Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 09, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | IMMUCELL CORP /DE/ | |
Entity Central Index Key | 811,641 | |
Amendment Flag | false | |
Trading Symbol | ICCC | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,048,390 |
Unaudited Condensed Balance She
Unaudited Condensed Balance Sheets - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 3,847,632 | $ 5,150,344 |
Short-term investments | 489,582 | 5,474,013 |
Inventory | 2,615,687 | 2,126,899 |
Accounts receivable, net | 705,018 | 992,390 |
Prepaid expenses and other current assets | 378,947 | 604,482 |
Total current assets | 8,036,866 | 14,348,128 |
PROPERTY, PLANT AND EQUIPMENT, net | 19,710,497 | 9,846,293 |
DEFERRED TAX ASSETS | 21,051 | 201,003 |
INTANGIBLE ASSETS, net | 162,384 | 171,936 |
GOODWILL | 95,557 | 95,557 |
OTHER ASSETS, net | 35,184 | 34,264 |
TOTAL ASSETS | 28,061,539 | 24,697,181 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 3,607,532 | 1,891,763 |
Current portion of bank debt | 143,129 | 133,269 |
Line of credit | 500,000 | |
Deferred revenue | 33,856 | |
Total current liabilities | 4,250,661 | 2,058,888 |
LONG-TERM LIABILITIES: | ||
Bank debt, net of current portion | 3,580,070 | 2,878,805 |
Interest rate swaps | 34,855 | 37,346 |
Total long-term liabilities | 3,614,925 | 2,916,151 |
TOTAL LIABILITIES | 7,865,586 | 4,975,039 |
CONTINGENT LIABILITIES AND COMMITMENTS (See Note 15) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock, $0.10 par value per share, 8,000,000 and 8,000,000 shares authorized, 5,044,838 and 5,044,838 shares issued and 4,848,390 and 4,847,390 shares outstanding, as of June 30, 2017 and December 31, 2016, respectively | 504,484 | 504,484 |
Additional paid-in capital | 18,630,559 | 18,526,383 |
Retained earnings | 1,512,973 | 1,147,120 |
Treasury stock, at cost, 196,448 and 197,448 shares as of June 30, 2017 and December 31, 2016, respectively | (429,756) | (431,943) |
Accumulated other comprehensive loss | (22,307) | (23,902) |
Total stockholders' equity | 20,195,953 | 19,722,142 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 28,061,539 | $ 24,697,181 |
Unaudited Condensed Balance Sh3
Unaudited Condensed Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares issued | 5,044,838 | 5,044,838 |
Common stock, shares outstanding | 4,848,390 | 4,847,390 |
Treasury stock, shares | 196,448 | 197,448 |
Unaudited Condensed Statements
Unaudited Condensed Statements of (Loss) Income - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Product sales | $ 1,749,605 | $ 2,375,662 | $ 5,293,536 | $ 5,362,021 |
Costs of goods sold | 828,253 | 1,135,801 | 2,220,251 | 2,364,601 |
Gross margin | 921,352 | 1,239,861 | 3,073,285 | 2,997,420 |
Sales and marketing expenses | 400,446 | 462,310 | 914,921 | 881,308 |
Administrative expenses | 399,206 | 375,652 | 778,838 | 712,808 |
Product development expenses | 387,007 | 380,434 | 726,623 | 682,877 |
Operating expenses | 1,186,659 | 1,218,396 | 2,420,382 | 2,276,993 |
NET OPERATING (LOSS) INCOME | (265,307) | 21,465 | 652,903 | 720,427 |
Other expenses, net | 36,396 | 31,299 | 66,638 | 54,685 |
INCOME (LOSS) BEFORE INCOME TAXES | (301,703) | (9,834) | 586,265 | 665,742 |
Income tax (benefit) expense | (83,314) | (679) | 220,412 | 222,450 |
NET (LOSS) INCOME | $ (218,389) | $ (9,155) | $ 365,853 | $ 443,292 |
Weighted average common shares outstanding: | ||||
Basic | 4,848,390 | 4,178,855 | 4,847,976 | 4,005,956 |
Diluted | 4,848,390 | 4,178,855 | 4,943,303 | 4,116,988 |
NET (LOSS) INCOME PER SHARE: | ||||
Basic | $ (0.05) | $ 0 | $ 0.08 | $ 0.11 |
Diluted | $ (0.05) | $ 0 | $ 0.07 | $ 0.11 |
Unaudited Condensed Statements5
Unaudited Condensed Statements of Comprehensive (Loss) Income - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statements of Other Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (218,389) | $ (9,155) | $ 365,853 | $ 443,292 |
Other comprehensive (loss) income: | ||||
Interest rate swaps, before taxes | (13,244) | (47,213) | 2,491 | (148,891) |
Income tax applicable to interest rate swaps | 4,768 | 16,996 | (897) | 53,601 |
Other comprehensive (loss) income, net of taxes | (8,476) | (30,217) | 1,594 | (95,290) |
Total comprehensive (loss) income | $ (226,865) | $ (39,372) | $ 367,447 | $ 348,002 |
Unaudited Condensed Statements6
Unaudited Condensed Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 365,853 | $ 443,292 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 421,138 | 368,358 |
Amortization | 9,552 | 15,442 |
Non-cash interest expense | 7,011 | 3,843 |
Deferred income taxes | 179,054 | 217,825 |
Stock-based compensation | 101,113 | 28,952 |
Gain on disposal of fixed assets | (3,663) | |
Provision for uncollectible accounts, net | (17,411) | 1,550 |
Changes in: | ||
Accounts receivable, gross | 304,783 | (230,740) |
Accrued interest income | 21,431 | (9,260) |
Inventory | (488,788) | (245,671) |
Prepaid expenses and other current assets | 225,536 | (237,135) |
Other assets | (920) | |
Accounts payable and accrued expenses | 5,633 | (190,399) |
Deferred revenue | (33,856) | |
Net cash provided by operating activities | 1,096,466 | 166,057 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property, plant and equipment | (8,616,542) | (691,278) |
Acquisition of certain business assets | (368,219) | |
Maturities of investments | 5,212,000 | 1,984,000 |
Purchases of investments | (249,000) | (4,216,000) |
Proceeds from sale of fixed assets | 45,000 | |
Net cash used for investing activities | (3,608,542) | (3,291,497) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from public offering, net | 5,313,223 | |
Proceeds from debt issuance | 840,000 | |
Proceeds from line of credit | 500,000 | |
Debt principal repayments | (73,572) | (66,828) |
Debt issuance costs | (62,314) | (46,734) |
Proceeds from exercise of stock options | 5,250 | 3,150 |
Net cash provided by financing activities | 1,209,364 | 5,202,811 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,302,712) | 2,077,371 |
BEGINNING CASH AND CASH EQUIVALENTS | 5,150,344 | 1,573,328 |
ENDING CASH AND CASH EQUIVALENTS | 3,847,632 | 3,650,699 |
CASH PAID FOR: | ||
Income taxes | 4,000 | 125,125 |
Interest expense | 76,252 | 77,415 |
NON-CASH ACTIVITIES: | ||
Change in capital expenditures included in accounts payable and accrued expenses | 1,710,136 | 328,222 |
Net change in fair value of interest rate swaps | (1,594) | 95,290 |
Fixed asset disposals, gross | $ 431,970 |
Business Operations
Business Operations | 6 Months Ended |
Jun. 30, 2017 | |
Business Operations [Abstract] | |
BUSINESS OPERATIONS | 1. BUSINESS OPERATIONS ImmuCell Corporation (the “Company”, “we”, “us”, “our”) is an animal health company whose purpose is to create scientifically-proven and practical products that improve animal health and productivity in the dairy and beef industries. The Company was originally incorporated in Maine in 1982 and reincorporated in Delaware in 1987, in conjunction with its initial public offering of common stock. We market products that provide immediate immunity to newborn dairy and beef cattle. We are developing product line extensions of our existing products and are in the late stages of developing a novel product that addresses mastitis, the most significant cause of economic loss to the dairy industry. These products help reduce the need to use traditional antibiotics in food producing animals. The Company is subject to certain risks associated with its stage of development including dependence on key individuals, competition from other larger companies, the successful sale of existing products and the development and acquisition of additional commercially viable products with appropriate regulatory approvals, where applicable. These and other risks to our Company are further detailed under Part II Item 1A |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation We have prepared the accompanying unaudited condensed financial statements reflecting all adjustments that are, in our opinion, necessary in order to ensure that the financial statements are not misleading. We follow accounting standards set by the Financial Accounting Standards Board (FASB). The FASB sets generally accepted accounting principles (GAAP) that we follow to ensure we consistently report our financial condition, results of operations, earnings per share and cash flows. References to GAAP in these footnotes are to the FASB Accounting Standards Codification (b) Cash, Cash Equivalents and Short-Term Investments We consider all highly liquid investment instruments that mature within three months of their purchase dates to be cash equivalents. Cash equivalents are principally invested in securities backed by the U.S. government. Certain cash balances in excess of Federal Deposit Insurance Corporation (FDIC) limits of $250,000 per financial institution per depositor are maintained in money market accounts at financial institutions that are secured, in part, by the Securities Investor Protection Corporation. Amounts in excess of these FDIC limits per bank that are not invested in securities backed by the U.S. government aggregated $3,595,362 and $4,650,044 as of June 30, 2017 and December 31, 2016, respectively. We account for investments in marketable securities in accordance with Codification Topic 320, Investments – Debt and Equity Securities (c) Inventory Inventory includes raw materials, work-in-process and finished goods and is recorded at the lower of cost, on the first-in, first-out method, or net realizable value (determined as the estimated selling price in the normal course of business, less reasonably predictable costs of completion, disposal and transportation). Work-in-process and finished goods inventories include materials, labor and manufacturing overhead. See Note 4. (d) Accounts Receivable Accounts receivable are carried at the original invoice amount less an estimate made for doubtful collection. Management determines the allowance for doubtful accounts on a monthly basis by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded as income when received. Accounts receivable are considered to be past due if any portion of the receivable balance is outstanding for more than 30 days. Interest is charged on past due accounts receivable. See Note 5. (e) Property, Plant and Equipment We depreciate property, plant and equipment on the straight-line method by charges to operations in amounts estimated to expense the cost of the assets from the date they are first put into service to the end of the estimated useful lives of the assets. The facility we are constructing to produce the active pharmaceutical ingredient, Nisin, will be depreciated over its useful life beginning when that facility is placed into service, which could be before the Food and Drug Administration (FDA) approval of the product is achieved. This facility is not yet placed in service. We are evaluating the estimated useful lives of the assets associated with this facility. Significant repairs to fixed assets that benefit more than a current period are capitalized and depreciated over their useful lives. See Note 7. (f) Intangible Assets and Goodwill We amortize intangible assets on the straight-line method by charges to operations in amounts estimated to expense the cost of the assets from the date they are first put into service to the end of the estimated useful lives of the assets. We have recorded intangible assets related to customer relationships, non-compete agreements, and developed technology, each with defined useful lives. We have classified as goodwill the amounts paid in excess of fair value of the net assets (including tax attributes) acquired in purchase transactions. We assess the impairment of intangible assets and goodwill that have indefinite lives at the reporting unit level on an annual basis (as of December 31 st (g) Fair Value Measurements In determining fair value measurements, we follow the provisions of Codification Topic 820, Fair Value Measurements and Disclosures Level - Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the measurement date. Level - Pricing inputs are quoted prices for similar assets or liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level - Pricing inputs are unobservable for the assets or liabilities, that is, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgement, and considers factors specific to the investment. Our held to maturity securities are comprised of investments in bank certificates of deposit. The value of these securities is disclosed in Note 3. We also hold money market mutual funds in a brokerage account, which are classified as cash equivalents and measured at fair value. The fair value of these investments is based on their closing published net asset value. We assess the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with our accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. During the six-month period ended June 30, 2017 and the year ended December 31, 2016, there were no transfers between levels. As of June 30, 2017 and December 31, 2016, our Level 1 assets measured at fair value by quoted prices in active markets consisted of bank savings accounts and money market funds. As of June 30, 2017 and December 31, 2016, our bank certificates of deposit were classified as Level 2 and were measured by significant other observable inputs. As of June 30, 2017 and December 31, 2016, our interest rate swaps were classified as Level 2 and were measured by observable market data in combination with expected cash flows for each instrument. There were no assets or liabilities measured at fair value on a nonrecurring basis as of June 30, 2017 or December 31, 2016. As of June 30, 2017 Level 1 Level 2 Level 3 Total Assets: Cash and money market accounts $ 3,847,632 - - $ 3,847,632 Bank certificates of deposit - $ 489,582 - $ 489,582 Liabilities: Interest rate swaps - $ 34,855 - $ 34,855 As of December 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash and money market accounts $ 5,150,344 - - $ 5,150,344 Bank certificates of deposit - $ 5,474,013 - $ 5,474,013 Liabilities: Interest rate swaps - $ 37,346 - $ 37,346 (h) Valuation of Long-Lived Assets We periodically evaluate our long-lived assets, consisting principally of fixed assets and amortizable intangible assets, for potential impairment. In accordance with the applicable accounting guidance for the treatment of