of-pocket costs and expenses payable to unaffiliated third parties, as documented in customary expense reports, as each of (i) and (ii) is incurred in connection with the Catalyst Services rendered under the Catalyst Services Agreement, with all reimbursements being contingent upon the prior approval of the Audit Committee of the Company’s Board of Directors. The Company incurred $ 72,986 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS Applied Asset Purchase On August 1, 2023, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) by and among the Company, as guarantor, Sanara MedTech Applied Technologies, LLC, a Texas limited liability company and wholly owned subsidiary of the Company (“SMAT”), The Hymed Group Corporation, a Delaware corporation (“Hymed”), Applied, a Delaware limited liability company (Applied, together with Hymed, the “Sellers”), and Dr. George D. Petito (the “Owner”), pursuant to which SMAT acquired certain assets of the Sellers and the Owner, including, among others, the Sellers’ and Owner’s inventory, intellectual property, manufacturing and related equipment, goodwill, rights and claims, other than certain excluded assets, all as more specifically set forth in the Purchase Agreement (collectively, the “Purchased Assets”), and assumed certain Assumed Liabilities (as defined in the Purchase Agreement), upon the terms and subject to the conditions set forth in the Purchase Agreement (such transaction, the “Applied Asset Purchase”). The Purchased Assets include the rights to manufacture and sell CellerateRX Surgical and HYCOL products for human wound care use. The transaction closed on August 1, 2023. The Purchased Assets were purchased for an initial aggregate purchase price of $ 15.25 million, consisting of (i) $ 9.75 million in cash (the “Cash Closing Consideration”), (ii) 73,809 shares of the Company’s common stock (the “Stock Closing Consideration”) with an agreed upon value of $ 3.0 million and (iii) $ 2.5 million in cash (the “Installment Payments”), to be paid in four equal installments on each of the next four anniversaries of the closing of the Applied Asset Purchase (the “Closing”). Prior to the Closing, the Company licensed certain of its products from Applied through the Sublicense Agreement with CGI Cellerate RX. Pursuant to the Sublicense Agreement, the Company has an exclusive, world-wide sublicense to distribute CellerateRX Surgical and HYCOL products into the surgical and wound care markets. The Company pays royalties based on the annual Net Sales (as defined in the Sublicense Agreement) of licensed products consisting of 3% of all collected Net Sales each year up to $12.0 million, 4% of all collected Net Sales each year that exceed $12.0 million up to $20.0 million, and 5% of all collected Net Sales each year that exceed $20.0 million. In addition to the Cash Closing Consideration, Stock Closing Consideration and Installment Payments, the Purchase Agreement provides that the Sellers are entitled to receive up to an additional $ 10.0 Professional Services Agreement In connection with the Applied Asset Purchase and pursuant to the Purchase Agreement, effective August 1, 2023, the Company entered into a professional services agreement (the “Petito Services Agreement”) with the Owner, pursuant to which the Owner, as an independent contractor, agreed to provide certain services to the Company, including, among other things, assisting with the development of products already in development and assisting with research, development, formulation, invention and manufacturing of any future products (the “Petito Services”). As consideration for the Petito Services, the Owner is entitled to receive: (i) a base salary of $12,000 per month during the term of the Petito Services Agreement, (ii) a royalty payment equal to three percent (3%) of the actual collections from net sales of certain products the Owner develops or co-develops that reach commercialization, (iii) a royalty payment equal to five percent (5%) for the first $50.0 million in aggregate collections from net sales of certain future products and a royalty payment of two and one-half percent (2.5%) on aggregate collections from net sales of certain future products on any amounts exceeding $50.0 million but up to $100.0 million, (iv) $500,000 in cash in the event that 510(k) clearance is issued for any future product accepted by the Company and (v) $1.0 million in cash in the event that a U.S. patent is issued for a certain product; provided that with respect to the incentive payments described in (iv) and (v) of the foregoing, the Owner shall not earn more than $2.5 million. The Petito Services Agreement has an initial term of three years and is subject to automatic successive one-month renewals unless earlier terminated in accordance with its terms. The Petito Services Agreement may be terminated upon the Owner’s death or disability or by the Company or the Owner “For Cause” (as defined in the Petito Services Agreement); provided, however, that the base salary described in (i) of the foregoing paragraph shall survive termination through the three-year initial term and the royalty payments and incentive payments described in (ii)-(v) of the foregoing paragraph shall survive termination of the Petito Services Agreement. Loan Agreement In connection with the entry into the Purchase Agreement, on August 1, 2023, SMAT, as borrower, and the Company, as guarantor, entered into a loan agreement (the “Loan Agreement”) with Cadence Bank (the “Bank”) providing for, among other things, an advancing term loan in the aggregate principal amount of $ 12.0 The proceeds of the advances under the Loan Agreement will be used for working capital and for purposes of financing up to one hundred percent (100%) of the Cash Closing Consideration and Installment Payments for the Applied Asset Purchase and related fees and expenses, including any subsequent payments that may be due to the Sellers after the Closing. On August 1, 2023, the Bank, at the request of SMAT, made an advance for $ 9.75 Advances under the Term Loan will begin amortizing in monthly installments commencing on August 5, 2024. All remaining unpaid balances under the Term Loan are due and payable in full on August 1, 2028 (the “Maturity Date”). SMAT may prepay amounts due under the Term Loan. All accrued but unpaid interest on the unpaid principal balance of outstanding advances is due and payable monthly, beginning on September 5, 2023 and continuing monthly on the fifth day of each month thereafter until the Maturity Date. The unpaid principal balance of outstanding advances bears interest, subject to certain conditions, at the lesser of the Maximum Rate (as defined in the Loan Agreement) or the Base Rate, which is for any day, a rate per annum equal to the term secured overnight financing rate (Term SOFR) (as administered by the Federal Reserve Bank of New York) for a one-month tenor in effect on such day plus three percent (3.0%). The obligations of SMAT under the Loan Agreement and the other loan documents delivered in connection therewith are guaranteed by the Company and are secured by a first priority security interest in substantially all of the existing and future assets of SMAT. The Loan Agreement contains customary representations and warranties and certain covenants that limit (subject to certain exceptions) the ability of SMAT and the Company to, among other things, (i) create, assume or guarantee certain liabilities, (ii) create, assume or suffer liens securing indebtedness, (iii) make or permit loans and advances, (iv) acquire any assets outside the ordinary course of business, (v) consolidate, merge or sell all or a material part of its assets, (vi) pay dividends or other distributions on, or redeem or repurchase, interest in an obligor, including the Company, as guarantor (vii) cease, suspend or materially curtail business operations or (viii) engage in certain affiliate transactions. In addition, the Loan Agreement contains financial covenants that require SMAT to maintain (i) a minimum Debt Services Coverage Ratio and (ii) a maximum Cash Flow Leverage Ratio, in each case, as defined and calculated according to the procedures set forth in the Loan Agreement. Pursuant to the Loan Agreement, in the event that SMAT fails to comply with the financial covenants described above, the Company is required to contribute cash to SMAT in an amount equal to the amount required to satisfy the financial covenants. The Loan Agreement also contains customary events of default. If such an event of default occurs, the Bank would be entitled to take various actions, including the acceleration of amounts due under the Loan Agreement and actions permitted to be taken by a secured creditor. