Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 01, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | RETRACTABLE TECHNOLOGIES INC | |
Entity Central Index Key | 946,563 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 31,666,454 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 15,472,553 | $ 16,199,043 |
Accounts receivable, net | 3,471,523 | 3,267,838 |
Inventories, net | 8,049,399 | 7,017,224 |
Other current assets | 448,407 | 192,548 |
Total current assets | 27,441,882 | 26,676,653 |
Property, plant, and equipment, net | 11,819,588 | 12,092,037 |
Other assets | 8,095 | 10,289 |
Total assets | 39,269,565 | 38,778,979 |
Current liabilities: | ||
Accounts payable | 4,445,649 | 4,471,756 |
Current portion of long-term debt | 440,971 | 430,393 |
Accrued compensation | 814,604 | 536,456 |
Dividends payable | 55,113 | 55,113 |
Accrued royalties to shareholder | 635,554 | 659,443 |
Insurance proceeds | 1,004,960 | |
Other accrued liabilities | 893,395 | 1,019,283 |
Total current liabilities | 8,290,246 | 7,172,444 |
Long-term debt, net of current maturities | 3,270,235 | 3,498,244 |
Total liabilities | 11,560,481 | 10,670,688 |
Commitments and contingencies - see Note 6 | ||
Preferred stock, $1 par value: | ||
Additional paid-in capital | 61,430,417 | 59,290,333 |
Accumulated deficit | (34,502,778) | (31,963,487) |
Total stockholders' equity | 27,709,084 | 28,108,291 |
Total liabilities and stockholders' equity | 39,269,565 | 38,778,979 |
Series I, Class B | ||
Preferred stock, $1 par value: | ||
Preferred stock | 98,500 | 98,500 |
Series II, Class B | ||
Preferred stock, $1 par value: | ||
Preferred stock | 171,200 | 171,200 |
Series III, Class B | ||
Preferred stock, $1 par value: | ||
Preferred stock | 129,245 | 129,245 |
Series IV, Class B | ||
Preferred stock, $1 par value: | ||
Preferred stock | 342,500 | 342,500 |
Series V, Class B | ||
Preferred stock, $1 par value: | ||
Preferred stock | $ 40,000 | $ 40,000 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
CONDENSED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
CONDENSED STATEMENTS OF OPERATIONS | ||||
Sales, net | $ 7,646,117 | $ 7,575,053 | $ 14,569,797 | $ 13,497,035 |
Cost of Sales | ||||
Cost of manufactured product | 4,801,495 | 4,274,010 | 8,812,408 | 7,500,607 |
Royalty expense to shareholders | 635,554 | 682,402 | 1,223,398 | 1,187,777 |
Total cost of sales | 5,437,049 | 4,956,412 | 10,035,806 | 8,688,384 |
Gross profit | 2,209,068 | 2,618,641 | 4,533,991 | 4,808,651 |
Operating expenses: | ||||
Sales and marketing | 1,223,842 | 986,172 | 2,251,553 | 1,895,744 |
Research and development | 157,395 | 146,854 | 305,844 | 271,773 |
General and administrative | 2,133,040 | 2,091,151 | 4,433,907 | 4,140,839 |
Total operating expenses | 3,514,277 | 3,224,177 | 6,991,304 | 6,308,356 |
Loss from operations | (1,305,209) | (605,536) | (2,457,313) | (1,499,705) |
Interest and other income | 14,173 | 6,032 | 24,678 | 11,213 |
Interest expense | (58,028) | (56,710) | (106,091) | (106,333) |
Net loss before income taxes | (1,349,064) | (656,214) | (2,538,726) | (1,594,825) |
Provision for income taxes | 282 | 480 | 565 | 960 |
Net loss | (1,349,346) | (656,694) | (2,539,291) | (1,595,785) |
Preferred stock dividend requirements | (176,249) | (176,249) | (352,498) | (352,498) |
Loss applicable to common shareholders | $ (1,525,595) | $ (832,943) | $ (2,891,789) | $ (1,948,283) |
Basic loss per share (in dollars per share) | $ (0.05) | $ (0.03) | $ (0.09) | $ (0.07) |
Diluted loss per share (in dollars per share) | $ (0.05) | $ (0.03) | $ (0.09) | $ (0.07) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 31,666,454 | 29,483,207 | 31,499,787 | 29,054,041 |
Diluted (in shares) | 31,666,454 | 29,483,207 | 31,499,787 | 29,054,041 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities | ||
Net Loss | $ (2,539,291) | $ (1,595,785) |
Adjustments to reconcile loss to net cash used by operating activities: | ||
Provision for doubtful accounts | 77,000 | |
Share based compensation | 470,309 | |
Depreciation and amortization | 405,102 | 446,798 |
(Increase) decrease in assets: | ||
Inventories | (1,032,175) | 18,003 |
Accounts receivable | (203,685) | (84,228) |
Other current assets | (255,859) | 986,438 |
Other assets | (750) | |
Increase (decrease) in liabilities: | ||
Accounts payable | (26,107) | (677,846) |
Accrued liabilities | 128,371 | 322,807 |
Insurance proceeds | 1,004,960 | |
Net cash used by operating activities | (2,048,375) | (507,563) |
Cash flows from investing activities | ||
Purchase of property, plant, and equipment | (130,459) | (928,180) |
Net cash used by investing activities | (130,459) | (928,180) |
Cash flows from financing activities | ||
Repayments of long-term debt and notes payable | (217,431) | (124,163) |
Proceeds from the sale of common stock | 1,780,000 | |
Proceeds from the exercise of stock options | 839,200 | |
Payment of Preferred Stock dividends | (110,225) | (110,528) |
Net cash provided by financing activities | 1,452,344 | 604,509 |
Net decrease in cash and cash equivalents | (726,490) | (831,234) |
Cash and cash equivalents at: | ||
Beginning of period | 16,199,043 | 18,045,044 |
End of period | 15,472,553 | 17,213,810 |
