Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 10, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-21617 | |
Entity Registrant Name | ProPhase Labs, Inc. | |
Entity Central Index Key | 0000868278 | |
Entity Tax Identification Number | 23-2577138 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 711 Stewart Ave | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Garden City | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 11530 | |
City Area Code | (215) | |
Local Phone Number | 345-0919 | |
Title of 12(b) Security | Common Stock, par value $0.0005 | |
Trading Symbol | PRPH | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 16,277,764 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 22,799 | $ 8,408 |
Restricted cash | 250 | |
Marketable debt securities, available for sale | 3,678 | 8,779 |
Marketable equity securities, at fair value | 76 | |
Accounts receivable, net | 37,832 | 37,708 |
Inventory, net | 4,912 | 4,600 |
Prepaid expenses and other current assets | 1,105 | 1,496 |
Total current assets | 70,326 | 61,317 |
Property, plant and equipment, net | 6,063 | 5,947 |
Prepaid expenses, net of current portion | 121 | 460 |
Operating lease right-of-use asset, net | 4,148 | 4,402 |
Intangible assets, net | 8,889 | 10,852 |
Goodwill | 5,709 | 5,709 |
Deferred tax asset | 1,339 | |
Other assets | 1,282 | 608 |
TOTAL ASSETS | 97,877 | 89,295 |
Current liabilities | ||
Accounts payable | 1,545 | 7,026 |
Accrued diagnostic services | 274 | 1,890 |
Accrued advertising and other allowances | 79 | 104 |
Operating lease liabilities | 301 | 663 |
Deferred revenue | 2,958 | 2,034 |
Income tax payable | 8,341 | 1,312 |
Other current liabilities | 3,195 | 2,495 |
Total current liabilities | 16,693 | 15,524 |
Non-current liabilities: | ||
Deferred revenue, net of current portion | 927 | 905 |
Note payable | 44 | |
Unsecured convertible promissory notes, net | 7,999 | 9,996 |
Operating lease liabilities, net of current portion | 4,337 | 4,198 |
Total non-current liabilities | 13,263 | 15,143 |
Total liabilities | 29,956 | 30,667 |
COMMITMENTS AND CONTINGENCIES | ||
Stockholders’ equity | ||
Preferred stock authorized 1,000,000, $0.0005 par value, no shares issued and outstanding | ||
Common stock authorized 50,000,000, $0.0005 par value, 16,026,164 and 15,485,900 shares outstanding, respectively | 17 | 16 |
Additional paid-in capital | 108,131 | 104,552 |
Retained earnings | 14,198 | 2,642 |
Treasury stock, at cost, 17,711,582 and 16,818,846 shares, respectively | (54,138) | (48,407) |
Accumulated other comprehensive loss | (287) | (175) |
Total stockholders’ equity | 67,921 | 58,628 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 97,877 | $ 89,295 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, par value | $ 0.0005 | $ 0.0005 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, par value | $ 0.0005 | $ 0.0005 |
Common stock, shares outstanding | 16,026,164 | 15,485,900 |
Treasury stock, shares | 17,711,582 | 16,818,846 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenues, net | $ 24,200,000 | $ 9,472,000 | $ 100,824,000 | $ 33,885,000 |
Cost of revenues | 12,227,000 | 5,495,000 | 41,453,000 | 16,515,000 |
Gross profit | 11,973,000 | 3,977,000 | 59,371,000 | 17,370,000 |
Operating expenses: | ||||
Diagnostic expenses | 2,398,000 | 1,478,000 | 8,869,000 | 6,117,000 |
General and administration | 7,512,000 | 5,938,000 | 21,643,000 | 14,713,000 |
Research and development | 110,000 | 208,000 | 174,000 | 416,000 |
Total operating expenses | 10,020,000 | 7,624,000 | 30,686,000 | 21,246,000 |
Income (loss) from operations | 1,953,000 | (3,647,000) | 28,685,000 | (3,876,000) |
Interest income, net | 25,000 | 230,000 | 123,000 | 531,000 |
Interest expense | (201,000) | (296,000) | (635,000) | (870,000) |
Change in fair value of investment securities | (265,000) | (76,000) | (101,000) | |
Income (loss) from operations before income taxes | 1,777,000 | (3,978,000) | 28,097,000 | (4,316,000) |
Income tax expense | (809,000) | (7,190,000) | ||
Income (loss) from operations after income taxes | 968,000 | (3,978,000) | 20,907,000 | (4,316,000) |
Net income (loss) | 968,000 | (3,978,000) | 20,907,000 | (4,316,000) |
Other comprehensive loss: | ||||
Unrealized loss on marketable debt securities | (51,000) | (33,000) | (112,000) | (111,000) |
Total comprehensive income | $ 917,000 | $ (4,011,000) | $ 20,795,000 | $ (4,427,000) |
Earnings (loss) per share: | ||||
Basic | $ 0.06 | $ (0.26) | $ 1.33 | $ (0.29) |
Diluted | $ 0.06 | $ (0.26) | $ 1.10 | $ (0.29) |
Weighted average common shares outstanding: | ||||
Basic | 15,898 | 15,439 | 15,712 | 15,055 |
Diluted | 20,248 | 15,439 | 19,504 | 15,055 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | AOCI Attributable to Parent [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 14,000 | $ 61,674,000 | $ (3,631,000) | $ (47,490,000) | $ (11,000) | $ 10,556,000 |
Beginning balance, shares at Dec. 31, 2020 | 11,604,253 | |||||
Unrealized loss on marketable debt securities, net of taxes | (111,000) | (111,000) | ||||
Stock-based compensation | 2,438,000 | 2,438,000 | ||||
Stock-based compensation, shares | 8,800 | |||||
Net Income (loss) | (4,316,000) | (4,316,000) | ||||
Issuance of common shares related to business acquisition | 3,608,000 | 3,608,000 | ||||
Issuance of common shares related to business acquisition, shares | 483,685 | |||||
Cashless warrants exercise | ||||||
Cashless warrants exercise, shares | 5,986 | |||||
Cash dividends | (4,546,000) | (4,546,000) | ||||
Issuance of common stock and warrants for cash from public offering, net of $2,365 offering cost | $ 2,000 | 35,133,000 | 35,135,000 | |||
Issuance of common stock and warrants for cash from public offering, net of $2,365 offering cost, shares | 3,000,000 | |||||
Issuance of common stock and warrants for cash from private offering | 5,500,000 | 5,500,000 | ||||
Issuance of common stock and warrants for cash from private offering, shares | 550,000 | |||||
Ending balance, value at Sep. 30, 2021 | $ 16,000 | 103,807,000 | (7,947,000) | (47,490,000) | (122,000) | 48,264,000 |
Ending balance, shares at Sep. 30, 2021 | 15,652,724 | |||||
Beginning balance, value at Jun. 30, 2021 | $ 16,000 | 99,265,000 | (3,969,000) | (47,490,000) | (89,000) | 47,733,000 |
Beginning balance, shares at Jun. 30, 2021 | 15,154,253 | |||||
Unrealized loss on marketable debt securities, net of taxes | (33,000) | (33,000) | ||||
Stock-based compensation | 934,000 | 934,000 | ||||
Stock-based compensation, shares | 8,800 | |||||
Net Income (loss) | (3,978,000) | (3,978,000) | ||||
Issuance of common shares related to business acquisition | 3,608,000 | 3,608,000 | ||||
Issuance of common shares related to business acquisition, shares | 483,685 | |||||
Cashless warrants exercise | ||||||
Cashless warrants exercise, shares | 5,986 | |||||
Ending balance, value at Sep. 30, 2021 | $ 16,000 | 103,807,000 | (7,947,000) | (47,490,000) | (122,000) | 48,264,000 |
Ending balance, shares at Sep. 30, 2021 | 15,652,724 | |||||
Beginning balance, value at Dec. 31, 2021 | $ 16,000 | 104,552,000 | 2,642,000 | (48,407,000) | (175,000) | 58,628,000 |
Beginning balance, shares at Dec. 31, 2021 | 15,485,900 | |||||
Repurchases of common shares | $ 1,000 | (1,200,000) | $ (1,199,000) | |||
Repurchases of common shares, shares | (205,048) | (5,048) | ||||
Unrealized loss on marketable debt securities, net of taxes | (112,000) | $ (112,000) | ||||
Issuance of common stock upon stock options cashless exercise | ||||||
Issuance of common stock upon stock options cashless exercise, shares | 545,312 | |||||
Treasury shares repurchased to satisfy tax withholding obligations | (4,531,000) | (4,531,000) | ||||
Stock-based compensation | 2,979,000 | 2,979,000 | ||||
Stock-based compensation, shares | ||||||
Net Income (loss) | 20,907,000 | 20,907,000 | ||||
Issuance of common shares for debt conversion | 600,000 | 600,000 | ||||
Issuance of common shares for debt conversion, shares | 200,000 | |||||
Cash dividends | (9,351,000) | (9,351,000) | ||||
Ending balance, value at Sep. 30, 2022 | $ 17,000 | 108,131,000 | 14,198,000 | (54,138,000) | (287,000) | 67,921,000 |
Ending balance, shares at Sep. 30, 2022 | 16,026,164 | |||||
Beginning balance, value at Jun. 30, 2022 | $ 16,000 | 106,162,000 | 13,230,000 | (51,015,000) | (236,000) | 68,157,000 |
Beginning balance, shares at Jun. 30, 2022 | 15,722,827 | |||||
Repurchases of common shares | $ 1,000 | (51,000) | $ (50,000) | |||
Repurchases of common shares, shares | (5,048) | (5,048) | ||||
Unrealized loss on marketable debt securities, net of taxes | (51,000) | $ (51,000) | ||||
Issuance of common stock upon stock options cashless exercise | ||||||
Issuance of common stock upon stock options cashless exercise, shares | 308,385 | |||||
Treasury shares repurchased to satisfy tax withholding obligations | (3,072,000) | (3,072,000) | ||||
Stock-based compensation | 1,969,000 | 1,969,000 | ||||
Stock-based compensation, shares | ||||||
Net Income (loss) | 968,000 | 968,000 | ||||
Ending balance, value at Sep. 30, 2022 | $ 17,000 | $ 108,131,000 | $ 14,198,000 | $ (54,138,000) | $ (287,000) | $ 67,921,000 |
Ending balance, shares at Sep. 30, 2022 | 16,026,164 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Subsidiary, Sale of Stock [Line Items] | |||
Marketable securities, realized loss | $ 7 | $ 186 | |
IPO [Member] | |||
Subsidiary, Sale of Stock [Line Items] | |||
Offering cost | $ 2,365 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Cash flows from operating activities | |||||
Net income (loss) | $ 968 | $ (3,978) | $ 20,907 | $ (4,316) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||
Realized loss on marketable debt securities | 192 | 40 | |||
Depreciation and amortization | 3,792 | 2,044 | |||
Amortization of debt discount | 4 | 4 | |||
Amortization on operating lease right-of-use assets | 254 | 247 | |||
Loss on sale of assets | 14 | ||||
Stock-based compensation expense | 2,979 | 2,438 | |||
Change in fair value of investment securities | 265 | 76 | 101 | ||
Accounts receivable allowances | 2,528 | ||||
Inventory valuation reserve | (179) | ||||
Non-cash interest income on secured promissory note receivable | (315) | ||||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (2,652) | (7,327) | |||
Inventory | (133) | (5,036) | |||
Prepaid expenses and other current assets | 643 | 1,639 | |||
Deferred tax asset | (1,339) | ||||
Other assets | (674) | (368) | |||
Accounts payable | (5,483) | (1,749) | |||
Accrued diagnostic services | (1,616) | 3,260 | |||
Accrued advertising and other allowances | (25) | ||||
Deferred revenue | 946 | 1,461 | |||
Operating lease liabilities | (223) | 197 | |||
Income tax payable | 7,029 | ||||
Other current liabilities | 700 | (1,292) | |||
Net cash provided by (used in) operating activities | 27,740 | (8,972) | |||
Cash flows from investing activities | |||||
Business acquisitions, net of cash acquired | (9,066) | ||||
Issuance of secured promissory note receivable | (1,000) | ||||
Purchase of marketable securities | (1,003) | (21,527) | |||
Proceeds from sale of marketable debt securities | 5,800 | 10,701 | |||
Proceeds from dispositions of property and other assets, net | 452 | ||||
Capital expenditures | (2,323) | (4,258) | |||
Net cash provided by (used in) investing activities | 2,926 | (25,150) | |||
Cash flows from financing activities | |||||
Proceeds from issuance of common stock from public offering, net | 35,135 | ||||
Proceeds from issuance of common stock and warrants from private offering | 5,500 | ||||
Repayment of note payable | (1,444) | ||||
Repurchases of common shares | (1,200) | ||||
Payment of dividends | (9,351) | (4,546) | |||
Repurchase of common stock for payment of statutory taxes due on cashless exercise of stock option | (4,530) | ||||
Net cash (used in) provided by financing activities | (16,525) | 36,089 | |||
Increase in cash, cash equivalents and restricted cash | 14,141 | 1,967 | |||
Cash, cash equivalents and restricted cash, at the beginning of the period | 8,658 | 6,816 | $ 6,816 | ||
Cash, cash equivalents and restricted cash, at the end of the period | $ 22,799 | $ 8,783 | 22,799 | 8,783 | $ 8,658 |
Supplemental disclosures: | |||||
Cash paid for income taxes | 1,500 | ||||
Interest payment on the promissory notes | 631 | 750 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||
Issuance of common shares for debt conversion | 600 | 3,608 | |||
Net unrealized loss, investments in marketable debt securities | $ (113) | $ (111) |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Note 1 - Organization and Business ProPhase Labs, Inc. (“ProPhase”, “we”, “us”, “our” or the “Company”) is a diversified company that offers a range of services including diagnostic testing, genomics testing and contract manufacturing. We provide traditional CLIA molecular laboratory services, including SARS-CoV-2 (“COVID-19”) testing and seek to leverage our Clinical Laboratory Improvement Amendments (“CLIA”) accredited laboratory services to provide whole genome sequencing and research direct to consumers, while building a genomics database to be used for further research. In addition, we have deep experience with over-the-counter (“OTC”) consumer healthcare products and dietary supplements. We currently conduct our operations through two operating segments: diagnostic services and consumer products. Until late fiscal year 2020, we were engaged primarily in the research, development, manufacture, distribution, marketing and sale of OTC consumer healthcare products and dietary supplements in the United States. However, commencing in December 2020, we also began offering COVID-19 and were prepared to validate other Respiratory Pathogen Panel (RPP) molecular tests through our diagnostic services business, and in August 2021 we began offering personal genomics products and services. Our wholly owned subsidiary, ProPhase Diagnostics, Inc. (“ProPhase Diagnostics”), which was formed on October 9, 2020, offers a broad array of clinical diagnostic and testing services at its CLIA certified laboratories including polymerase chain reaction (“PCR”) testing for COVID-19. Critical to COVID-19 testing, we provide fast turnaround times for results. We also offer rapid antigen testing for COVID-19. On October 23, 2020, we acquired Confucius Plaza Medical Laboratory Corp. (“CPM”), which included a non-operating but certified 4,000 square foot CLIA accredited laboratory located in Old Bridge, New Jersey. In December 2020, we expanded our diagnostic service business with the build-out of a second, larger CLIA accredited laboratory in Garden City, New York. Operations at this second facility commenced in January 2021. On August 10, 2021, we acquired Nebula Genomics, Inc. (“Nebula”), a privately owned personal genomics company, through our new wholly owned subsidiary, ProPhase Precision Medicine, Inc. (“ProPhase Precision”) (see Note 3, Business Acquisitions). ProPhase Precision focuses on genomics sequencing technologies, a comprehensive method for analyzing entire genomes, including the genes and chromosomes in DNA. The data obtained from genomic sequencing can be used to help identify inherited disorders and tendencies, help predict disease risk, help identify expected drug response, and characterize genetic mutations, including those that drive cancer progression. Our wholly owned subsidiary, ProPhase BioPharma, Inc. (“PBIO”) was formed on June 28, 2022, for the licensing, development and commercialization of novel drugs, dietary supplements and compounds beginning with Equivir and Equivir G. PBIO announced a second licensing agreement for two small molecule PIM kinase inhibitors, Linebacker LB-1 and LB-2, in July 2022, with plans to pursue development and commercialization of LB-1 as a cancer co-therapy. Our wholly owned subsidiary, Pharmaloz Manufacturing, Inc. (“PMI”), is a full-service contract manufacturer and private label developer of a broad range of non-GMO, organic and natural-based cough drops and lozenges and OTC drug and dietary supplement products. We also develop and market dietary supplements under the TK Supplements® brand. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements, and therefore do not include all disclosures that might normally be required for financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit and should be read in conjunction with our audited consolidated financial statements, including the notes thereto, appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position, consolidated results of operations and other comprehensive loss and consolidated cash flows, for the periods indicated, have been made. The results of operations for the three and nine months ended September 30, 2022, are not necessarily indicative of operating results that may be achieved over the course of the full year. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Segments In accordance with FASB ASC 280, “Segment Reporting” (“ASC 280”), the Company discloses financial and descriptive information about its reportable operating segments. ASC 280 establishes standards for reporting information about operating segments in annual and interim financial statements and requires that companies report financial and descriptive information about their reportable segments based on a management approach. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. Operating segments are defined as components of an enterprise that engage in business activities for which separate financial information is available and is evaluated by the Chief Operating Decision Maker (“CODM”), which for the Company is its Chief Executive Officer, in deciding how to allocate resources and assess performance. We maintain two operating segments: diagnostic services (which includes our COVID-19 and other diagnostic testing services) and consumer products (which includes our contract manufacturing, retail customers and personal genomics products and services) (see Note 15 Segment Information). Business and Liquidity Risks and Uncertainties Our diagnostic service business is and will continue to be impacted by the level of demand for COVID-19 and other diagnostic testing, how long this demand persists, the prices we are able to receive for performing our testing services, our ability to collect payment or reimbursement for our testing services, as well as the availability of COVID-19 testing from other laboratories and the period of time for which we are able to serve as an authorized laboratory offering COVID-19 testing under various Emergency Use Authorizations. While our revenues increased significantly since the launch of our diagnostic services business, we have been dependent on both government agency and insurance company reimbursement as well as the prevalence of COVID-19 associated strains. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), was enacted, providing for reimbursement to healthcare providers for COVID-19 tests provided to uninsured individuals, subject to continued available funding. Approximately 31.5 64.7 On March 22, 2022, the Health Resources & Services Administration (HRSA) program stopped accepting claims for COVID-19 testing and treatment due to lack of sufficient funds. As a result of the suspension of the HRSA uninsured program, we have not recognized any revenue related to COVID-19 testing that we performed for uninsured individuals from March 22, 2022 through September 30, 2022. For the nine months ended September 30, 2022, $ 27.7 26.5 The Company’s future capital needs and the adequacy of its available funds will depend on its ability to achieve sustained profitability from its diagnostic services, the Company’s ability to successfully diversify its diagnostic services revenue streams and the Company’s ability to market and grow its personal genomics business. The Company may be required to raise additional funds through equity or debt securities offerings or strategic collaboration and/or licensing agreements in order to fund operations until it is able to generate enough revenues. Such financing may not be available on acceptable terms, or at all, and the Company’s failure to raise capital when needed could have a material adverse effect on its strategic objectives, results of operations and financial condition. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Use of Estimates The preparation of condensed consolidated financial statements and the accompanying notes thereto, in conformity with GAAP, requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the respective reporting periods. Examples include revenue recognition and the impact of the variable consideration of diagnostic test reimbursement rates, the provision for uncollectible receivables and billing errors, allowances, slow moving and/or dated inventory and associated provisions, the potential impairment of long-lived assets, stock based compensation valuations, income tax asset valuations and assumptions related to accrued advertising. Our estimates and assumptions are based on historical experience, current trends and other factors that management believes to be relevant at the time the condensed consolidated financial statements are prepared. Management reviews the accounting policies, assumptions, estimates and judgments on a quarterly basis. Actual results could differ from those estimates. Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents include cash on hand and monies invested in money market funds. The carrying amount approximates the fair market value due to the short-term maturity of these securities. Restricted Cash Restricted cash as of December 31, 2021 includes approximately $ 250,000 Marketable Debt Securities We have classified our investments in marketable debt securities as available-for-sale and as a current asset. Our investments in marketable debt securities are carried at fair value, with unrealized gains and as a separate component of stockholders’ equity. Realized gains and losses from our marketable debt securities are recorded as interest income (expense). These investments in marketable debt securities carry maturity dates between one and three years from date of purchase. The following is a summary of the components of our marketable debt securities and the underlying fair value input level tier hierarchy (in thousands) (see fair value of financial instruments): Summary of Components of Marketable Securities As of September 30, 2022 Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. government obligations $ 1,448 $ - $ (93 ) $ 1,355 Corporate obligations 2,342 129 (148 ) 2,323 $ 3,790 $ 129 $ (241 ) $ 3,678 As of December 31, 2021 Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. government obligations $ 650 $ 17 $ - $ 667 Corporate obligations 8,304 - (192 ) 8,112 $ 8,954 $ 17 $ (192 ) $ 8,779 Marketable Equity Securities Marketable equity securities are recorded at fair value in the condensed consolidated balance sheets. The change in fair value of marketable equity securities is recognized within other non-operating income, net in the condensed consolidated statements of operations and comprehensive income (loss). On June 25, 2021, we were issued 1,260,619 315,000 76,000 112,000 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Accounts Receivable, net Accounts receivable consists primarily of amounts due from government agencies and healthcare insurers for our diagnostic services. Unbilled accounts receivable relates to the delivery of our diagnostic testing services for which the related billings will occur in a future period, after a patient’s insurance information has been validated, and represent amounts for which we have a right to receive payment. Unbilled accounts receivable is classified as accounts receivable on the condensed consolidated balance sheet. We carry our accounts receivable at the amount of consideration for which we expect to be entitled less allowances. When estimating the allowances for our diagnostics business, the Company pools its receivables based on the following payer types: healthcare insurers and government payers. The Company principally estimates the allowances by pool based on historical collection experience, current economic conditions, government and healthcare insurer payment trends, and the period of time that the receivables have been outstanding. Should a payer’s reimbursement policy change or their credit quality deteriorate, the Company removes the payer from their respective pools and establishes allowances based on the individual risk characteristics of such payer. Accounts are written off as uncollectible at the time we determine that collections are unlikely. Accounts receivable, net is comprised of the following (in thousands): Schedule of Accounts Receivable Net September 30, 2022 December 31, 2021 Trade accounts receivable $ 38,231 $ 18,520 Unbilled accounts receivable 6,031 23,089 Accounts receivable, gross 44,262 41,609 Less allowances (6,430 ) (3,901 ) Total accounts receivable $ 37,832 $ 37,708 Inventory, net Inventory is valued at the lower of cost, determined on a first-in, first-out basis (“FIFO”), or net realizable value. Inventory items are analyzed to determine cost and the net realizable value and appropriate valuation adjustments are established. At September 30, 2022 and December 31, 2021, the components of inventory are as follows (in thousands): Schedule of Components of Inventory September 30, 2022 December 31, 2021 Diagnostic services testing material $ 2,271 $ 2,989 Raw materials 1,904 1,514 Work in process 609 260 Finished goods 383 272 Inventory $ 5,167 $ 5,035 Inventory valuation reserve (255 ) (435 ) Inventory, net $ 4,912 $ 4,600 Property, Plant and Equipment Property, plant and equipment are recorded at cost. We use the straight-line method in computing depreciation for financial reporting purposes. Depreciation expense is computed in accordance with the following ranges of estimated asset lives: building and improvements - ten to thirty-nine years; machinery and equipment including lab equipment - three to seven years; computer equipment and software - three to five years; and furniture and fixtures - five years Concentration of Financial Risks Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments, marketable debt securities, and accounts receivable. Our marketable securities are fixed income investments, which are highly liquid and can be readily purchased or sold through established markets. We maintain cash and cash equivalents with certain major financial institutions. As of September 30, 2022, our cash and cash equivalents was $ 22.8 1.0 21.8 Accounts receivable subject us to credit risk concentrations from time-to-time. We extend credit to our consumer healthcare product customers based upon an evaluation of the customer’s financial condition and credit history and generally do not require collateral. Our diagnostic services receivable credit risk is based on payer reimbursement experience, which includes government agencies and healthcare insurers, the period the receivables have been outstanding and the historical collection rates. The collectability of the diagnostic services receivables is also directly linked to the quality of our billing processes, which depends on information provided to the payors and meeting their requirements for reimbursement. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Leases At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Most leases with a term greater than one year are recognized on the condensed consolidated balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. We have elected not to recognize on the condensed consolidated balance sheet leases with terms of 12 months or less. We typically only include an initial lease term in our assessment of a lease arrangement. Options to renew a lease are not included in our assessment unless there is reasonable certainty that we will renew. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in our leases is typically not readily determinable. As a result, we utilize our incremental borrowing rate, which reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term and in a similar economic environment (see Note 12, Leases). The components of a lease should be allocated between lease components ( e.g e.g Goodwill and Intangible Assets Goodwill represents the excess of the fair value of the consideration transferred over the fair value of the underlying identifiable assets and liabilities acquired in a business combination. Goodwill and intangible assets deemed to have an indefinite life are not amortized, but instead are assessed for impairment annually. Additionally, if an event or change in circumstances occurs that would more likely than not reduce the fair value of the reporting unit below its carrying value, we would evaluate goodwill at that time. In testing for goodwill impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. If we conclude otherwise, we are required to perform the two-step impairment test. The goodwill impairment test is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not impaired. If the estimated fair value is less than the carrying value, an impairment charge will be recorded to reduce the reporting unit to fair value. There have been no triggering events during the nine months ended September 30, 2022 and thus, there has been no adjustment to goodwill as of September 30, 2022. Intangible assets deemed to have finite lives are amortized on a straight-line basis over their estimated useful lives, where the useful life is the period over which the asset is expected to contribute directly, or indirectly, to our future cash flows. Fair Value of Financial Instruments We measure assets and liabilities at fair value based on expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale date of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) The following are the hierarchical levels of inputs to measure fair value: ● Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable, accounts payable, and unsecured note payable, approximate their fair values because of the short-term nature of these instruments. We account for our marketable securities at fair value, with the net unrealized gains or losses of marketable debt securities reported as a component of accumulated other comprehensive income or loss and marketable equity securities change in fair value reported on the condensed consolidated statements of operation and comprehensive income (loss). The components of marketable securities are as follows (in thousands): Schedule of Fair Value of Financial Instruments As of September 30, 2022 Level 1 Level 2 Level 3 Total U.S. government obligations $ - $ 1,355 $ - $ 1,355 Corporate obligations - 2,323 - 2,323 $ - $ 3,678 $ - $ 3,678 As of December 31, 2021 Level 1 Level 2 Level 3 Total U.S. government obligations $ - $ 667 $ - $ 667 Corporate obligations - 8,112 - 8,112 Marketable equity securities 76 - - 76 $ 76 $ 8,779 $ - $ 8,855 There were no transfers of marketable debt securities between Levels 1, 2 or 3 for the nine months ended September 30, 2022 and 2021. Revenue Recognition We recognize revenue that represents the transfer of promised goods or services to customers at an amount that reflects the consideration that is expected to be received in exchange for those goods or services. We recognize revenue when performance obligations with our customers have been satisfied. At contract inception, we evaluate the contract to determine if revenue should be recognized using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Contract with Customers and Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Sales from product shipments to contract manufacturing and retailer customers are recognized at the time ownership is transferred to the customer. Revenue from diagnostic services is recognized when the results are made available to the customer. Revenue from our personal genomics business is recognized when the genetic testing results are provided to the customer. For subscription services associated with our genomic testing, we recognize revenue ratably over the term of the subscription. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Transaction Price For contract manufacturing and retail customers, the transaction price is fixed based upon either (i) the terms of a combined master agreement and each related purchase order, or (ii) if there is no master agreement, the price per individual purchase order received from each customer. The customers are invoiced at an agreed upon contractual price for each unit ordered and delivered by the Company. Revenue from retail customers is reduced for trade promotions, estimated sales returns and other allowances in the same period as the related sales are recorded. No such allowance is applicable to our contract manufacturing customers. We estimate potential future product returns and other allowances related to current period revenue. We analyze historical returns, current trends, and changes in customer and consumer demand when evaluating the adequacy of the sales returns and other allowances. We do not accept returns from our contract manufacturing customers. Our return policy for retail customers accommodates returns for (i) discontinued products, (ii) store closings and (iii) products that have reached or exceeded their designated expiration date. We do not impose a period of time during which product may be returned. All requests for product returns must be submitted to us for pre-approval. We will not accept return requests pertaining to customer inventory “Overstocking” or “Resets”. We will accept return requests only for products in their intended package configuration. We reserve the right to terminate shipment of product to customers who have made unauthorized deductions contrary to our return policy or pursue other methods of reimbursement. We compensate the customer for authorized returns by means of a credit applied to amounts owed. For our diagnostic services business, a revenue transaction is initiated when we receive a requisition order to perform a diagnostic test. The information provided on the requisition form is used to determine the party that will be billed for the testing performed and the expected reimbursement. We provide diagnostic services to a range of customers. In many cases, the customer that orders our services is not responsible for paying for these services. Depending on the billing arrangement and applicable law, the payer may be the patient or a third party, such as a health plan, Medicare or Medicaid program and other government reimbursement programs. We bill the providers at standard price and take into consideration negotiated discounts and anticipated reimbursement remittance adjustments based on the payer portfolio, when revenue is recorded. We use the most expected value method to estimate the transaction price for reimbursements that vary from the listed contract price. For our personal genomics business, a revenue transaction is initiated by a DNA test kit sale direct to the consumer via our website or through online retailers. The kit sales and subscriptions are billed at a standard price and take into consideration any discounts when revenue is recorded. Recognize Revenue When the Company Satisfies a Performance Obligation Recognition for contract manufacturing and retail customers is satisfied at a point in time when the goods are shipped to the customer as (i) we have transferred control of the assets to the customers upon shipping, and (ii) the customer obtains title and assumes the risks and rewards of ownership after the goods are shipped. For diagnostic services, recognition occurs at the point in time that the results are made available to the customer, which is when the customer benefits from the information contained in the results and obtains control. For genomic services, we satisfy our product performance obligation at a point in time when the genetic testing results are provided to the customer. For subscriptions services associated with our genomic testing, we satisfy our performance obligation ratably over the subscription period. If the customer does not return the test kit, services cannot be completed by us, potentially resulting in unexercised rights (“breakage”) revenue, including lifetime subscription services. We estimate breakage for the portion of test kits not expected to be returned using an analysis of historical data and consider other factors that could influence customer test kit return behavior. When breakage revenue is recognized on a kit, we recognize breakage on any associated subscription services ratably over the term of the subscription. The Company recognized breakage revenue from aggregate unreturned test kits and subscriptions of $ 0.3 1.0 0.1 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Contract Balances Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance of services performed for the research and development (“R&D”) work. As of September 30, 2022 and December 31, 2021, we have deferred revenue of $ 3.9 2.9 3.7 2.7 12 36 The following table disaggregates our deferred revenue by recognition period (in thousands): Schedule of Deferred Revenue Recognition Period September 30, 2022 December 31, 2021 0-12 Months $ 2,958 $ 2,034 13-24 Months 626 530 Over 24 Months 301 375 Total $ 3,885 $ 2,939 Disaggregation of Revenue We disaggregate revenue from contracts with customers into four categories: diagnostic services, contract manufacturing, retail and others, and genomic products and services. We determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The following table disaggregates the Company’s revenue by revenue source for the three and nine months ended September 30, 2022 and 2021 (in thousands): Schedule of Disaggregation by Revenue For the three months ended For the nine months ended Revenue by Customer Type September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Diagnostic services $ 20,542 $ 7,142 $ 91,613 $ 27,416 Contract manufacturing 2,749 1,120 5,662 4,069 Retail and others 357 1,210 1,369 2,400 Genomic products and services 552 - 2,180 - Total revenue, net $ 24,200 $ 9,472 $ 100,824 $ 33,885 Customer Consideration The Company makes payments to certain diagnostic services customers for distinct services that approximate the fair value for those services. Such services include specimen collection, the collection and delivery of insurance and patient information necessary for billing and collection, and logistics services. Consideration associated with specimen collection services is classified in cost of revenues and the remaining costs are classified as diagnostic expenses within operating expenses in the accompanying condensed consolidated statements of operations and comprehensive income (loss). Sales Tax Exclusion from the Transaction Price We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Shipping and Handling Activities We account for shipping and handling activities that we perform as activities to fulfill the promise to transfer the good. Advertising and Incentive Promotions Advertising and incentive promotion costs are expensed within the period in which they are utilized. Advertising and incentive promotion expense is comprised of (i) media advertising, presented as part of general and administrative expense, (ii) cooperative incentive promotions and coupon program expenses, which are accounted for as part of net revenue, and (iii) free product, which is accounted for as part of cost of revenues. Advertising and incentive promotion expenses incurred for the three months ended September 30, 2022 and 2021 were $ 161,000 136,000 286,000 415,000 Stock-Based Compensation The Company accounts for stock-based compensation in accordance with FASB ASC 718, “Compensation - Stock Compensation.” Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model and stock grants at their closing reported market value. We recognize all stock-based payments to employees and directors, including grants of stock options, as compensation expense in the condensed consolidated financial statements based on their grant date fair values. The grant date fair values of stock options are determined through the use of the Black-Scholes option pricing model. The compensation cost is recognized as an expense over the requisite service period of the award, which usually coincides with the vesting period. We account for forfeitures as they occur. Stock and stock options to purchase our common stock have been granted to employees pursuant to the terms of certain agreements and stock option plans (see Note 7, Stockholders’ Equity). Stock options are exercisable during a period determined by us, but in no event later than seven years from the date granted. Research and Development R&D costs are charged to operations in the period incurred. R&D costs incurred for the three months ended September 30, 2022 and 2021 were $ 110,000 208,000 174,000 416,000 Income Taxes The Company recognizes deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. The provision for, or benefit from, income taxes includes deferred taxes resulting from the temporary differences in income for financial and tax purposes using the liability method. Future realization of deferred income tax assets requires sufficient taxable income within the carryback, carryforward period available under tax law. We evaluate, on a quarterly basis whether, based on all available evidence, it is probable that the deferred income tax assets are realizable. Valuation allowances are established when it is more likely than not that the tax benefit of the deferred tax asset will not be realized. The evaluation, as prescribed by ASC 740- 10, “Income Taxes,” includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. The Company accounts for uncertainties in income taxes under the provisions of FASB ASC 740-10-05 (the “Subtopic”). The Subtopic clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The Subtopic prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Subtopic provides guidance on the de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Recently Issued Accounting Standards, Adopted The Financial Accounting Standards Board (“FASB”) recently issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own |
Business Acquisition
Business Acquisition | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Acquisition | Note 3 - Business Acquisition Nebula Acquisition On August 10, 2021 (the “Nebula Effective Date”), the Company and its wholly owned subsidiary, ProPhase Precision, entered into and closed a Stock Purchase Agreement (the “Nebula Stock Purchase Agreement”) with Nebula, each of the stockholders of Nebula (the “Seller Parties”), and Kamal Obbad, as Seller Party Representative. Pursuant to the terms of the Nebula Stock Purchase Agreement, ProPhase Precision acquired all of the issued and outstanding shares of common stock of Nebula from the Seller Parties, for an aggregate purchase price of approximately $ 14.3 3.6 7.46 1,080,000 February 23, 2023 In connection with the Nebula Acquisition, ProPhase Precision entered into an employment agreement with Kamal Obbad, the Chief Executive Officer of Nebula, on the Nebula Effective Date, pursuant to which Mr. Obbad serves as Senior Vice President, Director of Sales and Marketing of ProPhase Precision. As a condition to the employment agreement, Mr. Obbad was awarded a stock option to purchase 250,000 7.67 Based on the valuation, the total consideration of $ 12.7 1.6 Schedule of Assets Acquired and Liabilities Assumed Account Amount Short term investments $ 1,800 Accounts receivable 171 Inventory 133 Prepaid expenses and other current assets 379 Definite-lived intangible assets 10,990 Total assets acquired 13,473 Accounts payable (805 ) Accrued expenses and other current liabilities (43 ) Deferred revenue (2,391 ) Note payable (81 ) Deferred tax liability (1,925 ) Total liabilities assumed (5,245 ) Net identifiable assets acquired 8,228 Goodwill 4,446 Total consideration, net of cash acquired (1) $ 12,674 (1) Net of $ 1.6 Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company believes the goodwill related to the acquisition was a result of the expected synergies to be realized from combining operations and is not deductible for income tax purposes. The preliminary purchase price allocation is adjusted, as necessary, up to one year after the acquisition closing date if management obtains more information regarding asset valuations and liabilities assumed. The intangible assets identified in conjunction with the Nebula Acquisition are as follows (in thousands): Schedule of Intangible Assets Acquisition Gross Estimated Useful Trade names $ 5,550 15 Proprietary intellectual property 4,260 5 Customer relationships 1,180 1 Total $ 10,990 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | Note 4 - Intangible Assets, Net Intangible assets as of September 30, 2022 and December 31, 2021 consisted of the following (in thousands): Schedule of Intangible Assets, Net September 30, 2022 December 31, 2021 Estimated Useful Life (in years) Trade names $ 5,550 $ 5,550 15 Proprietary intellectual property 4,260 4,260 5 Customer relationships 1,180 1,180 1 CLIA license 1,307 1,307 3 Total intangible assets, gross 12,297 12,297 Less: accumulated amortization (3,408 ) (1,445 ) Total intangible assets, net $ 8,889 $ 10,852 Amortization expense for acquired intangible assets was $ 545,000 445,000 2.0 662,000 Schedule of Estimated Future Amortization Expense of Acquired Intangible Assets Remaining periods in the year ended December 31, 2022 $ 414 Year ended December 31, 2023 1,585 Year ended December 31, 2024 1,222 Year ended December 31, 2025 1,222 Year ended December 31, 2026 890 Thereafter 3,556 Total intangible assets, net $ 8,889 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Note 5 - Property, Plant and Equipment The components of property, plant and equipment are as follows (in thousands): Schedule of Property, Plant and Equipment September 30, 2022 December 31, 2021 Estimated Useful Life Land $ 352 $ 352 Building improvements 1,729 1,729 10 39 Machinery 4,892 4,740 3 7 Lab equipment 4,403 4,330 3 7 Computer equipment 2,140 1,211 3 5 Furniture and fixtures 461 468 5 Property, Plant and Equipment, Gross 13,977 12,830 Less: accumulated depreciation (7,914 ) (6,883 ) Total property, plant and equipment, net $ 6,063 $ 5,947 Depreciation expense incurred for the three months ended September 30, 2022 and 2021 was $ 540,000 481,000 1,637,000 1,381,000 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Unsecured Convertible Promissor
Unsecured Convertible Promissory Notes Payable | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Unsecured Convertible Promissory Notes Payable | Note 6 - Unsecured Convertible Promissory Notes Payable On September 15, 2020, we issued two unsecured, partially convertible, promissory notes (the “September 2020 Notes”) for an aggregate principal amount of $ 10 On February 28, 2022, we entered into a letter agreement (the “Letter Agreement”) with one of the Lenders providing for the payoff of its September 2020 Note in the principal amount of $ 2,000,000 Pursuant to the terms of the Letter Agreement, (i) the Lender converted $ 600,000 200,000 3.00 1,440,548 1,400,000 40,548 5.75 1,150,000 2,590,548 The September 2020 Note that remains outstanding as of September 30, 2022 is due and payable on September 15, 2023 and accrues interest at a rate of 10 We have the right to prepay the outstanding September 2020 Note at any time after the 13-month anniversary of the initial issuance date after providing written notice to the Lender and may prepay the September 2020 Note prior to such time with the consent of the Lender. The Lender has the right, at any time, and from time to time, on and after the 13-month anniversary of the initial issuance date to convert up to an aggregate 3.0 3.00 The September 2020 Note contains customary events of default. If a default occurs and is not cured within the applicable cure period or is not waived, any outstanding obligations under the September 2020 Note may be accelerated. The September 2020 Note also contain certain restrictive covenants which, among other things, restrict our ability to create, incur, assume or permit to exist, directly or indirectly, any lien (other than certain permitted liens described in the September 2020 Note) securing any indebtedness of the Company, and prohibits us from distributing or reinvesting the proceeds from any divestment of assets (other than in the ordinary course) without the prior approval of the Lender. For the three months ended September 30, 2022 and 2021, we incurred $ 200,000 251,000 635,000 753,000 |
Stockholders_ Equity
Stockholders’ Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 7 - Stockholders’ Equity Our authorized capital stock consists of 50 0.0005 one million 0.0005 Preferred Stock The preferred stock authorized under our certificate of incorporation may be issued from time to time in one or more series. As of September 30, 2022 and December 31, 2021, no Common Stock Dividends On February 14, 2022, the board of directors of the Company declared a special cash dividend of $ 0.30 4.6 On May 9, 2022, the board of directors of the Company declared a special cash dividend of $ 0.30 4.7 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Note 7 - Stockholders’ Equity (continued) Common Stock Stock Repurchase Program On September 8, 2021, the Company’s board of directors approved a stock repurchase program under which the Company was authorized to repurchase up to $ 6.0 million of its outstanding shares of common stock from time to time, over a six-month period. During the nine months ended September 30, 2022, the Company did not make any common shares repurchases under the stock repurchase program. The stock repurchase program expired on March 30, 2022. On July 24, 2022, the Company’s board of directors authorized a new stock repurchase program of up to $ 6 5,048 Following the Commencement Date, and for a period of six months thereafter, repurchases may be made through open market transactions (based on prevailing market prices), privately negotiated transactions, block trades, or any combination thereof, in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The number of shares to be repurchased and the timing of the repurchases, if any, will depend on a number of factors, including, but not limited to, price, trading volume and general market conditions, along with the Company’s working capital requirements and general business conditions. The board of directors of the Company will re-evaluate the program from time to time, and may authorize adjustments to its terms. The Company expects to utilize its existing funds to fund any repurchases under the repurchase program. The 2022 Directors’ Equity Compensation Plan On May 19, 2022, the stockholders of the Company approved the 2022 Directors’ Equity Compensation Plan (the “2022 Directors’ Plan”) at the 2022 Annual Meeting of Stockholders of the Company (the “2022 Annual Meeting”). The 2022 Directors’ Plan amended and restated the Company’s Amended and Restated 2010 Directors’ Equity Compensation Plan and provides for an increase in the number of shares reserved for issuance under the plan by 300,000 As of September 30, 2022, there were 120,000 stock options outstanding and there were 180,000 shares of common stock available to be issued under the 2022 Directors’ Plan. The 2022 Equity Compensation Plan On May 19, 2022, the stockholders of the Company approved the 2022 Equity Compensation Plan (the “2022 Plan”) at the 2022 Annual Meeting. The 2022 Plan amended and restated the Company’s Amended and Restated 2010 Equity Compensation Plan and provides for an increase in the number of shares reserved for issuance under the plan by 1,000,000 As of September 30, 2022, there were 3,797,000 1,130,785 The 2018 Stock Incentive Plan On April 12, 2018, our stockholders approved the 2018 Stock Incentive Plan (the “2018 Stock Plan”). The 2018 Stock Plan provides for the grant of incentive stock options to eligible employees of the Company, and for the grant of non-statutory stock options to eligible employees, directors and consultants. The 2018 Stock Plan provides that the total number of shares that may be issued pursuant to the 2018 Stock Plan is 2,300,000 2,300,000 600,000 The 2018 Stock Plan requires certain proportionate adjustments to be made to the stock options granted under the 2018 Stock Plan upon the occurrence of certain events, including a special distribution (whether in the form of cash, shares, other securities, or other property) in order to maintain parity. Accordingly, the Compensation Committee of the board of directors, as required by the terms of the 2018 Stock Plan, has adjusted the exercise price of the CEO Option in connection with each special cash dividend paid by the Company proportionately to the amount of the dividend paid. The current exercise price of the CEO Option is $ 0.60 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Note 7 – Stockholders’ Equity (continued): Inducement Option Award As part of Nebula Acquisition, the Company issued a non-qualified stock option to the Chief Executive Officer of Nebula (the “Nebula CEO”, as an inducement to his employment with the Company (the “2021 Inducement Award”). The 2021 Inducement Award entitles the Nebula CEO to purchase up to 250,000 7.67 25 25 1,128,000 Also, during the year ended December 31, 2021, we issued an inducement award to a prospective employee to purchase up to 100,000 5.76 On May 9, 2022, the Company issued a non-qualified stock option to the Chief Financial Officer of the Company (the “CFO”), as an inducement to his employment with the Company, effective May 23, 2022 (the “2022 Inducement Award”). The 2022 Inducement Award entitled the CFO of the Company to purchase up to 400,000 shares of the Company’s common stock (the “CFO Option”) at an exercise price of $ 6.74 per share, the closing price of the Company’s common stock on May 9, 2022. The CFO Option provided for certain proportionate adjustments to be made in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends) in order to maintain parity. The exercise price of the CFO Option was reduced from $ 6.74 to $ 6.44 per share, effective as of June 3, 2022, the date $ 0.30 special cash dividend was paid to Company’s stockholders. The grant date fair value of the Inducement Award was approximately $ 1,604,000 . In connection with CFO’s separation from service on October 4, 2022, these options were forfeited on October 4, 2022 (see Note 18). During the three and nine months ended September 30, 2022, we also issued an inducement award to a prospective employee to purchase up to 250,000 13.00 25 All inducement awards have been granted outside of the Company’s equity compensation plans. During the nine months ended September 30, 2022, the Company issued options to purchase 935,000 5,638,000 The following table summarizes stock option activity during the nine months ended September 30, 2022, (in thousands, except per share data). Schedule of Stock Options Activity Number Weighted Weighted Remaining Contractual Life (in years) Total Intrinsic Value ( 1 Outstanding as of January 1, 2022 5,110 $ 3.27 3.4 $ 20,820 Granted 935 9.60 6.6 - Cashless exercised (1,233 ) 1.91 - - Forfeited (20 ) 2.02 - - Outstanding as of September 30, 2022 4,792 $ 4.55 3.7 $ 32,899 Options vested and exercisable 3,280 $ 3.18 2.6 $ 26,819 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $ 11.28 The following table summarizes weighted average assumptions used in determining the fair value of the options at the date of grant during the nine months ended September 30, 2022 and 2021: Summary of Weighted Average Assumptions Used in Determining Fair Value of Warrants For the nine months ended September 30, 2022 2021 Exercise price $ 9.73 $ 7.48 Expected term (years) 4.5 3.9 Expected stock price volatility 79 % 80 % Risk-free rate of interest 2.3 % 0.7 % Expected dividend yield (per share) 0 % 0 % ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Note 7 – Stockholders’ Equity (continued): During the nine months ended September 30, 2022 certain holders of stock options elected to exercise their stock options pursuant to a cashless exercise provision resulting in the net issuance of 545,312 shares of common stock and the return of 692,736 shares to the Company. The Company also made a cash payment of approximately $ 4.5 million to repurchase 283,395 shares of treasury stock to satisfy tax withholding obligations related to the cashless exercise of these stock options. Stock Warrants The following table summarizes warrant activity during the nine months ended September 30, 2022 (in thousands, except per share data): Schedule of Warrant Activity Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding as of January 1, 2022 855 $ 8.23 1.9 Warrants granted - - - Outstanding as of September 30, 2022 855 $ 8.23 1.1 Warrants vested and exercisable 855 $ 8.23 1.1 We recognized $ 1,969,000 59,000 2,976,000 252,000 5,907,000 3.9 |
Defined Contribution Plans
Defined Contribution Plans | 9 Months Ended |
Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plans | Note 8 – Defined Contribution Plans We maintain the ProPhase Labs, Inc. 401(k) Savings and Retirement Plan, a defined contribution plan for our employees. Our contributions to the plan are based on the amount of the employee plan contributions and compensation. Our contributions to the plan in the three months ended September 30, 2022 and 2021 were $ 53,000 34,000 153,000 69,000 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9 – Income Taxes We recognize tax assets and liabilities for future tax consequences related to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss carryforwards. Management evaluated the deferred tax assets for recoverability using a consistent approach that considers the relative impact of negative and positive evidence, including historical profitability and projections of future reversals of temporary differences and future taxable income. We are required to establish a valuation allowance for deferred tax assets if management determines, based on available evidence at the time the determination is made, that it is not more likely than not that some portion or all of the deferred tax assets will be realized. As of September 30, 2022 the Company has net deferred tax liabilities for federal and combined states jurisdictions compared to net deferred tax assets with a full valuation allowance as of December 31, 2021. The decrease in deferred tax assets with a corresponding decrease in valuation allowance against those assets as of September 30, 2022 is primarily due to utilization of net operating losses. The Company has net deferred tax assets in other states jurisdictions where we maintain a full valuation allowance. Judgment is required to estimate forecasted future taxable income, which may be impacted by future business developments, actual results, tax initiatives, legislative, and other economic factors. The Company will continue to monitor income levels and potential changes to its operating and tax model, and other legislative or global developments in its determination. The Company’s effective tax rate for the nine months ended September 30, 2022 is 25.57 21 10.71 7.2 |
Other Current Liabilities
Other Current Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Note 10 – Other Current Liabilities The following table sets forth the components of other current liabilities at September 30, 2022 and December 31, 2021, respectively (in thousands): Schedule of Other Current Liabilities September, 30 2022 December 31, 2021 Accrued commissions $ 2,448 $ 1,283 Accrued payroll 59 514 Accrued expenses 328 300 Accrued returns 311 338 Accrued benefits and vacation 49 60 Total other current liabilities $ 3,195 $ 2,495 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 – Commitments and Contingencies Manufacturing Agreement The Company and its wholly owned subsidiary, PMI, entered into a manufacturing agreement (the “Manufacturing Agreement”) with Mylan Consumer Healthcare Inc. (formerly known as Meda Consumer Healthcare Inc.) (“MCH”) and Mylan Inc. (together with MCH, “Mylan” in connection with the asset purchase agreement we entered into with Mylan in 2017. Pursuant to the terms of the Manufacturing Agreement, Mylan (or an affiliate or designee) purchased the inventory of the Company’s Cold-EEZE® brand and product line, and PMI agreed to manufacture certain products for Mylan, as described in the Manufacturing Agreement, at prices that reflect current market conditions for such products and include an agreed upon mark-up on our costs. On May 1, 2021, the Manufacturing Agreement was assigned by Mylan to Nurya Brands, Inc. (“Nurya”) in connection with Nurya’s acquisitions of certain assets from Mylan, including the Cold-EEZE® brand and product line. Unless terminated sooner by the parties, the Manufacturing Agreement will remain in effect until March 29, 2023. Thereafter, the Manufacturing Agreement may be renewed by Nurya for up to four successive one-year periods by providing notice of its intent to renew not less than 90 days prior to the expiration of the then-current term. License Agreement On July 19, 2022, the Company through its wholly-owned subsidiary ProPhase BioPharma entered into a License Agreement (the “License Agreement”) with Global BioLife, Inc. (the “Licensor”), with an effective date of July 18, 2022 (the “Linebacker Effective Date”), pursuant to which it acquired from Licensor a worldwide exclusive right and license under certain patents identified in the License Agreement (the “Licensed Patents”) and know-how (collectively, the “Licensed IP”) to exploit any compound covered by the Licensed Patents (the “Licensed Compound”), including Linebacker LB1 and LB2, and any product comprising or containing a Licensed Compound (“Licensed Products”) in the treatment of cancer, inflammatory diseases or symptoms, memory-related syndromes, diseases or symptoms including dementia and Alzheimer’s Disease (the “Field”). Under the terms of the License Agreement, the Licensor reserves the right, solely for itself and for GRDG Sciences, LLC (“GRDG”) to use the Licensed Compound and Licensed IP solely for research purposes inside the Field and for any purpose outside the Field. Subject to certain conditions set forth in the License Agreement, the Company may grant sublicenses (including the right to grant further sublicenses) to its rights under the License Agreement to any of its affiliates or any third party with the prior written consent of Licensor, which consent may not be unreasonably withheld. Either party to the License Agreement may assign its rights under the License Agreement (i) in connection with the sale or transfer of all or substantially all of its assets to a third party, (b) in the event of a merger or consolidation with a third party or (iii) to an affiliate; in each case contingent upon the assignee assuming in writing all of the obligations of its assignor under the License Agreement. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Under the terms of License Agreement, the Company is 50,000 900,000 1 During the term of the License Agreement, the Company is also required to pay to Licensor 3 250,000 Under the terms of the License Agreement, the development of the Licensed Compound and the first Licensed Product for the United States will be governed by a clinical development plan, including anticipated timeline goals in connection with the clinical trials for the first Licensed Product (the “Development Plan”). The Development Plan may be amended by the mutual written agreement of the parties to the License Agreement based upon results of preclinical studies or clinical trials, including safety and effectiveness, guidance by the FDA, or upon the agreement of the parties. The License Agreement will expire automatically on a country-by-country basis upon the last to occur of the expiration of the last to expire Licensed Patents (the “Term”). Following the expiration of the Term, and on a country-by-country basis, the License will become non-exclusive, perpetual, fully-paid, unrestricted, royalty-free and irrevocable. The License Agreement may be terminated by ProPhase BioPharma for any reason or for convenience in its sole discretion: (i) on a Licensed Product-by-Licensed Product or a country-by-country basis or (ii) in its entirety, in either case ((i) or (ii)) for convenience upon 180 days prior written notice to Lessor. Lessor may terminate the License Agreement solely for a material breach of the License Agreement by ProPhase BioPharma, which is not cured within 60 days’ of written notice to ProPhase BioPharma of such breach. In connection with the License Agreement, the Company has incurred approximately $ 15,000 Future Obligations We have estimated future minimum obligations for an executive’s employment agreement over the next five years as of September 30, 2022, as follows (in thousands): Schedule of Estimated Future Minimum Obligations Employment Contracts Remaining periods in 2022 $ 256 2023 1,025 2024 1,025 2025 1,025 2026 1,025 Total $ 4,356 Litigation In the normal course of our business, we may be named as a defendant in legal proceedings. It is our policy to vigorously defend litigation or to enter into a reasonable settlement where management deems it appropriate. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | Note 12 – Leases On October 23, 2020, we completed the acquisition of CPM, which included the acquisition of a 4,000 5,950 New York Second Floor Lease On December 8, 2020, the Company entered into a Lease Agreement (the “NY Second Floor Lease”) with BRG Office L.L.C. and Unit 2 Associates L.L.C. (the “Landlord”), pursuant to which the Company leases certain premises located on the second floor (the “Second Floor Leased Premises”) of 711 Stewart Avenue, Garden City, New York (the “Building”). The Second Floor Leased Premises serve as the Company’s second location and corporate headquarters, offering a wide range of laboratory testing services for diagnosis, screening and evaluation of diseases, including COVID-19 and Respiratory Pathogen Panel Molecular tests. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) New York Second Floor Lease (continued) The NY Second Floor Lease was effective as of December 8, 2020, and commenced in January 2021 (the “Second Floor Commencement Date”) when the facility was made available to us by the landlord. The initial term of the NY Second Floor Lease is 10 seven months We have the option to terminate the NY Second Floor Lease on the sixth anniversary of the Second Floor Commencement Date, provided that we give the landlord advance written notice of not less than nine months and not more than 12 months in advance and that we pay the landlord a termination fee For the first year of the NY Second Floor Lease, we paid a base rent of $ 56,963 2.75 74,716 We also have a right of first refusal to lease certain additional space located on the ground floor of the Building containing 4,500 square feet and 4,600 square feet, as more particularly described in the NY Second Floor Lease. We also have a right of first offer to purchase the Building during the term of the NY Second Floor Lease On June 10, 2022, we entered into a First Amendment to the NY Second Floor Lease (the “Second Floor Lease Amendment”). The Second Floor Lease Amendment amends the NY Second Floor Lease to provide that any uncured default by the Company or any of its affiliate under the NY First Floor Lease (defined below) will constitute a default by the Company under the NY Second Floor Lease. New York First Floor Lease On June 10, 2022, the Company entered into a second Lease Agreement (the “NY First Floor Lease”) with Landlord, pursuant to which the Company leases approximately 4,516 The NY First Floor Lease became effective as of June 10, 2022 and will commence upon the date of the Landlord’s substantial completion of certain improvements to the NY First Floor Leased Premises (the “First Floor Commencement Date”), as set forth in the NY First Floor Lease, targeted to be approximately five months from the execution of the NY First Floor Lease. The initial term of the NY First Floor Lease will expire on July 15, 2031, unless sooner terminated as provided in the NY First Floor Lease. The Company may extend the term of the NY First Floor Lease for one additional option period of five years For the first year of the NY First Floor Lease, the Company will pay a base rent of $ 11,290 2.75 14,026 203,220 At September 30, 2022, we had operating lease liabilities for the New York and New Jersey leases of approximately $ 4.6 4.1 The following summarizes quantitative information about our operating leases (amounts in thousands): Summary of Quantitative Information About Operating Leases For the three months ended For the nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Operating leases Operating lease cost $ 204 $ 204 $ 612 $ 611 Operating lease expense 204 204 612 611 Total rent expense $ 204 $ 204 $ 612 $ 611 For the nine months ended September 30, 2022 September 30, 2021 Operating cash flows used in operating leases $ (580 ) $ (168 ) Weighted-average remaining lease term – operating leases (in years) 8.8 9.7 Weighted-average discount rate – operating leases 10.00 % 10.00 % ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Maturities of the Company’s operating leases, excluding short-term leases, are as follows (in thousands): Schedule of Maturity of Operating Leases Remaining periods in the year ended December 31, 2022 $ 193 Year Ended December 31, 2023 739 Year Ended December 31, 2024 747 Year Ended December 31, 2025 768 Year Ended December 31, 2026 783 Thereafter 3,876 Total 7,106 Less present value discount (2,468 ) Operating lease liabilities $ 4,638 |
Consulting Agreement and Secure
Consulting Agreement and Secured Promissory Note Receivable | 9 Months Ended |
Sep. 30, 2022 | |
Consulting Agreement And Secured Promissory Note Receivable | |
Consulting Agreement and Secured Promissory Note Receivable | Note 13 – Consulting Agreement and Secured Promissory Note Receivable Promissory Note and Security Agreement On September 25, 2020 (the “Restatement Effective Date”), we entered into the Secured Note with a company consulting for us (“the Consultant”), pursuant to which we loaned $ 3.0 1.0 The Secured Note amended and restated in its entirety (i) that certain Promissory Note and Security Agreement, dated July 21, 2020 (the “Original July 21 Note”), pursuant to which we loaned $ 750,000 250,000 Commencing after September 1, 2021, in addition to payments of interest, the Consultant is also required to make payments on the principal amount of the loan equal to 1/36 of the then outstanding principal amount. The entire remaining unpaid principal amount of the Secured Note, together with all accrued and unpaid interest thereon and all other amounts payable under the Secured Note, was due and payable on September 30, 2022. As discussed in Amendment and Termination Agreement below, the Company issued a Notice of Default to the Consultant on October 11, 2021. Amendment and Termination Agreement On January 14, 2021, we entered into an Amendment and Termination Agreement (the “Termination Agreement”) with the Consultant pursuant to which the parties amended the Secured Note and terminated the former consulting agreement with the Consultant (the “Consulting Agreement”). Pursuant to the terms of the Termination Agreement, the Company loaned an additional $1 million to the Consultant in consideration for the termination of the Consulting Agreement and termination of the Company’s obligation to pay any additional consulting fees. As a result, the initial principal amount due under the Secured Note was increased from $ 2.75 3.75 Under the terms of the Termination Agreement, the Consultant will continue to sell and process its viral test by RT-PCR (together with other viral and other types of tests). Until the Secured Note is paid in full, each COVID-19 Test Kit sold or processed from and after January 14, 2021, and for which payment of at least the specified amount as defined for the test, is received by the Consultant, the Consultant will pay us a specified amount (the “Test Fee”). We received the first payment in the amount of $ 95,000 1,260,619 315,000 Effective September 1, 2021, in addition to the payment of the Test Fees described above, the Consultant is also required to make payments to us in an amount equal to the greater of (x) the Test Fee, or (y) 1/36th of the then outstanding principal amount together with interest thereon. The Company did not receive any payments from the Consultant for either contractual principal or interest. On October 11, 2021, the Company provided the Consultant with a Notice of Default and demanded the Secured Note be paid in full immediately. On January 25, 2022, the Company filed a complaint with the United States District Court for the District of Delaware for judgment against the Consultant for money damages consisting of principal, interest, default interest and other fees and costs. As a result, the Company considered that it is not probable that it will collect all amounts due under the Secured Note and reduced the carrying value of the Secured Note to $ 0 3.75 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Significant Customer Concentrat
Significant Customer Concentrations | 9 Months Ended |
Sep. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
Significant Customer Concentrations | Note 14 - Significant Customer Concentrations Revenue for the three months ended September 30, 2022 and 2021 was $ 24.2 9.5 73.8 19.6 12.0 10.4 Revenue for the nine months ended September 30, 2022 and 2021 was $ 100.8 33.9 54.8 13.0 28.4 20.7 One diagnostic services payer comprised 70.3 43.0 11.6 10.7 10.7 Currently, we rely on a sole supplier to manufacture our saliva collection kits used by customers who purchase our personal genomics services. Change in the supplier or design of certain of the materials that we rely on, in particular the saliva collection kit, could result in a requirement for additional premarket review from the FDA before making such a change. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Note 15 - Segment Information The Company has identified two operating segments, diagnostic services and consumer products, based on the manner in which the Company’s CEO as CODM assesses performance and allocates resources across the organization. The operating segments are organized in a manner that depicts the difference in revenue generating synergies that include the separate processes, profit generation and growth of each segment. The diagnostic services segment provides COVID-19 diagnostic information services to a broad range of customers in the United States, including health plans, third party payers and government organizations. The consumer products segment is engaged in the research, development, manufacture, distribution, marketing and sale of OTC consumer healthcare products and dietary supplements in the United States and also provides personal genomics products and services. The unallocated corporate expenses mainly included professional fees associated with the public company. The following table is a summary of segment information for three and nine months ended September 30, 2022 and 2021 (amounts in thousands): Schedule of Segment Information For the three months ended For the nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Net revenues Diagnostic services $ 20,541 $ 7,142 $ 91,613 $ 27,416 Consumer products 3,659 2,330 9,211 6,469 Consolidated net revenue 24,200 9,472 100,824 33,885 Cost of revenue Diagnostic services 8,452 4,009 33,558 11,833 Consumer products 3,775 1,486 7,895 4,682 Consolidated cost of revenue 12,227 5,495 41,453 16,515 Depreciation and amortization expense Diagnostic services 584 401 1,755 1,138 Consumer products 435 - 1,637 6 Total Depreciation and amortization expense 1,019 401 3,392 1,144 Operating and other expenses 9,176 13,020 27,882 20,542 Income (loss) from operations, before income taxes Diagnostic services 6,776 (1,145 ) 39,671 2,859 Consumer products (3,214 ) (958 ) (5,390 ) (453 ) Unallocated corporate (1,785 ) (1,875 ) (6,184 ) (6,722 ) Total income from operations, before income taxes 1,777 (3,978 ) 28,097 (4,316 ) Income tax expense (809 ) - (7,190 ) - Total income (loss) from operations, after income taxes 968 (3,978 ) 20,907 (4,316 ) Net income (loss) $ 968 $ (3,978 ) $ 20,907 $ (4,316 ) ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) The following table is a summary of segment information as of September 30, 2022 and December 31, 2021 (amounts in thousands): September 30, 2022 December 31, 2021 ASSETS Diagnostic services $ 53,631 $ 51,150 Consumer products 22,373 24,139 Unallocated corporate 21,873 14,006 Total assets $ 97,877 $ 89,295 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 16 - Earnings Per Share Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or otherwise result in the issuance of common stock that shared in the earnings of the entity. Diluted EPS also utilizes the treasury stock method which prescribes a theoretical buy back of shares from the theoretical proceeds of all options outstanding during the period, and the if-converted method for convertible debt. The following is a reconciliation of the weighted average number of common shares outstanding used in calculating basic and diluted net loss per share (in thousands): Schedule of Basic and Diluted Net Loss Per Share September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 For the three months ended For the nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Net income - basic $ 968 $ (3,978 ) $ 20,907 $ (4,136 ) Interest on unsecured convertible promissory note 201 - 635 - Net income - diluted $ 1,169 $ (3,978 ) $ 21,542 $ (4,136 ) Weighted average shares outstanding - basic 15,898 15,439 15,712 15,055 Diluted shares- Stock Options 2,453 - 1,925 - Diluted shares- Stock Warrants 1,097 - 1,067 - Unsecured convertible promissory note 800 - 800 - Weighted average shares outstanding - diluted 20,248 15,439 19,504 15,055 The following table represents the number of securities excluded from the income per share computation as a result of their anti-dilutive effect (in thousands): Schedule of Anti-dilutive Securities Excluded from the Income Per Share Computation For the three months ended For the nine months ended Anti-dilutive securities September 30, 2022 September 30, September 30, September 30, Common stock purchase warrants 455 455 455 299 Stock Options 370 730 610 730 Unsecured convertible promissory note - 1,000 - 1,000 Anti-dilutive securities 825 2,185 1,065 2,029 |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Parties | Note 17 - Related Parties Jason Karkus, President of ProPhase Diagnostics, is the son of Ted Karkus, the Company’s Chairman and Chief Executive Officer. For the nine months ended September 30, 2022 and 2021, Mr. Karkus received compensation of $165,000 and $139,000, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 18 - Subsequent Events Separation Agreement On October 4, 2022 (the “Separation Effective Date”), the Company and Bill White, the Company’s then Chief Financial Officer, agreed to a voluntary separation of employment from the Company, effective as of the Separation Effective Date. Mr. White will serve as a consultant to the Company through December 31, 2022. In connection with the separation, the Company entered into a Separation Agreement and Release (the “Separation Agreement”) with Mr. White, dated as of the Separation Effective Date, which provides that, subject to his execution and non-revocation of a release of claims against the Company, the Company will pay Mr. White a separation payment of $ 10,000 90,000 Stock Options Granted On October 9, 2022, the Company issued 100,000 772,000 3.0 On October 30, 2022, the Company issued 60,000 449,000 2.4 Other In November 2022, the Company purchased an aggregate of 664,592 2.9 664,592 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements, and therefore do not include all disclosures that might normally be required for financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit and should be read in conjunction with our audited consolidated financial statements, including the notes thereto, appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position, consolidated results of operations and other comprehensive loss and consolidated cash flows, for the periods indicated, have been made. The results of operations for the three and nine months ended September 30, 2022, are not necessarily indicative of operating results that may be achieved over the course of the full year. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Segments | Segments In accordance with FASB ASC 280, “Segment Reporting” (“ASC 280”), the Company discloses financial and descriptive information about its reportable operating segments. ASC 280 establishes standards for reporting information about operating segments in annual and interim financial statements and requires that companies report financial and descriptive information about their reportable segments based on a management approach. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. Operating segments are defined as components of an enterprise that engage in business activities for which separate financial information is available and is evaluated by the Chief Operating Decision Maker (“CODM”), which for the Company is its Chief Executive Officer, in deciding how to allocate resources and assess performance. We maintain two operating segments: diagnostic services (which includes our COVID-19 and other diagnostic testing services) and consumer products (which includes our contract manufacturing, retail customers and personal genomics products and services) (see Note 15 Segment Information). |
Business and Liquidity Risks and Uncertainties | Business and Liquidity Risks and Uncertainties Our diagnostic service business is and will continue to be impacted by the level of demand for COVID-19 and other diagnostic testing, how long this demand persists, the prices we are able to receive for performing our testing services, our ability to collect payment or reimbursement for our testing services, as well as the availability of COVID-19 testing from other laboratories and the period of time for which we are able to serve as an authorized laboratory offering COVID-19 testing under various Emergency Use Authorizations. While our revenues increased significantly since the launch of our diagnostic services business, we have been dependent on both government agency and insurance company reimbursement as well as the prevalence of COVID-19 associated strains. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), was enacted, providing for reimbursement to healthcare providers for COVID-19 tests provided to uninsured individuals, subject to continued available funding. Approximately 31.5 64.7 On March 22, 2022, the Health Resources & Services Administration (HRSA) program stopped accepting claims for COVID-19 testing and treatment due to lack of sufficient funds. As a result of the suspension of the HRSA uninsured program, we have not recognized any revenue related to COVID-19 testing that we performed for uninsured individuals from March 22, 2022 through September 30, 2022. For the nine months ended September 30, 2022, $ 27.7 26.5 The Company’s future capital needs and the adequacy of its available funds will depend on its ability to achieve sustained profitability from its diagnostic services, the Company’s ability to successfully diversify its diagnostic services revenue streams and the Company’s ability to market and grow its personal genomics business. The Company may be required to raise additional funds through equity or debt securities offerings or strategic collaboration and/or licensing agreements in order to fund operations until it is able to generate enough revenues. Such financing may not be available on acceptable terms, or at all, and the Company’s failure to raise capital when needed could have a material adverse effect on its strategic objectives, results of operations and financial condition. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements and the accompanying notes thereto, in conformity with GAAP, requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the respective reporting periods. Examples include revenue recognition and the impact of the variable consideration of diagnostic test reimbursement rates, the provision for uncollectible receivables and billing errors, allowances, slow moving and/or dated inventory and associated provisions, the potential impairment of long-lived assets, stock based compensation valuations, income tax asset valuations and assumptions related to accrued advertising. Our estimates and assumptions are based on historical experience, current trends and other factors that management believes to be relevant at the time the condensed consolidated financial statements are prepared. Management reviews the accounting policies, assumptions, estimates and judgments on a quarterly basis. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents include cash on hand and monies invested in money market funds. The carrying amount approximates the fair market value due to the short-term maturity of these securities. |
Restricted Cash | Restricted Cash Restricted cash as of December 31, 2021 includes approximately $ 250,000 |
Marketable Debt Securities | Marketable Debt Securities We have classified our investments in marketable debt securities as available-for-sale and as a current asset. Our investments in marketable debt securities are carried at fair value, with unrealized gains and as a separate component of stockholders’ equity. Realized gains and losses from our marketable debt securities are recorded as interest income (expense). These investments in marketable debt securities carry maturity dates between one and three years from date of purchase. The following is a summary of the components of our marketable debt securities and the underlying fair value input level tier hierarchy (in thousands) (see fair value of financial instruments): Summary of Components of Marketable Securities As of September 30, 2022 Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. government obligations $ 1,448 $ - $ (93 ) $ 1,355 Corporate obligations 2,342 129 (148 ) 2,323 $ 3,790 $ 129 $ (241 ) $ 3,678 As of December 31, 2021 Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. government obligations $ 650 $ 17 $ - $ 667 Corporate obligations 8,304 - (192 ) 8,112 $ 8,954 $ 17 $ (192 ) $ 8,779 |
Marketable Equity Securities | Marketable Equity Securities Marketable equity securities are recorded at fair value in the condensed consolidated balance sheets. The change in fair value of marketable equity securities is recognized within other non-operating income, net in the condensed consolidated statements of operations and comprehensive income (loss). On June 25, 2021, we were issued 1,260,619 315,000 76,000 112,000 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable consists primarily of amounts due from government agencies and healthcare insurers for our diagnostic services. Unbilled accounts receivable relates to the delivery of our diagnostic testing services for which the related billings will occur in a future period, after a patient’s insurance information has been validated, and represent amounts for which we have a right to receive payment. Unbilled accounts receivable is classified as accounts receivable on the condensed consolidated balance sheet. We carry our accounts receivable at the amount of consideration for which we expect to be entitled less allowances. When estimating the allowances for our diagnostics business, the Company pools its receivables based on the following payer types: healthcare insurers and government payers. The Company principally estimates the allowances by pool based on historical collection experience, current economic conditions, government and healthcare insurer payment trends, and the period of time that the receivables have been outstanding. Should a payer’s reimbursement policy change or their credit quality deteriorate, the Company removes the payer from their respective pools and establishes allowances based on the individual risk characteristics of such payer. Accounts are written off as uncollectible at the time we determine that collections are unlikely. Accounts receivable, net is comprised of the following (in thousands): Schedule of Accounts Receivable Net September 30, 2022 December 31, 2021 Trade accounts receivable $ 38,231 $ 18,520 Unbilled accounts receivable 6,031 23,089 Accounts receivable, gross 44,262 41,609 Less allowances (6,430 ) (3,901 ) Total accounts receivable $ 37,832 $ 37,708 |
Inventory, net | Inventory, net Inventory is valued at the lower of cost, determined on a first-in, first-out basis (“FIFO”), or net realizable value. Inventory items are analyzed to determine cost and the net realizable value and appropriate valuation adjustments are established. At September 30, 2022 and December 31, 2021, the components of inventory are as follows (in thousands): Schedule of Components of Inventory September 30, 2022 December 31, 2021 Diagnostic services testing material $ 2,271 $ 2,989 Raw materials 1,904 1,514 Work in process 609 260 Finished goods 383 272 Inventory $ 5,167 $ 5,035 Inventory valuation reserve (255 ) (435 ) Inventory, net $ 4,912 $ 4,600 |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost. We use the straight-line method in computing depreciation for financial reporting purposes. Depreciation expense is computed in accordance with the following ranges of estimated asset lives: building and improvements - ten to thirty-nine years; machinery and equipment including lab equipment - three to seven years; computer equipment and software - three to five years; and furniture and fixtures - five years |
Concentration of Financial Risks | Concentration of Financial Risks Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments, marketable debt securities, and accounts receivable. Our marketable securities are fixed income investments, which are highly liquid and can be readily purchased or sold through established markets. We maintain cash and cash equivalents with certain major financial institutions. As of September 30, 2022, our cash and cash equivalents was $ 22.8 1.0 21.8 Accounts receivable subject us to credit risk concentrations from time-to-time. We extend credit to our consumer healthcare product customers based upon an evaluation of the customer’s financial condition and credit history and generally do not require collateral. Our diagnostic services receivable credit risk is based on payer reimbursement experience, which includes government agencies and healthcare insurers, the period the receivables have been outstanding and the historical collection rates. The collectability of the diagnostic services receivables is also directly linked to the quality of our billing processes, which depends on information provided to the payors and meeting their requirements for reimbursement. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Leases | Leases At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Most leases with a term greater than one year are recognized on the condensed consolidated balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. We have elected not to recognize on the condensed consolidated balance sheet leases with terms of 12 months or less. We typically only include an initial lease term in our assessment of a lease arrangement. Options to renew a lease are not included in our assessment unless there is reasonable certainty that we will renew. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in our leases is typically not readily determinable. As a result, we utilize our incremental borrowing rate, which reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term and in a similar economic environment (see Note 12, Leases). The components of a lease should be allocated between lease components ( e.g e.g |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of the fair value of the consideration transferred over the fair value of the underlying identifiable assets and liabilities acquired in a business combination. Goodwill and intangible assets deemed to have an indefinite life are not amortized, but instead are assessed for impairment annually. Additionally, if an event or change in circumstances occurs that would more likely than not reduce the fair value of the reporting unit below its carrying value, we would evaluate goodwill at that time. In testing for goodwill impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. If we conclude otherwise, we are required to perform the two-step impairment test. The goodwill impairment test is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not impaired. If the estimated fair value is less than the carrying value, an impairment charge will be recorded to reduce the reporting unit to fair value. There have been no triggering events during the nine months ended September 30, 2022 and thus, there has been no adjustment to goodwill as of September 30, 2022. Intangible assets deemed to have finite lives are amortized on a straight-line basis over their estimated useful lives, where the useful life is the period over which the asset is expected to contribute directly, or indirectly, to our future cash flows. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We measure assets and liabilities at fair value based on expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale date of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) The following are the hierarchical levels of inputs to measure fair value: ● Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable, accounts payable, and unsecured note payable, approximate their fair values because of the short-term nature of these instruments. We account for our marketable securities at fair value, with the net unrealized gains or losses of marketable debt securities reported as a component of accumulated other comprehensive income or loss and marketable equity securities change in fair value reported on the condensed consolidated statements of operation and comprehensive income (loss). The components of marketable securities are as follows (in thousands): Schedule of Fair Value of Financial Instruments As of September 30, 2022 Level 1 Level 2 Level 3 Total U.S. government obligations $ - $ 1,355 $ - $ 1,355 Corporate obligations - 2,323 - 2,323 $ - $ 3,678 $ - $ 3,678 As of December 31, 2021 Level 1 Level 2 Level 3 Total U.S. government obligations $ - $ 667 $ - $ 667 Corporate obligations - 8,112 - 8,112 Marketable equity securities 76 - - 76 $ 76 $ 8,779 $ - $ 8,855 There were no transfers of marketable debt securities between Levels 1, 2 or 3 for the nine months ended September 30, 2022 and 2021. |
