Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 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 | Sep. 30, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
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 ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 10,000 | $ 115,000 |
Accounts receivable, net of allowance for doubtful accounts of $2,000 at September 30, 2022 and $3,000 at December 31, 2021 | 39,000 | 323,000 |
Inventory, net of allowance of $256,000 at September 30, 2022 and $278,000 at December 31, 2021 | 380,000 | 443,000 |
Employee retention credit receivable | 202,000 | 400,000 |
Prepaid expenses and other current assets | 24,000 | 24,000 |
Right of use asset - operating leases | 15,000 | 35,000 |
Total current assets | 670,000 | 1,340,000 |
Property, plant and equipment, net | 479,000 | 517,000 |
Right of use asset - operating leases | 7,000 | 5,000 |
Other assets | 21,000 | 21,000 |
Total assets | 1,177,000 | 1,883,000 |
Current liabilities | ||
Accounts payable | 950,000 | 682,000 |
Accrued expenses and other current liabilities | 544,000 | 467,000 |
Right of use liability - operating leases | 13,000 | 35,000 |
Wages payable | 90,000 | 97,000 |
Line of credit | 0 | 178,000 |
Current portion of long-term debt | 1,595,000 | 1,365,000 |
Total current liabilities | 3,192,000 | 2,824,000 |
Right of use liability - operating leases | 7,000 | 3,000 |
Total liabilities | 3,199,000 | 2,827,000 |
Stockholders' deficit: | ||
Preferred stock; par value $.01 per share; 5,000,000 shares authorized, none issued and outstanding at September 30, 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 September 30, 2022 and 47,598,476 issued and outstanding as of December 31, 2021 | 481,000 | 476,000 |
Additional paid-in capital | 22,403,000 | 22,393,000 |
Deficit | (24,906,000) | (23,813,000) |
Total stockholders' deficit | (2,022,000) | (944,000) |
Total liabilities and stockholders' deficit | $ 1,177,000 | $ 1,883,000 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Condensed Balance Sheets | ||
Allowance for doubtful accounts receivable, current | $ 2,000 | $ 3,000 |
Inventory valuation reserves | $ 256,000 | $ 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 | 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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Statements of Operations (Unaudited) | ||||
Net sales | $ 209,000 | $ 614,000 | $ 746,000 | $ 1,709,000 |
Cost of goods sold | 218,000 | 429,000 | 799,000 | 1,284,000 |
Gross (loss) / profit | (9,000) | 185,000 | (53,000) | 425,000 |
Operating expenses: | ||||
Research and development | 22,000 | 21,000 | 63,000 | 63,000 |
Selling and marketing | 26,000 | 79,000 | 109,000 | 233,000 |
General and administrative | 205,000 | 289,000 | 715,000 | 1,086,000 |
Total | 253,000 | 389,000 | 887,000 | 1,382,000 |
Operating loss | (262,000) | (204,000) | 0 | (957,000) |
Other (expense) / income : | ||||
Interest expense | (53,000) | (49,000) | (153,000) | (145,000) |
Income from forgiveness of PPP loan | 0 | 335,000 | 0 | 335,000 |
Other income, net | 1,000 | 0 | 2,000 | 50,000 |
Income from Employee Retention Credit | ||||
Income from Employee Retention Credit | 0 | 581,000 | 0 | 581,000 |
Total2 | (52,000) | 867,000 | (151,000) | 821,000 |
(Loss) / income before income tax expense | (314,000) | 663,000 | (1,091,000) | (136,000) |
Income tax expense | 0 | 0 | (2,000) | 2,000 |
Net (loss) / income | $ (314,000) | $ 663,000 | $ (1,093,000) | $ (138,000) |
Basic and diluted (loss) / income per common share | $ (0.01) | $ 0.02 | $ (0.02) | $ 0 |
Weighted average number of shares outstanding - basic & diluted | 48,098,476 | 44,020,650 | 47,990,417 | 39,281,286 |
Statements of Changes in Stockh
Statements of Changes in Stockholders Deficit (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2020 | 37,703,476 | |||
Balance, amount at Dec. 31, 2020 | $ (1,256,000) | $ 377,000 | $ 21,717,000 | $ (23,350,000) |
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 balance of Initial Purchase under the 2020 Lincoln Park Equity Line, amount | 125,000 | $ 5,000 | 120,000 | |
Shares issued to Lincoln Park for purchases under the 2020 Lincoln Park Equity Line, shares | 5,800,000 | |||
Shares issued to Lincoln Park for purchases under the 2020 Lincoln Park Equity Line, amount | 507,000 | $ 58,000 | 449,000 | |
Shares issued for Cherokee interest in lieu of cash, shares | 895,000 | |||
Shares issued for Cherokee interest in lieu of cash, amount | 36,000 | $ 9,000 | 27,000 | |
Net loss | (138,000) | (138,000) | ||
Balance, shares at Sep. 30, 2021 | 44,898,476 | |||
Balance, amount at Sep. 30, 2021 | (726,000) | $ 449,000 | 22,313,000 | (23,488,000) |
Balance, shares at Dec. 31, 2021 | 47,598,476 | |||
Balance, amount at Dec. 31, 2021 | (944,000) | $ 476,000 | 22,393,000 | (22,813,000) |
Net loss | (1,093,000) | (1,093,000) | ||
Shares issued in connection with Landmark consulting agreement, shares | 500,000 | |||
Shares issued in connection with Landmark consulting agreement, amount | 15,000 | $ 5,000 | 10,000 | |
Balance, shares at Sep. 30, 2022 | 48,098,476 | |||
Balance, amount at Sep. 30, 2022 | $ (2,022,000) | $ 481,000 | $ 22,403,000 | $ (24,906,000) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (1,093,000) | $ (138,000) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Depreciation and amortization | 38,000 | 53,000 |
Penalty added to Cherokee loan balance | 0 | 120,000 |
Recovery of bad debts | (1,000) | (17,000) |
(Reduction of) / provision for slow moving and obsolete inventory | (22,000) | 44,000 |
Employee retention credit | 0 | (537,000) |
Shares issued for services | 15,000 | 0 |
Interest paid with restricted stock | 0 | 36,000 |
Forgiveness of PPP loan | 0 | (332,000) |
Forgiveness of PPP loan interest | 0 | (3,000) |
Changes in: | ||
Accounts receivable | 285,000 | (121,000) |
Inventory | 85,000 | 73,000 |
Employee retention credit refund | 198,000 | 0 |
Prepaid expenses and other current assets | 0 | 73,000 |