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying unaudited consolidated financial statements include the accounts of Sanara MedTech Inc. and its wholly owned and majority-owned subsidiaries, as well as other entities in which the Company has a controlling financial interest. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of the Company, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period. These financial statements and notes should be read in conjunction with the financial statements for each of the two years ended December 31, 2022 and 2021, which are included in the Company’s most recent Annual Report on Form 10-K. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported revenue and expenses during the reporting period. However, actual results could differ from those estimates and there may be changes to the Company’s estimates in future periods. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
Income/Loss Per Share | Income/Loss Per Share The Company computes income/loss per share in accordance with Accounting Standards Codification (“ASC”) Topic 260, Earnings per Share, which requires the Company to present basic and diluted income per share when the effect is dilutive. Basic income per share is computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding. Diluted income per share is computed similarly to basic income per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive. The following table summarizes the shares of common stock that were potentially issuable but were excluded from the computation of diluted net loss per share for the six months ended June 30, 2023 and 2022, as such shares would have had an anti-dilutive effect: SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER SHARE 2023 2022 As of June 30, 2023 2022 Stock options (a) 124,191 155,691 Warrants (b) 16,725 16,725 Unvested restricted stock 164,755 199,136 Anti-dilutive securities 164,755 199,136 (a) Shares underlying stock options assumed pursuant to the merger agreement with Precision Healing, Inc. (“Precision Healing”) in April 2022. See Note 3 for more information regarding the Precision Healing merger. (b) Shares underlying warrants assumed pursuant to the merger agreement with Precision Healing in April 2022. See Note 3 for more information regarding the Precision Healing merger. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when a purchase order is received from the customer and control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for transferring those goods or services. Revenue is recognized based on the following five-step model: - Identification of the contract with a customer - Identification of the performance obligations in the contract - Determination of the transaction price - Allocation of the transaction price to the performance obligations in the contract - Recognition of revenue when, or as, the Company satisfies a performance obligation Details of this five-step process are as follows: Identification of the contract with a customer Customer purchase orders are generally considered to be contracts under ASC 606. Purchase orders typically identify the specific terms of products to be delivered, create the enforceable rights and obligations of both parties and result in commercial substance. No other forms of contract revenue recognition, such as the completed contract or percentage of completion methods, were utilized by the Company in either 2023 or 2022. Performance obligations The Company’s performance obligation is generally limited to delivery of the requested items to its customers at the agreed upon quantities and prices. Determination and allocation of the transaction price The Company has established prices for its products. These prices are effectively agreed to when customers place purchase orders with the Company. Rebates and discounts, if any, are recognized in full at the time of sale as a reduction of net revenue. Allocation of transaction prices is not necessary where only one performance obligation exists. Recognition of revenue as performance obligations are satisfied Product revenues are recognized when a purchase order is received from the customer, the products are delivered and control of the goods and services passes to the customer. Disaggregation of Revenue Revenue streams from product sales and royalties are summarized below for the three and six months ended June 30, 2023 and 2022. SCHEDULE OF REVENUE FROM PRODUCT SALES AND ROYALTIES 2023 2022 2023 2022 Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Soft tissue repair products $ 13,249,742 $ 9,569,441 $ 26,122,223 $ 17,327,648 Bone fusion products 2,453,172 51,087 5,052,358 53,853 Royalty revenue 50,250 50,250 100,500 100,500 Total Net Revenue $ 15,753,164 $ 9,670,778 $ 31,275,081 $ 17,482,001 The Company recognizes royalty revenue from a development and license agreement with BioStructures, LLC. The Company records revenue each calendar quarter as earned per the terms of the agreement, which stipulates the Company will receive quarterly royalty payments of at least $ 50,250 2.0 201,000 50,250 201,000 50,250 |
Accounts Receivable Allowances | Accounts Receivable Allowances Accounts receivable are typically due within 30 days of invoicing. The Company establishes an allowance for doubtful accounts to provide for an estimate of accounts receivable which are not expected to be collectible. The Company recorded bad debt expense of $ 50,000 180,000 86,000 195,000 354,189 269,850 3,100 4,761 |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis. Inventories consist of finished goods and related packaging components. The Company recorded inventory obsolescence expense of $ 39,479 87,898 69,990 159,717 349,405 523,832 |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets, ranging from two to ten years. Below is a summary of property and equipment for the periods presented: SCHEDULE OF PROPERTY AND EQUIPMENT Useful June 30, December 31, Life 2023 2022 Computers 3 5 $ 191,611 $ 172,154 Office equipment 3 7 97,097 87,225 Furniture and fixtures 5 10 265,584 258,414 Leasehold improvements 2 5 23,131 19,631 Internal use software 5 1,618,999 1,618,998 Property and equipment, gross 2,196,422 2,156,422 Less accumulated depreciation (956,153 ) (739,986 ) Property and equipment, net $ 1,240,269 $ 1,416,436 Depreciation expense related to property and equipment was $ 108,492 101,584 216,166 194,308 |
Internal Use Software | Internal Use Software The Company accounts for costs incurred to develop or acquire computer software for internal use in accordance with ASC Topic 350-40, Intangibles – Goodwill and Other. The Company capitalizes the costs incurred during the application development stage, which generally includes third-party developer fees to design the software configuration and interfaces, coding, installation and testing. The Company begins capitalization of qualifying costs when both the preliminary project stage is completed and management has authorized further funding for the completion of the project. Costs incurred during the preliminary project stage along with post implementation stages of internal-use computer software are expensed as incurred. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized development costs are classified as “Property and equipment, net” in the Consolidated Balance Sheets and are amortized over the estimated useful life of the software, which is generally five years. |