long-lived assets, we review the carrying value of our long-lived assets or asset group that is held and used, including intangible assets subject to amortization, for impairment whenever events and circumstances indicate that the carrying value of the assets may not be recoverable. Under the held and used approach, the asset or asset group to be tested for impairment should represent the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. We evaluate our long-lived assets whenever events or circumstances suggest that the carrying amount of an asset or group of assets may not be recoverable from the estimated undiscounted future cash flows. No impairment was recognized during the six-month period ended June 30, 2017 or the year ended December 31, 2016. (i) Concentration of Risk Concentration of credit risk with respect to accounts receivable is principally limited to certain customers to whom we make substantial sales. To reduce risk, we routinely assess the financial strength of our customers and, as a consequence, believe that our accounts receivable credit risk exposure is limited. We maintain an allowance for potential credit losses, but historically we have not experienced significant credit losses related to an individual customer or groups of customers in any particular industry or geographic area. Sales to significant customers that amounted to 10% or more of total product sales are detailed in the following table: Three-Month Periods Ended June 30, Six-Month Periods Ended June 30, 2017 2016 2017 2016 Patterson Companies, Inc. 42 % 42 % 41 % 39 % AmerisourceBergen Corporation 19 % 20 % 24 % 20 % As of June 30, As of December 31, 2016 Patterson Companies, Inc. 50 % 31 % AmerisourceBergen Corporation 17 % 33 % Robert J Matthews Company 12 % * * Amount is less than 10%. We believe that supplies and raw materials for the production of our products are available from more than one vendor or farm. Our policy is to maintain more than one source of supply for the components used in our products. However, there is a risk that we could have difficulty in efficiently acquiring essential supplies. (j) Interest Rate Swap Agreements All derivatives are recognized on the balance sheet at their fair value. We entered into interest rate swap agreements in 2010 and 2015. On the dates the agreements were entered into, we designated the derivatives as hedges of the variability of cash flows to be paid related to our long-term debt. The agreements have been determined to be highly effective in hedging the variability of identified cash flows, so changes in the fair market value of the interest rate swap agreements are recorded as comprehensive income (loss), until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). We formally documented the relationship between the interest rate swap agreements and the related hedged items. We also formally assess, both at the interest rate swap agreements’ inception and on an ongoing basis, whether the agreements are highly effective in offsetting changes in cash flow of hedged items. See Note 11. (k) Revenue Recognition We sell products that provide immediate immunity to newborn dairy and beef cattle. We recognize revenue when four criteria are met. These include i) persuasive evidence that an arrangement exists, ii) delivery has occurred or services have been rendered, iii) the seller’s price is fixed and determinable and iv) collectability is reasonably assured. We recognize revenue at the time of shipment (including to distributors) for substantially all products, as title and risk of loss pass to the customer on delivery to the common carrier after concluding that collectability is reasonably assured. We do not bill for or collect sales tax because our sales are generally made to distributors and thus our sales to them are not subject to sales tax. We generally have experienced an immaterial amount of product returns. (l) Expense Recognition Advertising costs are expensed when incurred, which is generally during the month in which the advertisement is published. Advertising expenses amounted to $32,337 and $37,938 during the six-month periods ended June 30, 2017 and 2016, respectively. All product development expenses are expensed as incurred, as are all related patent costs. We capitalize costs to produce inventory during the production cycle, and these costs are charged to costs of goods sold when the inventory is sold to a customer. (m) Income Taxes We account for income taxes in accordance with Codification Topic 740, Income Taxes (n) Stock-Based Compensation We account for stock-based compensation in accordance with Codification Topic 718, Compensation-Stock Compensation (o) Net Income (Loss) Per Common Share Net income (loss) per common share has been computed in accordance with Codification Topic 260-10, Earnings Per Share. Three-Month Periods Ended Six-Month Periods Ended 2017 2016 2017 2016 Weighted average number of shares outstanding 4,848,390 4,178,855 4,847,976 4,005,956 Effect of dilutive stock options - - 95,327 111,032 Diluted number of shares outstanding 4,848,390 4,178,855 4,943,303 4,116,988 Outstanding stock options not included in the calculation because the effect would be anti-dilutive 368,000 270,000 120,000 31,500 (p) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Although we regularly assess these estimates, actual amounts could differ from those estimates. Changes in estimates are recorded during the period in which they become known. Significant estimates include our inventory valuation, valuation of goodwill and long-lived assets, accrued expenses, costs of goods sold, and useful lives of intangible assets. (q) New Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements-Going Concern”, In July 2015, the FASB issued ASU No. 2015-11, Inventory In November 2015, the FASB issued ASU No. 2015-17, Income Taxes In February 2016, the FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill And Other (Topic 350) Simplifying The Test For Goodwill Impairment In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting |
Cash, Cash Equivalents and Shor
Cash, Cash Equivalents and Short-Term Investments | 6 Months Ended |
Jun. 30, 2017 | |
Cash, Cash Equivalents and Short-Term Investments [Abstract] | |
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS | 3. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Cash, cash equivalents and short-term investments (at amortized cost plus accrued interest) consisted of the following: As of June 30, 2017 As of December 31, 2016 (Decrease) Cash and cash equivalents $ 3,847,632 $ 5,150,344 $ (1,302,712 ) Short-term investments 489,582 5,474,013 (4,984,431 ) Total $ 4,337,214 $ 10,624,357 $ (6,287,143 ) Held to maturity securities (certificates of deposit) are carried at amortized cost. The cost of securities sold is determined based on the specific identification method. Realized gains and losses, and declines in value judged to be other than temporary, are included in investment income. As of June 30, 2017 and December 31, 2016, the fair value of held to maturity securities consisted of the following: As of June 30, As of December 31, Amortized cost $ 487,000 $ 5,450,000 Accrued interest 2,582 24,013 Gross unrealized gains 49 2,073 Gross unrealized losses - (59 ) Estimated fair value $ 489,631 $ 5,476,027 |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2017 | |
Inventory [Abstract] | |
INVENTORY | 4. INVENTORY Inventory consisted of the following: As of June 30, As of December 31, Increase (Decrease) Raw materials $ 430,233 $ 318,443 $ 111,790 Work-in-process 1,380,782 968,810 411,972 Finished goods 804,672 839,646 (34,974 ) Total $ 2,615,687 $ 2,126,899 $ 488,788 |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Receivable [Abstract] | |
ACCOUNTS RECEIVABLE | 5. ACCOUNTS RECEIVABLE Accounts receivable consisted of the following: As of June 30, As of December 31, (Decrease) Increase Trade accounts receivable, gross $ 708,933 $ 1,013,716 $ (304,783 ) Allowance for bad debt and product returns (3,915 ) (21,326 ) 17,411 Trade accounts receivable, net $ 705,018 $ 992,390 $ (287,372 ) |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: As of June 30, As of December 31, Increase (Decrease) Prepaid expenses $ 240,509 $ 126,523 $ 113,986 Other receivables 93,008 144,848 (51,840 ) Security deposits (1) 45,430 333,111 (287,681 ) Total $ 378,947 $ 604,482 $ (225,535 ) (1) This balance as of December 31, 2016 included an option payment of $20,500 towards land (which we did not exercise) that was subsequently applied to the purchase of a warehouse facility during the first quarter of 2017. |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | 7. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: Estimated Useful Lives (in years) As of June 30, As of December 31, 2016 (Decrease) Increase Laboratory and manufacturing equipment 5-10 $ 5,314,436 $ 5,562,938 $ (248,502 ) Building and improvements 10-33 5,373,019 5,037,512 335,507 Office furniture and equipment 5-10 656,575 653,462 3,113 Construction in progress (1) 13,319,215 3,694,509 9,624,706 Land 526,999 347,114 179,885 Property, plant and equipment, gross 25,190,244 15,295,535 9,894,709 Accumulated depreciation (5,479,747 ) (5,449,242 ) (30,505 ) Property, plant and equipment, net $ 19,710,497 $ 9,846,293 $ 9,864,204 (1) Construction in progress consisted principally of costs incurred in connection with the building and equipping of our Nisin production plant. |
Business Acquisition
Business Acquisition | 6 Months Ended |
Jun. 30, 2017 | |
Business Acquisition [Abstract] | |
BUSINESS ACQUISITION | 8. BUSINESS ACQUISITION On January 4, 2016, we acquired certain business assets and processes from DAY 1™ Technology, LLC of Minnesota. The acquired rights and know-how are primarily related to formulating our bovine antibodies into a gel solution for an oral delivery option to newborn calves via a syringe (or tube). This product format offers customers an alternative delivery option to the bolus (the standard delivery format of the bivalent First Defense ® |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | 9. INTANGIBLE ASSETS The intangible assets described in Note 8 are being amortized to cost of goods sold over their useful lives, which are estimated to be 10 years. Intangible amortization expense was $4,776 and $6,134 during the three-month periods ended June 30, 2017 and 2016 and $9,552 and $15,442 during the six-month periods ended June 30, 2017 and 2016, respectively. The net value of these intangibles was $162,384 as of June 30, 2017. A summary of intangible amortization expense estimated for the periods subsequent to June 30, 2017 is as follows: Period Amount Six months ending December 31, 2017 $ 9,552 Year ending December 31, 2018 $ 19,104 Year ending December 31, 2019 $ 19,104 Year ending December 31, 2020 $ 19,104 Year ending December 31, 2021 $ 19,104 After December 31, 2021 $ 76,416 Total $ 162,384 Intangible assets as of June 30, 2017 consisted of the following: Gross Carrying Value Accumulated Amortization Net Book Value Developed technology $ 184,100 $ (27,615 ) $ 156,485 Customer relationships 1,300 (195 ) 1,105 Non-compete agreements 5,640 (846 ) 4,794 Total $ 191,040 $ (28,656 ) $ 162,384 Intangible assets as of December 31, 2016 consisted of the following: Gross Carrying Value Accumulated Amortization Net Book Value Developed technology $ 184,100 $ (18,410 ) $ 165,690 Customer relationships 1,300 (130 ) 1,170 Non-compete agreements 5,640 (564 ) 5,076 Total $ 191,040 $ (19,104 ) $ 171,936 |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Payable and Accrued Expenses [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following: As of June 30, As of December 31, Increase (Decrease) Accounts payable – capital $ 2,959,998 $ 1,249,862 $ 1,710,136 Accounts payable – trade 252,451 257,397 (4,946 ) Accrued payroll 166,679 200,477 (33,798 ) Accrued professional fees 79,750 82,500 (2,750 ) Accrued other 148,654 101,527 47,127 Total $ 3,607,532 $ 1,891,763 $ 1,715,769 |
Bank Debt
Bank Debt | 6 Months Ended |
Jun. 30, 2017 | |
Bank Debt [Abstract] | |
BANK DEBT | 11. BANK DEBT During the first quarter of 2016, we entered into bank debt agreements covering certain additional credit facilities with TD Bank N.A. aggregating up to approximately $4.5 million. As a result of loan amendments entered into with TD Bank N.A. on March 1, 2017, these credit facilities now aggregate up to approximately $6.5 million, subject to certain restrictions set forth in the agreements. These amendments were accounted for as modifications, and the related debt issuance costs are being amortized over the new terms. The first instrument (Instrument #4) is comprised of a construction loan of up to $2.5 million and not to exceed 80% of the cost of the equipment to be installed in our commercial-scale Nisin production facility. Effective March 1, 2017, this loan amount was increased by $1.44 million to $3.94 million. As amended, interest only will be payable at a variable rate equal to the one-month LIBOR plus a margin of 2.25% (which was equal to 3.42% as of June 30, 2017) through September 2018, at which time the loan converts to a seven-year term loan facility at the same variable interest rate with monthly principal and interest payments due based on a seven-year amortization schedule. The second instrument (Instrument #5) is comprised of a construction loan of up to $2.0 million and not to exceed 80% (75% prior to the March 1, 2017 amendment) of the appraised value of our commercial-scale Nisin production facility in Portland, Maine. Effective March 1, 2017, this loan amount was increased by $560,000 to $2.56 million. As amended, interest only will be payable at a variable rate equal to the one-month LIBOR plus a margin of 2.25% through March 2018, at which time the loan converts to a nine-year term loan facility at the same variable interest rate with monthly principal and interest payments due based on a twenty-year amortization schedule with a balloon principal payment due in March 2027. These credit facilities are secured by substantially all of our assets and are subject to certain financial covenants. As of June 30, 2017, $500,000 was outstanding under Instrument #4. We have in place two other credit facilities with TD Bank N.A. not to exceed 80% of the appraised value of our corporate headquarters and production and research facility in Portland. Proceeds