Right of use asset | 18,000 | 26,000 |
Accounts payable | 268,000 | 90,000 |
Accrued expenses and other current liabilities | 77,000 | (149,000) |
Right of use liability | (18,000) | (27,000) |
Wages payable | (7,000) | (24,000) |
Net cash used in operating activities | (157,000) | (833,000) |
Cash flows from financing activities: | ||
Proceeds from debt financing | 280,000 | 0 |
Repayments of debt financing | (50,000) | (25,000) |
Proceeds from Lincoln Park financing | 0 | 632,000 |
Proceeds from line of credit | 901,000 | 1,712,000 |
Repayments of line of credit | (1,079,000) | (1,543,000) |
Net cash provided by financing activities | 52,000 | 776,000 |
Net change in cash and cash equivalents | (105,000) | (57,000) |
Cash and cash equivalents - beginning of period | 115,000 | 98,000 |
Cash and cash equivalents - end of period | 10,000 | 41,000 |
Non-Cash transactions | ||
Forgiveness of PPP loan principal and interest | 0 | 335,000 |
Cash paid during period for interest | 143,000 | 142,000 |
Cash paid during period for taxes | $ 2,000 | $ 2,000 |
Basis of Reporting
Basis of Reporting | 9 Months Ended |
Sep. 30, 2022 | |
Basis of Reporting | |
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 September 30, 2022, and the results of operations for the three and nine month periods ended September 30, 2022 and September 30, 2021 and cash flows for the nine month periods ended September 30, 2022 and September 30, 2021. Operating results for the nine months ended September 30, 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 nine months ended September 30, 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. Our 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 are not currently sufficient to fund operations through November 2023. Throughout most of the nine months ended September 30, 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. On September 29, 2022, we paid off the balance of our line of credit ($34,000) with the proceeds of a $40,000 loan from an unaffiliated third party. See Note I – Subsequent Events. The Company’s credit facilities with Cherokee Financial, LLC (“Cherokee”) matured/expired on February 15, 2022 with a final balloon payment due of $1,240,000. On June 14, 2022, Cherokee agreed that they would defer the principal amounts due under the facilities until February 15, 2023 and that any applicable penalties would also be deferred as long as the Company remains current on the quarterly interest payments. Furthermore, any penalties will also be waived if the principal amounts are paid on or prior to February 15, 2023. The Company’s total debt at September 30, 2022 with Cherokee 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 evaluating alternatives to pay off or refinance these facilities. As discussed in more detail in “Cash Flow, Outlook/Risk”, if sales levels continue to decline further, the Company will continue to have inadequate cash flow and will not be able to satisfy its working capital and any capital expenditure requirements. The Company would then be required to obtain additional credit facilities, sell additional equity securities, or delay capital expenditures and/or reduce or terminate operations, which would 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 or continue its operations. 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 ASU 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2022 | |
Inventory | |
Inventory | Note B – Inventory Inventory is comprised of the following: September 30, 2022 December 31, 2021 Raw Materials $ 456,000 $ 462,000 Work In Process 93,000 109,000 Finished Goods 87,000 150,000 Allowance for slow moving and obsolete inventory (256,000 ) (278,000 ) $ 380,000 $ 443,000 |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss Per Common Share | |
Net Loss Per Common Share | Note 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 September 30, 2022 and 2021: September 30, 2022 September 30, 2021 Options 1,736,000 1,937,000 Total 1,736,000 1,937,000 |
LitigationLegal Matters
LitigationLegal Matters | 9 Months Ended |
Sep. 30, 2022 | |
Litigation/Legal Matters | Note D – Litigation/Legal Matters From time to time, the Company may be involved in immaterial legal proceedings in connection with matters that arise during the normal course of business. While the ultimate outcome of any such immaterial litigation cannot be predicted, if the Company is unsuccessful in defending any such litigation, the resulting financial losses are not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company. Property Taxes: The Company is currently delinquent in its property and school taxes. The Company has been communicating with the county over the past several months to discuss options for payment of the delinquent taxes; including, but not limited to, entering into a payment plan offered by the county. |
Line of Credit and Debt
Line of Credit and Debt | 9 Months Ended |
Sep. 30, 2022 | |
Line of Credit and Debt | |
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 September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Loan and Security Agreement with Cherokee Financial, LLC $ 1,000,000 $ 1,000,000 Crestmark Line of Credit: 0 178,000 2019 Term Loan with Cherokee Financial, LLC: 240,000 240,000 November 2020 Shareholder Note: 50,000 50,000 December 2021 Shareholder Note: 265,000 75,000 September 2022 Loan & Promissory Note: 40,000 0 Total Debt $ 1,595,000 $ 1,543,000 Current portion $ 1,595,000 $ 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”) in the amount of $1,200,000. The Cherokee LSA reached maturity on February 15, 2020 with a balance of $900,000 (after 4 principal reduction payments of $75,000 each were made over the course of the initial term). In February 2020, the Cherokee LSA was extended for one year, or until February 15, 2021. No terms of the facility were changed under the February 2020 extension. In February 2021, the Cherokee LSA was further extended for another year, or until February 15, 2022 (the “February 2021 Extension”). Under the February 2021 Extension, the principal of 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. The annual interest rate on the Cherokee LSA was also 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 were still due quarterly. Cantone Research, Inc. earned a 3% fee on the extended principal of $900,000 (or $27,000) for their services related to securing the February 2021 Extension with Cherokee investors. The fee paid to Cantone Research, Inc. was recorded as a bank fee and is included in general and administrative expenses in the nine months ended September 30, 2021. 