Revenue Recognition | Revenue Recognition We recognize revenue that represents the transfer of promised goods or services to customers at an amount that reflects the consideration that is expected to be received in exchange for those goods or services. We recognize revenue when performance obligations with our customers have been satisfied. At contract inception, we evaluate the contract to determine if revenue should be recognized using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Contract with Customers and Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Sales from product shipments to contract manufacturing and retailer customers are recognized at the time ownership is transferred to the customer. Revenue from diagnostic services is recognized when the results are made available to the customer. Revenue from our personal genomics business is recognized when the genetic testing results are provided to the customer. For subscription services associated with our genomic testing, we recognize revenue ratably over the term of the subscription. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Transaction Price For contract manufacturing and retail customers, the transaction price is fixed based upon either (i) the terms of a combined master agreement and each related purchase order, or (ii) if there is no master agreement, the price per individual purchase order received from each customer. The customers are invoiced at an agreed upon contractual price for each unit ordered and delivered by the Company. Revenue from retail customers is reduced for trade promotions, estimated sales returns and other allowances in the same period as the related sales are recorded. No such allowance is applicable to our contract manufacturing customers. We estimate potential future product returns and other allowances related to current period revenue. We analyze historical returns, current trends, and changes in customer and consumer demand when evaluating the adequacy of the sales returns and other allowances. We do not accept returns from our contract manufacturing customers. Our return policy for retail customers accommodates returns for (i) discontinued products, (ii) store closings and (iii) products that have reached or exceeded their designated expiration date. We do not impose a period of time during which product may be returned. All requests for product returns must be submitted to us for pre-approval. We will not accept return requests pertaining to customer inventory “Overstocking” or “Resets”. We will accept return requests only for products in their intended package configuration. We reserve the right to terminate shipment of product to customers who have made unauthorized deductions contrary to our return policy or pursue other methods of reimbursement. We compensate the customer for authorized returns by means of a credit applied to amounts owed. For our diagnostic services business, a revenue transaction is initiated when we receive a requisition order to perform a diagnostic test. The information provided on the requisition form is used to determine the party that will be billed for the testing performed and the expected reimbursement. We provide diagnostic services to a range of customers. In many cases, the customer that orders our services is not responsible for paying for these services. Depending on the billing arrangement and applicable law, the payer may be the patient or a third party, such as a health plan, Medicare or Medicaid program and other government reimbursement programs. We bill the providers at standard price and take into consideration negotiated discounts and anticipated reimbursement remittance adjustments based on the payer portfolio, when revenue is recorded. We use the most expected value method to estimate the transaction price for reimbursements that vary from the listed contract price. For our personal genomics business, a revenue transaction is initiated by a DNA test kit sale direct to the consumer via our website or through online retailers. The kit sales and subscriptions are billed at a standard price and take into consideration any discounts when revenue is recorded. Recognize Revenue When the Company Satisfies a Performance Obligation Recognition for contract manufacturing and retail customers is satisfied at a point in time when the goods are shipped to the customer as (i) we have transferred control of the assets to the customers upon shipping, and (ii) the customer obtains title and assumes the risks and rewards of ownership after the goods are shipped. For diagnostic services, recognition occurs at the point in time that the results are made available to the customer, which is when the customer benefits from the information contained in the results and obtains control. For genomic services, we satisfy our product performance obligation at a point in time when the genetic testing results are provided to the customer. For subscriptions services associated with our genomic testing, we satisfy our performance obligation ratably over the subscription period. If the customer does not return the test kit, services cannot be completed by us, potentially resulting in unexercised rights (“breakage”) revenue, including lifetime subscription services. We estimate breakage for the portion of test kits not expected to be returned using an analysis of historical data and consider other factors that could influence customer test kit return behavior. When breakage revenue is recognized on a kit, we recognize breakage on any associated subscription services ratably over the term of the subscription. The Company recognized breakage revenue from aggregate unreturned test kits and subscriptions of $ 0.3 1.0 0.1 ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Contract Balances Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance of services performed for the research and development (“R&D”) work. As of September 30, 2022 and December 31, 2021, we have deferred revenue of $ 3.9 2.9 3.7 2.7 12 36 The following table disaggregates our deferred revenue by recognition period (in thousands): Schedule of Deferred Revenue Recognition Period September 30, 2022 December 31, 2021 0-12 Months $ 2,958 $ 2,034 13-24 Months 626 530 Over 24 Months 301 375 Total $ 3,885 $ 2,939 Disaggregation of Revenue We disaggregate revenue from contracts with customers into four categories: diagnostic services, contract manufacturing, retail and others, and genomic products and services. We determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The following table disaggregates the Company’s revenue by revenue source for the three and nine months ended September 30, 2022 and 2021 (in thousands): Schedule of Disaggregation by Revenue For the three months ended For the nine months ended Revenue by Customer Type September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Diagnostic services $ 20,542 $ 7,142 $ 91,613 $ 27,416 Contract manufacturing 2,749 1,120 5,662 4,069 Retail and others 357 1,210 1,369 2,400 Genomic products and services 552 - 2,180 - Total revenue, net $ 24,200 $ 9,472 $ 100,824 $ 33,885 Customer Consideration The Company makes payments to certain diagnostic services customers for distinct services that approximate the fair value for those services. Such services include specimen collection, the collection and delivery of insurance and patient information necessary for billing and collection, and logistics services. Consideration associated with specimen collection services is classified in cost of revenues and the remaining costs are classified as diagnostic expenses within operating expenses in the accompanying condensed consolidated statements of operations and comprehensive income (loss). Sales Tax Exclusion from the Transaction Price We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Shipping and Handling Activities We account for shipping and handling activities that we perform as activities to fulfill the promise to transfer the good. |
Advertising and Incentive Promotions | Advertising and Incentive Promotions Advertising and incentive promotion costs are expensed within the period in which they are utilized. Advertising and incentive promotion expense is comprised of (i) media advertising, presented as part of general and administrative expense, (ii) cooperative incentive promotions and coupon program expenses, which are accounted for as part of net revenue, and (iii) free product, which is accounted for as part of cost of revenues. Advertising and incentive promotion expenses incurred for the three months ended September 30, 2022 and 2021 were $ 161,000 136,000 286,000 415,000 |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with FASB ASC 718, “Compensation - Stock Compensation.” Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model and stock grants at their closing reported market value. We recognize all stock-based payments to employees and directors, including grants of stock options, as compensation expense in the condensed consolidated financial statements based on their grant date fair values. The grant date fair values of stock options are determined through the use of the Black-Scholes option pricing model. The compensation cost is recognized as an expense over the requisite service period of the award, which usually coincides with the vesting period. We account for forfeitures as they occur. Stock and stock options to purchase our common stock have been granted to employees pursuant to the terms of certain agreements and stock option plans (see Note 7, Stockholders’ Equity). Stock options are exercisable during a period determined by us, but in no event later than seven years from the date granted. |
Research and Development | Research and Development R&D costs are charged to operations in the period incurred. R&D costs incurred for the three months ended September 30, 2022 and 2021 were $ 110,000 208,000 174,000 416,000 |
Income Taxes | Income Taxes The Company recognizes deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. The provision for, or benefit from, income taxes includes deferred taxes resulting from the temporary differences in income for financial and tax purposes using the liability method. Future realization of deferred income tax assets requires sufficient taxable income within the carryback, carryforward period available under tax law. We evaluate, on a quarterly basis whether, based on all available evidence, it is probable that the deferred income tax assets are realizable. Valuation allowances are established when it is more likely than not that the tax benefit of the deferred tax asset will not be realized. The evaluation, as prescribed by ASC 740- 10, “Income Taxes,” includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. The Company accounts for uncertainties in income taxes under the provisions of FASB ASC 740-10-05 (the “Subtopic”). The Subtopic clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The Subtopic prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Subtopic provides guidance on the de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) |
Recently Issued Accounting Standards, Adopted | Recently Issued Accounting Standards, Adopted The Financial Accounting Standards Board (“FASB”) recently issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Earnings Per Share In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted ASU 2021-04 on January 1, 2022. The adoption of ASU 2021-04 did not have a material impact on the Company’s condensed consolidated financial statements or disclosures. |
Recently Issued Accounting Standards, Not Yet Adopted | Recently Issued Accounting Standards, Not Yet Adopted In September 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. In February 2020, the FASB issued ASU 2020-02, Financial Instruments - Credit Losses (Topic 326), which amends the effective date of the original pronouncement for smaller reporting companies. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. We are currently assessing the impact of the adoption of this ASU on our condensed consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB is issuing this Update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. We are currently assessing the impact of the adoption of this ASU on our condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Components of Marketable Securities | The following is a summary of the components of our marketable debt securities and the underlying fair value input level tier hierarchy (in thousands) (see fair value of financial instruments): Summary of Components of Marketable Securities As of September 30, 2022 Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. government obligations $ 1,448 $ - $ (93 ) $ 1,355 Corporate obligations 2,342 129 (148 ) 2,323 $ 3,790 $ 129 $ (241 ) $ 3,678 As of December 31, 2021 Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. government obligations $ 650 $ 17 $ - $ 667 Corporate obligations 8,304 - (192 ) 8,112 $ 8,954 $ 17 $ (192 ) $ 8,779 |
Schedule of Accounts Receivable Net | Accounts are written off as uncollectible at the time we determine that collections are unlikely. Accounts receivable, net is comprised of the following (in thousands): Schedule of Accounts Receivable Net September 30, 2022 December 31, 2021 Trade accounts receivable $ 38,231 $ 18,520 Unbilled accounts receivable 6,031 23,089 Accounts receivable, gross 44,262 41,609 Less allowances (6,430 ) (3,901 ) Total accounts receivable $ 37,832 $ 37,708 |
Schedule of Components of Inventory | At September 30, 2022 and December 31, 2021, the components of inventory are as follows (in thousands): Schedule of Components of Inventory September 30, 2022 December 31, 2021 Diagnostic services testing material $ 2,271 $ 2,989 Raw materials 1,904 1,514 Work in process 609 260 Finished goods 383 272 Inventory $ 5,167 $ 5,035 Inventory valuation reserve (255 ) (435 ) Inventory, net $ 4,912 $ 4,600 |
Schedule of Fair Value of Financial Instruments | Schedule of Fair Value of Financial Instruments As of September 30, 2022 Level 1 Level 2 Level 3 Total U.S. government obligations $ - $ 1,355 $ - $ 1,355 Corporate obligations - 2,323 - 2,323 $ - $ 3,678 $ - $ 3,678 As of December 31, 2021 Level 1 Level 2 Level 3 Total U.S. government obligations $ - $ 667 $ - $ 667 Corporate obligations - 8,112 - 8,112 Marketable equity securities 76 - - 76 $ 76 $ 8,779 $ - $ 8,855 |
Schedule of Deferred Revenue | The following table disaggregates our deferred revenue by recognition period (in thousands): Schedule of Deferred Revenue Recognition Period September 30, 2022 December 31, 2021 0-12 Months $ 2,958 $ 2,034 13-24 Months 626 530 Over 24 Months 301 375 Total $ 3,885 $ 2,939 |
Schedule of Disaggregation by Revenue | The following table disaggregates the Company’s revenue by revenue source for the three and nine months ended September 30, 2022 and 2021 (in thousands): Schedule of Disaggregation by Revenue For the three months ended For the nine months ended Revenue by Customer Type September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Diagnostic services $ 20,542 $ 7,142 $ 91,613 $ 27,416 Contract manufacturing 2,749 1,120 5,662 4,069 Retail and others 357 1,210 1,369 2,400 Genomic products and services 552 - 2,180 - Total revenue, net $ 24,200 $ 9,472 $ 100,824 $ 33,885 |
Business Acquisition (Tables)
Business Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | Schedule of Assets Acquired and Liabilities Assumed Account Amount Short term investments $ 1,800 Accounts receivable 171 Inventory 133 Prepaid expenses and other current assets 379 Definite-lived intangible assets 10,990 Total assets acquired 13,473 Accounts payable (805 ) Accrued expenses and other current liabilities (43 ) Deferred revenue (2,391 ) Note payable (81 ) Deferred tax liability (1,925 ) Total liabilities assumed (5,245 ) Net identifiable assets acquired 8,228 Goodwill 4,446 Total consideration, net of cash acquired (1) $ 12,674 (1) Net of $ 1.6 |
Schedule of Intangible Assets Acquisition | The intangible assets identified in conjunction with the Nebula Acquisition are as follows (in thousands): Schedule of Intangible Assets Acquisition Gross Estimated Useful Trade names $ 5,550 15 Proprietary intellectual property 4,260 5 Customer relationships 1,180 1 Total $ 10,990 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets, Net | Intangible assets as of September 30, 2022 and December 31, 2021 consisted of the following (in thousands): Schedule of Intangible Assets, Net September 30, 2022 December 31, 2021 Estimated Useful Life (in years) Trade names $ 5,550 $ 5,550 15 Proprietary intellectual property 4,260 4,260 5 Customer relationships 1,180 1,180 1 CLIA license 1,307 1,307 3 Total intangible assets, gross 12,297 12,297 Less: accumulated amortization (3,408 ) (1,445 ) Total intangible assets, net $ 8,889 $ 10,852 |
Schedule of Estimated Future Amortization Expense of Acquired Intangible Assets | Schedule of Estimated Future Amortization Expense of Acquired Intangible Assets Remaining periods in the year ended December 31, 2022 $ 414 Year ended December 31, 2023 1,585 Year ended December 31, 2024 1,222 Year ended December 31, 2025 1,222 Year ended December 31, 2026 890 Thereafter 3,556 Total intangible assets, net $ 8,889 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | The components of property, plant and equipment are as follows (in thousands): Schedule of Property, Plant and Equipment September 30, 2022 December 31, 2021 Estimated Useful Life Land $ 352 $ 352 Building improvements 1,729 1,729 10 39 Machinery 4,892 4,740 3 7 Lab equipment 4,403 4,330 3 7 Computer equipment 2,140 1,211 3 5 Furniture and fixtures 461 468 5 Property, Plant and Equipment, Gross 13,977 12,830 Less: accumulated depreciation (7,914 ) (6,883 ) Total property, plant and equipment, net $ 6,063 $ 5,947 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Stock Options Activity | The following table summarizes stock option activity during the nine months ended September 30, 2022, (in thousands, except per share data). Schedule of Stock Options Activity Number Weighted Weighted Remaining Contractual Life (in years) Total Intrinsic Value ( 1 Outstanding as of January 1, 2022 5,110 $ 3.27 3.4 $ 20,820 Granted 935 9.60 6.6 - Cashless exercised (1,233 ) 1.91 - - Forfeited (20 ) 2.02 - - Outstanding as of September 30, 2022 4,792 $ 4.55 3.7 $ 32,899 Options vested and exercisable 3,280 $ 3.18 2.6 $ 26,819 |
Summary of Weighted Average Assumptions Used in Determining Fair Value of Warrants | The following table summarizes weighted average assumptions used in determining the fair value of the options at the date of grant during the nine months ended September 30, 2022 and 2021: Summary of Weighted Average Assumptions Used in Determining Fair Value of Warrants For the nine months ended September 30, 2022 2021 Exercise price $ 9.73 $ 7.48 Expected term (years) 4.5 3.9 Expected stock price volatility 79 % 80 % Risk-free rate of interest 2.3 % 0.7 % Expected dividend yield (per share) 0 % 0 % |
Schedule of Warrant Activity | The following table summarizes warrant activity during the nine months ended September 30, 2022 (in thousands, except per share data): Schedule of Warrant Activity Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding as of January 1, 2022 855 $ 8.23 1.9 Warrants granted - - - Outstanding as of September 30, 2022 855 $ 8.23 1.1 Warrants vested and exercisable 855 $ 8.23 1.1 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Current Liabilities | The following table sets forth the components of other current liabilities at September 30, 2022 and December 31, 2021, respectively (in thousands): Schedule of Other Current Liabilities September, 30 2022 December 31, 2021 Accrued commissions $ 2,448 $ 1,283 Accrued payroll 59 514 Accrued expenses 328 300 Accrued returns 311 338 Accrued benefits and vacation 49 60 Total other current liabilities $ 3,195 $ 2,495 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Estimated Future Minimum Obligations | We have estimated future minimum obligations for an executive’s employment agreement over the next five years as of September 30, 2022, as follows (in thousands): Schedule of Estimated Future Minimum Obligations Employment Contracts Remaining periods in 2022 $ 256 2023 1,025 2024 1,025 2025 1,025 2026 1,025 Total $ 4,356 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Summary of Quantitative Information About Operating Leases | The following summarizes quantitative information about our operating leases (amounts in thousands): Summary of Quantitative Information About Operating Leases For the three months ended For the nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Operating leases Operating lease cost $ 204 $ 204 $ 612 $ 611 Operating lease expense 204 204 612 611 Total rent expense $ 204 $ 204 $ 612 $ 611 For the nine months ended September 30, 2022 September 30, 2021 Operating cash flows used in operating leases $ (580 ) $ (168 ) Weighted-average remaining lease term – operating leases (in years) 8.8 9.7 Weighted-average discount rate – operating leases 10.00 % 10.00 % |
