Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2022 | May 16, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | AMERICAN BIO MEDICA CORPORATION | |
Entity Central Index Key | 0000896747 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Entity Common Stock Shares Outstanding | 48,098,476 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 0-28666 | |
Entity Incorporation State Country Code | NY | |
Entity Tax Identification Number | 14-1702188 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 122 Smith Road | |
Entity Address City Or Town | Kinderhook | |
Entity Address State Or Province | NY | |
Entity Address Postal Zip Code | 12106 | |
City Area Code | 518 | |
Local Phone Number | 758-8158 | |
Security 12b Title | Common Stock | |
Trading Symbol | ABMC |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 17,000 | $ 115,000 |
Accounts receivable, net of allowance for doubtful accounts of $2,000 at March 31, 2022 and $3,000 at December 31, 2021 | 138,000 | 323,000 |
Inventory, net of allowance of $260,000 at March 31, 2022 and $278,000 at December 31, 2021 | 419,000 | 443,000 |
Employee retention credit receivable | 400,000 | 400,000 |
Prepaid expenses and other current assets | 35,000 | 24,000 |
Right of use asset - operating leases | 29,000 | 35,000 |
Total current assets | 1,038,000 | 1,340,000 |
Property, plant and equipment, net | 504,000 | 517,000 |
Right of use asset - operating leases | 2,000 | 5,000 |
Other assets | 21,000 | 21,000 |
Total assets | 1,565,000 | 1,883,000 |
Current liabilities | ||
Accounts payable | 843,000 | 682,000 |
Accrued expenses and other current liabilities | 450,000 | 467,000 |
Right of use liability - operating leases | 27,000 | 35,000 |
Wages payable | 93,000 | 97,000 |
Line of credit | 93,000 | 178,000 |
Cherokee notes payable, past due | 1,240,000 | 0 |
Current portion of long-term debt, net of deferred finance costs | 125,000 | 1,365,000 |
Total current liabilities | 2,871,000 | 2,824,000 |
Right of use liability - operating leases | 2,000 | 3,000 |
Total liabilities | 2,873,000 | 2,827,000 |
Stockholders' deficit: | ||
Preferred stock; par value $.01 per share; 5,000,000 shares authorized, none issued and outstanding at March 31, 2022 and December 31, 2021 | 0 | 0 |
Common stock; par value $.01 per share; 75,000,000 shares authorized; 48,098,476 issued and outstanding at March 31, 2022 and 47,598,476 issued and outstanding as of December 31, 2021 | 481,000 | 476,000 |
Additional paid-in capital | 22,403,000 | 23,393,000 |
Accumulated deficit | (24,192,000) | (23,813,000) |
Total stockholders' (deficit) | (1,308,000) | (944,000) |
Total liabilities and stockholders' deficit | $ 1,565,000 | $ 1,883,000 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Condensed Balance Sheets | ||
Allowance for doubtful accounts receivable, current | $ 2,000 | $ 3,000 |
Inventory valuation reserves | $ 260,000 | $ 278,000 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 48,098,476 | 47,598,476 |
Common stock, shares outstanding | 48,098,476 | 47,598,476 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Condensed Statements of Operations (Unaudited) | ||
Net sales | $ 351,000 | $ 566,000 |
Cost of goods sold | 323,000 | 461,000 |
Gross profit | 28,000 | 105,000 |
Operating expenses: | ||
Research and development | 22,000 | 20,000 |
Selling and marketing | 42,000 | 83,000 |
General and administrative | 295,000 | 511,000 |
Total Operating Expenses | 359,000 | 614,000 |
Operating loss | (331,000) | (509,000) |
Other expense: | ||
Interest expense | 48,000 | 47,000 |
Other Nonoperating Income (Expense) | (48,000) | (47,000) |
Net loss before tax | (379,000) | (556,000) |
Income tax expense | 0 | 0 |
Net loss | $ (379,000) | $ (556,000) |
Basic and diluted loss per common share | $ (0.01) | $ (0.01) |
Weighted average number of shares outstanding - basic & diluted | 47,770,698 | 38,859,032 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (379,000) | $ (556,000) |
Adjustments to reconcile net loss to bet cash used in operating activities: | ||
Depreciation and amortization | 13,000 | 18,000 |
Penalty added to Cherokee loan balance | 0 | 120,000 |
Provision for bad debt | (1,000) | (17,000) |
Provision for slow moving and obsolete inventory | 0 | 21,000 |
Consulting fee paid with restricted stock | 15,000 | 0 |
Changes in: | ||
Accounts receivable | 186,000 | 87,000 |
Inventory | 24,000 | 8,000 |
Prepaid expenses and other current assets | (11,000) | 7,000 |
Right of use asset | 9,000 | 9,000 |
Accounts payable | 161,000 | 52,000 |
Accrued expenses and other current liabilities | (17,000) | (103,000) |
Right of use liability | (9,000) | (9,000) |
Wages payable | (4,000) | 4,000 |
Net cash used in operating activities | (13,000) | (359,000) |
Cash flows from financing activities: | ||
Payments on debt financing | 0 | (25,000) |
Proceeds from Lincoln Park financing | 0 | 381,000 |
Proceeds from lines of credit | 462,000 | 595,000 |
Payments on lines of credit | (547,000) | (627,000) |
Net cash (used in) / provided by financing activities | (85,000) | 323,000 |
Net change in cash and cash equivalents | (98,000) | (35,000) |
Cash and cash equivalents - beginning of period | 115,000 | 98,000 |
Cash and cash equivalents - end of period | 17,000 | 63,000 |
Non-Cash transactions: | ||
Consulting fee paid with restricted stock | 15,000 | 0 |
Cash paid for interest | $ 46,000 | $ 41,000 |
Basis of Reporting
Basis of Reporting | 3 Months Ended |
Mar. 31, 2022 | |
Basis of Reporting | |
Note A - Basis of Reporting | Note A - Basis of Reporting The accompanying unaudited interim condensed financial statements of American Bio Medica Corporation (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X. Accordingly, these unaudited interim condensed financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statement presentation. These unaudited interim condensed financial statements should be read in conjunction with audited financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, the interim condensed financial statements include all normal, recurring adjustments which are considered necessary for a fair presentation of the financial position of the Company at March 31, 2022, and the results of operations and cash flows for the three month periods ended March 31, 2022 (the “First Quarter 2022”) and March 31, 2021 (the “First Quarter 2021”). Operating results for the First Quarter 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. Amounts at December 31, 2021 are derived from audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. During the First Quarter 2022, there were no significant changes to the Company’s critical accounting policies, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The preparation of these interim condensed financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates estimates, including those related to product returns, bad debts, inventories, income taxes, warranty obligations, contingencies and litigation. The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These unaudited interim condensed financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. The independent registered public accounting firm’s report on the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, contained an explanatory paragraph regarding the Company’s ability to continue as a going concern. As of the date of this report, the Company’s current cash balances, together with cash generated from future operations and amounts available under the Company’s credit facilities may not be sufficient to fund operations through May 2023. Through the First Quarter of 2022, the Company had a line of credit with Crestmark Bank. The maximum availability on the Company’s line of credit was $1,000,000. However, because the amount available under the line of credit is based upon the Company’s accounts receivable, the amounts actually available under the line of credit (historically) have been significantly less than the maximum availability. As of March 31, 2022, based on the Company’s availability calculation, there were no additional amounts available under the Company’s line of credit because the Company draws any balance available on a daily basis. The Company’s credit facilities with Cherokee Financial, LLC (“Cherokee”) matured/expired on