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. Under the terms of the February 2021 Extension, if the Company didn’t pay off the principal on or before February 15, 2022, Cherokee could charge an 8% delinquent fee on the principal balance ($1,000,000) on February 15, 2022. The Company was not able to pay off the facility on February 15, 2022; however, on June 14, 2022 Cherokee agreed that they would defer the principal amounts due under the Cherokee LSA until February 15, 2023 and that any applicable penalties would also be deferred as long as the Company remained current on the quarterly interest payments. Furthermore, any penalties will also be waived if the principal amounts are paid on or prior to February 15, 2023. The debt with Cherokee is collateralized by a first security interest in real estate and machinery and equipment. In the event of default, including 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%. As of the date of this report, the Company is current in its interest and administrative fee payments and the Company will continue to make interest and administrative fee payment quarterly on the Cherokee LSA until its maturity in February 2023. The Company can pay off the Cherokee loan at any time with no penalty; except that a 1% administration fee would be required to be paid to Cherokee to close out all participations. The Company recognized $75,000 in interest expense related to the Cherokee LSA in the nine months ended September 30, 2022 and $73,000 in interest expense related to the Cherokee LSA in the nine months ended September 30, 2021. The Company recognized $25,000 in interest expense related to the Cherokee LSA in the three months ended September 30, 2022and $25,000 in interest expense related to the Cherokee LSA in the three months ended September 30, 2021. The Company had $8,000 in accrued interest expense at September 30, 2022 related to the Cherokee LSA. As of September 30, 2022 and December 31, 2021, the balance of the Cherokee LSA was $1,000,000. 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 was used for working capital and general corporate purposes. Upon completion of the initial 5 year term, the Crestmark LOC automatically renewed for additional one (1) year terms unless notice of termination from the Company was received by Crestmark not less than sixty (60) days prior to the end of the renewal term. On September 29, 2022, the Company made a payment to Crestmark in the amount of $34,000 which paid off the balance on the Crestmark LOC. The Crestmark LOC was 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). Although secured by the assets previously indicated, the Crestmark LOC was a receivables-based only line of credit and the maximum availability (“Maximum Amount”) under the Crestmark LOC was $1,000,000. The Crestmark LOC had a minimum loan balance requirement of $500,000. Throughout the three and nine months ended September 30, 2022 (and until the Company paid off the Crestmark LOC on September 29, 2022), the Company did not meet the minimum loan balance requirement. Under the LSA, Crestmark had the right to calculate interest on the minimum balance requirement rather than the actual balance on the Crestmark LOC (and they were exercising that right). Interest on the Crestmark LOC was at a variable rate based on the Prime Rate plus 3% with a floor of 5.25%. As of September 29, 2022 (the payoff date), the interest only rate on the Crestmark LOC was 9.25%. As of September 29, 2022 (the payoff date), 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 was 16.38%. The Company incurred $35,000 in interest expense in the nine months ended September 30, 2022 and $38,000 in interest expense related to the Crestmark LOC in the nine months ended September 30, 2021. The Company incurred $13,000 in interest expense in the three months ended September 30, 2022 and $13,000 in interest expense in the three months ended September 30, 2021. The Crestmark LOC was paid off on September 29, 2022 so, the Company had $0 in accrued interest expense related to the Crestmark LOC at September 30, 2022. At September 30 2022, the balance on the Crestmark LOC was $0 and as of December 31, 2021, the balance on the Crestmark LOC was $178,000. 2019 TERM LOAN WITH CHEROKEE In February 2019, the Company entered into an agreement with Cherokee under which Cherokee provided the Company with a loan in the amount of $200,000 (the “2019 Cherokee Term Loan”). The annual interest rate under the 2019 Cherokee Term Loan is 18% (fixed) paid quarterly in arrears. In February 2020, the 2019 Cherokee Term Loan was extended for one year, or until February 15, 2021. No terms of the facility were changed under the February 2020 extension. For consideration of this extension, the Company issued 1.5% of the $200,000 principal, or $3,000, in 42,857 restricted shares of the Company’s common stock to Cherokee. The Company also incurred a penalty in the amount of $20,000 which was added to the principal balance of the 2019 Cherokee Term Loan; bringing the principal to $220,000. In February 2021, the 2019 Cherokee Term Loan was further extended 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. In addition, if the Company didn’t pay off the principal on or before February 15, 2022, Cherokee may charge an 8% delinquent fee on the principal balance ($240,000) on February 15, 2022. The Company was not able to pay off the facility on February 15, 2022; however, on June 14, 2022 Cherokee agreed that they would defer the principal amounts due under the 2019 Cherokee Term Loan until February 15, 2023 and that any applicable penalties would also be deferred as long as the Company remained current on the quarterly interest payments. Furthermore, any penalties will also be waived if the principal amounts are paid on or prior to February 15, 2023. In the event of default, this includes, but is not limited to, the Company’s inability to make any payments due under the 2019 Cherokee Term Loan; Cherokee has the right to increase the interest rate on the 2019 Cherokee Term Loan to 20%. The Company recognized $32,000 in interest expense related to the 2019 Cherokee Term Loan in both the nine months ended September 30, 2022 and the nine months ended September 30, 2021. The Company recognized $11,000 in interest expense related to the 2019 Cherokee Term Loan in both the three months ended September 30, 2022 and the three months ended September 30, 2021. The Company had $4,000 in accrued interest expense at September 30, 2022. The balance on the 2019 Cherokee Term Loan was $240,000 at September 30, 2022 and at December 31, 2021. NOVEMBER 2020 TERM LOAN On November 4, 2020, the Company entered into a loan agreement with an individual shareholder in the principal amount of $50,000. There were no expenses related to the term loan and the interest rate is 7%. The first interest only payment was paid on February 4, 2021 and the final interest payment and 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 this extension. On November 4, 2021, the November 2020 Term Loan was extended again. Under this extension, the principal was due on November 4, 2022. The last interest payment made to the shareholder was in November 2021 and was for the period of August 5, 2021 through November 4, 2021. The shareholder agreed to defer the quarterly interest payments due on the extended facility. The facility was further extended on November 4, 2022, under the same terms and conditions, for another 6 months. Therefore, interest accruing on the November 2020 Term Loan from November 5, 2021 until May 4, 2023 would be paid upon maturity of the loan along with the principal. Provided no further funds are loaned under the facility and no payments are made on the loan, including a complete payoff, the interest due on May 4, 2023 would be $5,000. At September 30, 2022, the interest due on this loan is $3,000. The Company recognized $3,000 of interest expense related to the November 2020 Term Loan in the nine months ended September 30, 2022 and $2,000 of interest expense in the nine months ended September 30, 2021. The Company recognized $1,000 of interest expense related to the November 2020 Term Loan in both the three months ended September 30, 2022 and in the three months ended September 30, 2021. The Company had $3,000 in accrued interest expense related to this loan as of September 30, 2022. The balance on the November 2020 Term Loan was $50,000 at September 30, 2022 and at December 31, 2021. DECEMBER 2021 SHAREHOLDER LOAN On December 14, 2021, the Company entered into Loan Agreements with two non-affiliated shareholders resulting in gross (and net) proceeds of $75,000 as there were no costs associated with the loans. Interest on the loans is 7% per annum until principal and interest were 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 was due June 15, 2022. One of the loans (in the amount of $25,000) was paid in full on June 13, 2022 along with the final interest payment due. On April 6, 2022, we amended the loan with the other non-affiliated shareholder. This amendment (No.1; hereinafter referred to in this paragraph as “Amendment No. 1”) increased 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. On June 13, 2022, the Company made a principal reduction payment to this shareholder in the amount of $25,000 from proceeds from the ERC refund received on June 2, 2022; bringing the principal amount owed on the loan to $175,000. See Note I – Subsequent Events for more information on this loan. On July 13, 2022, the loan was amended again (under Amendment No. 4; hereinafter referred to in this paragraph as “Amendment No. 4”) increasing the principal by $25,000; bringing their total principal to $200,000 again. The loan agreement was also amended to revise the maturity date from June 15, 2022 to no specific maturity date. On September 13, 2022, the loan was amended again (under Amendment No. 5; hereinafter referred to in this paragraph as “Amendment No. 5”) increasing the principal by $25,000; bringing their total principal to $225,000 again. On September 28, 2022, the shareholder provided the Company with additional funds, $40,000, under this shareholder loan with the understanding that the amount would be paid back once the September 2022 Loan funds were received and there would be no interest charged on this additional amount. This increased the amount due to the shareholder under the facility to $265,000. The Company did pay this additional amount in full on October 4, 2022 as indicated under Note I – Subsequent Events. The Company incurred $8,000 in interest expense related to these loans in the nine months ended September 30, 2022 and $0 in interest expense in the nine months ended September 30, 2021 (as the facilities were not in place until December 2021). The Company incurred $3,000 in interest expense related to these loans in the three months ended September 30, 2022 and $0 in interest expense in the three months ended September 30, 2021 (as the facilities were not in place until December 2021). The Company had $1,000 in accrued interest expense at September 30, 2022. The balance on these loans was $265,000 at September 30, 2022 and $75,000 at December 31, 2021. See Note I – Subsequent Event for more information regarding the balance of the loan. SEPTEMBER 