from a $1.0 million mortgage note (Instrument #1) were received during the third quarter of 2010. Based on a fifteen-year amortization schedule, a balloon principal payment of $451,885 will be due during the third quarter of 2020. Proceeds from a $2.5 million mortgage note (Instrument #2) were received during the third quarter of 2015. Based on a twenty-year amortization schedule, a balloon principal payment of approximately $1.55 million will be due during the third quarter of 2025. Additionally, proceeds from a $340,000 mortgage note (Instrument #3), which is secured by the 4,114 square foot warehouse and storage facility we acquired adjacent to our Nisin production plant, were received during the first quarter of 2017. This note bears interest at a variable rate equal to the one-month LIBOR plus a margin of 2.25% (which was equal to 3.42% as of June 30, 2017) with monthly principal and interest payments due for ten years based on a twenty-year amortization table. These three notes are secured by substantially all of our assets and are subject to certain financial covenants. Principal payments (net of debt issuance costs) due under debt outstanding as of June 30, 2017 (excluding our $500,000 line of credit) are reflected in the following table by the year that payments are due: Six-month period ending 12/31/2017 Year ending 12/31/2018 Year ending 12/31/2019 Year ending 12/31/2020 Year ending 12/31/2021 After 12/31/2021 Total Instrument #1 $ 31,152 $ 64,876 $ 68,908 $ 493,696 - - $ 658,632 Instrument #2 41,622 86,097 89,997 94,005 $ 98,538 $ 1,951,228 2,361,487 Instrument #3 (1) 5,993 12,367 12,796 13,241 13,701 278,920 337,018 Instrument #4 (1) - 125,098 374,902 - - - 500,000 Instrument #5 - - - - - - - Debt Issuance Costs (8,192 ) (16,384 ) (16,384 ) (15,751 ) (14,737 ) (62,490 ) (133,938 ) Total (excluding line $ 70,575 $ 272,054 $ 530,219 $ 585,191 $ 97,502 $ 2,167,658 $ 3,723,199 (1) These notes bear interest at a variable rate equal to the one-month LIBOR plus a margin of 2.25%. Figures in this table are estimated using an interest rate of approximately 3.42%. The actual interest rate and principal payments will be different. The $500,000 line of credit with TD Bank N.A. was first entered into during the third quarter of 2010 and has been renewed approximately annually since then and is available as needed and has been extended through May 31, 2018. The line of credit, which is subject to certain financial covenants, was fully utilized as of June 30, 2017. There was no outstanding balance under this line of credit as of December 31, 2016. Interest on borrowings against the line of credit are variable at the higher of 4.25% per annum or the one-month LIBOR plus 3.5% per annum. In connection with the credit facilities entered into during the third quarters of 2010 and 2015 and the first quarters of 2016 and 2017, we incurred debt issue costs of $26,489, $34,125, $46,734 and $62,314, respectively, which costs are being recorded as a component of other expenses over the terms of the credit facilities. We hedged our interest rate exposure on Instrument #1 and Instrument #2 mortgage notes with interest rate swap agreements that effectively converted floating interest rates based on the one-month LIBOR plus a margin of 3.25% and 2.25% to the fixed rates of 6.04% and 4.38%, respectively. As of June 30, 2017, the variable rates on these two mortgage notes were 4.38% and 3.46%, respectively. All derivatives are recognized on the balance sheet at their fair value. At the time of the closings and thereafter, the agreements were determined to be highly effective in hedging the variability of the identified cash flows and have been designated as cash flow hedges of the variability in the hedged interest payments. Changes in the fair value of the interest rate swap agreements are recorded in other comprehensive income (loss), net of taxes. The original notional amounts of the interest rate swap agreements of $1,000,000 and $2,500,000 amortize in accordance with the amortization of the mortgage notes. The notional amount of the interest rate swaps was $3,020,119 as of June 30, 2017. The fair values of the interest rate swaps have been determined using observable market-based inputs or unobservable inputs that are corroborated by market data. Accordingly, the interest rate swaps are classified as level 2 within the fair value hierarchy provided in Codification Topic 820, Fair Value Measurements and Disclosures Three-Month Periods Ended June 30, 2017 2016 Payments required by interest rate swaps $ 10,044 $ 14,984 Other comprehensive income (loss), net of taxes $ (8,476 ) $ (30,217 ) Six-Month Periods Ended June 30, 2017 2016 Payments required by interest rate swaps $ 21,720 $ 30,184 Other comprehensive income (loss), net of taxes $ 1,594 $ (95,290 ) Years Ended 2016 2015 Payments required by interest rate swaps $ 58,346 $ 32,515 Other comprehensive income (loss), net of taxes taxes $ 26,354 $ (26,925 ) |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS' EQUITY | 12. STOCKHOLDERS’ EQUITY On October 28, 2015, we filed a registration statement on Form S-3 with the Securities and Exchange Commission (SEC) for the potential issuance of up to $10,000,000 in equity (subject to certain limitations). This registration statement became effective on November 10, 2015. Under this form of registration statement, we were limited to raising gross proceeds of no more than one-third of the market capitalization of our common stock (as determined by the high price within the preceding 60 days leading up to a sale of securities) held by non-affiliates (non-insiders) of the Company within a twelve-month period. This limit was approximately $5,958,000, based on the closing price of $8.08 per share as of January 6, 2016. On February 3, 2016, we sold 1,123,810 shares of common stock at a price to the public of $5.25 per share in an underwritten public offering, raising gross proceeds of approximately $5,900,000, resulting in net proceeds to the Company of approximately $5,313,000 after deducting underwriting discounts and offering expenses incurred in connection with the equity financing. On October 21, 2016, we closed on a private placement of 659,880 shares of common stock to nineteen institutional and accredited investors at $5.25 per share, raising gross proceeds of approximately $3,464,000, resulting in net proceeds to the Company of approximately $3,161,000 after deducting placement agent fees and other estimated expenses incurred in connection with the equity financing. At the June 15, 2016 Annual Meeting of Stockholders, we reported that our stockholders voted to approve an amendment to the Company’s Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 8,000,000 to 10,000,000. After careful consideration, we determined that the method of voting instructions described in our Proxy Statement was not consistent with the way the votes were actually recorded in accordance with stock exchange rules. Therefore, we have elected to treat as ineffective the previous increase in our authorized common stock. As of June 30, 2017, we have 8,000,000 authorized shares of common stock. In June 2000, our stockholders approved the 2000 Stock Option and Incentive Plan (the “2000 Plan”) pursuant to the provisions of the Internal Revenue Code of 1986, under which employees and certain service providers may be granted options to purchase shares of the Company’s common stock at i) no less than fair market value on the date of grant in the case of incentive stock options and ii) no less than 85% of fair market value on the date of grant in the case of non-qualified stock options. Vesting requirements are determined by the Compensation and Stock Option Committee of the Board of Directors on a case by case basis. Originally, 250,000 shares of common stock were reserved for issuance under the 2000 Plan. The stockholders of the Company approved an increase in this number to 500,000 shares in June 2001. All options granted under the 2000 Plan expire no later than ten years from the date of grant. The 2000 Plan expired in February 2010, after which date no further options could be granted under the 2000 Plan. However, outstanding options under the 2000 Plan may be exercised in accordance with their terms. In June 2010, our stockholders approved the 2010 Stock Option and Incentive Plan (the “2010 Plan”) pursuant to the provisions of the Internal Revenue Code of 1986, under which employees and certain service providers may be granted options to purchase shares of the Company’s common stock at i) no less than fair market value on the date of grant in the case of incentive stock options and ii) no less than 85% of fair market value on the date of grant in the case of non-qualified stock options. At that time, 300,000 shares of common stock were reserved for issuance under the 2010 Plan and subsequently no additional shares have been reserved for the 2010 Plan. Vesting requirements are determined by the Compensation and Stock Option Committee of the Board of Directors on a case by case basis. All options granted under the 2010 Plan expire no later than ten years from the date of grant. The 2010 Plan expires in June 2020, after which date no further options could be granted under the 2010 Plan. However, options outstanding under the 2010 Plan at that time could be exercised in accordance with their terms. In June 2017, our stockholders approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”) pursuant to the provisions of the Internal Revenue Code of 1986, under which employees and certain service providers may be granted options to purchase shares of the Company’s common stock at i) no less than fair market value on the date of grant in the case of incentive stock options and ii) no less than 85% of fair market value on the date of grant in the case of non-qualified stock options. At that time, 300,000 shares of common stock were reserved for issuance under the 2017 Plan. Vesting requirements are determined by the Compensation and Stock Option Committee of the Board of Directors on a case by case basis. All options granted under the 2017 Plan expire no later than ten years from the date of grant. The 2017 Plan expires in March 2027, after which date no further options could be granted under the 2017 Plan. However, options outstanding under the 2017 Plan at that time could be exercised in accordance with their terms. Activity under the stock option plans described above was as follows: 2000 Plan 2010 Plan 2017 Plan Weighted Average Exercise Aggregate Intrinsic ( 1) Outstanding at December 31, 2015 131,500 106,500 - $ 3.57 $ 945,000 Grants - 46,000 - $ 6.98 Terminations (5,000 ) (12,000 ) - $ 6.16 Exercises - (16,000 ) - $ 5.59 Outstanding at December 31, 2016 126,500 124,500 - $ 3.89 $ 517,000 Grants - 130,000 - $ 5.83 Terminations (5,000 ) (7,000 ) - $ 5.56 Exercises (1,000 ) - - $ 5.25 Outstanding at June 30, 2017 120,500 247,500 - $ 4.52 $ 1,035,000 Vested at June 30, 2017 120,500 41,500 - $ 2.64 $ 760,000 Vested and expected to vest at June 30, 2017 120,500 247,500 - $ 4.52 $ 1,035,000 Reserved for future grants - 32,500 300,000 (1) Intrinsic value is the difference between the fair market value as of the date indicated and as of the date of the option grant. During the three-month period ended March 31, 2017, one employee who is also a director exercised stock options covering 1,000 shares for cash, resulting in total proceeds of $5,250. No stock options were exercised during the three-month period ended June 30, 2017. During the year ended December 31, 2016, one employee and one director exercised stock options covering the aggregate of 16,000 shares, of which 6,000 were exercised for cash, resulting in total proceeds of $31,900, and 10,000 of these options were exercised by the surrender of 7,334 shares of common stock with a fair market value of $57,425 at the time of exercise and $75 in cash. At June 30, 2017, 368,000 shares of common stock were reserved for future issuance under all outstanding stock options described above, and an additional 32,500 shares of common stock were reserved for the potential issuance of stock option grants in the future under the 2010 Plan, and an additional 300,000 shares of common stock were reserved for potential issuance of stock option grants in the future under the 2017 Plan. The weighted average remaining life of the options outstanding under the 2000 Plan and the 2010 Plan as of June 30, 2017 was approximately five years and ten months. The weighted average remaining life of the options exercisable under these plans as of June 30, 2017 was approximately one year and eleven months. The exercise prices of the options outstanding as of June 30, 2017 ranged from $1.70 to $8.21 per share. The 130,000 stock options granted during the six-month period ended June 30, 2017 had exercise prices between $5.33 and $6.18 per share. The 46,000 stock options granted during 2016 had exercise prices between $6.27 and $8.21 per share. The aggregate intrinsic value of options exercised during 2017 and 2016 approximated $350 and $32,000, respectively. The weighted-average grant date fair values of options granted during 2017 and 2016 were $3.46 and $4.16 per share, respectively. As of June 30, 2017, total unrecognized stock-based compensation related to non-vested stock options aggregated $538,197, which will be recognized over a weighted average period of two years and eight months. The fair value of each stock option grant has been estimated on the date of grant using the Black-Scholes option pricing model, for the purpose discussed in Note 2(n), with the following weighted-average assumptions for the three-month and six-month periods ended June 30, 2017 and for the year ended December 31, 2016: Three-Month Period Ended June 30, 2017 Six-Month Period Ended June 30, 2017 Year Ended December 31, 2016 Risk-free interest rate 1.8% 1.9% 1.2% Dividend yield 0% 0% 0% Expected volatility 61% 62% 63% Expected life 6.5 years 6.5 years 6.5 years The risk-free interest rate is based on U.S. Treasury yields for a maturity approximating the expected option term, while the other assumptions are derived from averages of our historical data. Common Stock Rights Plan In September 1995, our Board of Directors adopted a Common Stock Rights Plan (the “Rights Plan”) and declared a dividend of one common share purchase right (a “Right”) for each of the then