February 15, 2022 with a final balloon payment of $1,240,000 which has not been paid and is now past due. The Company is currently in discussions with Cherokee related to the maturity and loan payoff, including, but not limited to, methods to pay off the two credit facilities, restructuring of the credit facilities and/or further extension of the facilities. Considering these discussions, as of the date of this report, Cherokee has not called a default under either facility nor have they imposed default interest under either facility. The Company is hoping to conclude these discussions with Cherokee shortly and expects to file a Current Report on Form 8-K when required. The Company’s total debt at March 31, 2022 with Cherokee Financial, LLC is $1,240,000. The Company does not expect cash from operations within the next 12 months to be sufficient to pay the amounts due under these credit facilities so, the Company is currently looking at alternatives to pay off or refinance these facilities. As discussed in more detail in “Cash Flow, Outlook/Risk”, if sales levels decline further, the Company will have further reduced availability on its line of credit due to decreased accounts receivable balances. If availability under the Company’s line of credit is not sufficient to satisfy our working capital and capital expenditure requirements, the Company will be required to obtain additional credit facilities or sell additional equity securities, or delay capital expenditures, which could have a material adverse effect on the business. There is no assurance that such financing will be available or that the Company will be able to complete financing on satisfactory terms, if at all. Recently Adopted Accounting Standards 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) ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance Accounting Standards Issued; Not Yet Adopted There are not any new accounting standards issued but, not yet adopted in the First Quarter 2022. Any other new accounting pronouncements recently issued, but not yet effective, have been reviewed and determined to be not applicable or were related to technical amendments or codification. As a result, the adoption of such new accounting pronouncements, when effective, is not expected to have a material effect on the Company’s financial position or results of operations. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2022 | |
Inventory | |
Note B - Inventory | Note B – Inventory Inventory is comprised of the following: March 31, 2022 December 31, 2021 Raw Materials $ 448,000 $ 462,000 Work In Process 94,000 109,000 Finished Goods 137,000 150,000 Allowance for slow moving and obsolete inventory (260,000 ) (278,000 ) $ 419,000 $ 443,000 |
Net Loss Per Common Share
Net Loss Per Common Share | 3 Months Ended |
Mar. 31, 2022 | |
Net Loss Per Common Share | |
Note C - Net Loss Per Common Share | N ote C – Net Loss Per Common Share Basic net loss per common share is calculated by dividing the net loss by the weighted average number of outstanding common shares during the period. Diluted net income per common share includes the weighted average dilutive effect of stock options and warrants. When the Company has a loss, option and warrants are not included as they would be anti-dilutive. Potential common shares outstanding as of March 31, 2022 and 2021: March 31, 2022 March 31, 2021 Options 1,937,000 1,987,000 Total 1,937,000 1,987,000 |
LitigationLegal Matters
LitigationLegal Matters | 3 Months Ended |
Mar. 31, 2022 | |
Note D - Litigation/Legal Matters | Note D – Litigation/Legal Matters From time to time, the Company may be named in immaterial legal proceedings in connection with matters that arise during the normal course of business. While the ultimate outcome of any such litigation cannot be predicted, if the Company is unsuccessful in defending any such immaterial litigation, the resulting financial losses are not expected to have a material adverse effect on the financial position, results of operations and cash flows of the Company. |
Line of Credit and Debt
Line of Credit and Debt | 3 Months Ended |
Mar. 31, 2022 | |
Line of Credit and Debt | |
Note E - Line of Credit and Debt | Note E – Line of Credit and Debt The Company’s Line of Credit and Debt consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Loan and Security Agreement with Cherokee Financial, LLC $ 1,000,000 $ 1,000,000 Crestmark Line of Credit: 93,000 178,000 2019 Term Loan with Cherokee Financial, LLC: 240,000 240,000 November 2020 Shareholder Note: 50,000 50,000 December 2021 Shareholder Notes: 75,000 75,000 Total Debt $ 1,458,000 $ 1,543,000 Current portion $ 1,458,000 $ 1,543,000 LOAN AND SECURITY AGREEMENT ("LSA")WITH CHEROKEE FINANCIAL, LLC (“CHEROKEE”) On March 26, 2015, the Company entered into a LSA with Cherokee (the “Cherokee LSA”). The debt with Cherokee is collateralized by a first security interest in real estate and machinery and equipment. Under the Cherokee LSA, the Company was provided the sum of $1,200,000 in the form of a 5-year Note at a fixed annual interest rate of 8%; paid quarterly in arrears. In addition to the 8% interest, the Company is required to pay Cherokee a 1% annual fee for oversight and administration of the loan. This oversight fee is paid in cash and is paid contemporaneously with the quarterly interest payments. The Company received net proceeds of $80,000 after $1,015,000 of debt payments, and $105,000 in other expenses and fees which, were deducted from the balance on the Cherokee LSA and amortized over the initial term of the debt (in accordance with ASU No. 2015-03). The Company was required to make annual principal reduction payments of $75,000 on each anniversary of the date of the closing; with the first principal reduction payment being made on February 15, 2016 and the last principal reduction payment being made on February 15, 2019; partially with proceeds received from a term loan with Cherokee (See 2019 Term Loan with Cherokee within this Note E). In February 2020, the Company extended the due date of the Cherokee LSA (with a balance of $900,000) to February 15, 2021. No terms of the facility were changed in February 2020. In connection with this extension, the Company was required to issue 2% of the $900,000 principal, or $18,000, in 257,143 restricted shares of the Company’s common stock to Cherokee. On February 24, 2021, the Company completed a transaction related to another one-year Extension Agreement dated February 14, 2021 (the “Second Extension”) with Cherokee under which Cherokee extended the due date of the Cherokee LSA to February 15, 2022. Under the terms of the Second Extension, the Cherokee LSA was increased to $1,000,000 to include a $100,000 penalty that was due as a result of the Company being unable to pay back the principal balance to Cherokee on February 15, 2021. Under the Second Extension, the annual interest rate on the Cherokee LSA was increased to a fixed rate of 10% (the prior fixed rate was 8%) plus a 1% annual oversight fee (that remained unchanged). Interest and the oversight fee are due quarterly. In the event of default, this includes, but is not limited to; the Company’s inability to make any payments due under the Cherokee LSA (as amended) Cherokee has the right to increase the interest rate on the financing to 18%. A final balloon payment was due on February 15, 2022. Under the terms of the Second Extension Agreement, if the Company doesn’t pay off the principal on or before February 15, 2022, Cherokee may impose an 8% delinquent fee. This delinquent fee applies to the principal balance due on February 15, 2022. Although the facility was not paid off on February 15, 2022, Cherokee has not imposed this delinquent fee or increased the interest rate. Cantone Research, Inc. earned a 3% fee on the extended principal of $900,000 (or $27,000) for their services related to securing the Second Extension with Cherokee investors. The Company also paid Cherokee’s legal fees in the amount of $1,000. On August 18, 2021, we issued 625,000 restricted shares of common stock to Cherokee in lieu of paying the $25,000 August 2021 interest payment in cash. The closing price of the Company’s common shares on the date of the payment in lieu of cash was $0.04. The Company recognized $25,000 