2022 LOAN & PROMISSORY NOTE On September 28, 2022, the Company entered into a Loan and Promissory with an unaffiliated third party (the “September 2022 Loan”) at a fixed rate of 1% per month, compounded monthly and received gross/net proceeds of $40,000. The Company utilized $34,000 of the loan proceeds to pay off its Crestmark Line of Credit (See Note E – Line of Credit and Debt). The September 2022 Loan is collateralized by a first security interest in the Company’s receivables, inventory and all other assets. Principal and accrued interest is due on March 28, 2023. OTHER DEBT INFORMATION In addition to the current debt indicated previously, previous debt facilities had financial impact on the three and/or nine months ended September 30, 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 (“SBA”) 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 maturity 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 SBA remitted payment to Crestmark Bank for the balance of the PPP Loan principal and all interest due on the PPP Loan. The Company recognized $2,000 in interest expense in the nine months ended September 30, 2021 and $1,000 in interest expense in the three months ended September 30, 2021. |
Employee Retention Credit
Employee Retention Credit | 9 Months Ended |
Sep. 30, 2022 | |
Employee Retention Credit | |
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 the Company has 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 its 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 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 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 2021 via overnight service on December 31, 2021 and the IRS received it on January 5, 2022. This lack of receipt has resulted in a delay in receiving the expected refund in the amount of $202,000. On June 2, 2022, the Company received a refund for the second quarter of 2021 in the amount of $199,000. This amount represents the $198,000 claimed as a refund and $1,000 in interest. The Company has had a number of discussions with the IRS and has been given a number of time frames in which the refund for the first quarter of 2021 could be expected. However, the Company has not yet received the refund. Last contact with the IRS was in mid-September 2022 and the Company was informed at that time that the filing was still being processed with no adjustments. The Company’s remaining expected refunds; totaling $202,000, is 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. |
Stock Options and Warrants
Stock Options and Warrants | 9 Months Ended |
Sep. 30, 2022 | |
Stock Options and Warrants | |
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 three months ended September 30, 2022 and the three months ended September 30, 2021, the Company issued 0 options to purchase shares of common stock. Stock option activity for the nine months ended September 30, 2022 and the nine months ended September 30, 2021 is summarized as follows (the figures contained within the tables below have been rounded to the nearest thousand): Nine months ended September 30, 2022 Nine months ended September 30, 2021 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2022 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 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 (201,000 ) $ 0.18 (50,000 ) $ 0.13 Options outstanding at end of quarter 1,736,000 $ 0.12 $ 0 1,937,000 $ 0.13 $ 0 Options exercisable at end of quarter 1,736,000 $ 0.12 1,937,000 $ 0.13 The Company recognized $0 in share based payment expense in the nine months ended September 30, 2022 and in the nine months ended September 30, 2021. The Company recognized $0 in share based payment expense in the three months ended September 30, 2022 and in the three months ended September 30, 2021. At September 30, 2022, there was $0 of unrecognized share based payment expense related to stock options. Warrants There was no warrant activity in the three or nine months ended September 30, 2022 or September 30, 2021. |
Changes in Stockholders Deficit
Changes in Stockholders Deficit | 9 Months Ended |
Sep. 30, 2022 | |
Changes in Stockholders Deficit | |
Changes in Stockholders' Deficit | NOTE H – Changes in Stockholders’ Deficit LANDMARK CONSULTING AGREEMENT On March 7, 2022, the Company entered into a Financial Advisory Agreement (the “Agreement”) with Landmark Pegasus, Inc. (‘Landmark”). The Agreement provided that Landmark would 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 would 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 would 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 that Landmark 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. As of September 30, 2022 and as of the date of this report, no additional shares or warrants have been issued as the Breakup Fee has not been invoked nor has a Success Fee been required. 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). A Form S-1 Registration Statement was declared effective by the U.S. Securities and Exchange Commission (“SEC”) on January 11, 2021. Under the terms of the Lincoln Park facility, which have been previously disclosed in our periodic reports filed with the SEC, in the nine months ended September 30, 2021, the Company sold 500,000 shares of common stock that represented the balance of an initial purchase and 5,800,000 shares of common stock to Lincoln Park as Regular Purchases. The Company received proceeds of $632,000 from these purchases. The Company did not sell any shares of common stock to Lincoln Park in the nine months ended September 30, 2022 as the closing price of the Company’s shares of common stock did not exceed $0.05 (which is a requirement under the terms of the facility). In fact, the last sale to Lincoln Park was in October 2021. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events | |