Goodwill | Goodwill The excess of purchase price over the fair value of identifiable net assets acquired in business combinations is recorded as goodwill. As of June 30, 2023, all the Company’s goodwill relates to the acquisition of Scendia Biologics, LLC (“Scendia”) (see Note 4). Goodwill has an indefinite useful life and is not amortized. Goodwill is tested annually as of December 31 for impairment, or more frequently if circumstances indicate impairment may have occurred. The Company may first perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than the respective carrying value. If it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying value, then the Company will determine the fair value of the reporting unit and record an impairment charge for the difference between fair value and carrying value (not to exceed the carrying amount of goodwill). No impairment was recorded during the six months ended June 30, 2023. |
Intangible Assets | Intangible Assets Intangible assets are stated at cost of acquisition less accumulated amortization and impairment loss, if any. Cost of acquisition includes the purchase price and any cost directly attributable to bringing the asset to its working condition for the intended use. The Company amortizes its finite-lived intangible assets on a straight-line basis over the estimated useful life of the respective assets which is generally the life of the related patents or licenses, seven years for customer relationships and five years for assembled workforces. See Note 5 for more information on intangible assets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, including certain identifiable intangibles held and to be used by the Company, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company continuously evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated liquidation value of such long-lived assets and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, undiscounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated fair value less cost to sell. No impairment was recorded during the six months ended June 30, 2023 and 2022. |
Investments in Equity Securities | Investments in Equity Securities The Company’s equity investments consist of nonmarketable equity securities in privately held companies without readily determinable fair values. Unless accounted for under the equity method of accounting, the investments are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The Company applies the equity method of accounting to investments when it has significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “Share of losses from equity method investment” in the Company’s Consolidated Statements of Operations. The Company’s equity method investment is adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company classifies distributions received from its equity method investment using the cumulative earnings approach in the Company’s Consolidated Statements of Cash Flows. As a result of the Precision Healing merger in April 2022 (see Note 3), the Company does not have any investments which are recorded applying the equity method of accounting as of June 30, 2023. The Company has reviewed the carrying value of its investments and has determined there was no impairment or observable price changes as of and for the six months ended June 30, 2023 or 2022. |
Fair Value Measurement | Fair Value Measurement As defined in ASC Topic 820, Fair Value Measurement (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement. The three levels of the fair value hierarchy defined by ASC 820 are as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include nonexchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of the contingent earnout consideration and the acquisition date fair value of goodwill and intangibles related to the acquisitions discussed in Notes 3 and 4 are based on Level 3 inputs. Liabilities for contingent consideration are measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration transferred. Subsequent changes in fair value are reported under the line item captioned “Change in fair value of earnout liabilities” in the Company’s Consolidated Statements of Operations. The following table sets forth a summary of the changes in fair value for the Level 3 contingent earnout consideration. SCHEDULE OF CHANGES IN FAIR VALUE FOR CONTINGENT EARNOUT CONSIDERATION Additions - Balance at December 31, 2022 $ 7,166,691 Additions - Changes in fair value of earnout liabilities (813,157 ) Settlements - Balance at June 30, 2023 $ 6,353,534 |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method, whereby deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all the deferred tax asset will not be realized. |
Stock-based Compensation | Stock-based Compensation The Company accounts for stock-based compensation to employees and nonemployees in accordance with Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718). Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as expense over the stipulated vesting period, if any. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants, and the closing price of the Company’s common stock for grants of common stock, including restricted stock awards. |
Research and Development Costs | Research and Development Costs Research and development (“R&D”) expenses consist of personnel-related expenses, including salaries and benefits for all personnel directly engaged in R&D activities, contracted services, materials, prototype expenses and allocated overhead which is comprised of lease expense and other facilities-related costs. R&D expenses include costs related to enhancements to the Company’s currently available products and additional investments in the product, services and technologies development pipeline. The Company expenses R&D costs as incurred. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This update amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The Company adopted the new guidance effective January 1, 2023. The adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a material effect on the Company’s consolidated financial condition, results of operations or cash flows. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER SHARE | The following table summarizes the shares of common stock that were potentially issuable but were excluded from the computation of diluted net loss per share for the six months ended June 30, 2023 and 2022, as such shares would have had an anti-dilutive effect: SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER SHARE 2023 2022 As of June 30, 2023 2022 Stock options (a) 124,191 155,691 Warrants (b) 16,725 16,725 Unvested restricted stock 164,755 199,136 Anti-dilutive securities 164,755 199,136 (a) Shares underlying stock options assumed pursuant to the merger agreement with Precision Healing, Inc. (“Precision Healing”) in April 2022. See Note 3 for more information regarding the Precision Healing merger. (b) Shares underlying warrants assumed pursuant to the merger agreement with Precision Healing in April 2022. See Note 3 for more information regarding the Precision Healing merger. |