Supplemental schedule of cash flow information: | ||
Interest paid | 106,090 | 106,332 |
Income taxes paid | 2,000 | |
Supplemental schedule of noncash investing and financing activities: | ||
Preferred dividends declared, not paid | $ 55,113 | $ 55,113 |
BUSINESS OF THE COMPANY AND BAS
BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2017 | |
BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION | |
BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION | 1. BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION Business of the Company Retractable Technologies, Inc. (the “Company”) was incorporated in Texas on May 9, 1994, and designs, develops, manufactures, and markets safety syringes and other safety medical products for the healthcare profession. The Company began to develop its manufacturing operations in 1995. The Company’s manufacturing and administrative facilities are located in Little Elm, Texas. The Company’s products are the VanishPoint ® 0.5mL insulin syringe; 1mL tuberculin, insulin, and allergy antigen syringes; 0.5mL, 1mL, 2mL, 3mL, 5mL, and 10mL syringes; the blood collection tube holder; the small diameter tube adapter; the allergy tray; the IV safety catheter; the Patient Safe ® syringes; the Patient Safe ® Luer Cap; the VanishPoint ® Blood Collection Set; and the EasyPoint ® needle. The Company also sells VanishPoint ® autodisable syringes in the international market in addition to the Company’s other products. Basis of presentation The accompanying condensed financial statements are unaudited and, in the opinion of Management, reflect all adjustments that are necessary for a fair presentation of the financial position and results of operations for the periods presented. All such adjustments are of a normal and recurring nature. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the entire year. The condensed financial statements should be read in conjunction with the financial statement disclosures contained in the Company’s audited financial statements incorporated into its Form 10-K filed on March 31, 2017 for the year ended December 31, 2016. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Cash and cash equivalents For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and investments with original maturities of three months or less. Accounts receivable The Company records trade receivables when revenue is recognized. No product has been consigned to customers. The Company’s allowance for doubtful accounts is primarily determined by review of specific trade receivables. Those accounts that are doubtful of collection are included in the allowance. This provision is reviewed to determine the adequacy of the allowance for doubtful accounts. Trade receivables are charged off when there is certainty as to their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms. The Company requires certain customers to make a prepayment prior to beginning production or shipment of their order. Customers may apply such prepayments to their outstanding invoices or pay the invoice and continue to carry forward the deposit for future orders. Such amounts are included in Other accrued liabilities on the Condensed Balance Sheets and are shown in Note 5, Other Accrued Liabilities. The Company records an allowance for estimated returns as a reduction to Accounts receivable and Gross sales. Historically, returns have been immaterial. Inventories Inventories are valued at the lower of cost or net realizable value, with cost being determined using actual average cost. The Company compares the average cost to the net realizable value and records the lower value. Management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time to sell such inventory, the shelf life of inventory, and current market conditions when determining excess or obsolete inventories. A reserve is established for any excess or obsolete inventories or they may be written off. Property, plant, and equipment Property, plant, and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Cost includes major expenditures for improvements and replacements which extend useful lives or increase capacity and interest cost associated with significant capital additions. Gains or losses from property disposals are included in income. The Company’s property, plant, and equipment primarily consist of buildings, land, assembly equipment, molding machines, molds, office equipment, furniture, and fixtures. Depreciation and amortization are calculated using the straight-line method over the following useful lives: Production equipment 3 to 13 years Office furniture and equipment 3 to 10 years Buildings 39 years Building improvements 15 years Long-lived assets The Company assesses the recoverability of long-lived assets using an assessment of the estimated undiscounted future cash flows related to such assets. In the event that assets are found to be carried at amounts which are in excess of estimated gross future cash flows, the assets will be adjusted for impairment to a level commensurate with fair value determined using a discounted cash flow analysis of the underlying assets. Financial instruments The Company estimates the fair value