in interest expense related to the Cherokee LSA in the First Quarter 2022 and $23,000 in interest expense related to the Cherokee LSA in the First Quarter 2021. The Company had $8,000 in accrued interest expense at March 31, 2022 related to the Cherokee LSA. As of March 31, 2022 and December 31, 2021, the balance on the Cherokee LSA was $1,000,000. See Note I – Subsequent Events for more information on the status of the Cherokee LSA. LINE OF CREDIT WITH CRESTMARK BANK (“CRESTMARK”) On June 29, 2015 (the “Closing Date”), the Company entered into a Loan and Security Agreement (“LSA”) with Crestmark related to a revolving line of credit (the “Crestmark LOC”). The Crestmark LOC is used for working capital and general corporate purposes. Upon completion of the initial 5 year term, the Crestmark LOC automatically renews for additional one (1) year terms unless notice of termination from the Company is received by Crestmark not less than sixty (60) days prior to the end of the renewal term. The current maturity date of the Crestmark LOC is June 22, 2023. Although secured by inventory and other assets, the Crestmark LOC is a receivables-based only line of credit and the maximum availability (“Maximum Amount”) under the Crestmark LOC is $1,000,000. The Crestmark LOC has a minimum loan balance requirement of $500,000. At March 31, 2022, the Company did not meet the minimum loan balance requirement as our balance was $93,000. Under the LSA, Crestmark has the right to calculate interest on the minimum balance requirement rather than the actual balance on the Crestmark LOC (and they are exercising that right). The Crestmark LOC is secured by a first security interest in the Company’s inventory, receivables and security interest in all other assets of the Company (in accordance with permitted prior encumbrances). In the event of a default of the LSA, which includes but is not limited to, failure of the Company to make any payment when due, Crestmark is permitted to charge an Extra Rate. The Extra Rate is the Company’s then current interest rate plus 12.75% per annum. Interest on the Crestmark LOC is at a variable rate based on the Prime Rate plus 3% with a floor of 5.25%. As of March 31, 2022 and as of the date of this report, the interest only rate on the Crestmark LOC is 6.50%. As of the date of this report, with all fees considered (the interest rate + an Annual Loan Fee of $7,500 + a monthly maintenance fee of 0.30% of the actual average monthly balance from the prior month), the interest rate on the Crestmark LOC is 12.58%. The Company incurred $10,000 in interest expense in the First Quarter 2022 and $12,000 in interest expense in the First Quarter 2021 related to the Crestmark LOC. Given the nature of the administration of the Crestmark LOC, at March 31, 2022, the Company had $0 in accrued interest expense related to the Crestmark LOC, and there is $0 in additional availability under the Crestmark LOC. 2019 TERM LOAN WITH CHEROKEE On February 25, 2019, the Company entered into an agreement dated (and effective) February 13, 2019 with Cherokee under which Cherokee provided the Company with a loan in the amount of $200,000. The annual interest rate under the 2019 Cherokee Term Loan is 18% (fixed) paid quarterly in arrears. On February 24, 2020, the Company completed a transaction related to a one-year Extension Agreement dated February 14, 2020 (the “Extension Agreement”) with Cherokee under which Cherokee extended the due date of the 2019 Cherokee Term Loan to February 15, 2021. No terms of the facility were changed under the Extension Agreement. The final balloon payment was due on February 15, 2021; however the Company further extended the 2019 Cherokee Term Loan on February 24, 2021 to February 15, 2022. Under the terms of this additional extension, the 2019 Cherokee Term Loan was increased to $240,000 to include a $20,000 penalty that was due as a result of the Company being unable to pay back the principal balance to Cherokee on February 15, 2021. The annual interest rate under the 2019 Cherokee Term Loan remains fixed at 18% paid quarterly in arrears. In the event of default, this includes, but is not limited to, the Company’s inability to make any payments due under the Agreement; Cherokee has the right to increase the interest rate on the financing to 20%. A final balloon payment was due on February 15, 2022. If the Company didn’t pay off the principal on or before February 15, 2022, Cherokee could impose an 8% delinquent fee. This delinquent fee applies to the principal balance due on February 15, 2022. Although the facility was not paid off on February 15, 2022, Cherokee has not imposed this delinquent fee or increased the interest rate. The Company recognized $11,000 in interest expense in the First Quarter 2022 and $10,000 in interest expense in the First Quarter 2021 related to the 2019 Cherokee Term Loan. The Company had $4,000 in interest expense accrued at March 31, 2022. The balance on the 2019 Cherokee Term Loan is $240,000 at March 31, 2022 and December 31, 2021. See Note I – Subsequent Events for more information on the status of the 2019 Cherokee Term Loan. NOVEMBER 2020 TERM LOAN On November 4, 2020, the Company entered into a loan agreement with an unaffiliated, individual shareholder in the amount of $50,000. There were no expenses related to the term loan and the interest rate is 7% (Prime + 3.75%). The first interest only payment was paid on February 4, 2021 and the final interest payment and 50,000 principal was due on May 4, 2021. On May 4, 2021, the Company extended this loan for another 6 months, or until November 4, 2021. The interest rate and all other terms of the note remained unchanged under the Extension. On November 4, 2021, the Company entered into a twelve-month Extension Agreement (the “Extension”) with the shareholder. Under the Extension, the principal is now due on November 4, 2022. The interest rate and all other terms of the note remain unchanged under the Extension. All interest payments due to the shareholder have been paid as required with the next interest payment being due on May 4, 2022. The Company recognized $1,000 in interest expense related to the November 2020 term loan in the First Quarter 2022 and the First Quarter 2021. The Company had less than $1,000 of interest expense accrued related to the November 2020 Term Loan in the First Quarter 2022. The balance on the November 2020 Term Loan was $50,000 at March 31, 2022 and at December 31, 2021. DECEMBER 2021 SHAREHOLDER LOANS On December 14, 2021, the Company entered into Loan Agreements with two non-affiliated investors resulting in gross (and net) proceeds of $75,000 as there were no costs associated with the loans. The loans bear interest of 7% per annum until principal and interest are both due in full, or until June 15, 2022. The first interest payments were due on March 15, 2022 and payment of final interest and principal are due June 15, 2022, or earlier as we receive further ERC refunds. The Company incurred $1,000 in interest expense related to these loans in the First Quarter 2022 and $0 in interest expense in the First Quarter 2021 (as the facilities were not in place until December 2021). The Company had less than $1,000 in accrued interest expense at March 31, 2022. The balance on these loans was $75,000 at March 31, 2022 and at December 31, 2021. OTHER DEBT INFORMATION In addition to the debt indicated previously, previous debt facilities (paid in full via refinance or conversion into equity) had financial impact on the First Quarter 2021. More specifically: SBA PAYCHECK PROTECTION LOAN (PPP LOAN) On April 22, 2020, the Company entered into a Promissory Note (“PPP Note”) for $332,000 with Crestmark Bank, pursuant to the U.S. Small Business Administration Paycheck Protection Program under Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed by Congress and signed into law on March 27, 2020. The PPP Note was unsecured, with an interest rate of 1.00% per annum, with principal and interest payments deferred for the first six months, and would mature in two years. On June 15, 2021, the Company applied for forgiveness of the PPP loan in the amount of $332,000 under PPP guidelines. Our forgiveness application was reviewed by the SBA and on August 3, 2021, the Small Business Administration remitted payment to Crestmark Bank for the balance of the PPP Loan principal and all interest due on the PPP Loan. The Company recognized $1,000 in interest expense related to the PPP Loan in the First Quarter 2021. The Company had $3,000 in accrued interest expense at March 31, 2021. |