SCHEDULE OF REVENUE FROM PRODUCT SALES AND ROYALTIES | Revenue streams from product sales and royalties are summarized below for the three and six months ended June 30, 2023 and 2022. SCHEDULE OF REVENUE FROM PRODUCT SALES AND ROYALTIES 2023 2022 2023 2022 Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Soft tissue repair products $ 13,249,742 $ 9,569,441 $ 26,122,223 $ 17,327,648 Bone fusion products 2,453,172 51,087 5,052,358 53,853 Royalty revenue 50,250 50,250 100,500 100,500 Total Net Revenue $ 15,753,164 $ 9,670,778 $ 31,275,081 $ 17,482,001 |
SCHEDULE OF PROPERTY AND EQUIPMENT | SCHEDULE OF PROPERTY AND EQUIPMENT Useful June 30, December 31, Life 2023 2022 Computers 3 5 $ 191,611 $ 172,154 Office equipment 3 7 97,097 87,225 Furniture and fixtures 5 10 265,584 258,414 Leasehold improvements 2 5 23,131 19,631 Internal use software 5 1,618,999 1,618,998 Property and equipment, gross 2,196,422 2,156,422 Less accumulated depreciation (956,153 ) (739,986 ) Property and equipment, net $ 1,240,269 $ 1,416,436 |
SCHEDULE OF CHANGES IN FAIR VALUE FOR CONTINGENT EARNOUT CONSIDERATION | SCHEDULE OF CHANGES IN FAIR VALUE FOR CONTINGENT EARNOUT CONSIDERATION Additions - Balance at December 31, 2022 $ 7,166,691 Additions - Changes in fair value of earnout liabilities (813,157 ) Settlements - Balance at June 30, 2023 $ 6,353,534 |
PRECISION HEALING MERGER (Table
PRECISION HEALING MERGER (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Restructuring Cost and Reserve [Line Items] | |
SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED | SCHEDULE OF CHANGES IN FAIR VALUE FOR CONTINGENT EARNOUT CONSIDERATION Additions - Balance at December 31, 2022 $ 7,166,691 Additions - Changes in fair value of earnout liabilities (813,157 ) Settlements - Balance at June 30, 2023 $ 6,353,534 |
Precision Healing Inc [Member] | |
Restructuring Cost and Reserve [Line Items] | |
SCHEDULE OF PURCHASE CONSIDERATIONS | The total purchase consideration as determined by the Company was as follows: SCHEDULE OF PURCHASE CONSIDERATIONS Consideration Equity Shares Dollar Value Fair value of Sanara common shares issued 165,738 $ 5,096,444 Fair value of assumed options 144,191 4,109,750 Fair value of assumed warrants 16,725 502,895 Cash paid to nonaccredited investors 125,370 Cash paid for fractional shares 596 Carrying value of equity method investment in Precision Healing 1,803,440 Fair value of contingent earnout consideration 3,882,151 Direct transaction costs 1,061,137 Total purchase consideration $ 16,581,783 |
SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED | SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED Description Amount Cash $ 32,202 Net working capital (excluding cash) (308,049 ) Fixed assets, net 9,228 Noncontrolling interest in Sanara Biologics, LLC Customer relationships Deferred tax assets 278,661 Intellectual property 20,325,469 Assembled workforce 664,839 Deferred tax liabilities (4,420,567 ) Goodwill Net assets acquired $ 16,581,783 |
SCENDIA PURCHASE AGREEMENT (Tab
SCENDIA PURCHASE AGREEMENT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Restructuring Cost and Reserve [Line Items] | |
SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED | SCHEDULE OF CHANGES IN FAIR VALUE FOR CONTINGENT EARNOUT CONSIDERATION Additions - Balance at December 31, 2022 $ 7,166,691 Additions - Changes in fair value of earnout liabilities (813,157 ) Settlements - Balance at June 30, 2023 $ 6,353,534 |
Scendia Biologics LLC [Member] | |
Restructuring Cost and Reserve [Line Items] | |
SCHEDULE OF PURCHASE CONSIDERATIONS | The total purchase consideration, subject to typical post-closing adjustments, as determined by the Company was as follows: SCHEDULE OF PURCHASE CONSIDERATIONS Consideration Equity Shares Dollar Value Fair value of Sanara common shares issued 291,686 $ 6,032,066 Cash consideration 1,562,668 Fair value of contingent earnout consideration 3,000,000 Total purchase consideration $ 10,594,734 |
SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED | SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED Description Amount Cash $ 201,406 Net working capital (excluding cash) 1,294,499 Fixed assets, net 42,300 Noncontrolling interest in Sanara Biologics, LLC 2,638 Customer relationships 7,155,000 Deferred tax liabilities (1,702,890 ) Goodwill 3,601,781 Net assets acquired $ 10,594,734 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS | The carrying values of the Company’s intangible assets were as follows for the periods presented: SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS June 30, 2023 December 31, 2022 Accumulated Accumulated Cost Amortization Net Cost Amortization Net Amortizable Intangible Assets: Product Licenses $ 4,793,879 $ (1,149,604 ) $ 3,644,275 $ 4,793,879 $ (980,583 ) $ 3,813,296 Patents and Other IP 21,935,580 (2,105,580 ) 19,830,000 21,935,580 (1,492,057 ) 20,443,523 Customer relationships and other 7,947,332 (1,278,029 ) 6,669,303 7,947,332 (694,171 ) 7,253,161 Total $ 34,676,791 $ (4,533,213 ) $ 30,143,578 $ 34,676,791 $ (3,166,811 ) $ 31,509,980 |
SCHEDULE OF FUTURE AMORTIZATION EXPENSE | SCHEDULE OF FUTURE AMORTIZATION EXPENSE Remainder of 2023 $ 1,390,403 2024 2,780,806 2025 2,780,806 2026 2,763,550 2027 2,649,698 2028 2,616,456 Thereafter 15,161,859 Total $ 30,143,578 |
INVESTMENTS IN EQUITY SECURIT_2
INVESTMENTS IN EQUITY SECURITIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Schedule of Investments [Abstract] | |
SCHEDULE OF INVESTMENTS | The following summarizes the Company’s investments for the periods presented: SCHEDULE OF INVESTMENTS June 30, 2023 December 31, 2022 Carrying Amount Economic Interest Carrying Amount Economic Interest Equity Method Investment Precision Healing Inc. $ - - % $ - - % Cost Method Investments Direct Dermatology, Inc. 1,000,000 1,000,000 Pixalere Healthcare Inc. 2,084,278 2,084,278 Total Cost Method Investments 3,084,278 3,084,278 Total Investments $ 3,084,278 $ 3,084,278 |
SCHEDULE OF LOSS FROM EQUITY METHOD INVESTMENT | The following summarizes the loss from the equity method investment reflected in the Consolidated Statements of Operations: SCHEDULE OF LOSS FROM EQUITY METHOD INVESTMENT 2023 2022 2023 2022 Three Months ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Investment Precision Healing Inc. $ - $ - $ - $ (379,633 ) Total $ - $ - $ - $ (379,633 ) Loss from equity method investment $ - $ - $ - $ (379,633 ) |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Operating Leases | |
SCHEDULE OF OPERATING LEASE LIABILITY | Maturity of Operating Lease Liabilities SCHEDULE OF OPERATING LEASE LIABILITY June 30, 2023 Remainder of 2023 $ 178,783 2024 424,753 2025 450,551 2026 365,911 2027 297,947 2028 295,689 Thereafter 604,050 Total lease payments 2,617,684 Less imputed interest (564,732 ) Present Value of Lease Liabilities $ 2,052,952 Operating lease liabilities – current 273,539 Operating lease liabilities – long-term 1,779,413 |
SHAREHOLDERS_ EQUITY (Tables)
SHAREHOLDERS’ EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
SUMMARY OF RESTRICTED STOCK ACTIVITY | Below is a summary of restricted stock activity for the six months ended June 30, 2023: SUMMARY OF RESTRICTED STOCK ACTIVITY For the Six Months Ended June 30, 2023 Weighted Average Shares Grant Date Fair Value Nonvested at beginning of period 181,102 $ 22.89 Granted 114,284 39.28 Vested (124,483 ) 22.22 Forfeited (6,148 ) 31.71 Nonvested at June 30, 2023 164,755 $ 34.36 |
SCHEDULE OF STOCK OPTION ACTIVITY | A summary of the status of outstanding stock options at June 30, 2023 and changes during the six months then ended is presented below: SCHEDULE OF STOCK OPTION ACTIVITY For the Six Months Ended June 30, 2023 Weighted Average Weighted Average Exercise Remaining Options Price Contract Life Outstanding at beginning of period 146,191 $ 10.65 Granted or assumed - - Exercised (22,000 ) 11.47 Forfeited - - Expired - - Outstanding at June 30, 2023 124,191 $ 10.50 7.3 Exercisable at June 30, 2023 124,191 $ 10.50 7.3 |