of financial instruments through the use of public market prices, quotes from financial institutions, and other available information. Judgment is required in interpreting data to develop estimates of fair value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange. Short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on Management’s estimates, equals their recorded values. The fair value of long-term liabilities, based on Management’s estimates, approximates their reported values. Concentration risks The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. Cash balances, some of which exceed federally insured limits, are maintained in financial institutions; however, Management believes the institutions are of high credit quality. The majority of accounts receivable are due from companies which are well-established entities. As a consequence, Management considers any exposure from concentrations of credit risks to be limited. The following table reflects our significant customers for the first three and six months of 2017 and 2016: Six Months Six Months Three Months Three Months Number of significant customers Aggregate dollar amount of net sales to significant customers $4.1 million $6.1 million $3.1 million $2.8 million Percentage of net sales to significant customers The Company manufactures some of its products in Little Elm, Texas as well as utilizing manufacturers in China. The Company purchases most of its product components from single suppliers, including needle adhesives and packaging materials. There are multiple sources of these materials. The Company obtained roughly 89.1% and 78.2% of its VanishPoint ® syringes in the first six months of 2017 and 2016, respectively, from its primary Chinese manufacturer. Purchases from this Chinese manufacturer aggregated 90.1% and 91.8% of VanishPoint ® syringes in the three month periods ended June 30, 2017 and 2016, respectively. In the event that the Company becomes unable to purchase products from its Chinese manufacturers, the Company would need to find an alternate manufacturer for its blood collection set, IV catheter, Patient Safe ® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes and would increase domestic production for the 1mL and 3mL syringes. Revenue recognition Revenue is recognized for sales when title and risk of ownership passes to the customer, generally upon shipment. Under certain contracts, revenue is recorded on the basis of sales price to distributors, less contractual pricing allowances. Contractual pricing allowances consist of: (i) rebates granted to distributors who provide tracking reports which show, among other things, the facility that purchased the products, and (ii) a provision for estimated contractual pricing allowances for products for which the Company has not received tracking reports. Rebates are recorded when issued and are applied against the customer’s receivable balance. Distributors receive a rebate for the difference between the Wholesale Acquisition Cost and the appropriate contract price as reflected on a tracking report provided by the distributor to the Company. If product is sold by a distributor to an entity that has no contract, there is a standard rebate (lower than a contracted rebate) given to the distributor. One of the purposes of the rebate is to encourage distributors to submit tracking reports to the Company. The provision for contractual pricing allowances is reviewed at the end of each quarter and adjusted for changes in levels of products for which there is no tracking report. Additionally, if it becomes clear that tracking reports will not be provided by individual distributors, the provision is further adjusted. The estimated contractual allowance is included in Accounts payable in the Balance Sheets and deducted from revenues in the Statements of Operations. Accounts payable included estimated contractual allowances for $3,479,252 and $3,591,534 as of June 30, 2017 and December 31, 2016, respectively. The terms and conditions of contractual pricing allowances are governed by contracts between the Company and its distributors. Revenue for shipments directly to end-users is recognized when title and risk of ownership pass from the Company. Any product shipped or distributed for evaluation purposes is expensed. The Company’s domestic return policy is set forth in its standard Distribution Agreement. This policy provides that a customer may return incorrect shipments within 10 days following arrival at the distributor’s facility. In all such cases, the distributor must obtain an authorization code from the Company and affix the code to the returned product. The Company will not accept returned goods without a returned goods authorization number. The Company may refund the customer’s money or replace the product. The Company’s domestic return policy also generally provides that a customer may return product that is overstocked. Overstocking returns are limited to two times in each 12-month period up to 1% of distributor’s total purchase of products for the prior 12-month period. All product overstocks and returns are subject to inspection and acceptance by the Company. The Company’s international