SUBSEQUENT EVENTS | Note I – Subsequent Events OCTOBER 2022 LOAN AND PROMISSORY NOTE On October 3, 2022, we entered into a Loan and Promissory Note (the “October 2022 Loan) with the same unaffiliated third party (the “Holder”) discussed in the September 2022 Loan and Promissory Note (found in Note E). The total principal under the October 2022 Loan is $400,000 and includes the $40,000 that was extended under the September 2022 Loan; thereby cancelling the September 2022 Loan. The October 2022 Loan is at a fixed rate of 1% per month, compounded monthly. The October 2022 Loan is payable in three equal monthly installments of $140,132.50 with the first payment being due on January 28, 2023 and the final payment being due on March 28, 2023 (the maturity date of the facility). The October 2022 Loan is collateralized by a first security interest in the Company’s receivables, inventory and all other assets. If the Holder does not receive any payment when due, we would need to pay a late charge equaling 1% of the overdue amount. The principal may be paid prior to maturity without any premium or penalty. Our CEO Melissa Waterhouse (“Waterhouse”) also provided a Validity Guarantee in connection with the October 2022 Loan. Under the Validity Guarantee, Waterhouse provides representations and warranties with respect to the validity of our financials. Waterhouse did not receive any compensation in connection with providing the required Validity Guarantee. DECEMBER 2021 SHAREHOLDER LOAN On October 4, 2022, we paid $40,000 to the shareholder to pay off a short-term loan provided to the Company on September 28, 2022. With this payment, the loan balance under the December 2021 Shareholder Loan is $225,000. EXTENSION OF THE NJ FACILITY LEASE On October 27, 2022, we extended the lease of our NJ facility for an additional two months after the term of our current lease (which expires on December 31, 2022), or until February 28, 2023. In connection with the extension, we were required to pay $21,000 to our landlord which, is rent in advance for the months of November 2022 through February 2023 at a higher rate as consideration for the short-term extension. NOVEMBER 2020 TERM LOAN On November 4, 2022, the November 2020 Term Loan was further extended under the same terms and conditions for another 6 months, or until May 4, 2023. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 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 September 30, 2022 Quarter Ended September 30, 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: September 30, 2022 December 31, 2021 Inventory capitalization $ 0 $ 8,000 Inventory allowance 66,000 72,000 Allowance for doubtful accounts 1,000 1,000 Accrued compensation 18,000 18,000 Stock based compensation 149,000 160,000 Deferred wages payable 19,000 21,000 Depreciation – Property, Plant & Equipment (19,000 ) (24,000 ) Research and development credits 24,000 24,000 Net operating loss carry-forwards 2,916,000 2,631,000 Total deferred income tax assets, net 3,174,000 2,911,000 Less: valuation allowance (3,174,000 (2,911,000 ) Net deferred income tax assets $ 0 $ 0 The valuation allowance for deferred income tax assets was $3,174,000 as of September 30, 2022 and $2,911,000 as of December 31, 2021. The net change in the deferred income tax assets valuation allowance was $263,000 for the nine months ended September 30, 2022. The Company believes that it is more likely than not that the deferred tax assets will not be realized. As of September 30, 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 September 30, 2022, the Company had Federal and state net operating loss carry-forwards for income tax purposes of approximately $11,214,000 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. |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Inventory | |
Inventory | September 30, 2022 December 31, 2021 Raw Materials $ 456,000 $ 462,000 Work In Process 93,000 109,000 Finished Goods 87,000 150,000 Allowance for slow moving and obsolete inventory (256,000 ) (278,000 ) $ 380,000 $ 443,000 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss Per Common Share | |
Potentially dilutive shares | September 30, 2022 September 30, 2021 Options 1,736,000 1,937,000 Total 1,736,000 1,937,000 |
Line of Credit and Debt (Tables
Line of Credit and Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Line of Credit and Debt | |
Line of credit and debt | September 30, 2022 December 31, 2021 Loan and Security Agreement with Cherokee Financial, LLC $ 1,000,000 $ 1,000,000 Crestmark Line of Credit: 0 178,000 2019 Term Loan with Cherokee Financial, LLC: 240,000 240,000 November 2020 Shareholder Note: 50,000 50,000 December 2021 Shareholder Note: 265,000 75,000 September 2022 Loan & Promissory Note: 40,000 0 Total Debt $ 1,595,000 $ 1,543,000 Current portion $ 1,595,000 $ 1,543,000 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stock Options and Warrants | |
Stock option/warrant activity | Nine months ended September 30, 2022 Nine months ended September 30, 2021 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2022 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 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 (201,000 ) $ 0.18 (50,000 ) $ 0.13 Options outstanding at end of quarter 1,736,000 $ 0.12 $ 0 1,937,000 $ 0.13 $ 0 Options exercisable at end of quarter 1,736,000 $ 0.12 1,937,000 $ 0.13 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Effective income tax rate reconciliation | Quarter Ended September 30, 2022 Quarter Ended September 30, 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 | September 30, 2022 December 31, 2021 Inventory capitalization $ 0 $ 8,000 Inventory allowance 66,000 72,000 Allowance for doubtful accounts 1,000 1,000 Accrued compensation 18,000 18,000 Stock based compensation 149,000 160,000 Deferred wages payable 19,000 21,000 Depreciation – Property, Plant & Equipment (19,000 ) (24,000 ) Research and development credits 24,000 24,000 Net operating loss carry-forwards 2,916,000 2,631,000 Total deferred income tax assets, net 3,174,000 2,911,000 Less: valuation allowance (3,174,000 (2,911,000 ) Net deferred income tax assets $ 0 $ 0 |