SCHEDULE OF WARRANTS TO PURCHASE COMMON STOCK | A summary of the status of outstanding warrants to purchase common stock at June 30, 2023 and changes during the six months then ended is presented below: SCHEDULE OF WARRANTS TO PURCHASE COMMON STOCK For the Six Months Ended June 30, 2023 Weighted Average Weighted Average Exercise Remaining Warrants Price Contract Life Outstanding at beginning of period 16,725 $ 10.80 Granted or assumed - - Exercised - - Forfeited - - Expired - - Outstanding at June 30, 2023 16,725 $ 10.80 7.3 Exercisable at June 30, 2023 16,725 $ 10.80 7.3 |
SCHEDULE OF COMPUTATION OF DILU
SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER SHARE (Details) - shares | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities | 164,755 | 199,136 | |
Equity Option [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities | [1] | 124,191 | 155,691 |
Warrant [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities | [2] | 16,725 | 16,725 |
Unvested Restricted Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities | 164,755 | 199,136 | |
[1]Shares underlying stock options assumed pursuant to the merger agreement with Precision Healing, Inc. (“Precision Healing”) in April 2022. See Note 3 for more information regarding the Precision Healing merger.[2]Shares underlying warrants assumed pursuant to the merger agreement with Precision Healing in April 2022. See Note 3 for more information regarding the Precision Healing merger. |
SCHEDULE OF REVENUE FROM PRODUC
SCHEDULE OF REVENUE FROM PRODUCT SALES AND ROYALTIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Product Information [Line Items] | ||||
Total Net Revenue | $ 15,753,164 | $ 9,670,778 | $ 31,275,081 | $ 17,482,001 |
Soft Tissue Repair Products [Member] | ||||
Product Information [Line Items] | ||||
Total Net Revenue | 13,249,742 | 9,569,441 | 26,122,223 | 17,327,648 |
Bone Fusion Products [Member] | ||||
Product Information [Line Items] | ||||
Total Net Revenue | 2,453,172 | 51,087 | 5,052,358 | 53,853 |
Royalty [Member] | ||||
Product Information [Line Items] | ||||
Total Net Revenue | $ 50,250 | $ 50,250 | $ 100,500 | $ 100,500 |
SCHEDULE OF PROPERTY AND EQUIPM
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,196,422 | $ 2,156,422 |
Less accumulated depreciation | (956,153) | (739,986) |
Property and equipment, net | 1,240,269 | 1,416,436 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 191,611 | 172,154 |
Computer Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Computer Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years | |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 97,097 | 87,225 |
Office Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Office Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 7 years | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 265,584 | 258,414 |
Furniture and Fixtures [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years | |
Furniture and Fixtures [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 10 years | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 23,131 | 19,631 |
Leasehold Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 2 years | |
Leasehold Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years | |
Internal Use Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,618,999 | $ 1,618,998 |
Useful life | 5 years |
SCHEDULE OF CHANGES IN FAIR VAL
SCHEDULE OF CHANGES IN FAIR VALUE FOR CONTINGENT EARNOUT CONSIDERATION (Details) | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Accounting Policies [Abstract] | |
Balance at December 31, 2022 | $ 7,166,691 |
Additions | |
Changes in fair value of earnout liabilities | (813,157) |
Settlements | |
Balance at June 30, 2023 | $ 6,353,534 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Proceeds from royalties | $ 50,250 | ||||
Bad debt expense | $ 50,000 | $ 180,000 | 86,000 | $ 195,000 | |
Allowance for doubtful accounts | 354,189 | 354,189 | $ 269,850 | ||
Accounts receivable allowances | 3,100 | 3,100 | 4,761 | ||
Inventory obsolescence expense | 39,479 | 87,898 | 69,990 | 159,717 | |
Allowance for obsolete and slow-moving inventory | 349,405 | 349,405 | $ 523,832 | ||
Depreciation | $ 108,492 | $ 101,584 | 216,166 | $ 194,308 | |
Minimum [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Proceeds from royalties | 201,000 | ||||
BioStructures LLC [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Proceeds from royalties | $ 50,250 | ||||
Royalty percentage | 2% | ||||
BioStructures LLC [Member] | Minimum [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Proceeds from royalties | $ 201,000 |
SCHEDULE OF PURCHASE CONSIDERAT
SCHEDULE OF PURCHASE CONSIDERATIONS (Details) - USD ($) | 1 Months Ended | |
Apr. 04, 2022 | Jul. 31, 2022 | |
Precision Healing Inc [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Cash paid to non-accredited investors | $ 125,370 | |
Cash paid for fractional shares | 596 | |
Carrying value of equity method investment in Precision Healing | 1,803,440 | |
Fair value of contingent earnout consideration | 3,882,151 | |
Direct transaction costs | 1,061,137 | |
Total purchase consideration | $ 16,581,783 | |
Precision Healing Inc [Member] | Equity Option [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Equity Shares | 144,191 | |
Fair value of stok issued, value | $ 4,109,750 | |
Precision Healing Inc [Member] | Common Stock [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Equity Shares | 165,738 | |
Fair value of stok issued, value | $ 5,096,444 | |
Precision Healing Inc [Member] | Warrant [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Equity Shares | 16,725 | |
Fair value of stok issued, value | $ 502,895 | |
Scendia Purchase Agreement [Member] | Common Stock [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Equity Shares | 291,686 | |
Fair value of stok issued, value | $ 6,032,066 | |
Fair value of contingent earnout consideration | 3,000,000 | |
Total purchase consideration | 10,594,734 | |
Cash consideration | $ 1,562,668 |
SCHEDULE OF PURCHASE CONSIDER_2
SCHEDULE OF PURCHASE CONSIDERATION ON FAIR VALUE OF ASSETS ACQUIRED (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Restructuring Cost and Reserve [Line Items] | ||
Goodwill | $ 3,601,781 | $ 3,601,781 |
Precision Healing Inc [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Cash | 32,202 | |
Net working capital (excluding cash) | (308,049) | |
Fixed assets, net | 9,228 | |
Deferred tax assets | 278,661 | |
Intellectual property | 20,325,469 | |
Assembled workforce | 664,839 | |
Deferred tax liabilities | (4,420,567) | |
Net assets acquired | 16,581,783 | |
Scendia Purchase Agreement [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Cash | 201,406 | |
Net working capital (excluding cash) | 1,294,499 | |
Fixed assets, net | 42,300 | |
Noncontrolling interest in Sanara Biologics, LLC | 2,638 | |
Customer relationships | 7,155,000 | |
Deferred tax liabilities | (1,702,890) | |
Goodwill | 3,601,781 | |
Net assets acquired | $ 10,594,734 |
PRECISION HEALING MERGER (Detai
PRECISION HEALING MERGER (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | |
Apr. 04, 2022 | Apr. 30, 2022 | Jun. 30, 2023 | |
Asset Acquisition [Line Items] | |||
Number of stock options exercised | 22,000 | ||
Warrants to purchase common stock | 4,424 | ||
Warrant initial exercise price | $ 7.32 | ||
Expiration date | Apr. 22, 2031 | ||
Precision Healing Inc [Member] | |||
Asset Acquisition [Line Items] | |||
Share price | $ 30.75 | ||
Precision Healing Inc [Member] | Warrants One [Member] | |||
Asset Acquisition [Line Items] | |||
Warrants to purchase common stock | 4,424 | ||
Warrant initial exercise price | $ 7.32 | ||
Expiration date | Apr. 22, 2031 | ||
Precision Healing Inc [Member] | Warrants Two [Member] | |||
Asset Acquisition [Line Items] | |||
Warrants to purchase common stock | 12,301 | ||
Warrant initial exercise price | $ 12.05 | ||
Expiration date | Aug. 10, 2030 | ||