distribution agreements generally do not provide for any returns. Litigation proceeds Proceeds from litigation are recognized when realizable. Generally, realization is not reasonably assured and expected until proceeds are collected and the legal proceeding has concluded. Income taxes The Company evaluates tax positions taken or expected to be taken in a tax return for recognition in the financial statements based on whether it is “more-likely-than-not” that a tax position will be sustained based upon the technical merits of the position. Measurement of the tax position is based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company provides for deferred income taxes through utilizing an asset and liability approach for financial accounting and reporting based on the tax effects of differences between the financial statement and tax bases of assets and liabilities, based on enacted rates expected to be in effect when such differences reverse in future periods. Deferred tax assets are periodically reviewed for realizability. The Company has established a valuation allowance for its net deferred tax asset as future taxable income cannot be reasonably assured. Penalties and interest related to income tax are classified as General and administrative expense and Interest expense, respectively, in the Condensed Statements of Operations. Such expenses are not material. Loss per share The Company computes basic loss per share by dividing net loss for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. Diluted loss per share includes the determinants of basic loss per share and, in addition, reflects the dilutive effect, if any, of the common stock deliverable pursuant to stock options or common stock issuable upon the conversion of convertible preferred stock. The calculation of diluted loss per share excluded 147,775 and 678,349 shares of Common Stock underlying issued and outstanding stock options at June 30, 2017 and June 30, 2016, respectively, as their effect was antidilutive. The potential dilution, if any, is shown on the following schedule: Three Months Three Months Six Months Six Months Net loss $ ) $ ) $ ) $ ) Preferred dividend requirements ) ) ) ) Loss applicable to common shareholders $ ) $ ) $ ) $ ) Average common shares outstanding Average common and common equivalent shares outstanding - assuming dilution Basic loss per share $ ) $ ) $ ) $ ) Diluted loss per share $ ) $ ) $ ) $ ) Shipping and handling costs The Company classifies shipping and handling costs as part of Cost of sales in the Condensed Statements of Operations. Research and development costs Research and development costs are expensed as incurred. Share-based compensation The Company’s share-based payments are accounted for using the fair value method. The Company records share-based compensation expense on a straight-line basis over the requisite service period. The Company incurred the following share-based compensation costs: Three Months Three Months Six Months Six Months Cost of sales $ $ — $ $ — Sales and marketing — — Research and development — — General and administrative — — $ $ — $ $ — Insurance Proceeds Receipts from insurance up to the amount of any loss recognized by the Company are considered recoveries. Any such recoveries are recorded when they are received. Insurance recoveries are not recognized as a component of earnings (loss) from operations until all repairs are made. Recent pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” which is part of the FASB’s Simplification Initiative. Inventory, including inventory measured at average cost, would be valued at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for the Company’s annual periods and interim periods within those annual periods beginning January 1, 2017. Amendments in this ASU should be applied prospectively with earlier application permitted at the beginning of an interim or annual reporting period. The adoption of this pronouncement had no impact on the Company’s Balance Sheet, Results of Operations, or Cash Flows in the period of adoption. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. These amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The updated guidance is effective for the Company’s quarter ending March 31, 2018, with early adoption permitted. The Company is currently assessing the impact that adoption of this guidance will have on its financial statements and related disclosures. In June 2016, the FASB issued Accounting Standards Update 2016-13, “Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. This ASU is effective for the Company’s quarter ending March 31, 2020 with early application permitted for the Company’s quarter ending March 31, 2019. The Company is currently assessing the impact that adoption of this guidance will have on its financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (topic 842). Under the new ASU, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance lessor accounting is largely unchanged. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. This ASU is effective for the Company’s quarter ending March 31, 2019, with early adoption permitted. The Company is currently evaluating the impact of this standard. In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. This ASU’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB voted to delay the effective date of this ASU by one year. The ASU will now be effective commencing with the Company’s quarter ending March 31, 2018. Early adoption of this ASU is allowed no sooner than the original effective date. The Company is currently assessing the potential impact of this ASU on its financial statements. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2017 | |