Basis of Reporting (Details Nar
Basis of Reporting (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 29, 2022 | |
Basis of Reporting (Details Narrative) | ||
Line of credit | $ 1,000,000 | |
Payment for line of credit | $ 34,000 | |
Total debt | 1,240,000 | |
Proceeds from loan from unaffiliated third party | 40,000 | |
Credit facilities outstanding | $ 1,240,000 |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory | ||
Raw materials | $ 456,000 | $ 462,000 |
Work in process | 93,000 | 109,000 |
Finished goods | 87,000 | 150,000 |
Allowance for slow moving and obsolete inventory | (256,000) | (278,000) |
Inventory, net | $ 380,000 | $ 443,000 |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Weighted average number diluted shares outstanding adjustment | 1,736,000 | 1,937,000 |
Equity Option [Member] | ||
Weighted average number diluted shares outstanding adjustment | 1,736,000 | 1,937,000 |
Line of Credit and Debt (Detail
Line of Credit and Debt (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Total debt, net | $ 1,595,000 | $ 1,543,000 |
Current portion | 1,595,000 | 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 | 0 | 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 | 265,000 | 75,000 |
September 2021 Laon & Promissory Note | ||
Long-term debt, gross | $ 40,000 | $ 0 |
Line of Credit and Debt (Deta_2
Line of Credit and Debt (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||||||||||
Sep. 13, 2022 | Jul. 13, 2022 | Jun. 13, 2022 | May 11, 2022 | Apr. 14, 2022 | Apr. 06, 2022 | Nov. 04, 2020 | Sep. 28, 2022 | Feb. 15, 2022 | Aug. 18, 2021 | Feb. 28, 2021 | Feb. 15, 2021 | Jun. 29, 2015 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 04, 2023 | Sep. 29, 2022 | Dec. 31, 2021 | Dec. 14, 2021 | Apr. 22, 2020 | Mar. 26, 2015 | |
Payment for line of credit | $ 34,000 | ||||||||||||||||||||||
2019 Cherokee Loan and Security Agreement | |||||||||||||||||||||||
Description of consideration of extention agreement | the Company issued 1.5% of the $200,000 principal, or $3,000, in 42,857 restricted shares of the Company’s common stock to Cherokee. | ||||||||||||||||||||||
Principal balance | $ 240,000 | $ 220,000 | $ 240,000 | $ 240,000 | $ 240,000 | ||||||||||||||||||
Delinquent fee charged | 8% | ||||||||||||||||||||||
Loan amount | 200,000 | 200,000 | |||||||||||||||||||||
Interest expense | 11,000 | $ 11,000 | 32,000 | $ 32,000 | |||||||||||||||||||
Accrued interest | 4,000 | $ 4,000 | |||||||||||||||||||||
Restricted shares | 625,000 | ||||||||||||||||||||||
Penalty | $ 20,000 | $ 20,000 | |||||||||||||||||||||
Administration fee rate | 1% | ||||||||||||||||||||||
Annual interest rate on loan | 18% | ||||||||||||||||||||||
Interest rate on the financing | 20% | ||||||||||||||||||||||
Loan and Security Agreement with Cherokee Financial, LLC | |||||||||||||||||||||||
Delinquent fee charged | 8% | ||||||||||||||||||||||
Loan amount | 1,000,000 | $ 1,000,000 | 1,000,000 | $ 1,200,000 | |||||||||||||||||||
Interest expense | 25,000 | 25,000 | 75,000 | 73,000 | |||||||||||||||||||
Accrued interest | 8,000 | 8,000 | |||||||||||||||||||||
Interest rate on the financing | 18% | ||||||||||||||||||||||
Penalty | $ 100,000 | ||||||||||||||||||||||
Annual oversight fee percentage | 1% | ||||||||||||||||||||||
Fixed rate | 10% | ||||||||||||||||||||||
Principal amount | $ 1,000,000 | ||||||||||||||||||||||
Initial term | 5 years | ||||||||||||||||||||||
Annual principal reduction payments | 75,000 | ||||||||||||||||||||||
Increased agreement extension amount | $ 100,000 | ||||||||||||||||||||||
Fees interest rate | 3% | ||||||||||||||||||||||
Extended principal amount | $ 900,000 | ||||||||||||||||||||||
Legal fees | $ 1,000 | ||||||||||||||||||||||
Crestmark Line of Credit | |||||||||||||||||||||||
Loan amount | 0 | 0 | 178,000 | ||||||||||||||||||||
Interest expense | 35,000 | 38,000 | |||||||||||||||||||||
Accrued interest | 0 | $ 0 | |||||||||||||||||||||
Initial term | 5 years | ||||||||||||||||||||||
Payment for line of credit | 34,000 | ||||||||||||||||||||||
Prime Rate | 3% | ||||||||||||||||||||||
Loan fee | $ 7,500 | ||||||||||||||||||||||
Floor rate | 5.25% | ||||||||||||||||||||||
Crestmark LOC interest rate | 9.25% | ||||||||||||||||||||||
Maintenance fee charge | 0.30% | ||||||||||||||||||||||
Actual average rate | 16.38% | ||||||||||||||||||||||
Decrease inventory receivables | $ 1,000,000 | ||||||||||||||||||||||
Minimum loan balance requirement | 500,000 | 500,000 | |||||||||||||||||||||
December 2021 Shareholder Note | |||||||||||||||||||||||
Interest expense | 3,000 | 0 | 8,000 | 0 | |||||||||||||||||||
Accrued interest | 1,000 | $ 1,000 | |||||||||||||||||||||
Loan interest rate | 7% | ||||||||||||||||||||||
Debt payments | $ 25,000 | ||||||||||||||||||||||
Additional funds | $ 40,000 | ||||||||||||||||||||||
Loan agreement amount | $ 225,000 | 175,000 | $ 200,000 | $ 125,000 | $ 75,000 | 265,000 | $ 265,000 | $ 200,000 | 75,000 | $ 75,000 | |||||||||||||
Increase in principal loan | $ 25,000 | $ 25,000 | $ 75,000 | $ 50,000 | $ 25,000 | $ 265,000 | |||||||||||||||||
Principal reduction payment | $ 25,000 | ||||||||||||||||||||||
November 2020 Shareholder Note 1 | |||||||||||||||||||||||
Interest expense | 1,000 | 2,000 | 3,000 | 2,000 | |||||||||||||||||||
Accrued interest | 3,000 | 3,000 | |||||||||||||||||||||
Interest due | 3,000 | 3,000 | $ 5,000 | ||||||||||||||||||||
Term Loan | 50,000 | 50,000 | $ 50,000 | ||||||||||||||||||||
Loan interest rate | 7% | ||||||||||||||||||||||
Extended loan maturity | Feb. 04, 2021 | ||||||||||||||||||||||
April 2020 PPP Loan with Crestmark | |||||||||||||||||||||||
Interest expense | $ 1,000 | $ 2,000 | |||||||||||||||||||||
Promissory Note | $ 332,000 | ||||||||||||||||||||||
PPP loans | $ 332,000 | ||||||||||||||||||||||
SEPTEMBER 2022 LOAN & PROMISSORY NOTE [Member] | |||||||||||||||||||||||
Loan interest rate | 1% | ||||||||||||||||||||||
Promissory Note | $ 40,000 | ||||||||||||||||||||||