outstanding shares of the common stock of the Company. Each Right entitles the registered holder to purchase from the Company one share of common stock at an initial purchase price of $70.00 per share, subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement between the Company and American Stock Transfer & Trust Co., as Rights Agent. The Rights (as amended) become exercisable and transferable apart from the common stock upon the earlier of i) 10 days following a public announcement that a person or group (Acquiring Person) has, without the prior consent of the Continuing Directors (as such term is defined in the Rights Agreement), acquired beneficial ownership of 20% or more of the outstanding common stock or ii) 10 days following commencement of a tender offer or exchange offer the consummation of which would result in ownership by a person or group of 20% or more of the outstanding common stock (the earlier of such dates being called the Distribution Date). Upon the Distribution Date, the holder of each Right not owned by the Acquiring Person would be entitled to purchase common stock at a discount to the initial purchase price of $70.00 per share, effectively equal to one half of the market price of a share of common stock on the date the Acquiring Person becomes an Acquiring Person. If, after the Distribution Date, the Company should consolidate or merge with any other entity and the Company were not the surviving company, or, if the Company were the surviving company, all or part of the Company’s common stock were changed or exchanged into the securities of any other entity, or if more than 50% of the Company’s assets or earning power were sold, each Right would entitle its holder to purchase, at the Rights’ then-current purchase price, a number of shares of the acquiring company’s common stock having a market value at that time equal to twice the Right’s exercise price. At any time after a person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding common stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of common stock per Right (subject to adjustment). At any time prior to 14 days following the date that any person or group becomes an Acquiring Person (subject to extension by the Board of Directors), the Board of Directors of the Company may redeem the then outstanding Rights in whole, but not in part, at a price of $0.005 per Right, subject to adjustment. On June 8, 2005, our Board of Directors voted to authorize an amendment of the Rights Agreement to extend the Final Expiration Date by an additional three years, to September 19, 2008. As of June 30, 2005, we entered into an amendment to the Rights Agreement with the Rights Agent reflecting such extension. On June 6, 2008 our Board of Directors voted to authorize an amendment of the Rights Agreement to extend the Final Expiration Date by an additional three years, to September 19, 2011 and to increase the ownership threshold for determining “Acquiring Person” status from 15% to 18%. As of June 30, 2008, we entered into an amendment to the Rights Agreement with the Rights Agent reflecting such extension and threshold increase. On August 5, 2011, our Board of Directors voted to authorize amendments of the Rights Agreement to extend the Final Expiration Date by an additional three years to September 19, 2014 and to increase the ownership threshold for determining “Acquiring Person” status from 18% to 20%. As of August 9, 2011, we entered into an amendment to the Rights Agreement with the Rights Agent reflecting such extension and threshold increase. On June 10, 2014, our Board of Directors voted to authorize an amendment to the Rights Agreement to extend the final expiration date by an additional three years to September 19, 2017. As of June 16, 2014, we entered into an amendment to the Rights Agreement with the Rights Agent reflecting such extension. During the second quarter of 2015, we amended our Common Stock Rights Plan by removing a provision that prevented a new group of directors elected following the emergence of an Acquiring Person (an owner of more than 20% of our stock) from controlling the Rights Plan by maintaining exclusive authority over the Rights Plan with pre-existing directors. We did this because such provisions have come to be viewed with disfavor by Delaware courts. On June 15, 2017, our Board of Directors voted to authorize an amendment to the Rights Agreement to extend the final expiration date by an additional five years to September 19, 2022. As of August 10, 2017, we entered into an amendment to the Rights Agreement with the Rights Agent reflecting such extension. No other changes have been made to the terms of the Rights or the Rights Agreement. |
Other Expenses, Net
Other Expenses, Net | 6 Months Ended |
Jun. 30, 2017 | |
Other Expenses, Net [Abstract] | |
OTHER EXPENSES, NET | 13. OTHER EXPENSES, NET Other expenses, net, consisted of the following: Three-Month Periods Ended Six-Month Periods Ended 2017 2016 2017 2016 Interest expense $ 43,493 $ 44,935 $ 83,395 $ 81,841 Interest income (6,418 ) (13,410 ) (12,375 ) (26,745 ) Other gains (679 ) (226 ) (4,382 ) (411 ) Other expenses, net $ 36,396 $ 31,299 $ 66,638 $ 54,685 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes [Abstract] | |
INCOME TAXES | 14. INCOME TAXES Our income tax (benefit) aggregated ($83,314) and ($679) (amounting to 28% and 7% of our income before income taxes, respectively) for the three-month periods ended June 30, 2017 and 2016, respectively. Our income tax expense aggregated $220,412 and $222,450 (amounting to 38% and 33% of our income before income taxes, respectively) for the six-month periods ended June 30, 2017 and 2016, respectively. As of June 30, 2017, we had federal general business tax credit carryforwards of approximately $98,000 that expire in 2032 through 2036 (if not utilized before then) and state tax credit carryforwards of approximately $136,000 that expire in 2023 through 2036 (if not utilized before then). The $965,000 licensing payment that we made during the fourth quarter of 2004 was treated as an intangible asset and is being amortized over 15 years, for tax return purposes only. Approximately $1,112,000 of our investment in a small-scale facility to produce the Drug Substance (our Active Pharmaceutical Ingredient, Nisin) was expensed as incurred for our books. Included in this amount is approximately $820,000 that was capitalized and is being depreciated over statutory periods for tax return purposes only. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the estimated future tax effects of temporary differences between book and tax treatment of assets and liabilities and carryforwards to the extent they are realizable. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we consider future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net recorded amount, a reduction of the valuation allowance would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, a reduction to the deferred tax asset would be charged to income in the period such determination was made. Net operating loss carryforwards, credits, and other tax attributes are subject to review and possible adjustment by the Internal Revenue Service. Section 382 of the Internal Revenue Code contains provisions that could place annual limitations on the future utilization of net operating loss carryforwards and credits in the event of a change in ownership of the Company, as defined. The Company files income tax returns in the U.S. federal jurisdiction and several state jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before 2013. We currently have no tax examinations in progress. We also have not paid additional taxes, interest or penalties as a result of tax examinations nor do we have any unrecognized tax benefits for any of the periods in the accompanying financial statements. |
Contingent Liabilities and Comm
Contingent Liabilities and Commitments | 6 Months Ended |
Jun. 30, 2017 | |
Contingent Liabilities and Commitments [Abstract] | |
CONTINGENT LIABILITIES AND COMMITMENTS | 15. CONTINGENT LIABILITIES AND COMMITMENTS Our bylaws, as amended, in effect provide that the Company will indemnify its officers and directors to the maximum extent permitted by Delaware law. In addition, we make similar indemnity undertakings to each director through a separate indemnification agreement with that director. The maximum payment that we may be required to make under such provisions is theoretically unlimited and is impossible to determine. We maintain directors’ and officers’ liability insurance, which may provide reimbursement to the Company for payments made to, or on behalf of, officers and directors pursuant to the indemnification provisions. Our indemnification obligations were grandfathered under the provisions of Codification Topic 460 , Guarantees The development, manufacturing and marketing of animal health care products entails an inherent risk that liability claims will be asserted against us during the normal course of business. We are aware of no such claims against us as of the date of this filing. We feel that we have reasonable levels of liability insurance to support our operations. We enter into agreements with third parties in the ordinary course of business under which we are obligated to indemnify such third parties from and against various risks and losses. The precise terms of such indemnities vary with the nature of the agreement. In many cases, we limit the maximum amount of our indemnification obligations, but in some cases those obligations may be theoretically unlimited. We have not incurred material expenses in discharging any of these indemnification obligations, and based on our analysis of the nature of the risks involved, we believe that the fair value of the liabilities potentially arising under these agreements is minimal. Accordingly, we have recorded no liabilities for such obligations as of June 30, 2017. We are committed to purchasing certain key parts (syringes) and services (formulation, filling and packaging of Drug Product) pertaining to our mastitis product exclusively from two contractors. If we do not commercialize the product by the end of 2019, we would be liable for a $100,000 termination fee under one of such agreements. During the second quarter of 2009, we entered into an exclusive license with the Baylor College of Medicine covering the underlying rotavirus vaccine technology used to generate the specific antibodies for our product line extension ( First Defense Ò ™ During the third quarter of 2016, we initiated construction of our Nisin production facility. The estimated total cost of the Nisin facility is approximately $20,163,000. As of June 30, 2017, we had incurred approximately $13,148,000 of capital expenditures related to this project, of which $10,129,000 had been paid as of the end of the quarter. The majority of the remainder of this investment is expected to be paid during the six-month period ending September 30, 2017. As of June 30, 2017, we had committed $6,493,000 of the remaining $10,034,000 expected to be paid on this project. Approximately $3,584,000 of these capital expenditures is committed under a guaranteed maximum price contract with our construction management firm, net of payments made. This contract includes provisions that could reduce the amount of the commitment generally by the amount not expended or committed by the construction manager at the time of an unexpected and unlikely early termination. We expect to fund the remaining costs in excess of our current cash and investments with borrowings under the credit facilities described in Note 11. In addition to the commitments related to our Nisin production facility discussed above, we had committed $473,000 to the production of inventory and $177,000 to other obligations, as of June 30, 2017. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information [Abstract] | |
SEGMENT INFORMATION | 16. SEGMENT INFORMATION We principally operate in the business segment described in Note 1. Pursuant to Codification Topic 280, Segment Reporting Sales of the First Defense ® |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 17. RELATED PARTY TRANSACTIONS Dr. David S. Tomsche (Chair of our Board of Directors) is a controlling owner of Leedstone Inc. (formerly Stearns Veterinary Outlet, Inc.), a domestic distributor of ImmuCell products ( First Defense ® CMT |
Employee Benefits
Employee Benefits | 6 Months Ended |
Jun. 30, 2017 | |
Employee Benefits [Abstract] | |
EMPLOYEE BENEFITS | 18. EMPLOYEE BENEFITS We have a 401(k) savings plan (the Plan) in which all employees completing one month of service with the Company are eligible to participate. Participants may contribute up to the maximum amount allowed by the Internal Revenue Service. Since August 2012, we have matched 100% of the first 3% of each employee’s salary that is contributed to the Plan and 50% of the next 2% of each employee’s salary that is contributed to the Plan. Under this matching plan, we paid $24,314 and $20,241 into the plan during the three-month periods ended June 30, 2017 and 2016, respectively, and $43,022 and $37,567 during the six-month periods end June 30, 2017 and 2016, respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS We have evaluated subsequent events through the time of filing on August 14, 2017, the date we have issued this Quarterly Report on Form 10-Q. As of such date, except as described below, there were no material, reportable subsequent events. On July 24, 2017, we entered into an amendment of our Supply Agreement with Plas-Pak Industries, Inc. (now owned by Nordson Corporation) extending its expiration date by three years from January 1, 2021 to January 1, 2024. On July 27, 2017, we issued 200,000 shares of our common stock at a price of $5.25 per share to two related investors pursuant to our effective shelf registration statement on Form S-3 (SEC File No. 333-207635), raising gross proceeds of $1,050,000 and net proceeds of approximately $1,026,000 (after deducting estimated expenses incurred in connection with the issuance). As of August 10, 2017, we entered into an amendment to our Common Stock Rights Plan with the Rights Agent, extending its expiration date by five years to September 19, 2022. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | (a) Basis of Presentation We have prepared the accompanying unaudited condensed financial statements reflecting all adjustments that are, in our opinion, necessary in order to ensure that the financial statements are not misleading. We follow accounting standards set by the Financial Accounting Standards Board (FASB). The FASB sets generally accepted accounting principles (GAAP) that we follow to ensure we consistently report our financial condition, results of operations, earnings per share and cash flows. References to GAAP in these footnotes are to the FASB Accounting Standards Codification |