INVENTORIES | |
INVENTORIES | 3. INVENTORIES Inventories consist of the following: June 30, 2017 December 31, 2016 Raw materials $ $ Finished goods Inventory reserve ) ) $ $ |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2017 | |
INCOME TAXES | |
INCOME TAXES | 4. INCOME TAXES The Company’s effective tax rate on the net loss before income taxes was 0.0% and (0.1) for the six months ended June 30, 2017 and June 30, 2016, respectively. For the three months ended June 30, 2017 and June 30, 2016, the Company’s effective tax rate on the net loss before income taxes was 0.0% and (0.1)%, respectively. |
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2017 | |
OTHER ACCRUED LIABILITIES | |
OTHER ACCRUED LIABILITIES | 5. OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: June 30, 2017 December 31, 2016 Prepayments from customers $ $ Accrued property taxes — Accrued professional fees Other accrued expenses $ $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 6. COMMITMENTS AND CONTINGENCIES In May 2010, the Company and an officer’s suit against Becton, Dickinson and Company (“BD”) in the U.S. District Court for the Eastern District of Texas, Marshall Division alleging violations of antitrust acts, false advertising, product disparagement, tortious interference, and unfair competition was reopened. The trial commenced on September 9, 2013, in the U.S. District Court for the Eastern District of Texas, Tyler Division, and the jury found that BD illegally engaged in anticompetitive conduct with the intent to acquire or maintain monopoly power in the safety syringe market and engaged in false advertising under the Lanham Act. The jury awarded the Company $113,508,014 in damages, which was trebled pursuant to statute. The Court granted injunctive relief to take effect January 15, 2015. In doing so, the Court found that BD’s business practices limited innovation, including false advertisements that suppressed sales of the VanishPoint ® syringes. The specific injunctive relief includes: (1) enjoining BD’s use of “World’s Sharpest Needle” or any similar assertion of superior sharpness; (2) requiring notification to all customers who purchased BD syringe products from July 2, 2004 to date that BD wrongfully claimed that its syringe needles were sharper and that its statement that it had “data on file” was false and misleading; (3) requiring notification to employees, customers, distributors, GPOs, and government agencies that the deadspace of the VanishPoint ® has been within ISO standards since 2004 and that BD overstated the deadspace of the VanishPoint ® to represent that it was higher than some of BD’s syringes when it was actually less, and that BD’s statement that it had “data on file” was false and misleading, and, in addition, posting this notice on its website for a period of three years; (4) enjoining BD from advertising that its syringe products save medication as compared to VanishPoint ® products for a period of three years; (5) requiring notification to all employees, customers, distributors, GPOs, and government agencies that BD’s website, cost calculator, printed materials, and oral representations alleging BD’s syringes save medication as compared to the VanishPoint ® were based on false and inaccurate measurement of the VanishPoint ® , and, in addition, posting this notice on its website for a period of three years; and (6) requiring the implementation of a comprehensive training program for BD employees and distributors that specifically instructs them not to use old marketing materials and not to make false representations regarding VanishPoint ® syringes. Final judgment was entered on January 15, 2015, awarding the Company $340,524,042 in damages and $11,722,823 in attorneys’ fees, as well as granting injunctive relief consistent with the orders as indicated above. The parties stipulated that the amount of litigation costs recoverable by the Company is $295,000. On January 14, 2015, the District Court stayed the portion of the injunctive relief that requires BD to notify end-user customers but also ordered BD to comply with internal correction activities as well as mandatory disclosures as set out above to its employees, customers, distributors and Group Purchasing Organizations. BD filed an appeal of that ruling with the 5 th Circuit Court of Appeals and that appeal was denied on February 3, 2015. On February 12, 2015, BD filed a motion to amend the judgment directed most specifically to the issue of award of prejudgment interest. On April 23, 2015, the Court entered an Amended Final Judgment that removed prejudgment interest but kept all other monetary and injunctive relief the same as was