Precision Healing Inc [Member] | Precision Healing Plan [Member] | |||
Asset Acquisition [Line Items] | |||
Number of stock options exercised | 144,191 | ||
Weighted exercise price | $ 10.71 | ||
Accredited Investors [Member] | Precision Healing Inc [Member] | |||
Asset Acquisition [Line Items] | |||
Number of shares issued, acquisitions, value | 165,738 | ||
Precision Healing Inc [Member] | |||
Asset Acquisition [Line Items] | |||
Merger agreement cash consideration | $ 125,966 | ||
Transaction expenses | $ 600,000 | ||
Payments to contingent consideration | $ 10,000,000 | ||
Precision Healing Inc [Member] | Stockholders [Member] | |||
Asset Acquisition [Line Items] | |||
Merger agreement cash consideration | 125,966 | ||
Precision Healing Inc [Member] | Security Holders [Member] | |||
Asset Acquisition [Line Items] | |||
Payments to contingent consideration | $ 10,000,000 | ||
Common stock conversion price | $ 27.13 |
SCENDIA PURCHASE AGREEMENT (Det
SCENDIA PURCHASE AGREEMENT (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended |
Jul. 31, 2022 | Dec. 31, 2022 | |
Cash consideration | $ 10,000,000 | |
Number of shares | 486,145 | |
Scendia Acquisition [Member] | ||
Acquisition costs | $ 187,000 | |
Purchase Agreement [Member] | ||
Issuance of common stock for purchase of assets | 291,686 | |
Number of shares issued | 94,798 | |
Proceeds from offering | $ 1,950,000 | |
Purchase Agreement [Member] | Scendia Biologics LLC [Member] | ||
Merger agreement cash consideration | $ 1,600,000 | |
Scendia Biologics LLC [Member] | ||
Equity method ownership percentage | 50% | |
Membership Interest Purchase Agreement [Member] | ||
Equity method ownership percentage | 100% | |
Scendia Biologics LLC [Member] | Scendia Purchase Agreement [Member] | ||
Equity method ownership percentage | 100% |
SCHEDULE OF FINITE LIVED INTANG
SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Net | $ 30,143,578 | $ 31,509,980 |
Licensing Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 4,793,879 | 4,793,879 |
Accumulated amortization | (1,149,604) | (980,583) |
Net | 3,644,275 | 3,813,296 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 21,935,580 | 21,935,580 |
Accumulated amortization | (2,105,580) | (1,492,057) |
Net | 19,830,000 | 20,443,523 |
Customer Relationships and Other [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 7,947,332 | 7,947,332 |
Accumulated amortization | (1,278,029) | (694,171) |
Net | 6,669,303 | 7,253,161 |
Amortizable Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 34,676,791 | 34,676,791 |
Accumulated amortization | (4,533,213) | (3,166,811) |
Net | $ 30,143,578 | $ 31,509,980 |
SCHEDULE OF FUTURE AMORTIZATION
SCHEDULE OF FUTURE AMORTIZATION EXPENSE (Details) | Jun. 30, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2023 | $ 1,390,403 |
2024 | 2,780,806 |
2025 | 2,780,806 |
2026 | 2,763,550 |
2027 | 2,649,698 |
2028 | 2,616,456 |
Thereafter | 15,161,859 |
Total | $ 30,143,578 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Weighted average useful life | 14 years 3 months 18 days | |||
Amortization of intangible assets | $ 695,202 | $ 437,540 | $ 1,366,403 | $ 547,563 |
SCHEDULE OF INVESTMENTS (Detail
SCHEDULE OF INVESTMENTS (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Cost method investment | $ 3,084,278 | $ 3,084,278 |
Total Investments | 3,084,278 | 3,084,278 |
Precision Healing Inc [Member] | ||
Equity method investment | ||
Economic interest | ||
Direct Dermatology Inc. [Member] | ||
Cost method investment | $ 1,000,000 | $ 1,000,000 |
Pixalere Healthcare Inc. [Member] | ||
Cost method investment | $ 2,084,278 | $ 2,084,278 |
SCHEDULE OF LOSS FROM EQUITY ME
SCHEDULE OF LOSS FROM EQUITY METHOD INVESTMENT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Loss from equity method investment | $ (379,633) | |||
Precision Healing Inc [Member] | ||||
Loss from equity method investment | $ (379,633) |
INVESTMENTS IN EQUITY SECURIT_3
INVESTMENTS IN EQUITY SECURITIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Mar. 31, 2022 | Dec. 31, 2021 | Oct. 31, 2021 | Jun. 30, 2021 | Feb. 28, 2021 | Nov. 30, 2020 | Jul. 31, 2020 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | |
Long term investments | $ 3,084,278 | $ 3,084,278 | $ 3,084,278 | |||||||||||
Value of shares purchased | $ 1,033,761 | |||||||||||||
Investments | 3,084,278 | 3,084,278 | $ 3,084,278 | |||||||||||
Loss on equity method investment | $ 379,633 | |||||||||||||
Precision Healing Inc [Member] | ||||||||||||||
Loss on equity method investment | $ 379,633 | |||||||||||||
Series B-2 Preferred Shares [Member] | Direct Derm's [Member] | ||||||||||||||
Ownership interest | 2.90% | 8.10% | 8.10% | |||||||||||
Series A Convertible Preferred Stock [Member] | ||||||||||||||
Ownership interest | 12.60% | |||||||||||||
Series A Stock [Member] | ||||||||||||||
Ownership interest | 29% | 22.40% | ||||||||||||
Series B-2 Preferred Shares [Member] | ||||||||||||||
Long term investments | $ 500,000 | |||||||||||||
Purchase of additional shares | 7,142,857 | |||||||||||||
Series B-2 Preferred Shares [Member] | Direct Derm's [Member] | ||||||||||||||
Purchase of additional shares | 3,571,429 | 3,571,430 | ||||||||||||
Value of shares purchased | $ 250,000 | $ 250,000 | ||||||||||||
Series A Convertible Preferred Stock [Member] | Precision Healing Inc [Member] | ||||||||||||||
Purchase of additional shares | 150,000 | |||||||||||||
Value of shares purchased | $ 600,000 | |||||||||||||
Conversion of stock | 150,000 | |||||||||||||
Series A Stock [Member] | ||||||||||||||
Purchase of additional shares | 150,000 | 125,000 | 125,000 | 150,000 | ||||||||||
Value of shares purchased | $ 600,000 | $ 500,000 | ||||||||||||
Investments | $ 500,000 | $ 600,000 | ||||||||||||
Series A Stock [Member] | Precision Healing Inc [Member] | ||||||||||||||
Conversion of stock | 150,000 | |||||||||||||
Class A Preferred Shares [Member] | Pixalere Healthcare Inc. [Member] | ||||||||||||||
Purchase of additional shares | 278,587 | |||||||||||||
Investments | $ 2,084,278 | |||||||||||||
Conversion of shares | 27.30% | |||||||||||||
Class A Preferred Shares [Member] | Pixalere Healthcare Inc. [Member] | ||||||||||||||
Ownership interest | 27.30% | |||||||||||||
Ownership amount | $ 93,879 |
SCHEDULE OF OPERATING LEASE LIA
SCHEDULE OF OPERATING LEASE LIABILITY (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Operating Leases | ||
Remainder of 2023 | $ 178,783 | |
2024 | 424,753 | |
2025 | 450,551 | |
2026 | 365,911 | |
2027 | 297,947 | |
2028 | 295,689 | |
Thereafter | 604,050 | |
Total lease payments | 2,617,684 | |
Less imputed interest | (564,732) | |
Present Value of Lease Liabilities | 2,052,952 | |
Operating lease liabilities – current | 273,539 | $ 313,933 |
Operating lease liabilities – long-term | $ 1,779,413 | $ 505,291 |
OPERATING LEASES (Details Narra
OPERATING LEASES (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||
Operating lease right of use asset | $ 2,030,938 | $ 806,402 | |
Operating lease liability | 2,052,952 | ||
Operating lease expenses | 184,575 | $ 126,815 | |
Operating lease payments | $ 175,382 | $ 127,777 | |
Weighted average remaining lease term | 6 years 4 months 24 days | ||
Weighted average discount rate | 7.51% | ||
Office Space One [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Remaining lease term | 90 months | ||
Office Space Two [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Remaining lease term | 43 months | ||
Office Space Three [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Remaining lease term | 26 months |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||
Jul. 07, 2019 | Aug. 27, 2018 | Dec. 31, 2022 | Jul. 31, 2022 | Apr. 30, 2022 | May 31, 2020 | Apr. 30, 2020 | Oct. 31, 2019 | May 31, 2019 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Apr. 04, 2022 | |