Cash, Cash Equivalents and Short-Term Investments | (b) Cash, Cash Equivalents and Short-Term Investments We consider all highly liquid investment instruments that mature within three months of their purchase dates to be cash equivalents. Cash equivalents are principally invested in securities backed by the U.S. government. Certain cash balances in excess of Federal Deposit Insurance Corporation (FDIC) limits of $250,000 per financial institution per depositor are maintained in money market accounts at financial institutions that are secured, in part, by the Securities Investor Protection Corporation. Amounts in excess of these FDIC limits per bank that are not invested in securities backed by the U.S. government aggregated $3,595,362 and $4,650,044 as of June 30, 2017 and December 31, 2016, respectively. We account for investments in marketable securities in accordance with Codification Topic 320, Investments – Debt and Equity Securities |
Inventory | (c) Inventory Inventory includes raw materials, work-in-process and finished goods and is recorded at the lower of cost, on the first-in, first-out method, or net realizable value (determined as the estimated selling price in the normal course of business, less reasonably predictable costs of completion, disposal and transportation). Work-in-process and finished goods inventories include materials, labor and manufacturing overhead. See Note 4. |
Accounts Receivable | (d) Accounts Receivable Accounts receivable are carried at the original invoice amount less an estimate made for doubtful collection. Management determines the allowance for doubtful accounts on a monthly basis by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded as income when received. Accounts receivable are considered to be past due if any portion of the receivable balance is outstanding for more than 30 days. Interest is charged on past due accounts receivable. See Note 5. |
Property, Plant and Equipment | (e) Property, Plant and Equipment We depreciate property, plant and equipment on the straight-line method by charges to operations in amounts estimated to expense the cost of the assets from the date they are first put into service to the end of the estimated useful lives of the assets. The facility we are constructing to produce the active pharmaceutical ingredient, Nisin, will be depreciated over its useful life beginning when that facility is placed into service, which could be before the Food and Drug Administration (FDA) approval of the product is achieved. This facility is not yet placed in service. We are evaluating the estimated useful lives of the assets associated with this facility. Significant repairs to fixed assets that benefit more than a current period are capitalized and depreciated over their useful lives. See Note 7. |
Intangible Assets and Goodwill | (f) Intangible Assets and Goodwill We amortize intangible assets on the straight-line method by charges to operations in amounts estimated to expense the cost of the assets from the date they are first put into service to the end of the estimated useful lives of the assets. We have recorded intangible assets related to customer relationships, non-compete agreements, and developed technology, each with defined useful lives. We have classified as goodwill the amounts paid in excess of fair value of the net assets (including tax attributes) acquired in purchase transactions. We assess the impairment of intangible assets and goodwill that have indefinite lives at the reporting unit level on an annual basis (as of December 31 st |
Fair Value Measurements | (g) Fair Value Measurements In determining fair value measurements, we follow the provisions of Codification Topic 820, Fair Value Measurements and Disclosures Level - Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the measurement date. Level - Pricing inputs are quoted prices for similar assets or liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level - Pricing inputs are unobservable for the assets or liabilities, that is, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgement, and considers factors specific to the investment. Our held to maturity securities are comprised of investments in bank certificates of deposit. The value of these securities is disclosed in Note 3. We also hold money market mutual funds in a brokerage account, which are classified as cash equivalents and measured at fair value. The fair value of these investments is based on their closing published net asset value. We assess the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with our accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. During the six-month period ended June 30, 2017 and the year ended December 31, 2016, there were no transfers between levels. As of June 30, 2017 and December 31, 2016, our Level 1 assets measured at fair value by quoted prices in active markets consisted of bank savings accounts and money market funds. As of June 30, 2017 and December 31, 2016, our bank certificates of deposit were classified as Level 2 and were measured by significant other observable inputs. As of June 30, 2017 and December 31, 2016, our interest rate swaps were classified as Level 2 and were measured by observable market data in combination with expected cash flows for each instrument. There were no assets or liabilities measured at fair value on a nonrecurring basis as of June 30, 2017 or December 31, 2016. As of June 30, 2017 Level 1 Level 2 Level 3 Total Assets: Cash and money market accounts $ 3,847,632 - - $ 3,847,632 Bank certificates of deposit - $ 489,582 - $ 489,582 Liabilities: Interest rate swaps - $ 34,855 - $ 34,855 As of December 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash and money market accounts $ 5,150,344 - - $ 5,150,344 Bank certificates of deposit - $ 5,474,013 - $ 5,474,013 Liabilities: Interest rate swaps - $ 37,346 - $ 37,346 |
Valuation of Long-Lived Assets | (h) Valuation of Long-Lived Assets We periodically evaluate our long-lived assets, consisting principally of fixed assets and amortizable intangible assets, for potential impairment. In accordance with the applicable accounting guidance for the treatment of long-lived assets, we review the carrying value of our long-lived assets or asset group that is held and used, including intangible assets subject to amortization, for impairment whenever events and circumstances indicate that the carrying value of the assets may not be recoverable. Under the held and used approach, the asset or asset group to be tested for impairment should represent the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. We evaluate our long-lived assets whenever events or circumstances suggest that the carrying amount of an asset or group of assets may not be recoverable from the estimated undiscounted future cash flows. No impairment was recognized during the six-month period ended June 30, 2017 or the year ended December 31, 2016. |
Concentration of Risk | (i) Concentration of Risk Concentration of credit risk with respect to accounts receivable is principally limited to certain customers to whom we make substantial sales. To reduce risk, we routinely assess the financial strength of our customers and, as a consequence, believe that our accounts receivable credit risk exposure is limited. We maintain an allowance for potential credit losses, but historically we have not experienced significant credit losses related to an individual customer or groups of customers in any particular industry or geographic area. Sales to significant customers that amounted to 10% or more of total product sales are detailed in the following table: Three-Month Periods Ended June 30, Six-Month Periods Ended June 30, 2017 2016 2017 2016 Patterson Companies, Inc. 42 % 42 % 41 % 39 % AmerisourceBergen Corporation 19 % 20 % 24 % 20 % As of June 30, As of December 31, 2016 Patterson Companies, Inc. 50 % 31 % AmerisourceBergen Corporation 17 % 33 % Robert J Matthews Company 12 % * * Amount is less than 10%. We believe that supplies and raw materials for the production of our products are available from more than one vendor or farm. Our policy is to maintain more than one source of supply for the components used in our products. However, there is a risk that we could have difficulty in efficiently acquiring essential supplies. |
Interest Rate Swap Agreements | (j) Interest Rate Swap Agreements All derivatives are recognized on the balance sheet at their fair value. We entered into interest rate swap agreements in 2010 and 2015. On the dates the agreements were entered into, we designated the derivatives as hedges of the variability of cash flows to be paid related to our long-term debt. The agreements have been determined to be highly effective in hedging the variability of identified cash flows, so changes in the fair market value of the interest rate swap agreements are recorded as comprehensive income (loss), until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). We formally documented the relationship between the interest rate swap agreements and the related hedged items. We also formally assess, both at the interest rate swap agreements’ inception and on an ongoing basis, whether the agreements are highly effective in offsetting changes in cash flow of hedged items. See Note 11. |
Revenue Recognition | (k) Revenue Recognition We sell products that provide immediate immunity to newborn dairy and beef cattle. We recognize revenue when four criteria are met. These include i) persuasive evidence that an arrangement exists, ii) delivery has occurred or services have been rendered, iii) the seller’s price is fixed and determinable and iv) collectability is reasonably assured. We recognize revenue at the time of shipment (including to distributors) for substantially all products, as title and risk of loss pass to the customer on delivery to the common carrier after concluding that collectability is reasonably assured. We do not bill for or collect sales tax because our sales are generally made to distributors and thus our sales to them are not subject to sales tax. We generally have experienced an immaterial amount of product returns. |
Expense Recognition | (l) Expense Recognition Advertising costs are expensed when incurred, which is generally during the month in which the advertisement is published. Advertising expenses amounted to $32,337 and $37,938 during the six-month periods ended June 30, 2017 and 2016, respectively. All product development expenses are expensed as incurred, as are all related patent costs. We capitalize costs to produce inventory during the production cycle, and these costs are charged to costs of goods sold when the inventory is sold to a customer. |
Income Taxes | (m) Income Taxes We account for income taxes in accordance with Codification Topic 740, Income Taxes |
Stock-Based Compensation | (n) Stock-Based Compensation We account for stock-based compensation in accordance with Codification Topic 718, Compensation-Stock Compensation |
Net Income (Loss) Per Common Share | (o) Net Income (Loss) Per Common Share Net income (loss) per common share has been computed in accordance with Codification Topic 260-10, Earnings Per Share. Three-Month Periods Ended Six-Month Periods Ended 2017 2016 2017 2016 Weighted average number of shares outstanding 4,848,390 4,178,855 4,847,976 4,005,956 Effect of dilutive stock options - - 95,327 111,032 Diluted number of shares outstanding 4,848,390 4,178,855 4,943,303 4,116,988 Outstanding stock options not included in the calculation because the effect would be anti-dilutive 368,000 270,000 120,000 31,500 |
Use of Estimates | (p) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Although we regularly assess these estimates, actual amounts could differ from those estimates. Changes in estimates are recorded during the period in which they become known. Significant estimates include our inventory valuation, valuation of goodwill and long-lived assets, accrued expenses, costs of goods sold, and useful lives of intangible assets. |
New Accounting Pronouncements | (q) New Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements-Going Concern”, In July 2015, the FASB issued ASU No. 2015-11, Inventory In November 2015, the FASB issued ASU No. 2015-17, Income Taxes In February 2016, the FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill And Other (Topic 350) Simplifying The Test For Goodwill Impairment In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of financial assets measured at fair value on nonrecurring basis | As of June 30, 2017 Level 1 Level 2 Level 3 Total Assets: Cash and money market accounts $ 3,847,632 - - $ 3,847,632 Bank certificates of deposit - $ 489,582 - $ 489,582 Liabilities: Interest rate swaps - $ 34,855 - $ 34,855 As of December 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash and money market accounts $ 5,150,344 - - $ 5,150,344 Bank certificates of deposit - $ 5,474,013 - $ 5,474,013 Liabilities: Interest rate swaps - $ 37,346 - $ 37,346 |
Schedule of sales to significant customers | Three-Month Periods Ended June 30, Six-Month Periods Ended June 30, 2017 2016 2017 2016 Patterson Companies, Inc. 42 % 42 % 41 % 39 % AmerisourceBergen Corporation 19 % 20 % 24 % 20 % |
Schedule of accounts receivable due from significant customers | As of June 30, As of December 31, 2016 Patterson Companies, Inc. 50 % 31 % AmerisourceBergen Corporation 17 % 33 % Robert J Matthews Company 12 % * * Amount is less than 10%. |
Schedule of weighted average and diluted number of shares outstanding | Three-Month Periods Ended Six-Month Periods Ended 2017 2016 2017 2016 Weighted average number of shares outstanding 4,848,390 4,178,855 4,847,976 4,005,956 Effect of dilutive stock options - - 95,327 111,032 Diluted number of shares outstanding 4,848,390 4,178,855 4,943,303 4,116,988 Outstanding stock options not included in the calculation because the effect would be anti-dilutive 368,000 270,000 120,000 31,500 |