Employee Retention Credit
Employee Retention Credit | 3 Months Ended |
Mar. 31, 2022 | |
Employee Retention Credit | |
NOTE F - Employee Retention Credit | NOTE F – Employee Retention Credit The employee retention credit (“ERC”), as originally enacted on March 27, 2020 by the CARES Act, is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees. On March 1, 2021, the IRS released Notice 2021-20 to provide guidance on the original ERC, as modified by the Relief Act. The Relief Act extended and enhanced the ERC for qualified wages paid after December 31, 2020 through June 30, 2021. Under the Relief Act, eligible employers may claim a refundable tax credit against certain employment taxes equal to 70% of the qualified wages an eligible employer pays to employees after December 31, 2020 through June 30, 2021. Under the American Rescue Plan Act and previously under the Consolidated Appropriations Act, 2021, the ERC was extended and expanded allowing claims through December 31, 2021 by eligible employers who retained employees during the Covid-19 pandemic. However, on November 5, 2021, the House of Representatives passed the Infrastructure Investment and Jobs Act (“Infrastructure Bill”) under which the ERC would terminate as of September 20, 2021 instead of December 31, 2021 and, President Biden signed the bill on November 15, 2021. The maximum qualified wages for each employee under the current ERC is $10,000 per quarter. Also, because we have 100 or fewer full-time employees, health plan expenses borne by the Company can also be included as qualified wages in addition to salary. To qualify for the ERC in 2021, an employer must have experienced at least a 20% reduction in gross receipts when compared to the same quarter in either 2020 or 2019. During the first quarter of 2021, the second quarter of 2021 and the third quarter of 2021, the Company qualified for the ERC when comparing its 2021 quarters with both 2020 and 2019 quarters. In August 2021, the Company’s payroll service provider processed and mailed a Form 941-X to claim a refund in the amount of $202,000 on qualified wages paid in the first quarter of 2021. Due to a change in the Form 941-X, the Company’s payroll service provider did not process and mail its Form 941-X to claim a refund in the amount of $198,000 on qualified wages paid in the second quarter of 2021 until October 28, 2021. In the middle of the third quarter of 2021, the Company began taking the ERC in our current payroll; which reduced payroll by approximately $44,000 in the third quarter of 2021. Given this, the Company did not have to amend its Form 941 for the third quarter of 2021; however the Form 941 claiming a refund in the amount of $137,000 was filed electronically with the IRS on November 1, 2021 by the Company’s payroll service provider. Upon passing of the Infrastructure Bill, the Company ceased taking the ERC in its current payroll. On December 28, 2021, the Company received its refund for the third quarter of Fiscal 2021 in the amount of $137,000. Shortly before receiving the first refund, the Company spoke with the Internal Revenue Service (“IRS”) to obtain statuses of our filings. The Company was informed that the IRS did not have record of receiving the Company’s Form 941-X for the first quarter of Fiscal 2021 (which was mailed by the Company’s service provider in August 2021). The Company re-sent the Form 941-X for the first quarter of Fiscal 2021 via overnight service on December 31, 2021 and the IRS received it on January 5, 2022. This lack of receipt will result in a delay in receiving the expected refund in the amount of $202,000. Based on our discussion with the IRS, we were expecting the refund for the second quarter of Fiscal 2020 sometime in February 2022; however, as of the date of this report, we have not received any further refund payments. The Company’s expected refunds; totaling $400,000, are included on the Condensed Balance Sheets under current assets, as well as on the Company’s Condensed Statements of Operations under other income. Laws and regulations concerning government programs, including the Employee Retention Credit are complex and subject to varying interpretations. Claims made under the CARES Act may also be subject to retroactive audit and review. There can be no assurance that regulatory authorities will not challenge the Company’s claim to the ERC, and it is not possible to determine the impact (if any) this would have upon the Company. Although the Company has recorded $400,000 under other long term liabilities on our Condensed Balance Sheets at March 31, 2022, even if the Company’s refund claim was challenged and ultimately denied, the Company would not actually have to remit $400,000 to the IRS as that amount has already been remitted to the IRS. |
Stock Options and Warrants
Stock Options and Warrants | 3 Months Ended |
Mar. 31, 2022 | |
Stock Options and Warrants | |
Note G - Stock Options and Warrants | NOTE G – Stock Options and Warrants The Company currently has two non-statutory stock option plans, the Fiscal 2001 Non-statutory Stock Option Plan (the “2001 Plan”) and the 2013 Equity Compensation Plan (the “2013 Plan”). Both plans have been adopted by our Board of Directors and approved by our shareholders. Both the 2001 Plan and the 2013 Plan have options available for future issuance. Any common shares issued as a result of the exercise of stock options would be new common shares issued from our authorized issued shares. During the First Quarter 2022 and the First Quarter 2021, the Company issued 0 options to purchase shares of common stock. Stock option activity for the First Quarter 2022 and the First Quarter 2021 is summarized as follows (the figures contained within the tables below have been rounded to the nearest thousand): First Quarter 2022 First Quarter 2021 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of March 31, 2022 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of March 31, 2021 Options outstanding at beginning of year 1,937,000 $ 0.13 1,987,000 $ 0.13 Granted 0 NA 0 NA Exercised 0 NA 0 NA Cancelled/expired 0 NA 0 NA Options outstanding at end of quarter 1,937,000 $ 0.13 $ 0 1,987,000 $ 0.13 $ 107,000 Options exercisable at end of quarter 1,937,000 $ 0.13 1,987,000 $ 0.13 The Company recognized $0 in share based payment expense in the First Quarter 2022 and the First Quarter 2021. At March 31, 2022, there was $0 of unrecognized share based payment expense related to stock options. Warrants There was no warrant activity in the First Quarter 2022 or the First Quarter 2021. |
Changes in Stockholders Deficit
Changes in Stockholders Deficit1 | 3 Months Ended |
Mar. 31, 2022 | |
Changes in Stockholders Deficit1 | |
Note H - Changes in Stockholders' Deficit | NOTE H – Changes in Stockholders’ Deficit The following table summarizes the changes in stockholders’ deficit for the three month periods ending March 31, 2022 and March 31, 2021: Common Stock Additional Paid in Accumulated Shares Amount Capital Deficit Total Balance – January 1, 2022 47,598,476 476,000 22,393,000 (22,813,000 ) (944,000 ) Shares issued in connection with Landmark consulting agreement 500,000 5,000 10,000 15,000 Net loss (379,000 ) (379,000 ) Balance – March 31, 2022 48,098,476 481,000 22,403,000 (24,192,000 ) (1,308,000 ) Balance – January 1, 2021 37,703,476 $ 377,000 $ 21,717,000 $ (23,350,000 ) $ (1,256,000 ) Shares issued to Lincoln Park for balance of Initial Purchase under the 2020 Lincoln Park Equity Line 500,000 5,000 120,000 125,000 Shares issued to Lincoln Park for purchases under the 2020 Lincoln Pak Equity Line 1,600,000 16,000 240,000 256,000 Net loss (556,000 ) (556,000 ) Balance – March 31, 2021 39,803,476 $ 398,000 $ 22,077,000 $ (23,906,000 ) $ (1,431,000 ) *indicates less than $1,000 LANDMARK CONSULTING AGREEMENT On March 7, 2022, the Company entered into a Financial Advisory Agreement (the “Agreement”) with Landmark Pegasus, Inc. (‘Landmark”). The Agreement provides that Landmark will provide