Schedule of Maturity of Operating Leases | Maturities of the Company’s operating leases, excluding short-term leases, are as follows (in thousands): Schedule of Maturity of Operating Leases Remaining periods in the year ended December 31, 2022 $ 193 Year Ended December 31, 2023 739 Year Ended December 31, 2024 747 Year Ended December 31, 2025 768 Year Ended December 31, 2026 783 Thereafter 3,876 Total 7,106 Less present value discount (2,468 ) Operating lease liabilities $ 4,638 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | The following table is a summary of segment information for three and nine months ended September 30, 2022 and 2021 (amounts in thousands): Schedule of Segment Information For the three months ended For the nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Net revenues Diagnostic services $ 20,541 $ 7,142 $ 91,613 $ 27,416 Consumer products 3,659 2,330 9,211 6,469 Consolidated net revenue 24,200 9,472 100,824 33,885 Cost of revenue Diagnostic services 8,452 4,009 33,558 11,833 Consumer products 3,775 1,486 7,895 4,682 Consolidated cost of revenue 12,227 5,495 41,453 16,515 Depreciation and amortization expense Diagnostic services 584 401 1,755 1,138 Consumer products 435 - 1,637 6 Total Depreciation and amortization expense 1,019 401 3,392 1,144 Operating and other expenses 9,176 13,020 27,882 20,542 Income (loss) from operations, before income taxes Diagnostic services 6,776 (1,145 ) 39,671 2,859 Consumer products (3,214 ) (958 ) (5,390 ) (453 ) Unallocated corporate (1,785 ) (1,875 ) (6,184 ) (6,722 ) Total income from operations, before income taxes 1,777 (3,978 ) 28,097 (4,316 ) Income tax expense (809 ) - (7,190 ) - Total income (loss) from operations, after income taxes 968 (3,978 ) 20,907 (4,316 ) Net income (loss) $ 968 $ (3,978 ) $ 20,907 $ (4,316 ) ProPhase Labs, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) The following table is a summary of segment information as of September 30, 2022 and December 31, 2021 (amounts in thousands): September 30, 2022 December 31, 2021 ASSETS Diagnostic services $ 53,631 $ 51,150 Consumer products 22,373 24,139 Unallocated corporate 21,873 14,006 Total assets $ 97,877 $ 89,295 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss Per Share | The following is a reconciliation of the weighted average number of common shares outstanding used in calculating basic and diluted net loss per share (in thousands): Schedule of Basic and Diluted Net Loss Per Share September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 For the three months ended For the nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Net income - basic $ 968 $ (3,978 ) $ 20,907 $ (4,136 ) Interest on unsecured convertible promissory note 201 - 635 - Net income - diluted $ 1,169 $ (3,978 ) $ 21,542 $ (4,136 ) Weighted average shares outstanding - basic 15,898 15,439 15,712 15,055 Diluted shares- Stock Options 2,453 - 1,925 - Diluted shares- Stock Warrants 1,097 - 1,067 - Unsecured convertible promissory note 800 - 800 - Weighted average shares outstanding - diluted 20,248 15,439 19,504 15,055 |
Schedule of Anti-dilutive Securities Excluded from the Income Per Share Computation | The following table represents the number of securities excluded from the income per share computation as a result of their anti-dilutive effect (in thousands): Schedule of Anti-dilutive Securities Excluded from the Income Per Share Computation For the three months ended For the nine months ended Anti-dilutive securities September 30, 2022 September 30, September 30, September 30, Common stock purchase warrants 455 455 455 299 Stock Options 370 730 610 730 Unsecured convertible promissory note - 1,000 - 1,000 Anti-dilutive securities 825 2,185 1,065 2,029 |
Summary of Components of Market
Summary of Components of Marketable Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Amortized Cost | $ 3,790 | $ 8,954 |
Unrealized Gains | 129 | 17 |
Unrealized Losses | (241) | (192) |
Fair Value | 3,678 | 8,779 |
U.S. Government Obligations [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Amortized Cost | 1,448 | 650 |
Unrealized Gains | 17 | |
Unrealized Losses | (93) | |
Fair Value | 1,355 | 667 |
Corporate Obligations [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Amortized Cost | 2,342 | 8,304 |
Unrealized Gains | 129 | |
Unrealized Losses | (148) | (192) |
Fair Value | $ 2,323 | $ 8,112 |
Schedule of Accounts Receivable
Schedule of Accounts Receivable Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Trade accounts receivable | $ 38,231 | $ 18,520 |
Unbilled accounts receivable | 6,031 | 23,089 |
Accounts receivable, gross | 44,262 | 41,609 |
Less allowances | (6,430) | (3,901) |
Total accounts receivable | $ 37,832 | $ 37,708 |
Schedule of Components of Inven
Schedule of Components of Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Diagnostic services testing material | $ 2,271 | $ 2,989 |
Raw materials | 1,904 | 1,514 |
Work in process | 609 | 260 |
Finished goods | 383 | 272 |
Inventory | 5,167 | 5,035 |
Inventory valuation reserve | (255) | (435) |
Inventory, net | $ 4,912 | $ 4,600 |
Schedule of Fair Value of Finan
Schedule of Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | $ 3,678 | $ 8,855 |
U.S. Government Obligations [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | 1,355 | 667 |
Corporate Obligations [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | 2,323 | 8,112 |
Marketable Equity Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | 76 | |
Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | 76 | |
Fair Value, Inputs, Level 1 [Member] | U.S. Government Obligations [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | ||
Fair Value, Inputs, Level 1 [Member] | Corporate Obligations [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | ||
Fair Value, Inputs, Level 1 [Member] | Marketable Equity Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | 76 | |
Fair Value, Inputs, Level 2 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | 3,678 | 8,779 |
Fair Value, Inputs, Level 2 [Member] | U.S. Government Obligations [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | 1,355 | 667 |
Fair Value, Inputs, Level 2 [Member] | Corporate Obligations [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | 2,323 | 8,112 |
Fair Value, Inputs, Level 2 [Member] | Marketable Equity Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | ||
Fair Value, Inputs, Level 3 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | ||
Fair Value, Inputs, Level 3 [Member] | U.S. Government Obligations [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | ||
Fair Value, Inputs, Level 3 [Member] | Corporate Obligations [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities | ||
Fair Value, Inputs, Level 3 [Member] | Marketable Equity Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of marketable debt securities |
Schedule of Deferred Revenue (D
Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Contract with customer liability | $ 3,885 | $ 2,939 |
0-12 Months [Member] | ||
Contract with customer liability | 2,958 | 2,034 |
13-24 Months [Member] | ||
Contract with customer liability | 626 | 530 |
Over 24 Months [Member] | ||
Contract with customer liability | $ 301 | $ 375 |
Schedule of Disaggregation by R
Schedule of Disaggregation by Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Product Information [Line Items] | ||||
Total revenue, net | $ 24,200 | $ 9,472 | $ 100,824 | $ 33,885 |
Diagnostic Services [Member] | ||||
Product Information [Line Items] | ||||
Total revenue, net | 20,542 | 7,142 | 91,613 | 27,416 |
Contract Manufacturing [Member] | ||||
Product Information [Line Items] | ||||
Total revenue, net | 2,749 | 1,120 | 5,662 | 4,069 |
Retail and Others [Member] | ||||
Product Information [Line Items] | ||||
Total revenue, net | 357 | 1,210 | 1,369 | 2,400 |
Genomic Products and Services [Member] | ||||
Product Information [Line Items] | ||||
Total revenue, net | $ 552 | $ 2,180 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jun. 25, 2021 | |
Product Information [Line Items] | ||||||
Net cash provided by used in operating activities | $ 27,740,000 | $ (8,972,000) | ||||
Cash equivalents at carrying value | $ 26,500,000 | 26,500,000 | ||||
Restricted cash | $ 250,000 | |||||
Fair value of investment securities | 51,000 | $ 33,000 | $ 112,000 | 111,000 | ||
Description of property plant and equipment useful lives | ranges of estimated asset lives: building and improvements - ten to thirty-nine years; machinery and equipment including lab equipment - three to seven years; computer equipment and software - three to five years; and furniture and fixtures - five years | |||||
Cash and cash equivalents | 22,799,000 | $ 22,799,000 | 8,408,000 | |||
Federal depository insurance | 1,000,000 | 1,000,000 | ||||
Uninsured | 21,800,000 | 21,800,000 | ||||
Breakage revenue | 300,000 | 1,000,000 | ||||
Contract with customer liability | 3,885,000 | 3,885,000 | 2,939,000 | |||
Deferred revenue | 3,700,000 | 3,700,000 | 2,700,000 | |||
R&D costs incurred | 110,000 | 208,000 | 174,000 | 416,000 | ||
Advertising and Incentive Promotion [Member] | ||||||
Product Information [Line Items] | ||||||
Advertising and incentive promotion expenses | $ 161,000 | 136,000 | $ 286,000 | $ 415,000 | ||
Minimum [Member] | ||||||
Product Information [Line Items] | ||||||
Contract with customer estimated life | 12 months | |||||
Maximum [Member] | ||||||
Product Information [Line Items] | ||||||
Contract with customer estimated life | 36 months | |||||
Investment Shares [Member] | ||||||
Product Information [Line Items] | ||||||
Investment owned balance shares | 1,260,619 | |||||
Investment owned at fairValue | $ 76,000 | $ 315,000 | ||||
Diagnostic Services [Member] | ||||||
Product Information [Line Items] | ||||||
Percentage of revenue from diagnostic services | 31.50% | 64.70% | ||||
Unreturned Test Kits and Subscriptions [Member] | ||||||
Product Information [Line Items] | ||||||
Breakage revenue | $ 100,000 | $ 100,000 |
Schedule of Assets Acquired and
Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 5,709 | $ 5,709 | |
Nebula Genomics [Member] | |||
Business Acquisition [Line Items] | |||
Short term investments | 1,800 | ||
Accounts receivable | 171 | ||
Inventory | 133 | ||
Prepaid expenses and other current assets | 379 | ||
Definite-lived intangible assets | 10,990 | ||
Total assets acquired | 13,473 | ||
Accounts payable | (805) | ||
Accrued expenses and other current liabilities | (43) | ||
Deferred revenue | (2,391) | ||
Note payable | (81) | ||
Deferred tax liability | (1,925) | ||
Total liabilities assumed | (5,245) | ||
Net identifiable assets acquired | 8,228 | ||
Goodwill | 4,446 | ||
Total consideration, net of cash acquired | [1] | $ 12,674 | |
[1]Net of $ 1.6 |
Schedule of Assets Acquired a_2
Schedule of Assets Acquired and Liabilities Assumed (Details) (Parenthetical) $ in Millions | Aug. 10, 2021 USD ($) |
Nebula Acquisition [Member] | |
Business Acquisition [Line Items] | |
Cash acquired from acquisition | $ 1.6 |
Schedule of Intangible Assets A
Schedule of Intangible Assets Acquisition (Details) - Nebula Acquisition [Member] $ in Thousands | Aug. 10, 2021 USD ($) |
Business Acquisition [Line Items] | |
Gross carying value | $ 10,990 |
Trade Names [Member] | |
Business Acquisition [Line Items] | |
Gross carying value | $ 5,550 |
Estimated useful life (in years) | 15 years |
Intellectual Property [Member] | |
Business Acquisition [Line Items] | |
Gross carying value | $ 4,260 |
Estimated useful life (in years) | 5 years |
Customer Relationships [Member] | |
Business Acquisition [Line Items] | |
Gross carying value | $ 1,180 |
Estimated useful life (in years) | 1 year |
Business Acquisition (Details N
Business Acquisition (Details Narrative) - USD ($) | 9 Months Ended | ||
Aug. 10, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Business Acquisition [Line Items] | |||
Payments for repurchase of common stock | $ 1,200,000 | ||
Shares issued, price per share | $ 11.28 | ||
Stock options to purchase shares | 935,000 | ||
Share-based payment award, options, grants in period, weighted average exercise price | $ 9.60 | ||
Nebula Acquisition [Member] | |||
Business Acquisition [Line Items] | |||
Business acquisition, purchase price | $ 3,600,000 | ||
Business combination consideration | 12,700,000 | ||
Cash acquired from acquisition | $ 1,600,000 | ||
Nebula Acquisition [Member] | Mr. Kamal Obbad [Member] | |||
Business Acquisition [Line Items] | |||
Stock options to purchase shares | 250,000 | ||
Share-based payment award, options, grants in period, weighted average exercise price | $ 7.67 | ||
Nebula Acquisition [Member] | Nebula Stock Purchase Agreement [Member] | |||
Business Acquisition [Line Items] | |||
Payments for repurchase of common stock | $ 14,300,000 | ||
Shares issued, price per share | $ 7.46 | ||
Nebula Acquisition [Member] | Nebula Stock Purchase Agreement [Member] | CitiBankm, N.A. [Member] | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 1,080,000 | ||
Escrow termination date | Feb. 23, 2023 |
Schedule of Intangible Assets,
Schedule of Intangible Assets, Net (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | $ 12,297 | $ 12,297 |
Less: accumulated amortization | (3,408) | (1,445) |
Total intangible assets, net | 8,889 | 10,852 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | $ 5,550 | 5,550 |
Finite-Lived Intangible Asset, Useful Life | 15 years | |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | $ 4,260 | 4,260 |
Finite-Lived Intangible Asset, Useful Life | 5 years | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | $ 1,180 | 1,180 |
Finite-Lived Intangible Asset, Useful Life | 1 year | |
License [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | $ 1,307 | $ 1,307 |
Finite-Lived Intangible Asset, Useful Life | 3 years |
Schedule of Estimated Future Am
Schedule of Estimated Future Amortization Expense of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remaining periods in the year ended December 31, 2022 | $ 414 | |
Year ended December 31, 2023 | 1,585 | |
Year ended December 31, 2024 | 1,222 | |
Year ended December 31, 2025 | 1,222 | |
Year ended December 31, 2026 | 890 | |
Thereafter | 3,556 | |
Total intangible assets, net | $ 8,889 | $ 10,852 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 545,000 | $ 445,000 | $ 2,000,000 | $ 662,000 |
Schedule of Property, Plant and
Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 13,977 | $ 12,830 |
Less: accumulated depreciation | (7,914) | (6,883) |
Total property, plant and equipment, net | 6,063 | 5,947 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 352 | 352 |
Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 1,729 | 1,729 |
Building Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 10 years | |
Building Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 39 years | |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 4,892 | 4,740 |
Machinery and Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 7 years | |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 4,403 | 4,330 |
Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 7 years | |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 2,140 | 1,211 |
Computer Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Computer Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 461 | $ 468 |
Property, Plant and Equipment, Useful Life | 5 years |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
us-gaap:Depreciation | $ 540,000 | $ 481,000 | $ 1,637,000 | $ 1,381,000 |
Unsecured Convertible Promiss_2
Unsecured Convertible Promissory Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Feb. 28, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 15, 2020 | |
Short-Term Debt [Line Items] | ||||||
Debt instrument convertible conversion price | $ 5.75 | |||||
Cash | $ 1,440,548 | |||||
Investment owned balance principal amount | 1,400,000 | |||||
Accrued interest | 40,548 | |||||
Conversion amount | 1,150,000 | |||||
Debt instrument periodic payment | 2,590,548 | |||||
Unsecured Debt [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Debt instrument face amount | $ 600,000 | |||||
Debt instrument face amount | 200,000 | |||||
Debt instrument convertible conversion price | $ 3 | |||||
Unsecured Debt [Member] | Letter Agreement [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Debt instrument face amount | $ 2,000,000 | |||||
September 2020 Notes [Member] | Unsecured Debt [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Debt instrument face amount | $ 10,000,000 | |||||
Debt instrument convertible conversion price | $ 3 | $ 3 | ||||
Debt instrument interest rate stated percentage | 10% | 10% | ||||
Debt conversion description | We have the right to prepay the outstanding September 2020 Note at any time after the 13-month anniversary of the initial issuance date after providing written notice to the Lender and may prepay the September 2020 Note prior to such time with the consent of the Lender. The Lender has the right, at any time, and from time to time, on and after the 13-month anniversary of the initial issuance date to convert up to an aggregate | |||||
Convertible debt | $ 3,000,000 | $ 3,000,000 | ||||
Interest expense other | $ 200,000 | $ 251,000 | $ 635,000 | $ 753,000 |
Schedule of Stock Options Activ
Schedule of Stock Options Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 USD ($) $ / shares shares | ||
Equity [Abstract] | ||
Number of shares options outstanding - beginning | shares | 5,110 | |
Weighted average exercise price of shares options beginning | $ / shares | $ 3.27 | |
Weighted average remaining contractual life shares options outstanding beginning | 3 years 4 months 24 days | |
Intrinsic value of options outstanding - Beginning | $ | $ 20,820 | [1] |
Number of shares options granted | shares | 935 | |
Weighted average exercise price of shares options granted | $ / shares | $ 9.60 | |
Weighted average remaining contractual life shares options granted | 6 years 7 months 6 days | |
Number of shares options exercised | shares | (1,233) | |
Weighted average exercise price of shares options exercised | $ / shares | $ 1.91 | |
Number of shares options forfeited | shares | (20) | |
Weighted average exercise price of shares options forfeited | $ / shares | $ 2.02 | |
Number of shares options outstanding - ending | shares | 4,792 | |
Weighted average exercise price of shares options ending | $ / shares | $ 4.55 | |
Weighted average remaining contractual life shares options outstanding ending | 3 years 8 months 12 days | |
Intrinsic value of options outstanding, ending | $ | $ 32,899 | [1] |
Number of shares options vested and exercisable | shares | 3,280 | |
Weighted average exercise price of shares options vested exercisable | $ / shares | $ 3.18 | |