Cash, Cash Equivalents and Sh28
Cash, Cash Equivalents and Short-Term Investments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Cash, Cash Equivalents and Short-Term Investments [Abstract] | |
Schedule of cash, cash equivalents and short-term investments | As of June 30, 2017 As of December 31, 2016 (Decrease) Cash and cash equivalents $ 3,847,632 $ 5,150,344 $ (1,302,712 ) Short-term investments 489,582 5,474,013 (4,984,431 ) Total $ 4,337,214 $ 10,624,357 $ (6,287,143 ) |
Schedule of held to maturity securities | As of June 30, As of December 31, Amortized cost $ 487,000 $ 5,450,000 Accrued interest 2,582 24,013 Gross unrealized gains 49 2,073 Gross unrealized losses - (59 ) Estimated fair value $ 489,631 $ 5,476,027 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory [Abstract] | |
Schedule of inventory | As of June 30, As of December 31, Increase (Decrease) Raw materials $ 430,233 $ 318,443 $ 111,790 Work-in-process 1,380,782 968,810 411,972 Finished goods 804,672 839,646 (34,974 ) Total $ 2,615,687 $ 2,126,899 $ 488,788 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Receivable [Abstract] | |
Schedule of accounts receivable | As of June 30, As of December 31, (Decrease) Increase Trade accounts receivable, gross $ 708,933 $ 1,013,716 $ (304,783 ) Allowance for bad debt and product returns (3,915 ) (21,326 ) 17,411 Trade accounts receivable, net $ 705,018 $ 992,390 $ (287,372 ) |
Prepaid Expenses and Other Cu31
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of prepaid expenses and other current assets | As of June 30, As of December 31, Increase (Decrease) Prepaid expenses $ 240,509 $ 126,523 $ 113,986 Other receivables 93,008 144,848 (51,840 ) Security deposits (1) 45,430 333,111 (287,681 ) Total $ 378,947 $ 604,482 $ (225,535 ) (1) This balance as of December 31, 2016 included an option payment of $20,500 towards land (which we did not exercise) that was subsequently applied to the purchase of a warehouse facility during the first quarter of 2017. |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | Estimated Useful Lives (in years) As of June 30, As of December 31, 2016 (Decrease) Increase Laboratory and manufacturing equipment 5-10 $ 5,314,436 $ 5,562,938 $ (248,502 ) Building and improvements 10-33 5,373,019 5,037,512 335,507 Office furniture and equipment 5-10 656,575 653,462 3,113 Construction in progress (1) 13,319,215 3,694,509 9,624,706 Land 526,999 347,114 179,885 Property, plant and equipment, gross 25,190,244 15,295,535 9,894,709 Accumulated depreciation (5,479,747 ) (5,449,242 ) (30,505 ) Property, plant and equipment, net $ 19,710,497 $ 9,846,293 $ 9,864,204 (1) Construction in progress consisted principally of costs incurred in connection with the building and equipping of our Nisin production plant. |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Intangible Assets [Abstract] | |
Summary of intangible amortization expense | Period Amount Six months ending December 31, 2017 $ 9,552 Year ending December 31, 2018 $ 19,104 Year ending December 31, 2019 $ 19,104 Year ending December 31, 2020 $ 19,104 Year ending December 31, 2021 $ 19,104 After December 31, 2021 $ 76,416 Total $ 162,384 |
Schedule of intangible assets | Intangible assets as of June 30, 2017 consisted of the following: Gross Carrying Value Accumulated Amortization Net Book Value Developed technology $ 184,100 $ (27,615 ) $ 156,485 Customer relationships 1,300 (195 ) 1,105 Non-compete agreements 5,640 (846 ) 4,794 Total $ 191,040 $ (28,656 ) $ 162,384 Intangible assets as of December 31, 2016 consisted of the following: Gross Carrying Value Accumulated Amortization Net Book Value Developed technology $ 184,100 $ (18,410 ) $ 165,690 Customer relationships 1,300 (130 ) 1,170 Non-compete agreements 5,640 (564 ) 5,076 Total $ 191,040 $ (19,104 ) $ 171,936 |
Accounts Payable and Accrued 34
Accounts Payable and Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Payable and Accrued Expenses [Abstract] | |
Schedule of accounts payable and accrued expenses | As of June 30, As of December 31, Increase (Decrease) Accounts payable – capital $ 2,959,998 $ 1,249,862 $ 1,710,136 Accounts payable – trade 252,451 257,397 (4,946 ) Accrued payroll 166,679 200,477 (33,798 ) Accrued professional fees 79,750 82,500 (2,750 ) Accrued other 148,654 101,527 47,127 Total $ 3,607,532 $ 1,891,763 $ 1,715,769 |
Bank Debt (Tables)
Bank Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Bank Debt [Abstract] | |
Schedule of principal payments due under debt outstanding | Six-month period ending 12/31/2017 Year ending 12/31/2018 Year ending 12/31/2019 Year ending 12/31/2020 Year ending 12/31/2021 After 12/31/2021 Total Instrument #1 $ 31,152 $ 64,876 $ 68,908 $ 493,696 - - $ 658,632 Instrument #2 41,622 86,097 89,997 94,005 $ 98,538 $ 1,951,228 2,361,487 Instrument #3 (1) 5,993 12,367 12,796 13,241 13,701 278,920 337,018 Instrument #4 (1) - 125,098 374,902 - - - 500,000 Instrument #5 - - - - - - - Debt Issuance Costs (8,192 ) (16,384 ) (16,384 ) (15,751 ) (14,737 ) (62,490 ) (133,938 ) Total (excluding line $ 70,575 $ 272,054 $ 530,219 $ 585,191 $ 97,502 $ 2,167,658 $ 3,723,199 |
Schedule of interest rate swaps classified as level 2 fair value | Three-Month Periods Ended June 30, 2017 2016 Payments required by interest rate swaps $ 10,044 $ 14,984 Other comprehensive income (loss), net of taxes $ (8,476 ) $ (30,217 ) Six-Month Periods Ended June 30, 2017 2016 Payments required by interest rate swaps $ 21,720 $ 30,184 Other comprehensive income (loss), net of taxes $ 1,594 $ (95,290 ) Years Ended 2016 2015 Payments required by interest rate swaps $ 58,346 $ 32,515 Other comprehensive income (loss), net of taxes taxes $ 26,354 $ (26,925 ) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Schedule of activity under the stock option plans | 2000 Plan 2010 Plan 2017 Plan Weighted Average Exercise Aggregate Intrinsic ( 1) Outstanding at December 31, 2015 131,500 106,500 - $ 3.57 $ 945,000 Grants - 46,000 - $ 6.98 Terminations (5,000 ) (12,000 ) - $ 6.16 Exercises - (16,000 ) - $ 5.59 Outstanding at December 31, 2016 126,500 124,500 - $ 3.89 $ 517,000 Grants - 130,000 - $ 5.83 Terminations (5,000 ) (7,000 ) - $ 5.56 Exercises (1,000 ) - - $ 5.25 Outstanding at June 30, 2017 120,500 247,500 - $ 4.52 $ 1,035,000 Vested at June 30, 2017 120,500 41,500 - $ 2.64 $ 760,000 Vested and expected to vest at June 30, 2017 120,500 247,500 - $ 4.52 $ 1,035,000 Reserved for future grants - 32,500 300,000 |
Schedule of fair value stock option grant using black-scholes option valuation model with the weighted-average assumptions | Three-Month Period Ended June 30, 2017 Six-Month Period Ended June 30, 2017 Year Ended December 31, 2016 Risk-free interest rate 1.8% 1.9% 1.2% Dividend yield 0% 0% 0% Expected volatility 61% 62% 63% Expected life 6.5 years 6.5 years 6.5 years |
Other Expenses, Net (Tables)
Other Expenses, Net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Other Expenses, Net [Abstract] | |
Schedule of other expenses, net | Three-Month Periods Ended Six-Month Periods Ended 2017 2016 2017 2016 Interest expense $ 43,493 $ 44,935 $ 83,395 $ 81,841 Interest income (6,418 ) (13,410 ) (12,375 ) (26,745 ) Other gains (679 ) (226 ) (4,382 ) (411 ) Other expenses, net $ 36,396 $ 31,299 $ 66,638 $ 54,685 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Interest Rate Swap [Member] | ||
Liabilities: | ||
Liabilities fair value nonrecurring basis | $ 34,855 | $ 37,346 |
Cash and money market accounts [Member] | ||
Assets: | ||
Assets fair value nonrecurring basis | 3,847,632 | 5,150,344 |
Bank certificates of deposit [Member] | ||
Assets: | ||
Assets fair value nonrecurring basis | 489,582 | 5,474,013 |
Level 1 [Member] | Interest Rate Swap [Member] | ||
Liabilities: | ||
Liabilities fair value nonrecurring basis | ||
Level 1 [Member] | Cash and money market accounts [Member] | ||
Assets: | ||
Assets fair value nonrecurring basis | 3,847,632 | 5,150,344 |
Level 1 [Member] | Bank certificates of deposit [Member] | ||
Assets: | ||
Assets fair value nonrecurring basis | ||
Level 2 [Member] | Interest Rate Swap [Member] | ||
Liabilities: | ||
Liabilities fair value nonrecurring basis | 34,855 | 37,346 |
Level 2 [Member] | Cash and money market accounts [Member] | ||
Assets: | ||
Assets fair value nonrecurring basis | ||
Level 2 [Member] | Bank certificates of deposit [Member] | ||
Assets: | ||
Assets fair value nonrecurring basis | 489,582 | 5,474,013 |
Level 3 [Member] | Interest Rate Swap [Member] | ||
Liabilities: | ||
Liabilities fair value nonrecurring basis | ||
Level 3 [Member] | Cash and money market accounts [Member] | ||
Assets: | ||
Assets fair value nonrecurring basis | ||
Level 3 [Member] | Bank certificates of deposit [Member] | ||
Assets: | ||
Assets fair value nonrecurring basis |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details 1) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Patterson Companies, Inc. [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk percentage | 42.00% | 42.00% | 41.00% | 39.00% |
AmerisourceBergen Corporation [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk percentage | 19.00% | 20.00% | 24.00% | 20.00% |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Details 2) | Jun. 30, 2017 | Dec. 31, 2016 | |
Patterson Companies, Inc. [Member] | |||
Revenue, Major Customer [Line Items] | |||
Accounts receivable due from significant customers | 50.00% | 31.00% | |
AmerisourceBergen Corporation [Member] | |||
Revenue, Major Customer [Line Items] | |||
Accounts receivable due from significant customers | 17.00% | 33.00% | |
Robert J Matthews Company [Member] | |||
Revenue, Major Customer [Line Items] | |||
Accounts receivable due from significant customers | 12.00% | [1] | |
[1] | Amount is less than 10%. |
Summary of Significant Accoun41
Summary of Significant Accounting Policies (Details 3) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net Income Per Common Share | ||||
Weighted average number of shares outstanding | 4,848,390 | 4,178,855 | 4,847,976 | 4,005,956 |
Effect of dilutive stock options | 95,327 | 111,032 | ||
Diluted number of shares outstanding | 4,848,390 | 4,178,855 | 4,943,303 | 4,116,988 |
Outstanding stock options not included in the calculation because the effect would be anti-dilutive | 368,000 | 270,000 | 120,000 | 31,500 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies (Textual) | ||||||
Federal deposit insurance corporation limits | $ 250,000 | $ 250,000 | ||||
U.S. government aggregated amount | 3,595,362 | 3,595,362 | $ 4,650,044 | |||
Advertising expense | 32,337 | $ 37,938 | ||||
Stock-based compensation | $ 54,350 | $ 20,044 | $ 101,113 | $ 28,952 | ||
Reclassification of current deferred tax liabilities | $ 19,588 | |||||
Concentration risk percentage, description | Sales to significant customers that amounted to 10% or more of total product sales. |
Cash, Cash Equivalents and Sh43
Cash, Cash Equivalents and Short-Term Investments (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of cash, cash equivalents short-term investments | ||||
Cash and cash equivalents | $ 3,847,632 | $ 3,650,699 | $ 5,150,344 | $ 1,573,328 |
Short-term investments | 489,582 | 5,474,013 | ||
Total | 4,337,214 | $ 10,624,357 | ||
(Decrease) in cash and cash equivalents | (1,302,712) | $ 2,077,371 | ||
(Decrease) in short-term investments | (4,984,431) | |||
(Decrease) in Total | $ (6,287,143) |
Cash, Cash Equivalents and Sh44
Cash, Cash Equivalents and Short-Term Investments (Details 1) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of fair value of held to maturity securities | ||
Amortized cost | $ 487,000 | $ 5,450,000 |
Accrued interest | 2,582 | 24,013 |
Gross unrealized gains | 49 | 2,073 |
Gross unrealized losses | (59) | |
Estimated fair value | $ 489,631 | $ 5,476,027 |
Inventory (Details)
Inventory (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Schedule of inventory | |||
Raw materials | $ 430,233 | $ 318,443 | |
Work-in-process | 1,380,782 | 968,810 | |
Finished goods | 804,672 | 839,646 | |
Total | 2,615,687 | $ 2,126,899 | |
(Decrease) Increase in Raw materials | 111,790 | ||
Increase (Decrease) in Work-in-process | 411,972 | ||
Increase (Decrease) in Finished goods | (34,974) | ||
Increase (Decrease) in inventory, Total | $ 488,788 | $ 245,671 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Schedule of accounts receivable | ||
Trade accounts receivable, gross | $ 708,933 | $ 1,013,716 |
Allowance for bad debt and product returns | (3,915) | (21,326) |
Trade accounts receivable, net | 705,018 | $ 992,390 |
(Decrease) Increase in Trade accounts receivable, gross | (304,783) | |
(Decrease) Increase in Allowance for bad debt and product returns | 17,411 | |
(Decrease) Increase in Trade accounts receivable, net | $ (287,372) |
Prepaid Expenses and Other Cu47
Prepaid Expenses and Other Current Assets (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | ||
Prepaid Expenses and Other Current Assets [Abstract] | ||||
Prepaid expenses | $ 240,509 | $ 126,523 | ||
Other receivables | 93,008 | 144,848 | ||
Security deposits | [1] | 45,430 | 333,111 | |
Total | 378,947 | $ 604,482 | ||
Increase (Decrease) in Prepaid expenses | 113,986 | |||
Increase (Decrease) in Other receivables | (51,840) | |||
Increase (Decrease) in Security deposits | [1] | (287,681) | ||
Prepaid expenses and other current assets | $ 225,536 | $ (237,135) | ||
[1] | This balance as of December 31, 2016 included an option payment of $20,500 towards land (which we did not exercise) that was subsequently applied to the purchase of a warehouse facility during the first quarter of 2017. |
Prepaid Expenses and Other Cu48
Prepaid Expenses and Other Current Assets (Details Textual) | Dec. 31, 2016USD ($) |
Prepaid Expenses and Other Current Assets (Textual) | |
Option to purchase additional land | $ 20,500 |
Property, Plant and Equipment49
Property, Plant and Equipment (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2016 | ||
Property, Plant and Equipment [Line Items] | |||
Laboratory and manufacturing equipment | $ 5,314,436 | $ 5,562,938 | |
Building and improvements | 5,373,019 | 5,037,512 | |
Office furniture and equipment | 656,575 | 653,462 | |
Construction in progress | [1] | 13,319,215 | 3,694,509 |
Land | 526,999 | 347,114 | |
Property, plant and equipment, gross | 25,190,244 | 15,295,535 | |