Loss Contingencies [Line Items] | ||||||||||||||||
Proceeds from royalties received | $ 50,250 | |||||||||||||||
Annual royalty obligation | $ 4,020 | |||||||||||||||
Options to acquire shares | 144,191 | |||||||||||||||
Weighted exercise price | $ 10.71 | |||||||||||||||
Warrants to purchase shares | 4,424 | |||||||||||||||
Exercise price | $ 7.32 | |||||||||||||||
Expiration date | Apr. 22, 2031 | |||||||||||||||
Cash consideration | $ 10,000,000 | |||||||||||||||
Number of shares | 486,145 | |||||||||||||||
Net income | $ (38,447) | $ (12,512) | $ (76,876) | $ (39,693) | ||||||||||||
Common Stock [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Warrants to purchase shares | 12,301 | |||||||||||||||
Exercise price | $ 12.05 | |||||||||||||||
Expiration date | Aug. 10, 2030 | |||||||||||||||
Number of shares isssued | 26,143 | |||||||||||||||
Precision Healing Inc [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Cash consideration | $ 125,966 | |||||||||||||||
Payments receive | $ 10,000,000 | |||||||||||||||
Precision Healing [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Payments receive | $ 10,000,000 | |||||||||||||||
2009 [Member] | Resorbable Bone Hemostat [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty percentage | 2% | |||||||||||||||
Rochal [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Payment of cash | $ 500,000 | |||||||||||||||
Accredited Investors [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Issuance of shares | 165,738 | |||||||||||||||
Nonaccredited Investors [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Share price | $ 30.75 | |||||||||||||||
Minimum [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Proceeds from royalties received | $ 201,000 | |||||||||||||||
Minimum [Member] | 2009 [Member] | Resorbable Bone Hemostat [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Payments for royalties | 201,000 | |||||||||||||||
Precision Healing [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Payment in cash | $ 600,000 | |||||||||||||||
Share price | $ 27.13 | $ 27.13 | ||||||||||||||
Wound Care Solutions Limited [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Net income | $ 242,000 | $ 220,000 | $ 200,000 | |||||||||||||
Wound Care Solutions Limited [Member] | 2021 Through 2024 [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Net income, percentage | 10% | |||||||||||||||
Cost of Sales [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty expense | $ 548,430 | $ 443,733 | 1,069,244 | 812,966 | ||||||||||||
Annual royalty obligation | 16,080 | |||||||||||||||
Sub License Agreement [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
License agreement and royalties description | In August 2018, the Company entered an exclusive, world-wide sublicense agreement (the “Sublicense Agreement”) with CGI Cellerate RX, LLC (“CGI Cellerate RX”) to distribute CellerateRX Surgical Activated Collagen (Powder and Gel) (“CellerateRX Surgical”) and HYCOL Hydrolyzed Collagen (Powder and Gel) (“HYCOL”) products into the surgical and wound care markets. Pursuant to the Sublicense Agreement, the Company pays royalties of 3-5% of annual collected net sales of CellerateRX Surgical and HYCOL. As amended in January 2021, the term of the sublicense extends through May 2050, with automatic successive year-to-year renewal terms thereafter so long as the Company’s Net Sales (as defined in the Sublicense Agreement) each year are equal to or in excess of $1,000,000. If the Company’s Net Sales fall below $1,000,000 for any year after the initial expiration date, CGI Cellerate RX will have the right to terminate the Sublicense Agreement upon written notice. | |||||||||||||||
BIAKOS License Agreement [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty expense | 65,000 | $ 60,000 | ||||||||||||||
BIAKOS License Agreement [Member] | Rochal Industries LLC [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Increase of royalties payable | 10,000 | |||||||||||||||
BIAKOS License Agreement [Member] | Rochal Industries LLC [Member] | Minimum [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty percentage | 2% | |||||||||||||||
Payments for royalties | $ 120,000 | |||||||||||||||
BIAKOS License Agreement [Member] | Rochal Industries LLC [Member] | Maximum [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty percentage | 4% | |||||||||||||||
Payments for royalties | 150,000 | |||||||||||||||
BIAKOS Agreement [Member] | Maximum [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Payment for additional royalties | $ 1,000,000 | |||||||||||||||
ABF License Agreement [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty annual minimum percentage | 10% | |||||||||||||||
ABF License Agreement [Member] | Minimum [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty percentage | 2% | |||||||||||||||
Payments for royalties | $ 50,000 | |||||||||||||||
ABF License Agreement [Member] | Maximum [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty percentage | 4% | |||||||||||||||
Payments for royalties | $ 75,000 | |||||||||||||||
Payment for additional royalties | $ 500,000 | |||||||||||||||
Debrider License Agreement [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty annual minimum percentage | 10% | |||||||||||||||
Payment of cash | $ 1,000,000 | |||||||||||||||
Debrider License Agreement [Member] | Minimum [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty percentage | 2% | |||||||||||||||
Payments for royalties | $ 100,000 | |||||||||||||||
Debrider License Agreement [Member] | Maximum [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty percentage | 4% | |||||||||||||||
Payments for royalties | $ 150,000 | |||||||||||||||
Payment for additional royalties | $ 1,000,000 | |||||||||||||||
Royalty Agreement [Member] | 2009 [Member] | Resorbable Bone Hemostat [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Royalty annual minimum percentage | 8% | |||||||||||||||
Purchase Agreement [Member] | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Acquisition consideration transferred | $ 7,600,000 | |||||||||||||||
Cash | $ 1,600,000 | |||||||||||||||
Issuance of common stock for purchase of assets | 291,686 | |||||||||||||||
Number of shares isssued | 94,798 |
SUMMARY OF RESTRICTED STOCK ACT
SUMMARY OF RESTRICTED STOCK ACTIVITY (Details) | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Equity [Abstract] | |
Non-vested shares, beginning | shares | 181,102 |
Weighted average grant date fair value, beginning | $ / shares | $ 22.89 |
Granted | shares | 114,284 |
Weighted average grant date fair value, granted | $ / shares | $ 39.28 |
Vested | shares | (124,483) |
Weighted average grant date fair value, vested | $ / shares | $ 22.22 |
Forfeited | shares | (6,148) |
Weighted average grant date fair value, forfeited | $ / shares | $ 31.71 |
Non-vested shares, ending | shares | 164,755 |
Weighted average grant date fair value, ending | $ / shares | $ 34.36 |
SCHEDULE OF STOCK OPTION ACTIVI
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - $ / shares | 1 Months Ended | 6 Months Ended |
Apr. 30, 2022 | Jun. 30, 2023 | |
Equity [Abstract] | ||
Number of options outstanding, beginning | 146,191 | |
Weighted average exercise price outstanding, beginning | $ 10.65 | |
Granted | 144,191 | |
Exercised | (22,000) | |
Weighted average exercise price, Exercised | $ 11.47 | |
Forfeited | ||
Expired | ||
Number of options outstanding, ending | 124,191 | |
Weighted average exercise price outstanding, ending | $ 10.50 | |
Weighted average remaining contract life outstanding | 7 years 3 months 18 days | |
Number of options exercisable, ending | 124,191 | |
Weighted average exercise price exercisable, ending | $ 10.50 | |
Weighted average remaining contract life exercisable, ending | 7 years 3 months 18 days |
SCHEDULE OF WARRANTS TO PURCHAS