Payment for line of credit | $ 34,000 | $ 34,000 |
Employee Retention Credit (Deta
Employee Retention Credit (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Jun. 02, 2022 | Mar. 31, 2021 | Jun. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Employee Retention Credit | ||||||
Refund of wages | $ 199,000 | $ 202,000 | $ 198,000 | $ 137,000 | $ 137,000 | |
Payroll reduced | $ 44,000 | |||||
Claimed as a refund amount | 198,000 | |||||
Refund as interest amount | $ 1,000 | |||||
Refund Total | 202,000 | |||||
Employee retention credit receivable | $ 202,000 | $ 400,000 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details) - Equity Option [Member] - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Shares, beginning balance | 1,937,000 | 1,987,000 |
Granted | 0 | 0 |
Share exercised | 0 | 0 |
Cancelled | 201,000 | 50,000 |
Shares, ending balance | 1,736,000 | 1,937,000 |
Option Exercisable qat end of quarter | 1,736,000 | 1,937,000 |
Options outstanding at end of quarter Aggregate Intrinsic | $ 0 | $ 0 |
Weighted average exercise price, beginning balance | 0.13 | 0.13 |
Weighted average exercise price, cancelled/expired | 0.18 | 0.13 |
Weighted average exercise price, ending balance | 0.12 | 0.13 |
Weighted average exercise price, exercisable | $ 0.12 | $ 0.13 |
Stock Options and Warrants (D_2
Stock Options and Warrants (Details Narrative) - Equity Option [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share based payment | $ 0 | $ 0 | $ 0 | $ 0 |
Unrecognized share based payment expense related to stock options | $ 0 | $ 0 |
Changes in Stockholders Defic_2
Changes in Stockholders Deficit (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | |
LINCOLN PARK EQUITY LINE OF CREDIT [Member] | |||
Purchase Agreement description | A Form S-1 Registration Statement was declared effective by the U.S. Securities and Exchange Commission (“SEC”) on January 11, 2021. Under the terms of the Lincoln Park facility, which have been previously disclosed in our periodic reports filed with the SEC, in the nine months ended September 30, 2021, the Company sold 500,000 shares of common stock that represented the balance of an initial purchase and 5,800,000 shares of common stock to Lincoln Park as Regular Purchases. The Company received proceeds of $632,000 from these purchases. The Company did not sell any shares of common stock to Lincoln Park in the nine months ended September 30, 2022 as the closing price of the Company’s shares of common stock did not exceed $0.05 (which is a requirement under the terms of the facility). In fact, the last sale to Lincoln Park was in October 2021. | ||
Common stock purchase | $ 10,250,000 | ||
Par value | $ 0.01 | ||
Common stock remaining | 500,000 | ||
Initial purchase | 5,800,000 | ||
Proceeds from sale of common stock shares | $ 381,000 | $ 632,000 | |
Common stock did not exceed | $ 0.05 | $ 0.05 | |
Shares of common stock sold | 2,100,000 | 500,000 | |
Beneficially ownership percentage | 0.09% | ||
LANDMARK CONSULTING AGREEMENT [Member] | |||
Restricted shares | 500,000 | ||
Warrant to purchase | 2,750,000 | ||
Gross proceeds | 96,250,000,000 | ||
common shares | $ 0.035 | ||
Additional restricted shares | 250,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | 1 Months Ended | ||
Oct. 04, 2022 | Oct. 03, 2022 | Oct. 27, 2022 | |
Loan,principal amount | $ 400,000 | ||
September 2022 loan amount | $ 40,000 | ||
Description of loan payment and security | The October 2022 Loan is payable in three equal monthly installments of $140,132.50 with the first payment being due on January 28, 2023 and the final payment being due on March 28, 2023 (the maturity date of the facility). The October 2022 Loan is collateralized by a first security interest in the Company’s receivables, inventory and all other assets. If the Holder does not receive any payment when due, we would need to pay a late charge equaling 1% of the overdue amount. The principal may be paid prior to maturity without any premium or penalty | ||
Interest rate on loan | 1% | ||
Payment made to shareholders to pay off loan | $ 40,000 | ||
Balance due on Short term loan to shareholders | $ 225,000 | ||
Description of extension of lease | we extended the lease of our NJ facility for an additional two months after the term of our current lease (which expires on December 31, 2022), or until February 28, 2023. In connection with the extension, we were required to pay $21,000 to our landlord which, is rent in advance for the months of November 2022 through February 2023 at a higher rate as consideration for the short-term extension. |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Taxes | ||
Tax expense at federal statutory rate | (21.00%) | (21.00%) |
State tax expense, net of federal tax effect | 0% | 0% |
Increase in valuation allowance | 21% | 21% |
Effective income tax rate | 0% | 0% |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Income Taxes | ||
Inventory capitalization | $ 0 | $ 8,000 |
Inventory allowance | 66,000 | 72,000 |
Allowance for doubtful accounts | 1,000 | 1,000 |
Accrued compensation | 18,000 | 18,000 |
Stock based compensation | 149,000 | 160,000 |
Deferred wages payable | 19,000 | 21,000 |
Depreciation - property, plant & equipment | (19,000) | (24,000) |
Research and development credits | 24,000 | 24,000 |
Net operating loss carry-forward | 2,916,000 | 2,631,000 |
Total gross deferred income tax assets | 3,174,000 | 2,911,000 |
Less: valuation allowance | (3,174,000) | (2,911,000) |
Net deferred income tax assets | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
valuation allowance | $ 3,174,000 | $ 2,911,000 |
Valuation allowance, deferred tax asset, change in amount | 263,000 | |
Research and development | 24,000 | |
Operating loss carryforwards | $ 11,214,000 | |
Expire date | expire in 2022 and continue to expire through 2037 | |
Carry overs Operating losses | 100% | |
Carry overs Operating losses taxabale income percentage | 80% |