granted in the original Final Judgment. BD filed its brief in the appeal on July 20, 2015. Oral argument occurred on Monday, February 29, 2016. On December 2, 2016, the 5th Circuit Court of Appeals overturned the antitrust damages. The finding of false advertising liability was affirmed and the case was remanded to the Eastern District of Texas for a redetermination as to the amount of damages to which the Company is entitled. The Company’s petition for certiorari to the U.S. Supreme Court was denied on March 20, 2017. The Eastern District of Texas trial date was May 11, 2017. The Court announced that it will issue its decision within three months of May 11, 2017. No decision has been issued. In September 2007, BD and MDC Investment Holdings, Inc. (“MDC”) sued the Company in the United States District Court for the Eastern District of Texas, Texarkana Division, initially alleging that the Company is infringing two U.S. patents of MDC (6,179,812 and 7,090,656) that are licensed to BD. BD and MDC seek injunctive relief and unspecified damages. The Company counterclaimed for declarations of non-infringement, invalidity, and unenforceability of the asserted patents. The plaintiffs subsequently dropped allegations with regard to patent no. 7,090,656 and the Company subsequently dropped its counterclaims for unenforceability of the asserted patents. On June 30, 2015, the Court ordered that further proceedings in this matter be stayed and that this case remain administratively closed until resolution of all appeals in the case detailed in the preceding paragraph. The case remains stayed as a result of the ongoing proceedings regarding the Lanham Act claims in the separate proceeding described above. |
BUSINESS SEGMENT
BUSINESS SEGMENT | 6 Months Ended |
Jun. 30, 2017 | |
BUSINESS SEGMENT | |
BUSINESS SEGMENT | 7. BUSINESS SEGMENT The Company does not operate in separate reportable segments. Shipments to international customers generally require a prepayment either by wire transfer or an irrevocable confirmed letter of credit. The Company does extend credit to international customers on some occasions depending upon certain criteria, including, but not limited to, the credit worthiness of the customer, the stability of the country, banking restrictions, and the size of the order. All transactions are in U.S. currency. Revenues by geography are as follows: Three Months Three Months Six Months Six Months U.S. sales $ $ $ $ North and South America sales (excluding U.S.) Other international sales Total sales, net $ $ $ $ Long-lived assets by geography are as follows: June 30, 2017 December 31, 2016 Long-lived assets U.S. $ $ International $ $ |
DIVIDENDS
DIVIDENDS | 6 Months Ended |
Jun. 30, 2017 | |
DIVIDENDS | |
DIVIDENDS | 8. DIVIDENDS The Company declared dividends in the first quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 21, 2016. The Company declared dividends in the second quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 28, 2016. The Company declared dividends in the first quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 27, 2017. The Company declared dividends in the second quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 20, 2017. |
PRIVATE PURCHASE
PRIVATE PURCHASE | 6 Months Ended |
Jun. 30, 2017 | |
PRIVATE PURCHASE | |
PRIVATE PURCHASE | 9. PRIVATE PURCHASE The Company approved three of its executive officers to purchase shares directly from the Company. Thomas J. Shaw, CEO, exercised a portion of such right on January 12, 2017, buying two million shares at market price for an aggregate purchase price of $1.78 million. Mr. Shaw has one million additional shares authorized for purchase at market price any time prior to September 9, 2018. Mr. Cowan, CFO, and Ms. Larios, Vice President and General Counsel, are authorized to purchase 500,000 shares each at market price any time prior to September 9, 2018. The approximate dollar value of these potential future purchases cannot be predicted. |
BONUSES
BONUSES | 6 Months Ended |
Jun. 30, 2017 | |
BONUSES | |
BONUSES | 10. BONUSES In February of 2017, Mr. Cowan and Ms. Larios were each granted cash bonuses of $250,000. Ms. Larios received her bonus in the first quarter of 2017. Mr. Cowan will receive his bonus later this year. Bonuses payable are included in accrued compensation in the Condensed Balance Sheets. |
STORM DAMAGE AND INSURANCE PROC
STORM DAMAGE AND INSURANCE PROCEEDS | 6 Months Ended |
Jun. 30, 2017 | |
STORM DAMAGE AND INSURANCE PROCEEDS | |
STORM DAMAGE AND INSURANCE PROCEEDS | 11. STORM DAMAGE AND INSURANCE PROCEEDS On March 26, 2017 a hail storm passed through Little Elm, TX, resulting in damage to the Company’s two buildings. During April, the Company performed an inspection of its facilities and determined that possible roof damage had been sustained. In late April, the Company’s insurance carrier inspected the two buildings and confirmed that damage occurred from the hail storm. This damage was principally to the roofs of the buildings but also many of the HVAC units and a wall alongside one of the buildings sustained damage. The Company’s insurance carrier has assessed the damages at approximately $1 million and the Company’s deductible is less than $25,000. The Company has received these funds from its carrier. At this time, the Company does not expect the cost of repairs to the roofs, the wall, and to the HVAC units to exceed its coverage. The Company expects repairs to commence during the third quarter of 2017 and to be completed by the end of the year. The Company does not currently anticipate that these repairs will result any significant disruption to its operations or interruption to its production. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Accounting estimates | Accounting estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. |