SCHEDULE OF WARRANTS TO PURCHASE COMMON STOCK (Details) | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Equity [Abstract] | |
Number of warrants outstanding, beginning | shares | 16,725 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 10.80 |
Number of warrants, granted | shares | |
Weighted average exercise price, granted | $ / shares | |
Number of warrants, exercised | shares | |
Weighted average exercise price, exercised | $ / shares | |
Number of warrants, forfeited | shares | |
Weighted average exercise price, forfeited | $ / shares | |
Number of warrants, expired | shares | |
Weighted average exercise price, expired | $ / shares | |
Number of warrants outstanding, ending | shares | 16,725 |
Weighted average exercise price outstanding, ending | $ / shares | $ 10.80 |
Weighted average remaining contract life outstanding | 7 years 3 months 18 days |
Number of warrants exercisable, ending | shares | 16,725 |
Weighted average exercise price, exercisable, ending | $ / shares | $ 10.80 |
Weighted average remaining contract life exercisable, ending | 7 years 3 months 18 days |
SHAREHOLDERS_ EQUITY (Details N
SHAREHOLDERS’ EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Feb. 28, 2023 | Jul. 31, 2022 | Apr. 30, 2022 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Apr. 04, 2022 | Apr. 30, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Options to acquire shares | 144,191 | |||||||||
Weighted exercise price | $ 10.71 | |||||||||
Warrants to purchase shares | 4,424 | |||||||||
Exercise price | $ 7.32 | |||||||||
Expiration date | Apr. 22, 2031 | |||||||||
Cash consideration | $ 10,000,000 | |||||||||
Number of shares | 486,145 | |||||||||
Number of shares issued, value | $ 1,033,761 | |||||||||
Stock granted and issued | 108,136 | |||||||||
Restricted stock award, gross | $ 4,293,988 | |||||||||
Share-based compensation | $ 1,127,332 | $ 703,400 | 1,724,637 | $ 1,288,335 | ||||||
Unrecognized share-based compensation expense | $ 4,844,361 | $ 4,844,361 | ||||||||
Unrecognized share-based compensation expense period for recognition | 1 year 2 months 12 days | |||||||||
Purchase Agreement [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Issuance of common stock in equity offering, shares | 94,798 | |||||||||
Payments to acquire assets | $ 7,600,000 | |||||||||
Cash | $ 1,600,000 | |||||||||
Issuance of common stock for purchase of assets | 291,686 | |||||||||
Net proceeds | $ 1,950,000 | |||||||||
Common Stock [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Issuance of common stock in equity offering, shares | 26,143 | |||||||||
Warrants to purchase shares | 12,301 | |||||||||
Exercise price | $ 12.05 | |||||||||
Expiration date | Aug. 10, 2030 | |||||||||
Number of shares issued, value | $ 26 | |||||||||
Common Stock [Member] | Sales Agreement [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Issuance of common stock in equity offering, shares | 26,143 | |||||||||
Number of shares issued, value | $ 1,066,000 | |||||||||
Net proceeds | $ 1,034,000 | |||||||||
Precision Healing [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Payment in cash | $ 600,000 | |||||||||
Share price | $ 27.13 | $ 27.13 | ||||||||
Cantor Fitzgerald and Co [Member] | Sales Agreement [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Percentage of commissions payable to sales agent | 3% | |||||||||
Cantor Fitzgerald and Co [Member] | Sales Agreement [Member] | Maximum [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Sale of stock, consideration received on transaction | $ 75,000,000 | |||||||||
Accredited Investors [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Accredited investors shares | 165,738 | |||||||||
Nonaccredited Investors [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Share price | $ 30.75 | |||||||||
Precision Healing Inc [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Cash consideration | $ 125,966 | |||||||||
Payment of contingent consideration | $ 10,000,000 | |||||||||
Restated 2014 Omnibus Long Term Incentive Plan [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Number of shares available for issuance | 1,412,196 | 1,412,196 | ||||||||
Restated 2014 Omnibus Long Term Incentive Plan [Member] | Directors Officers Employees [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Issuance of common stock in equity offering, shares | 587,804 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Valuation allowance, percentage | 100% | |||
Income tax benefit | $ 4,141,906 | $ 4,141,906 |
RELATED PARTIES (Details Narrat
RELATED PARTIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2021 | Jan. 31, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Consulting Agreement [Member] | Ms Salamone [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Professional fees | $ 177,697 | |||||
Cost of Sales [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Royalty expense | $ 548,430 | $ 443,733 | $ 1,069,244 | $ 812,966 | ||
Cellerate Rx Sub License Agreement [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Net sale | $ 1,000,000 | |||||
License agreement and royalties description | The Company pays royalties based on the annual Net Sales of licensed products (as defined in the Sublicense Agreement) consisting of 3% of all collected Net Sales each year up to $12,000,000, 4% of all collected Net Sales each year that exceed $12,000,000 up to $20,000,000, and 5% of all collected Net Sales each year that exceed $20,000,000. | |||||
Services Agreement [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Expense incurred | $ 72,986 | $ 72,986 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] $ in Thousands | Aug. 01, 2023 USD ($) shares |
Subsequent Event [Line Items] | |
Cash consideration | $ 10,000 |
SubLicense agreement description | The Company pays royalties based on the annual Net Sales (as defined in the Sublicense Agreement) of licensed products consisting of 3% of all collected Net Sales each year up to $12.0 million, 4% of all collected Net Sales each year that exceed $12.0 million up to $20.0 million, and 5% of all collected Net Sales each year that exceed $20.0 million. |
Services Agreement [Member] | |
Subsequent Event [Line Items] | |
Purchase agreement description | As consideration for the Petito Services, the Owner is entitled to receive: (i) a base salary of $12,000 per month during the term of the Petito Services Agreement, (ii) a royalty payment equal to three percent (3%) of the actual collections from net sales of certain products the Owner develops or co-develops that reach commercialization, (iii) a royalty payment equal to five percent (5%) for the first $50.0 million in aggregate collections from net sales of certain future products and a royalty payment of two and one-half percent (2.5%) on aggregate collections from net sales of certain future products on any amounts exceeding $50.0 million but up to $100.0 million, (iv) $500,000 in cash in the event that 510(k) clearance is issued for any future product accepted by the Company and (v) $1.0 million in cash in the event that a U.S. patent is issued for a certain product; provided that with respect to the incentive payments described in (iv) and (v) of the foregoing, the Owner shall not earn more than $2.5 million. |
Loan Agreement [Member] | |
Subsequent Event [Line Items] | |
Aggregate principal amount | $ 12,000 |
Loan Agreement [Member] | Promissory Note [Member] | |
Subsequent Event [Line Items] | |
Payment on advance by bank | 9,750 |
Cash Closing Consideration [Member] | |
Subsequent Event [Line Items] | |
Payments to Acquire Productive Assets | 15,250 |
Cash consideration | $ 9,750 |
Stock Issued During Period, Shares, Issued for Services | shares | 73,809 |
Stock Closing Consideration [Member] | |
Subsequent Event [Line Items] | |
Payments to Acquire Productive Assets | $ 3,000 |
Cash consideration | $ 2,500 |