certain financial advisory services for a minimum period of 3 months (which period commenced on February 28, 2022), and as consideration for these services, the Company will pay Landmark (a) a retainer fee consisting of 500,000 restricted shares of common stock and a warrant to purchase 2.75 million shares of the Company’s common stock at a strike price equal to the average closing price of the Company’s common shares for the 30 days preceding the Agreement, or $0.035 per share, resulting in gross proceeds to the Company in the amount of $96,250. The warrant would vest upon the closing of a transaction involving Landmark or upon the invocation of a “Breakup Fee”. In a subsequent amendment, the terms of the warrant were changed to reflect that the warrant would be issued immediately preceding the closing of a transaction involving Landmark or immediately upon the invocation of the Breakup Fee. In each case, the warrant would vest immediately (i.e. the warrant would be 100% immediately exercisable). The Breakup Fee will be invoked upon the generation of a specific transaction to ABMC which meets certain criteria agreed upon by both the Company and Landmark; which transaction is then rejected by the Company. The Company will also pay to Landmark a “Success Fee” for the consummation of a transaction closing during the term of the Agreement and for 12 months thereafter, between the Company and any party first introduced to the Company by Landmark, or with any party the Company has specifically requested Landmark’s assistance with the transaction. Upon invocation of the Breakup Fee or payment of the Success Fee, the Company will also issue an additional 250,000 restricted shares of the Company’s common stock. In the event that the Company consummates a transaction involving the provision of services to any party introduced to the Company by Landmark or with any party the Company has specifically requested Landmark’s assistance with, the Company will pay Landmark 10% of any revenues received from the transaction, unless this percentage is modified by both the Company and Landmark in writing. There is no material relationship between the Company and Landmark, other than with respect to the Agreement. LINCOLN PARK EQUITY LINE OF CREDIT – DECEMBER 2020 On December 9, 2020, the Company entered into a Purchase Agreement and a Registration Rights Agreement with Lincoln Park (together the “Agreements”) under which Lincoln Park agreed to purchase from the Company, from time to time, up to $10,250,000 of its shares of common stock, par value $0.01 per share, subject to certain limitations set forth in the Purchase Agreement, during the term of the Purchase Agreement (two years). Pursuant to the terms of the Registration Rights Agreement, on December 29, 2020, the Company filed a registration statement on Form S-1 (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) to register for resale under the Securities Act of 1933, as amended (the “Securities Act”), the shares of common stock issued and sold as well as the shares of common stock that the Company may elect in the future to issue and sell to Lincoln Park. The SEC declared the Form S-1, as amended, effective on January 11, 2021. On January 11, 2021, the Company sold the remaining 500,000 shares of common stock to Lincoln Park required as an initial purchase under the Purchase Agreement for a purchase price of $125,000. Under the Purchase Agreement, on any business day selected by the Company on which the closing sale price of its common stock exceeds $0.05, the Company may direct Lincoln Park to purchase up to 200,000 common shares on the applicable purchase date (a “Regular Purchase”), which maximum number of shares may be increased to certain higher amounts up to a maximum of 250,000 or 500,000 common shares, if the market price of the Company’s common stock at the time of the Regular Purchase equals or exceeds amounts outlined in the Purchase Agreement. However, Lincoln Park’s purchase obligation under any single Regular Purchase may not exceed $500,000. The purchase price of the shares of common stock the Company may elect to sell to Lincoln Park under the Purchase Agreement in a Regular Purchase, if any, will be based on 95% of the lower of: (i) the lowest sale price on the purchase date for such Regular Purchase and (ii) the arithmetic average of the three lowest closing sale prices for the Company’s common shares during the 15 consecutive business days ending on the business day immediately preceding the purchase date for a Regular Purchase (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction.) Lincoln Park cannot require the Company to sell them any common stock, but is obligated to make purchases as the Company directs, subject to certain conditions outlined under the Purchase Agreement. There are no upper limits on the price per share that Lincoln Park must pay for the Company’s common shares that the Company may elect to sell to them pursuant to the Purchase Agreement. In all instances, the Company may not sell common shares to Lincoln Park under the Purchase Agreement to the extent that the sale of shares would result in Lincoln Park beneficially owning more than 9.99% of our common shares. There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration Rights Agreement, other than the Company’s agreement not to enter into any “variable rate” transactions (as defined in the Purchase Agreement) with any third party, subject to certain exceptions set forth in the Purchase Agreement, for the period set forth in the Purchase Agreement. Lincoln Park has covenanted not to cause or engage in any direct or indirect short selling or hedging of the Company’s common stock. Actual sales of common stock to Lincoln Park, and the timing of the same, under the Purchase Agreement depend on a variety of factors to be determined by the Company from time to time. Proceeds the Company received from sales of common stock to Lincoln Park under the Purchase Agreement are used at the sole discretion of Company management and are used for general corporate purposes, capital expenditures and working capital. The Company did not sell any shares of common stock to Lincoln Park in the First Quarter 2022 as the closing price of the Company’s shares of common stock did not exceed $0.05. In fact, the last sale to Lincoln Park was in October 2021. In the First Quarter 2021, the Company sold a total of 2,100,000 shares of common stock to Lincoln Park (including the balance of the required initial purchase) as Regular Purchases and received proceeds of $381,000. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2022 | |
SUBSEQUENT EVENTS | |
Note I - SUBSEQUENT EVENTS | NOTE I – SUBSEQUENT EVENTS Amendment to December 2021 Shareholder Loan On April 6, 2022, we amended a loan with one of the non-affiliated shareholders. This amendment (No.1; hereinafter referred to in this paragraph as Amendment No. 1) increasing the principal due to the shareholder by $25,000; bringing their total principal to $75,000. No other terms of the loan were changed under Amendment No. 1. On April 14, 2022, the loan was amended again (under Amendment No. 2; hereinafter referred to in this paragraph as Amendment No. 2) increasing the principal again by $50,000; bringing their total principal to $125,000. No other terms of the loan were changed under Amendment No. 2. On May 11, 2022, the loan was amended again (under Amendment No. 3; hereinafter referred to in this paragraph as Amendment No. 3) increasing the principal again by $75,000; bringing their total principal to $200,000. The loan was further amended to include a specific payment schedule based on receipt of anticipated ERC refunds. More specifically, $75,000 will be repaid to the shareholder upon receipt of the next ERC refund (anticipated to be $198,000), $100,000 will be repaid to the shareholder upon receipt of the final ERC refund (anticipated to be $202,000) and the final $25,000 and any accrued interest due under the loan will be paid prior to December 31, 2022. Cherokee LSA and 2019 Term Loan As of the date of this report, we are still in discussions with Cherokee about our inability to pay off these credit facilities. These discussions involve possible payoff of the loans (via a refinance or other means), modification of the terms of the facilities and/or further extension of the due date of the credit facilities. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE J- INCOME TAXES The Company follows ASC 740 “Income Taxes” (“ASC 740”) which prescribes the asset and liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted laws and tax rates that will be in effect when the differences are expected to reverse. The measurement of net, deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are not expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. Under ASC 740, tax benefits are recorded only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. With regards to the use of net losses incurred for 2018 and later, such net operating losses have no expiration date, while net operating loss carryforwards can only be used to offset up to 80% of taxable income. Net operating losses incurred prior to 2018 may be fully utilized to offset taxable income, but expire in 20 years. A reconciliation of the U.S. Federal statutory income tax rate to the effective income tax rate is as follows: Quarter Ended March 31, 2022 Quarter Ended March 31, 2021 Tax expense at federal statutory rate (21 )% (21 )% State tax expense, net of federal tax effect 0 % 0 % Increase in valuation allowance 21 % 21 % Effective income tax rate (0 )% (0 )% Deferred income taxes reflect the temporary differences between the financial statement carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, adjusted by the relevant tax rate. The components of deferred tax assets and liabilities are as follows: March 31, 2022 December 31, 2021 Inventory capitalization $ 8,000 $ 8,000 Inventory allowance 68,000 72,000 Allowance for doubtful accounts 1,000 1,000 Accrued compensation 18,000 18,000 Stock based compensation 159,000 160,000 Deferred wages payable 18,000 21,000 Depreciation – Property, Plant & Equipment (24,000 ) (24,000 ) Research and development credits 24,000 24,000 Net operating loss carry-forwards 2,730,000 2,631,000 Total deferred income tax assets, net 3,002,000 2,911,000 Less: valuation allowance (3,002,000 ) (2,911,000 ) Net deferred income tax assets $ 0 0 The valuation allowance for deferred income tax assets was $3,002,000 as of March 31, 2022 and $2,911,000 as of December 31, 2021. The net change in the deferred income tax assets valuation allowance was $91,000 for the three month ended March 31, 2022. The Company believes that it is more likely than not that the deferred tax assets will not be realized. As of March 31, 2022, the prior full three years remain open for examination by the federal or state regulatory agencies for purposes of an audit for tax purposes. At March 31, 2022, the Company had Federal and state net operating loss carry-forwards for income tax purposes of approximately $10,100,000 and research and development credits of $24,000. The Company’s net operating loss carry-forwards began to expire in 2022 and continue to expire through 2037. Net operating losses incurred from 2018 to date have no expiration date. In assessing the reliability of deferred income tax assets, management considers whether or not it is more likely than not that some portion or all deferred income tax assets, net, will be realized. The ultimate realization of net deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the projected future taxable income and tax planning strategies in making this assessment. The Company’s ability to utilize the operating loss carry-forwards and research and development credits may be subject to an annual limitation in future periods pursuant to Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, if future changes in ownership occur. The Company recognizes potential interest and penalties related to income tax positions as a component of the provision for income taxes on operations. The Company does not anticipate that total unrecognized tax benefits will materially change in the next twelve months. |
Basis of Reporting (Policies)
Basis of Reporting (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Basis of Reporting | |
Basis of Reporting | The accompanying unaudited interim condensed financial statements of American Bio Medica Corporation (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X. Accordingly, these unaudited interim condensed financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statement presentation. These unaudited interim condensed financial statements should be read in conjunction with audited financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, the interim condensed financial statements include all normal, recurring adjustments which are considered necessary for a fair presentation of the financial position of the Company at March 31, 2022, and the results of operations and cash flows for the three month periods ended March 31, 2022 (the “First Quarter 2022”) and March 31, 2021 (the “First Quarter 2021”). Operating results for the First Quarter 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. Amounts at December 31, 2021 are derived from audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. During the First Quarter 2022, there were no significant changes to the Company’s critical accounting policies, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The preparation of these interim condensed financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates estimates, including those related to product returns, bad debts, inventories, income taxes, warranty obligations, contingencies and litigation. The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These unaudited interim condensed financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. The independent registered public accounting firm’s report on the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, contained an explanatory paragraph regarding the Company’s ability to continue as a going concern. As of the date of this report, the Company’s current cash balances, together with cash generated from future operations and amounts available under the Company’s credit facilities may not be sufficient to fund operations through May 2023. Through the First Quarter of 2022, the Company had a line of credit with Crestmark Bank. The maximum availability on the Company’s line of credit was $1,000,000. However, because the amount available under the line of credit is based upon the Company’s accounts receivable, the amounts actually available under the line of credit (historically) have been significantly less than the maximum availability. As of March 31, 2022, based on the Company’s availability calculation, there were no additional amounts available under the Company’s line of credit because the Company draws any balance available on a daily basis. The Company’s credit facilities with Cherokee Financial, LLC (“Cherokee”) matured/expired on February 15, 2022 with a final balloon payment of $1,240,000 which has not been paid and is now past due. The Company is currently in discussions with Cherokee related to the maturity and loan payoff, including, but not limited to, methods to pay off the two credit facilities, restructuring of the credit facilities and/or further extension of the facilities. Considering these discussions, as of the date of this report, Cherokee has not called a default under either facility nor have they imposed default interest under either facility. The Company is hoping to conclude these discussions with Cherokee shortly and expects to file a Current Report on Form 8-K when required. The Company’s total debt at March 31, 2022 with Cherokee Financial, LLC is $1,240,000. The Company does not expect cash from operations within the next 12 months to be sufficient to pay the amounts due under these credit facilities so, the Company is currently looking at alternatives to pay off or refinance these facilities. As discussed in more detail in “Cash Flow, Outlook/Risk”, if sales levels decline further, the Company will have further reduced availability on its line of credit due to decreased accounts receivable balances. If availability under the Company’s line of credit is not sufficient to satisfy our working capital and capital expenditure requirements, the Company will be required to obtain additional credit facilities or sell additional equity securities, or delay capital expenditures, which could have a material adverse effect on the business. There is no assurance that such financing will be available or that the Company will be able to complete financing on satisfactory terms, if at all. |