Weighted average remaining contractual life shares options vested and exercisable | 2 years 7 months 6 days | |
Intrinsic value of options outstanding vested and exercisable | $ | $ 26,819 | [1] |
[1]The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $ 11.28 |
Schedule of Stock Options Act_2
Schedule of Stock Options Activity (Details) (Parenthetical) | Sep. 30, 2022 $ / shares |
Equity [Abstract] | |
Shares issued, price per share | $ 11.28 |
Summary of Weighted Average Ass
Summary of Weighted Average Assumptions Used in Determining Fair Value of Warrants (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Equity [Abstract] | ||
Exercise price | $ 9.73 | $ 7.48 |
Expected term (years) | 4 years 6 months | 3 years 10 months 24 days |
Expected stock price volatility | 79% | 80% |
Risk-free rate of interest | 2.30% | 0.70% |
Expected dividend yield (per share) | 0% | 0% |
Schedule of Warrant Activity (D
Schedule of Warrant Activity (Details) - Warrant [Member] shares in Thousands | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Number of shares warrant outstanding, beginning | shares | 855 |
Weighted average exercise price warrants outstanding - beginning | $ / shares | $ 8.23 |
Weighted average remaining contractual life warrants outstanding - beginning | 1 year 10 months 24 days |
Number of shares warrant, granted | shares | |
Weighted average exercise price warrants, granted | $ / shares | |
Weighted average remaining contractual life warrants, granted | |
Number of shares warrant outstanding, ending | shares | 855 |
Weighted average exercise price warrants outstanding - ending | $ / shares | $ 8.23 |
Weighted average remaining contractual life warrants outstanding - ending | 1 year 1 month 6 days |
Number of shares warrant vested and exercisable | shares | 855 |
Weighted average exercise price warrants vested and exercisable | $ / shares | $ 8.23 |
Weighted average remaining contractual life warrants, vested and exercisable | 1 year 1 month 6 days |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Jun. 03, 2022 | May 09, 2022 | May 09, 2022 | Feb. 14, 2022 | Apr. 12, 2018 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jul. 24, 2022 | May 19, 2022 | Sep. 08, 2021 | |
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | ||||||||||
Common stock, par value | $ 0.0005 | $ 0.0005 | $ 0.0005 | ||||||||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||
Preferred stock, par value | $ 0.0005 | $ 0.0005 | $ 0.0005 | ||||||||||
Preferred stock, shares issued | 0 | 0 | 0 | ||||||||||
Common stock dividends per share cash paid | $ 0.30 | $ 0.30 | |||||||||||
Payments of ordinary dividends, common stock | $ 4,700,000 | $ 4,600,000 | |||||||||||
Repurchases of common shares, shares | 5,048 | 5,048 | |||||||||||
Stock options to purchase shares | 935,000 | ||||||||||||
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price | $ 9.60 | ||||||||||||
Shares issued price per share | $ 11.28 | $ 11.28 | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Exercised | 545,312 | ||||||||||||
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsReturnOfShares] | 692,736 | ||||||||||||
Weighted average remaining contractual life shares options outstanding beginning | 3 years 4 months 24 days | ||||||||||||
Inducement Option Award [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Stock options to purchase shares | 100,000 | ||||||||||||
Business acquisition, share price | $ 7.67 | $ 7.67 | |||||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25% | ||||||||||||
Share-based pyment arrangement, plan modification, incremental cost | $ 1,128,000 | ||||||||||||
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price | $ 5.76 | ||||||||||||
Inducement Option Award [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Employee to purchase of common stock, shares | 250,000 | 250,000 | |||||||||||
Inducement Option Award [Member] | Next Three Years [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25% | ||||||||||||
Inducement Option Award [Member] | Next Two Years [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25% | 25% | |||||||||||
Employees Consultants And Vendors [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Stock options to purchase shares | 935,000 | ||||||||||||
Share-based pyment arrangement, plan modification, incremental cost | $ 5,638,000 | ||||||||||||
Common Stock [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Repurchases of common shares, shares | 5,048 | 205,048 | |||||||||||
Stock options exercised | 308,385 | 545,312 | |||||||||||
Common Stock [Member] | Inducement Option Award [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Shares issued price per share | $ 13 | $ 13 | |||||||||||
Treasury Stock [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
[custom:StockRepurchasedDuringPeriodValueWithholdingObligations] | $ 4,500,000 | ||||||||||||
[custom:StockRepurchasedDuringPeriodSharesWithholdingObligations] | 283,395 | ||||||||||||
Warrant [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Share-based compensation expense | $ 1,969,000 | $ 59,000 | $ 2,976,000 | $ 252,000 | |||||||||
Share-based compensation expense | $ 5,907,000 | ||||||||||||
Weighted average remaining contractual life shares options outstanding beginning | 3 years 10 months 24 days | ||||||||||||
2022 Directors plan [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Number of shares reserved for issuance | 300,000 | ||||||||||||
2022 Directors Equity Compensation Plan [Member] | Common Stock [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized | 120,000 | 120,000 | |||||||||||
[custom:SharesAvailableForIssued] | 180,000 | ||||||||||||
2022 plan [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Number of shares reserved for issuance | 1,000,000 | ||||||||||||
2010 Equity Compensation Plan [Member] | Common Stock [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized | 3,797,000 | 3,797,000 | |||||||||||
[custom:SharesAvailableForIssued] | 1,130,785 | ||||||||||||
2018 Stock Incentive Plan [Member] | CEO Options [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Exercise price | $ 0.60 | ||||||||||||
2018 Stock Incentive Plan [Member] | CFO Options [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Share-based pyment arrangement, plan modification, incremental cost | $ 1,604,000 | ||||||||||||
Board of Directors Chairman [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Stock repurchase program, remaining authorized repurchase amount | $ 6,000,000 | ||||||||||||
Chief Executive Officer [Member] | Inducement Option Award [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Employee to purchase of common stock, shares | 250,000 | ||||||||||||
Chief Executive Officer [Member] | 2018 Stock Incentive Plan [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Number of shares issued | 2,300,000 | ||||||||||||
Stock options to purchase shares | 2,300,000 | ||||||||||||
Stock options exercised | 600,000 | ||||||||||||
Chief Financial Officer [Member] | Inducement Option Award [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Stock options to purchase shares | 400,000 | ||||||||||||
Shares issued price per share | $ 6.74 | $ 6.74 | |||||||||||
Chief Financial Officer [Member] | 2018 Stock Incentive Plan [Member] | CFO Options [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Common stock dividends per share cash paid | 0.30 | ||||||||||||
Exercise price | 6.44 | ||||||||||||
Share-Based Payment Arrangement, Option, Exercise Price Range, Upper Range Limit | $ 6.74 | ||||||||||||
Share Repurchase Program [Member] | |||||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||||
Stock repurchase program, remaining authorized repurchase amount | $ 6,000,000 |
Defined Contribution Plans (Det
Defined Contribution Plans (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Retirement Benefits [Abstract] | ||||
Defined contributions | $ 53,000 | $ 34,000 | $ 153,000 | $ 69,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Operating Loss Carryforwards [Line Items] | ||||
Effective income tax rate | 25.57% | |||
Effective income tax rate, federal | 21% | |||
Effective income tax rate, state | 10.71% | |||
Income tax expense | $ 809 | $ 7,190 | ||
Domestic Tax Authority [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Income tax expense | $ 7,200 |
Schedule of Other Current Liabi
Schedule of Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Other Liabilities Disclosure [Abstract] | ||
Accrued commissions | $ 2,448 | $ 1,283 |
Accrued payroll | 59 | 514 |
Accrued expenses | 328 | 300 |
Accrued returns | 311 | 338 |
Accrued benefits and vacation | 49 | 60 |
Total other current liabilities | $ 3,195 | $ 2,495 |
Schedule of Estimated Future Mi
Schedule of Estimated Future Minimum Obligations (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remaining periods in 2022 | $ 256 |
2023 | 1,025 |
2024 | 1,025 |
2025 | 1,025 |
2026 | 1,025 |
Total | $ 4,356 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jul. 19, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
General and administrative expense | $ 7,512,000 | $ 5,938,000 | $ 21,643,000 | $ 14,713,000 | |
License Agreement [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Upfront license fee | $ 50,000 | ||||
License or royalty net revenue percentage | 3% | ||||
Minimum royalty | $ 250,000 | ||||
General and administrative expense | $ 15,000 | $ 15,000 | |||
License Agreement [Member] | Phase 3 [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Additional payment of fee | 900,000 | ||||
License Agreement [Member] | New Drug Application [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Additional payment of fee | $ 1,000,000 |
Summary of Quantitative Informa
Summary of Quantitative Information About Operating Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases | ||||
Operating lease cost | $ 204 | $ 204 | $ 612 | $ 611 |
Operating lease expense | 204 | 204 | 612 | 611 |
Total rent expense | $ 204 | $ 204 | 612 | 611 |
Operating cash flows used in operating leases | $ (580) | $ (168) | ||
Weighted-average remaining lease term - operating leases (in years) | 8 years 9 months 18 days | 9 years 8 months 12 days | 8 years 9 months 18 days | 9 years 8 months 12 days |
Weighted-average discount rate - operating leases | 10% | 10% | 10% | 10% |
Schedule of Maturity of Operati
Schedule of Maturity of Operating Leases (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Leases | |
Remaining periods in the year ended December 31, 2022 | $ 193 |
Year Ended December 31, 2023 | 739 |
Year Ended December 31, 2024 | 747 |
Year Ended December 31, 2025 | 768 |
Year Ended December 31, 2026 | 783 |
Thereafter | 3,876 |
Total | 7,106 |
Less present value discount | (2,468) |
Operating lease liabilities | $ 4,638 |
Leases (Details Narrative)
Leases (Details Narrative) | 9 Months Ended | |||||
Dec. 08, 2020 USD ($) | Oct. 23, 2020 USD ($) ft² | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jun. 10, 2022 ft² | Dec. 31, 2021 USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||||
Operating lease payments | $ 580,000 | $ 168,000 | ||||
Operating lease term of contract | 5 years | |||||
Payments for rent | $ 11,290 | |||||
Gradual rental rate | 2.75% | |||||
Prepaid rent | $ 14,026 | |||||
Construction allowance | 203,220 | |||||
Operating lease, liability | 4,638,000 | |||||
Operating lease, right-of-use asset | $ 4,148,000 | $ 4,402,000 | ||||
Lease Agreement[Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Area of land | ft² | 4,516 | |||||
NY Second Floor Lease [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Operating lease term of contract | 10 years | |||||
Lease term of contract | 7 months | |||||
Confucius Plaza Medical Laboratory Corp [Member] | Old Bridge New Jersey [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Area of land | ft² | 4,000 | |||||
Operating lease payments | $ 5,950 | |||||
Confucius Labs [Member] | Old Bridge New Jersey [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Operating lease payments | $ 56,963 | |||||
Operating lease description | We have the option to terminate the NY Second Floor Lease on the sixth anniversary of the Second Floor Commencement Date, provided that we give the landlord advance written notice of not less than nine months and not more than 12 months in advance and that we pay the landlord a termination fee | We also have a right of first refusal to lease certain additional space located on the ground floor of the Building containing 4,500 square feet and 4,600 square feet, as more particularly described in the NY Second Floor Lease. We also have a right of first offer to purchase the Building during the term of the NY Second Floor Lease | ||||
Gradual rental rate increase percentage | 2.75% | |||||
Confucius Labs [Member] | Old Bridge New Jersey [Member] | Final Months [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Operating lease payments | $ 74,716 |
Consulting Agreement and Secu_2
Consulting Agreement and Secured Promissory Note Receivable (Details Narrative) - USD ($) | 2 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Feb. 28, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jun. 25, 2021 | Jan. 14, 2021 | Sep. 25, 2020 | Jul. 29, 2020 | Jul. 21, 2020 | |
Secured Debt | $ 0 | ||||||||
Accounts receivable, credit loss expense | $ 2,528,000 | ||||||||
General and Administrative Expense [Member] | |||||||||
Accounts receivable, credit loss expense | 3,750,000 | ||||||||
Investment Shares [Member] | |||||||||
Investment owned, balance, shares | 1,260,619 | ||||||||
Investment owned, at fair value | $ 76,000 | $ 315,000 | |||||||
Termination Agreement [Member] | |||||||||
Test fees received | $ 95,000 | ||||||||
Unrelated Third party [Member] | Minimum [Member] | |||||||||
Debt instrument face amount | $ 2,750,000 | ||||||||
Unrelated Third party [Member] | Maximum [Member] | |||||||||
Debt instrument face amount | $ 3,750,000 | ||||||||
Unrelated Third party [Member] | Secured Debt [Member] | |||||||||
Debt instrument face amount | $ 1,000,000 | ||||||||
Unrelated Third party [Member] | Revision of Prior Period, Adjustment [Member] | Secured Debt [Member] | |||||||||
Debt instrument face amount | $ 3,000,000 | $ 250,000 | $ 750,000 |
Significant Customer Concentr_2
Significant Customer Concentrations (Details Narrative) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Concentration Risk [Line Items] | |||||
Revenues | $ 24.2 | $ 9.5 | $ 100.8 | $ 33.9 | |
Revenue Benchmark [Member] | Diagnostic Services Clients One [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 73.80% | 19.60% | 54.80% | 28.40% | |
Revenue Benchmark [Member] | Diagnostic Services Clients Two [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 12% | 13% | 20.70% | ||
Revenue Benchmark [Member] | Diagnostic Services Clients Three [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10.40% | ||||
Trade Receivable [Member] | Diagnostic Services Clients One [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 70.30% | 43% | |||
Trade Receivable [Member] | Diagnostic Services Clients Two [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 11.60% | ||||
Trade Receivable [Member] | Diagnostic Services Clients Three [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10.70% | ||||
Trade Receivable [Member] | Diagnostic Services Clients Four [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10.70% |
Schedule of Segment Information
Schedule of Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Segment Reporting Information [Line Items] | |||||
Consolidated net revenue | $ 24,200 | $ 9,472 | $ 100,824 | $ 33,885 | |
Consolidated cost of revenue | 12,227 | 5,495 | 41,453 | 16,515 | |
Total Depreciation and amortization expense | 1,019 | 401 | 3,392 | 1,144 | |
Operating and other expenses | 9,176 | 13,020 | 27,882 | 20,542 | |
Total income from operations, before income taxes | 1,777 | (3,978) | 28,097 | (4,316) | |
Income tax expense | (809) | (7,190) | |||
Total income (loss) from operations, after income taxes | 968 | (3,978) | 20,907 | (4,316) | |
Net income (loss) | 968 | (3,978) | 20,907 | (4,316) | |
Total assets | 97,877 | 97,877 | $ 89,295 | ||
Diagnostic Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Consolidated net revenue | 20,541 | 7,142 | 91,613 | 27,416 | |
Consolidated cost of revenue | 8,452 | 4,009 | 33,558 | 11,833 | |
Total Depreciation and amortization expense | 584 | 401 | 1,755 | 1,138 | |
Total income from operations, before income taxes | 6,776 | (1,145) | 39,671 | 2,859 | |
Total assets | 53,631 | 53,631 | 51,150 | ||
Consumer Products [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Consolidated net revenue | 3,659 | 2,330 | 9,211 | 6,469 | |
Consolidated cost of revenue | 3,775 | 1,486 | 7,895 | 4,682 | |
Total Depreciation and amortization expense | 435 | 1,637 | 6 | ||
Total income from operations, before income taxes | (3,214) | (958) | (5,390) | (453) | |
Total assets | 22,373 | 22,373 | 24,139 | ||
Unallocated Corporate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total income from operations, before income taxes | (1,785) | $ (1,875) | (6,184) | $ (6,722) | |
Total assets | $ 21,873 | $ 21,873 | $ 14,006 |
Schedule of Basic and Diluted N
Schedule of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Net income - basic | $ 968 | $ (3,978) | $ 20,907 | $ (4,136) |
Interest on unsecured convertible promissory note | 201 | 635 | ||
Net income - diluted | $ 1,169 | $ (3,978) | $ 21,542 | $ (4,136) |
Weighted average shares outstanding - basic | 15,898 | 15,439 | 15,712 | 15,055 |
Diluted shares- Stock Options | 2,453 | 1,925 | ||
Diluted shares- Stock Warrants | 1,097 | 1,067 | ||
Unsecured convertible promissory note | 800 | 800 | ||
Weighted average shares outstanding - diluted | 20,248 | 15,439 | 19,504 | 15,055 |
Schedule of Anti-dilutive Secur
Schedule of Anti-dilutive Securities Excluded from the Income Per Share Computation (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 825 | 2,185 | 1,065 | 2,029 |
Common Stock Purchase Warrants [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 455 | 455 | 455 | 299 |
Share-Based Payment Arrangement, Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 370 | 730 | 610 | 730 |
Unsecured Convertible Promissory Note [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 1,000 | 1,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 9 Months Ended | ||||
Nov. 10, 2022 | Oct. 30, 2022 | Oct. 09, 2022 | Oct. 04, 2022 | Sep. 30, 2022 | |
Subsequent Event [Line Items] | |||||
Stock options granted, shares | 935,000 | ||||
Weighted average period | 3 years 4 months 24 days | ||||
Subsequent Event [Member] | 2022 Equity Compensation Plan [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock options granted, shares | 60,000 | 100,000 | |||
Share-based compensation expense | $ 449,000 | $ 772,000 | |||
Weighted average period | 2 years 4 months 24 days | 3 years | |||
Subsequent Event [Member] | Mr. White [Member] | |||||
Subsequent Event [Line Items] | |||||
Seperation payment | $ 10,000 | ||||
Compensation for consulting services | $ 90,000 | ||||
Subsequent Event [Member] | Chief Executive Officer [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of common stock shares purchased | 664,592 | ||||
Value of common stock shares purchased | $ 2,900,000 |