Accumulated depreciation | (5,479,747) | (5,449,242) | |
Property, plant and equipment, net | 19,710,497 | $ 9,846,293 | |
(Decrease) Increase in Accumulated depreciation | (30,505) | ||
(Decrease) Increase in Property, plant and equipment, net | 9,864,204 | ||
Laboratory and manufacturing equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
(Decrease) Increase in Property, plant and equipment, gross | $ (248,502) | ||
Laboratory and manufacturing equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, Estimated Useful Lives | 10 years | ||
Laboratory and manufacturing equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, Estimated Useful Lives | 5 years | ||
Building and improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
(Decrease) Increase in Property, plant and equipment, gross | $ 335,507 | ||
Building and improvements [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, Estimated Useful Lives | 33 years | ||
Building and improvements [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, Estimated Useful Lives | 10 years | ||
Office furniture and equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
(Decrease) Increase in Property, plant and equipment, gross | $ 3,113 | ||
Office furniture and equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, Estimated Useful Lives | 10 years | ||
Office furniture and equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, Estimated Useful Lives | 5 years | ||
Construction in progress [Member] | |||
Property, Plant and Equipment [Line Items] | |||
(Decrease) Increase in Property, plant and equipment, gross | [1] | $ 9,624,706 | |
Land [Member] | |||
Property, Plant and Equipment [Line Items] | |||
(Decrease) Increase in Property, plant and equipment, gross | $ 179,885 | ||
[1] | Construction in progress consisted principally of costs incurred in connection with the building and equipping of our Nisin production plant. |
Business Acquisition (Details)
Business Acquisition (Details) - USD ($) | Jan. 04, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Business Acquisition (Textual) | ||||
Total purchase price | $ 532,000 | |||
Amount paid on acquisition | 368,000 | |||
Technology transfer payment | $ 97,000 | |||
Aggregate royalties to be paid | 67,000 | |||
Estimated fair values of accounts payable and accrued expenses | $ 25,000 | $ 30,000 | ||
Payments for business acquisition | $ 4,892 | $ 8,200 | ||
Estimated fair values of inventory | 113,000 | |||
Estimated fair values of machinery and equipment | 132,000 | |||
Estimated fair values of intangible assets | 191,000 | |||
Estimated fair values of goodwill | $ 96,000 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Summary of intangible amortization expense | ||
Six months ending December 31, 2017 | $ 9,552 | |
Year ending December 31, 2018 | 19,104 | |
Year ending December 31, 2019 | 19,104 | |
Year ending December 31, 2020 | 19,104 | |
Year ending December 31, 2021 | 19,104 | |
After December 31, 2021 | 76,416 | |
Total | $ 162,384 | $ 171,936 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 191,040 | $ 191,040 |
Accumulated Amortization | (28,656) | (19,104) |
Net Book Value | 162,384 | 171,936 |
Developed technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 184,100 | 184,100 |
Accumulated Amortization | (27,615) | (18,410) |
Net Book Value | 156,485 | 165,690 |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 1,300 | 1,300 |
Accumulated Amortization | (195) | (130) |
Net Book Value | 1,105 | 1,170 |
Non-compete agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 5,640 | 5,640 |
Accumulated Amortization | (846) | (564) |
Net Book Value | $ 4,794 | $ 5,076 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Intangible Assets (Textual) | |||||
Intangible amortization expense | $ 4,776 | $ 6,134 | $ 9,552 | $ 15,442 | |
Intangible asset amortized, useful lives | 10 years | ||||
Net value | $ 162,384 | $ 162,384 | $ 171,936 |
Accounts Payable and Accrued 54
Accounts Payable and Accrued Expenses (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Accounts Payable and Accrued Expenses [Abstract] | ||
Accounts payable - capital | $ 2,959,998 | $ 1,249,862 |
Accounts payable - trade | 252,451 | 257,397 |
Accrued payroll | 166,679 | 200,477 |
Accrued professional fees | 79,750 | 82,500 |
Accrued other | 148,654 | 101,527 |
Total | 3,607,532 | $ 1,891,763 |
Increase (Decrease) in Accounts payable - capital | 1,710,136 | |
Increase (Decrease) in Accounts payable - trade | (4,946) | |
Increase (Decrease) in Accrued payroll | (33,798) | |
Increase (Decrease) in Accrued professional fees | (2,750) | |
Increase (Decrease) in Accrued other | 47,127 | |
Increase (Decrease) in Total | $ 1,715,769 |
Bank Debt (Details)
Bank Debt (Details) | Jun. 30, 2017USD ($) | |
Debt Instrument [Line Items] | ||
Six-month period ending 12/31/17 | $ 70,575 | |
Year ending 12/31/18 | 272,054 | |
Year ending 12/31/19 | 530,219 | |
Year ending 12/31/20 | 585,191 | |
Year ending 12/31/21 | 97,502 | |
After 12/31/21 | 2,167,658 | |
Total | 3,723,199 | |
Instrument #1 [Member] | ||
Debt Instrument [Line Items] | ||
Six-month period ending 12/31/17 | 31,152 | |
Year ending 12/31/18 | 64,876 | |
Year ending 12/31/19 | 68,908 | |
Year ending 12/31/20 | 493,696 | |
Year ending 12/31/21 | ||
After 12/31/21 | ||
Total | 658,632 | |
Instrument #2 [Member] | ||
Debt Instrument [Line Items] | ||
Six-month period ending 12/31/17 | 41,622 | |
Year ending 12/31/18 | 86,097 | |
Year ending 12/31/19 | 89,997 | |
Year ending 12/31/20 | 94,005 | |
Year ending 12/31/21 | 98,538 | |
After 12/31/21 | 1,951,228 | |
Total | 2,361,487 | |
Instrument #3 [Member] | ||
Debt Instrument [Line Items] | ||
Six-month period ending 12/31/17 | 5,993 | [1] |
Year ending 12/31/18 | 12,367 | [1] |
Year ending 12/31/19 | 12,796 | [1] |
Year ending 12/31/20 | 13,241 | [1] |
Year ending 12/31/21 | 13,701 | [1] |
After 12/31/21 | 278,920 | [1] |
Total | 337,018 | [1] |
Instrument #4 [Member] | ||
Debt Instrument [Line Items] | ||
Six-month period ending 12/31/17 | [1] | |
Year ending 12/31/18 | 125,098 | [1] |
Year ending 12/31/19 | 374,902 | [1] |
Year ending 12/31/20 | [1] | |
Year ending 12/31/21 | [1] | |
After 12/31/21 | [1] | |
Total | 500,000 | [1] |
Instrument #5 [Member] | ||
Debt Instrument [Line Items] | ||
Six-month period ending 12/31/17 | ||
Year ending 12/31/18 | ||
Year ending 12/31/19 | ||
Year ending 12/31/20 | ||
Year ending 12/31/21 | ||
After 12/31/21 | ||
Total | ||
Debt Issuance Costs [Member] | ||
Debt Instrument [Line Items] | ||
Six-month period ending 12/31/17 | (8,192) | |
Year ending 12/31/18 | (16,384) | |
Year ending 12/31/19 | (16,384) | |
Year ending 12/31/20 | (15,751) | |
Year ending 12/31/21 | (14,737) | |
After 12/31/21 | (62,490) | |
Total | $ (133,938) | |
[1] | These notes bear interest at a variable rate equal to the one-month LIBOR plus a margin of 2.25%. Figures in this table are estimated using an interest rate of approximately 3.42%. The actual interest rate and principal payments will be different. |
Bank Debt (Details 1)
Bank Debt (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Bank Debt [Abstract] | ||||||
Payments required by interest rate swaps | $ 10,044 | $ 14,984 | $ 21,720 | $ 30,184 | $ 58,346 | $ 32,515 |
Other comprehensive income (loss), net of taxes | $ (8,476) | $ (30,217) | $ 1,594 | $ (95,290) | $ 26,354 | $ (26,925) |
Bank Debt (Details Textual)
Bank Debt (Details Textual) | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2017USD ($)ft² | Mar. 31, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2010USD ($) | Jun. 30, 2017USD ($) | Mar. 01, 2017USD ($) | |
Bank Debt (Textual) | ||||||
Line of credit | $ 500,000 | |||||
LIBOR, Description | One-month LIBOR plus a margin of 2.25%. Figures in this table are estimated using an interest rate of approximately 3.42%. | |||||
Debt issuance costs | $ 62,314 | $ 46,734 | $ 34,125 | $ 26,489 | ||
TD Bank N.A. [Member] | ||||||
Bank Debt (Textual) | ||||||
Line of credit | $ 4,500,000 | $ 6,500,000 | ||||
LIBOR, Description | This note bears interest at a variable rate equal to the one-month LIBOR plus a margin of 2.25% (which was equal to 3.42% as of June 30, 2017). | |||||
TD Bank N.A. [Member] | Construction Loan One [Member] | ||||||
Bank Debt (Textual) | ||||||
Line of credit facility, Description | The first instrument (Instrument #4) is comprised of a construction loan of up to $2.5 million and not to exceed 80% of the cost of the equipment to be installed in our commercial-scale Nisin production facility. Effective March 1, 2017, this loan amount was increased by $1.44 million to $3.94 million. As amended, interest only will be payable at a variable rate equal to the one-month LIBOR plus a margin of 2.25% (which was equal to 3.42% as of June 30, 2017) through September 2018, at which time the loan converts to a seven-year term loan facility at the same variable interest rate with monthly principal and interest payments due based on a seven-year amortization schedule. | |||||
TD Bank N.A. [Member] | Construction Loan One [Member] | Maximum [Member] | ||||||
Bank Debt (Textual) | ||||||
Loan amount | 1,440,000 | |||||
TD Bank N.A. [Member] | Construction Loan One [Member] | Minimum [Member] | ||||||
Bank Debt (Textual) | ||||||
Loan amount | 3,940,000 | |||||
TD Bank N.A. [Member] | Construction Loan Two [Member] | ||||||
Bank Debt (Textual) | ||||||
Line of credit facility, Description | The second instrument (Instrument #5) is comprised of a construction loan of up to $2.0 million and not to exceed 80% (75% prior to the March 1, 2017 amendment) of the appraised value of our commercial-scale Nisin production facility in Portland, Maine. Effective March 1, 2017, this loan amount was increased by $560,000 to $2.56 million. As amended, interest only will be payable at a variable rate equal to the one-month LIBOR plus a margin of 2.25% through March 2018, at which time the loan converts to a nine-year term loan facility at the same variable interest rate with monthly principal and interest payments due based on a twenty-year amortization schedule with a balloon principal payment due in March 2027. These credit facilities are secured by substantially all of our assets and are subject to certain financial covenants. As of June 30, 2017, $500,000 was outstanding under the first debt Instrument #4. | |||||
TD Bank N.A. [Member] | Construction Loan Two [Member] | Maximum [Member] | ||||||
Bank Debt (Textual) | ||||||
Loan amount | 2,560,000 | |||||
TD Bank N.A. [Member] | Construction Loan Two [Member] | Minimum [Member] | ||||||
Bank Debt (Textual) | ||||||
Loan amount | $ 560,000 | |||||
Nisin production plant [Member] | ||||||
Bank Debt (Textual) | ||||||
Proceeds from mortgage note | $ 340,000 | |||||
LIBOR, Description | This note bears interest at a variable rate equal to the one-month LIBOR plus a margin of 2.25% (which was equal to 3.42% as of June 30, 2017) with monthly principal and interest payments due for ten years based on a twenty-year amortization table. | |||||
Warehouse and storage facility area | ft² | 4,114 | |||||
Interest Rate Swap [Member] | ||||||
Bank Debt (Textual) | ||||||
Long-term debt, percentage bearing fixed interest, percentage rate | 4.38% | 6.04% | ||||
Derivative notional amount | $ 2,500,000 | $ 1,000,000 | $ 3,020,119 | |||
LIBOR, Description | Interest rate exposure on Instrument #1 and Instrument #2 mortgage notes with interest rate swap agreements that effectively converted floating interest rates based on the one-month LIBOR plus a margin of 3.25% and 2.25% to the fixed rates of 6.04% and 4.38%, respectively. | |||||
Mortgages One [Member] | ||||||
Bank Debt (Textual) | ||||||
Proceeds from mortgage note | $ 1,000,000 | |||||
Debt instrument term | 15 years | |||||
Balloon principal payment | $ 451,885 | |||||
Mortgage loans on real estate periodic payment terms | Will be due during the third quarter of 2020. | |||||
Long-term debt, percentage bearing fixed interest, percentage rate | 4.38% | |||||
Mortgages Two [Member] | ||||||
Bank Debt (Textual) | ||||||
Proceeds from mortgage note | $ 2,500,000 | |||||
Debt instrument term | 20 years | |||||
Balloon principal payment | $ 1,550,000 | |||||
Mortgage loans on real estate periodic payment terms | Will be due during the third quarter of 2025. | |||||
Long-term debt, percentage bearing variable interest, percentage rate | 3.46% | |||||
Line of Credit [Member] | ||||||
Bank Debt (Textual) | ||||||
Extended date of line of credit | May 31, 2018 | |||||
LIBOR, Description | Interest on borrowings against the line of credit are variable at the higher of 4.25% per annum or the one-month LIBOR plus 3.5% per annum. | |||||
Line of Credit [Member] | TD Bank N.A. [Member] | ||||||
Bank Debt (Textual) | ||||||
Line of credit | $ 500,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2016 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||
Outstanding balance, Weighted Average Exercise Price | $ 3.89 | $ 3.57 | ||
Grants, Weighted Average Exercise Price | 5.83 | 6.98 | ||
Terminations, Weighted Average Exercise Price | 5.56 | 6.16 | ||
Exercises, Weighted Average Exercise Price | 5.25 | 5.59 | ||
Outstanding balance, Weighted Average Exercise Price | 4.52 | $ 3.89 | ||
Exercisable, Weighted Average Exercise Price | 2.64 | |||
Weighted average exercise price vested and expected to vest | $ 4.52 | |||
Aggregate Intrinsic Value | ||||
Outstanding balance, Aggregate Intrinsic Value | $ 517,000 | [1] | $ 945,000 | |
Outstanding balance, Aggregate Intrinsic Value | [1] | 1,035,000 | $ 517,000 | |
Exercisable, Aggregate Intrinsic Value | [1] | 760,000 | ||
Vested and expected to vest, Aggregate Intrinsic Value | [1] | $ 1,035,000 | ||
2000 Plan [Member] | Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Beginning Balance, Outstanding | 126,500 | 131,500 | ||
Grants | ||||
Terminations | (5,000) | (5,000) | ||
Exercises | (1,000) | |||
Ending balance, Outstanding | 120,500 | 126,500 | ||
Vested | 120,500 | |||
Vested and expected to vest | 120,500 | |||
Aggregate Intrinsic Value | ||||
Reserved for future grants | ||||
2010 Plan [Member] | Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Beginning Balance, Outstanding | 124,500 | 106,500 | ||
Grants | 130,000 | 46,000 | ||
Terminations | (7,000) | (12,000) | ||
Exercises | (16,000) | |||
Ending balance, Outstanding | 247,500 | 124,500 | ||
Vested | 41,500 | |||
Vested and expected to vest | 247,500 | |||