Recently Adopted Accounting Standards | 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) ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance |
Accounting Standards Issued; Not Yet Adopted | There are not any new accounting standards issued but, not yet adopted in the First Quarter 2022. Any other new accounting pronouncements recently issued, but not yet effective, have been reviewed and determined to be not applicable or were related to technical amendments or codification. As a result, the adoption of such new accounting pronouncements, when effective, is not expected to have a material effect on the Company’s financial position or results of operations. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventory | |
Inventory | March 31, 2022 December 31, 2021 Raw Materials $ 448,000 $ 462,000 Work In Process 94,000 109,000 Finished Goods 137,000 150,000 Allowance for slow moving and obsolete inventory (260,000 ) (278,000 ) $ 419,000 $ 443,000 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Net Loss Per Common Share | |
Potentially dilutive shares | March 31, 2022 March 31, 2021 Options 1,937,000 1,987,000 Total 1,937,000 1,987,000 |
Line of Credit and Debt (Tables
Line of Credit and Debt (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Line of Credit and Debt | |
Line of credit and debt | March 31, 2022 December 31, 2021 Loan and Security Agreement with Cherokee Financial, LLC $ 1,000,000 $ 1,000,000 Crestmark Line of Credit: 93,000 178,000 2019 Term Loan with Cherokee Financial, LLC: 240,000 240,000 November 2020 Shareholder Note: 50,000 50,000 December 2021 Shareholder Notes: 75,000 75,000 Total Debt $ 1,458,000 $ 1,543,000 Current portion $ 1,458,000 $ 1,543,000 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Stock Options and Warrants | |
Stock option/warrant activity | First Quarter 2022 First Quarter 2021 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of March 31, 2022 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of March 31, 2021 Options outstanding at beginning of year 1,937,000 $ 0.13 1,987,000 $ 0.13 Granted 0 NA 0 NA Exercised 0 NA 0 NA Cancelled/expired 0 NA 0 NA Options outstanding at end of quarter 1,937,000 $ 0.13 $ 0 1,987,000 $ 0.13 $ 107,000 Options exercisable at end of quarter 1,937,000 $ 0.13 1,987,000 $ 0.13 |
Changes in Stockholders Defic_2
Changes in Stockholders Deficit (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Changes in Stockholders Deficit1 | |
Statement of Stockholders' Deficit | Common Stock Additional Paid in Accumulated Shares Amount Capital Deficit Total Balance – January 1, 2022 47,598,476 476,000 22,393,000 (22,813,000 ) (944,000 ) Shares issued in connection with Landmark consulting agreement 500,000 5,000 10,000 15,000 Net loss (379,000 ) (379,000 ) Balance – March 31, 2022 48,098,476 481,000 22,403,000 (24,192,000 ) (1,308,000 ) Balance – January 1, 2021 37,703,476 $ 377,000 $ 21,717,000 $ (23,350,000 ) $ (1,256,000 ) Shares issued to Lincoln Park for balance of Initial Purchase under the 2020 Lincoln Park Equity Line 500,000 5,000 120,000 125,000 Shares issued to Lincoln Park for purchases under the 2020 Lincoln Pak Equity Line 1,600,000 16,000 240,000 256,000 Net loss (556,000 ) (556,000 ) Balance – March 31, 2021 39,803,476 $ 398,000 $ 22,077,000 $ (23,906,000 ) $ (1,431,000 ) *indicates less than $1,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
Effective income tax rate reconciliation | Quarter Ended March 31, 2022 Quarter Ended March 31, 2021 Tax expense at federal statutory rate (21 )% (21 )% State tax expense, net of federal tax effect 0 % 0 % Increase in valuation allowance 21 % 21 % Effective income tax rate (0 )% (0 )% |
Deferred tax assets and liabilities | March 31, 2022 December 31, 2021 Inventory capitalization $ 8,000 $ 8,000 Inventory allowance 68,000 72,000 Allowance for doubtful accounts 1,000 1,000 Accrued compensation 18,000 18,000 Stock based compensation 159,000 160,000 Deferred wages payable 18,000 21,000 Depreciation – Property, Plant & Equipment (24,000 ) (24,000 ) Research and development credits 24,000 24,000 Net operating loss carry-forwards 2,730,000 2,631,000 Total deferred income tax assets, net 3,002,000 2,911,000 Less: valuation allowance (3,002,000 ) (2,911,000 ) Net deferred income tax assets $ 0 0 |
Basis of Reporting (Details Nar
Basis of Reporting (Details Narrative) | Mar. 31, 2022USD ($) |
Basis of Reporting (Details Narrative) | |
Line of credit | $ 1,000,000 |
Total debt | 1,240,000 |
Credit facilities outstanding | $ 1,240,000 |
Inventory (Details)
Inventory (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Inventory | ||
Raw materials | $ 448,000 | $ 462,000 |
Work in process | 94,000 | 109,000 |
Finished goods | 137,000 | 150,000 |
Allowance for slow moving and obsolete inventory | (260,000) | (278,000) |
Inventory, net | $ 419,000 | $ 443,000 |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - shares | 2 Months Ended | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | |
Weighted average number diluted shares outstanding adjustment | 1,937,000 | 1,937,000 | 1,987,000 |
Equity Option [Member] | |||
Weighted average number diluted shares outstanding adjustment | 1,937,000 | 1,987,000 |
Net Loss Per Common Share (De_2
Net Loss Per Common Share (Details Narrative) - shares | 2 Months Ended | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | |
Net Loss Per Common Share | |||
Antidilutive securities excluded from computation of earnings per share, amount | 1,937,000 | 1,937,000 | 1,987,000 |
Line of Credit and Debt (Detail
Line of Credit and Debt (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Total debt, net | $ 1,458,000 | $ 1,543,000 |
Current portion | 1,458,000 | 1,543,000 |
Loan and Security Agreement with Cherokee Financial, LLC | ||
Long-term debt, gross | 1,000,000 | 1,000,000 |
Crestmark Line of Credit | ||
Long-term debt, gross | 93,000 | 178,000 |
2019 Term Loan with Cherokee Financial, LLC | ||
Long-term debt, gross | 240,000 | 240,000 |
November 2020 Shareholder Note 2 | ||
Long-term debt, gross | 50,000 | 50,000 |
December 2021 Shareholder Note | ||
Long-term debt, gross | $ 75,000 | $ 75,000 |
Line of Credit and Debt (Deta_2
Line of Credit and Debt (Details Narrative) - USD ($) | Nov. 04, 2020 | Feb. 15, 2022 | Aug. 18, 2021 | Feb. 24, 2021 | Feb. 24, 2020 | Jun. 29, 2015 | Mar. 26, 2015 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Apr. 22, 2020 |
Loan and Security Agreement with Cherokee Financial, LLC | |||||||||||
Interest expense | $ 25,000 | $ 23,000 | |||||||||
Accrued interest | 8,000 | ||||||||||
Fixed rate | 10.00% | ||||||||||
Interest rate on the financing | 18.00% | ||||||||||
Principal amount | $ 18,000 | ||||||||||
Delinquent fee charged | 8.00% | 8.00% | |||||||||
Remaining balance | 1,000,000 | $ 1,000,000 | |||||||||
Initial term | 5 years | ||||||||||
Machinery and equipment | $ 1,200,000 | ||||||||||
Fixed annual interest rate | 8.00% | ||||||||||
Additional interest rate | 8.00% | ||||||||||
Pay annual loan interest | 1.00% | ||||||||||
Net proceeds | $ 80,000 | ||||||||||
Debt payments | 1,015,000 | ||||||||||
Other expenses and fees | 105,000 | ||||||||||
Annual principal reduction payments | 75,000 | ||||||||||
Agreement extension amount | 900,000 | ||||||||||
Consideration amount | $ 900,000 | ||||||||||
Percentage | 2.00% | ||||||||||
Increased agreement extension amount | $ 100,000 | ||||||||||
Fees interest rate | 3.00% | ||||||||||
Extended principal amount | $ 900,000 | ||||||||||
Legal fees | $ 1,000 | ||||||||||
Crestmark Line of Credit | |||||||||||
Interest expense | 10,000 | 12,000 | |||||||||
Accrued interest | $ 0 | 0 | |||||||||
Initial term | 5 years | ||||||||||
Prime Rate | 3.00% | ||||||||||
Loan fee | $ 7,500 | ||||||||||
Current interest rate | 12.75% | ||||||||||
Floor rate | 5.25% | ||||||||||
Crestmark LOC interest rate | 6.50% | ||||||||||
Maintenance fee charge | 0.30% | ||||||||||
Actual average rate | 12.58% | ||||||||||
Decrease inventory receivables | $ 1,000,000 | ||||||||||
Minimum loan balance requirement | 500,000 | ||||||||||
December 2021 Shareholder Note | |||||||||||
Interest expense | 1,000 | 0 | |||||||||
Accrued interest | 1,000 | 0 | |||||||||
Loan agreement amount | $ 75,000 | ||||||||||
Loan interest rate | 7.00% | ||||||||||
November 2020 Shareholder Note 1 | |||||||||||
Interest expense | $ 1,000 | 1,000 | |||||||||
Accrued interest | 1,000 | 1,000 | |||||||||
Principal amount | $ 50,000 | ||||||||||
Loan agreement amount | 50,000 | ||||||||||
Term Loan | $ 50,000 | ||||||||||
Loan interest rate | 7.00% | ||||||||||
Extended loan maturity | Feb. 4, 2021 | ||||||||||
April 2020 PPP Loan with Crestmark | |||||||||||
Interest expense | 1,000 | ||||||||||
Accrued interest | 3,000 | ||||||||||
Fixed annual interest rate | 1.00% | ||||||||||
Promissory Note | $ 332,000 | ||||||||||
PPP loans | $ 332,000 | ||||||||||
2019 Cherokee Loan and Security Agreement | |||||||||||
Loan amount | $ 200,000 | ||||||||||
Interest expense | 11,000 | 10,000 | |||||||||
Accrued interest | $ 4,000 | $ 7,000 | |||||||||
Restricted shares | 625,000 | ||||||||||
Fixed rate | 18.00% | ||||||||||
Penalty | $ 20,000 | ||||||||||
Term Loan | $ 240,000 | ||||||||||
Annual interest rate on loan | 18.00% | ||||||||||
Interest rate on the financing | 20.00% |
Employee Retention Credit (Deta
Employee Retention Credit (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Jun. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2021 | |
Employee Retention Credit | |||||
Refund of wages | $ 137,000 | $ 202,000 | $ 198,000 | $ 137,000 | |
Payroll reduced | $ 44,000 | ||||
Other long term liabilities | 400,000 | ||||
Refunf Total | 400,000 | ||||
Employee retention credit receivable | $ 400,000 | $ 400,000 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details) - Equity Option [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Shares, beginning balance | 1,937,000 | 1,987,000 |
Shares, granted | 0 | 0 |
Shares, exercised | 0 | 0 |
Shares, cancelled/expired | 0 | 0 |
Shares, ending balance | 1,937,000 | 1,987,000 |
Shares, exercisable | 1,937,000 | 1,987,000 |
Weighted average exercise price, beginning balance | $ 0.13 | $ 0.13 |
Weighted average exercise price, granted | 0 | 0 |
Weighted average exercise price, exercised | 0 | 0 |
Weighted average exercise price, cancelled/expired | 0 | 0 |
Weighted average exercise price, ending balance | 0.13 | 0.13 |
Weighted average exercise price, exercisable | $ 0.13 | $ 0.13 |
Aggregate intrinsic value, outstanding | $ 0 | $ 107,000 |
Stock Options and Warrants (D_2
Stock Options and Warrants (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Equity Option [Member] | ||
Share based payment | $ 0 | $ 0 |
Changes in Stockholders Defic_3
Changes in Stockholders Deficit (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Balance, amount | $ (1,308,000) | $ (1,431,000) | $ (944,000) | $ (1,256,000) |
Shares issued to Lincoln Park for balance of Initial Purchase under the 2020 Lincoln Park Equity Line, amount | 125,000 | |||
Shares issued to Lincoln Park for purchases under the 2020 Lincoln Pak Equity Line, amount | 15,000 | 256,000 | ||
Net loss | (379,000) | (556,000) | ||
Balance, amount | (1,308,000) | (1,431,000) | ||
Common Stock | ||||
Balance, amount | 481,000 | $ 476,000 | $ 377,000 | |
Shares issued to Lincoln Park for balance of Initial Purchase under the 2020 Lincoln Park Equity Line, amount | 5,000 | |||
Shares issued to Lincoln Park for purchases under the 2020 Lincoln Pak Equity Line, amount | 5,000 | $ 16,000 | ||
Balance, amount | $ 481,000 | |||
Balance, shares | 48,098,476 | 47,598,476 | 37,703,476 | |
Shares issued to Lincoln Park for balance of Initial Purchase under the 2020 Lincoln Park Equity Line, shares | 500,000 | |||
Shares issued to Lincoln Park for purchases under the 2020 Lincoln Pak Equity Line, shares | 1,600,000 | |||
Shares issued in connection with Landmark consulting agreement, shares | 500,000 | |||
Additional Paid-In Capital | ||||
Balance, amount | $ 22,403,000 | $ 22,393,000 | $ 21,717,000 | |
Shares issued to Lincoln Park for balance of Initial Purchase under the 2020 Lincoln Park Equity Line, amount | $ 120,000 | |||
Shares issued to Lincoln Park for purchases under the 2020 Lincoln Pak Equity Line, amount | 10,000 | 240,000 | ||
Balance, amount | 22,403,000 | |||
Retained Earnings (Accumulated Deficit) | ||||
Balance, amount | (24,192,000) | $ (22,813,000) | $ (23,350,000) | |
Net loss | (379,000) | $ (556,000) | ||
Balance, amount | $ (24,192,000) |
Changes in Stockholders Defic_4
Changes in Stockholders Deficit (Details Narrative) | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
LINCOLN PARK EQUITY LINE OF CREDIT [Member] | |
Purchase Agreement description | Under the Purchase Agreement, on any business day selected by the Company on which the closing sale price of its common stock exceeds $0.05, the Company may direct Lincoln Park to purchase up to 200,000 common shares on the applicable purchase date (a “Regular Purchase”), which maximum number of shares may be increased to certain higher amounts up to a maximum of 250,000 or 500,000 common shares, if the market price of the Company’s common stock at the time of the Regular Purchase equals or exceeds amounts outlined in the Purchase Agreement. However, Lincoln Park’s purchase obligation under any single Regular Purchase may not exceed $500,000. The purchase price of the shares of common stock the Company may elect to sell to Lincoln Park under the Purchase Agreement in a Regular Purchase, if any, will be based on 95% of the lower of: (i) the lowest sale price on the purchase date for such Regular Purchase and (ii) the arithmetic average of the three lowest closing sale prices for the Company’s common shares during the 15 consecutive business days ending on the business day immediately preceding the purchase date for a Regular Purchase (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction.) |
Par value | $ / shares | $ 0.01 |
Common stock did not exceed | $ / shares | $ 0.05 |
Common stock purchase | $ | $ 10,250,000 |
Common stock remaining | 500,000 |
Initial purchase | 125,000 |
LANDMARK CONSULTING AGREEMENT [Member] | |
Restricted shares | 500,000 |
Warrant to purchase | 2,750,000 |
Gross proceeds | 96,250,000,000 |
common shares | $ / shares | $ 0.035 |
Additional restricted shares | 250,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | May 11, 2022 | Apr. 14, 2022 | Apr. 06, 2022 |
Increased principal amount | $ 75,000 | $ 50,000 | $ 25,000 |
Principal amount | $ 200,000 | $ 125,000 | $ 75,000 |
Description of loan amended | More specifically, $75,000 will be repaid to the shareholder upon receipt of the next ERC refund (anticipated to be $198,000), $100,000 will be repaid to the shareholder upon receipt of the final ERC refund (anticipated to be $202,000) and the final $25,000 and any accrued interest due under the loan will be paid prior to December 31, 2022. |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
INCOME TAXES | ||
Tax expense at federal statutory rate | (21.00%) | (21.00%) |
State tax expense, net of federal tax effect | 0.00% | 0.00% |
Increase in valuation allowance | 21.00% | 21.00% |
Effective income tax rate | 0.00% | 0.00% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
INCOME TAXES | ||
Inventory capitalization | $ 8,000 | $ 8,000 |
Inventory allowance | 68,000 | 72,000 |
Allowance for doubtful accounts | 1,000 | 1,000 |
Accrued compensation | 18,000 | 18,000 |
Stock based compensation | 159,000 | 160,000 |
Deferred wages payable | 18,000 | 21,000 |
Depreciation - property, plant & equipment | (24,000) | (24,000) |
Research and development credits | 24,000 | 24,000 |
Net operating loss carry-forward | 2,730,000 | 2,631,000 |
Total gross deferred income tax assets | 3,002,000 | 2,911,000 |
Less: valuation allowance | 3,002,000 | 2,911,000 |
Net deferred income tax assets | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Less: valuation allowance | $ 3,002,000 | $ 2,911,000 |
Valuation allowance, deferred tax asset, change in amount | 91,000 | |
Research and development | 24,000 | |
Operating loss carryforwards | $ 10,100,000 | |
Expire date | expire in 2022 and continue to expire through 2037. | |
Carry overs Operating losses | 100.00% | |
Carry overs Operating losses taxabale income percentage | 80.00% |