Aggregate Intrinsic Value | ||||
Reserved for future grants | 32,500 | |||
2017 Plan [Member] | Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Beginning Balance, Outstanding | ||||
Grants | ||||
Terminations | ||||
Exercises | ||||
Ending balance, Outstanding | ||||
Vested | ||||
Vested and expected to vest | ||||
Aggregate Intrinsic Value | ||||
Reserved for future grants | 300,000 | |||
[1] | Intrinsic value is the difference between the fair market value as of the date indicated and as of the date of the option grant. |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Stockholders' Equity [Abstract] | |||
Risk-free interest rate | 1.80% | 1.90% | 1.20% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 61.00% | 62.00% | 63.00% |
Expected life | 6 years 6 months | 6 years 6 months | 6 years 6 months |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) | Feb. 03, 2016USD ($)$ / sharesshares | Jan. 06, 2016USD ($)$ / shares | Sep. 30, 1995$ / shares | Oct. 21, 2016USD ($)$ / sharesshares | Oct. 28, 2015USD ($) | Jun. 30, 2010shares | Jun. 30, 2000shares | Mar. 31, 2017 | Jun. 30, 2017USD ($)Director$ / sharesshares | Jun. 30, 2016USD ($)$ / shares | Dec. 31, 2016USD ($)EmployeeDirector$ / sharesshares | Jun. 15, 2016shares | Dec. 31, 2015$ / shares | Aug. 05, 2011 | Jun. 06, 2008 | Jun. 30, 2001shares |
Stockholders' Equity (Textual) | ||||||||||||||||
Potential issuance or sale of equity | $ | $ 10,000,000 | |||||||||||||||
Gross proceeds | $ | $ 5,900,000 | $ 5,958,000 | ||||||||||||||
Net proceeds | $ | $ 5,313,000 | |||||||||||||||
Common stock shares sold | 1,123,810 | |||||||||||||||
Sale of stock, per share | $ / shares | $ 5.25 | |||||||||||||||
Closing share price | $ / shares | $ 8.08 | |||||||||||||||
Common stock, shares authorized | 8,000,000 | 8,000,000 | ||||||||||||||
Stock option and incentive plan, description | August 2012, we have matched 100% of the first 3% of each employee's salary that is contributed to the Plan and 50% of the next 2% of each employee's salary that is contributed to the Plan. | |||||||||||||||
Proceeds from exercise of stock options | $ | $ 5,250 | $ 3,150 | ||||||||||||||
Exercise prices of options outstanding | $ / shares | $ 4.52 | $ 3.89 | $ 3.57 | |||||||||||||
Employee stock, plan description | On June 15, 2017, our Board of Directors voted to authorize an amendment to the Rights Agreement to extend the final expiration date by an additional five years to September 19, 2022. | |||||||||||||||
Private Placement [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Gross proceeds | $ | $ 3,464,000 | |||||||||||||||
Net proceeds | $ | $ 3,161,000 | |||||||||||||||
Common stock shares sold | 659,880 | |||||||||||||||
Closing share price | $ / shares | $ 5.25 | |||||||||||||||
Minimum [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Common stock, shares authorized | 8,000,000 | |||||||||||||||
Maximum [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Common stock, shares authorized | 10,000,000 | |||||||||||||||
Employee [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Common stock reserved for issuance under the plan | 368,000 | |||||||||||||||
Stock Option [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Aggregate intrinsic value of options exercised | $ | $ 350 | $ 32,000 | ||||||||||||||
Weighted-average grant date fair values of options granted | $ / shares | $ 3.46 | $ 4.16 | ||||||||||||||
Weighted average remaining life of options exercisable | 2 years 8 months | |||||||||||||||
Total unrecognized stock-based compensation related to non-vested stock options | $ | $ 538,197 | |||||||||||||||
Number of director exercised stock options | Director | 1 | 1 | ||||||||||||||
Share-based payment, description | Exercised stock options covering 1,000 shares for cash, resulting in total proceeds of $5,250. | The aggregate of 16,000 shares, of which 6,000 were exercised for cash, resulting in total proceeds of $31,900, and 10,000 of these options were exercised by the surrender of 7,334 shares of common stock with a fair market value of $57,425 at the time of exercise and $75 in cash. | ||||||||||||||
Stock Option [Member] | 46,000 stock options granted [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Stock option granted during the period | 46,000 | |||||||||||||||
Stock Option [Member] | Minimum [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Sale of stock, per share | $ / shares | $ 5.33 | |||||||||||||||
Exercise prices of options outstanding | $ / shares | 1.70 | $ 1.70 | ||||||||||||||
Stock Option [Member] | Minimum [Member] | 46,000 stock options granted [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Exercise prices of options outstanding | $ / shares | 6.27 | |||||||||||||||
Stock Option [Member] | Maximum [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Sale of stock, per share | $ / shares | 6.18 | |||||||||||||||
Exercise prices of options outstanding | $ / shares | $ 8.21 | 8.21 | ||||||||||||||
Stock Option [Member] | Maximum [Member] | 46,000 stock options granted [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Exercise prices of options outstanding | $ / shares | $ 8.21 | |||||||||||||||
Stock Option [Member] | Employee [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Number of stock options exercised | 16,000 | |||||||||||||||
Proceeds from exercise of stock options | $ | $ 31,900 | |||||||||||||||
Number of employee exercised stock options | Employee | 1 | |||||||||||||||
2000 Plan [Member] | Stock Option [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Common stock reserved for issuance under the plan | ||||||||||||||||
Number of stock options exercised | (1,000) | |||||||||||||||
Stock option granted during the period | ||||||||||||||||
2000 Plan [Member] | Stock Option [Member] | Employee [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Stock option and incentive plan, description | No less than 85% of fair market value on the date of grant in the case of non-qualified stock options. | |||||||||||||||
Common stock reserved for issuance under the plan | 250,000 | 500,000 | ||||||||||||||
Stock option expiration period | 10 years | 5 years 10 months | ||||||||||||||
Weighted average remaining life of options exercisable | 1 year 11 months | |||||||||||||||
2010 Plan [Member] | Stock Option [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Common stock reserved for issuance under the plan | 32,500 | |||||||||||||||
Number of stock options exercised | (16,000) | |||||||||||||||
Stock option granted during the period | 130,000 | 46,000 | ||||||||||||||
2010 Plan [Member] | Stock Option [Member] | Employee [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Stock option and incentive plan, description | No less than 85% of fair market value on the date of grant in the case of non-qualified stock options. | |||||||||||||||
Common stock reserved for issuance under the plan | 300,000 | |||||||||||||||
Stock option expiration period | 10 years | 5 years 10 months | ||||||||||||||
Share-based payment, description | The 2010 Plan expires in June 2020, after which date no further options could be granted under the 2010 Plan. | |||||||||||||||
Common Stock Rights Plan [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Share-based payment, description | At any time after a person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding common stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of common stock per Right (subject to adjustment). | |||||||||||||||
Common stock purchase price | $ / shares | $ 70 | |||||||||||||||
Employee stock, plan description | The Rights (as amended) become exercisable and transferable apart from the common stock upon the earlier of i) 10 days following a public announcement that a person or group (Acquiring Person) has, without the prior consent of the Continuing Directors (as such term is defined in the Rights Agreement), acquired beneficial ownership of 20% or more of the outstanding common stock or ii) 10 days following commencement of a tender offer or exchange offer the consummation of which would result in ownership by a person or group of 20% or more of the outstanding common stock (the earlier of such dates being called the Distribution Date). | During the second quarter of 2015, we amended our Common Stock Rights Plan by removing a provision that prevented a new group of directors elected following the emergence of an Acquiring Person (an owner of more than 20% of our stock) from controlling the Rights Plan by maintaining exclusive authority over the Rights Plan with pre-existing directors. | ||||||||||||||
Sale of common stock, description | The Company should consolidate or merge with any other entity and the Company were not the surviving company, or, if the Company were the surviving company, all or part of the Company's common stock were changed or exchanged into the securities of any other entity, or if more than 50% of the Company's assets or earning power were sold. | |||||||||||||||
Outstanding rights price per share | $ / shares | $ 0.005 | |||||||||||||||
Common Stock Rights Plan [Member] | Minimum [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Ownership percentage | 18.00% | 15.00% | ||||||||||||||
Common Stock Rights Plan [Member] | Maximum [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Ownership percentage | 20.00% | 18.00% | ||||||||||||||
2017 Plan [Member] | Stock Option [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Common stock reserved for issuance under the plan | 300,000 | |||||||||||||||
Number of stock options exercised | ||||||||||||||||
Stock option granted during the period | ||||||||||||||||
2017 Plan [Member] | Stock Option [Member] | Employee [Member] | ||||||||||||||||
Stockholders' Equity (Textual) | ||||||||||||||||
Stock option and incentive plan, description | No less than 85% of fair market value on the date of grant in the case of non-qualified stock options. | |||||||||||||||
Common stock reserved for issuance under the plan | 300,000 | |||||||||||||||
Stock option expiration period | 10 years |
Other Expenses, Net (Details)
Other Expenses, Net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Other Expenses, Net [Abstract] | ||||
Interest expense | $ 43,493 | $ 44,935 | $ 83,395 | $ 81,841 |
Interest income | (6,418) | (13,410) | (12,375) | (26,745) |
Other gains | (679) | (226) | (4,382) | (411) |
Other expenses, net | $ 36,396 | $ 31,299 | $ 66,638 | $ 54,685 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Taxes (Textual) | ||||
Income tax (benefit) expense | $ (83,314) | $ (679) | $ 220,412 | $ 222,450 |
Federal general business tax credit carryforwards | $ 98,000 | $ 98,000 | ||
Income before income taxes percentage | 28.00% | 7.00% | 38.00% | 33.00% |
Tax credit carryforward, description | We had federal general business tax credit carryforwards of approximately $98,000 that expire in 2032 through 2036 (if not utilized before then) and state tax credit carryforwards of approximately $136,000 that expire in 2023 through 2036 (if not utilized before then). | |||
Intangible asset | $ 965,000 | $ 965,000 | ||
Investment | 820,000 | 820,000 | ||
State tax credit carryforwards | 136,000 | $ 136,000 | ||
Amortization period | 15 years | |||
Investment Income [Member] | ||||
Income Taxes (Textual) | ||||
Investment | $ 1,112,000 | $ 1,112,000 |
Contingent Liabilities and Co63
Contingent Liabilities and Commitments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Sep. 30, 2016 | Jun. 30, 2009 | Jun. 30, 2017 | |
Contingent Liabilities and Commitments (Textual) | |||
Termination fee | $ 100,000 | ||
Capital expenditure | 13,148,000 | ||
Payment of capital expenditure | 10,129,000 | ||
Production of inventory | 473,000 | ||
Other obligations | 177,000 | ||
Construction costs | $ 20,163,000 | 6,493,000 | |
Milestone payment | $ 150,000 | ||
Capital expenditures committed | 3,584,000 | ||
Construction cost payable | $ 10,034,000 | ||
Royalty, percentage | 4.00% |
Segment Information (Details)
Segment Information (Details) - Sales Revenue, Net [Member] | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment Information (Textual) | ||||
Concentration risk percentage | 95.00% | 93.00% | 93.00% | 92.00% |
U.S. dairy and beef industries [Member] | ||||
Segment Information (Textual) | ||||
Concentration risk percentage | 91.00% | 80.00% | 82.00% | 85.00% |
Foreign dairy and beef industries [Member] | ||||
Segment Information (Textual) | ||||
Concentration risk percentage | 9.00% | 17.00% | 15.00% | 13.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Related Party Transactions (Textual) | |||
Revenues from transactions with related party | $ 335,351 | $ 331,946 | |
Related party transaction, expenses from transactions with related party | 2,193 | $ 1,950 | |
Accounts receivable, related parties | $ 444 | $ 3,221 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Employee Benefits (Textual) | ||||
Employee savings plan, description | All employees completing one month of service with the Company are eligible to participate. | |||
Defined benefit plans general information | August 2012, we have matched 100% of the first 3% of each employee's salary that is contributed to the Plan and 50% of the next 2% of each employee's salary that is contributed to the Plan. | |||
Defined benefit plan benefits paid | $ 24,314 | $ 20,241 | $ 43,022 | $ 37,567 |
Subsequent Events (Details)
Subsequent Events (Details) | Aug. 10, 2017 | Jul. 27, 2017USD ($)Investors$ / sharesshares | Jul. 24, 2017 | Oct. 28, 2015USD ($) |
Subsequent Events (Textual) | ||||
Net proceeds of common stock | $ 10,000,000 | |||
Subsequent Events [Member] | Investors [Member] | ||||
Subsequent Events (Textual) | ||||
Common stock shares issued | shares | 200,000 | |||
Common stock price per share | $ / shares | $ 5.25 | |||
Number of investors | Investors | 2 | |||
Gross proceeds of common stock | $ 1,050,000 | |||
Net proceeds of common stock | $ 1,026,000 | |||
Subsequent Events [Member] | Plas-Pak Industries, Inc. [Member] | ||||
Subsequent Events (Textual) | ||||
Amendment of expiration date description | Extending its expiration date by three years from January 1, 2021 to January 1, 2024. | |||
Subsequent Events [Member] | Rights Agent [Member] | ||||
Subsequent Events (Textual) | ||||
Amendment of expiration date description | Extending its expiration date by five years to September 19, 2022. |