Cash and cash equivalents | Cash and cash equivalents For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and investments with original maturities of three months or less. |
Accounts receivable | Accounts receivable The Company records trade receivables when revenue is recognized. No product has been consigned to customers. The Company’s allowance for doubtful accounts is primarily determined by review of specific trade receivables. Those accounts that are doubtful of collection are included in the allowance. This provision is reviewed to determine the adequacy of the allowance for doubtful accounts. Trade receivables are charged off when there is certainty as to their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms. The Company requires certain customers to make a prepayment prior to beginning production or shipment of their order. Customers may apply such prepayments to their outstanding invoices or pay the invoice and continue to carry forward the deposit for future orders. Such amounts are included in Other accrued liabilities on the Condensed Balance Sheets and are shown in Note 5, Other Accrued Liabilities. The Company records an allowance for estimated returns as a reduction to Accounts receivable and Gross sales. Historically, returns have been immaterial. |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value, with cost being determined using actual average cost. The Company compares the average cost to the net realizable value and records the lower value. Management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time to sell such inventory, the shelf life of inventory, and current market conditions when determining excess or obsolete inventories. A reserve is established for any excess or obsolete inventories or they may be written off. |
Property, plant, and equipment | Property, plant, and equipment Property, plant, and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Cost includes major expenditures for improvements and replacements which extend useful lives or increase capacity and interest cost associated with significant capital additions. Gains or losses from property disposals are included in income. The Company’s property, plant, and equipment primarily consist of buildings, land, assembly equipment, molding machines, molds, office equipment, furniture, and fixtures. Depreciation and amortization are calculated using the straight-line method over the following useful lives: Production equipment 3 to 13 years Office furniture and equipment 3 to 10 years Buildings 39 years Building improvements 15 years |
Long-lived assets | Long-lived assets The Company assesses the recoverability of long-lived assets using an assessment of the estimated undiscounted future cash flows related to such assets. In the event that assets are found to be carried at amounts which are in excess of estimated gross future cash flows, the assets will be adjusted for impairment to a level commensurate with fair value determined using a discounted cash flow analysis of the underlying assets. |
Financial instruments | Financial instruments The Company estimates the fair value of financial instruments through the use of public market prices, quotes from financial institutions, and other available information. Judgment is required in interpreting data to develop estimates of fair value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange. Short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on Management’s estimates, equals their recorded values. The fair value of long-term liabilities, based on Management’s estimates, approximates their reported values. |
Concentration risks | Concentration risks The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. Cash balances, some of which exceed federally insured limits, are maintained in financial institutions; however, Management believes the institutions are of high credit quality. The majority of accounts receivable are due from companies which are well-established entities. As a consequence, Management considers any exposure from concentrations of credit risks to be limited. The following table reflects our significant customers for the first three and six months of 2017 and 2016: Six Months Six Months Three Months Three Months Number of significant customers Aggregate dollar amount of net sales to significant customers $4.1 million $6.1 million $3.1 million $2.8 million Percentage of net sales to significant customers The Company manufactures some of its products in Little Elm, Texas as well as utilizing manufacturers in China. The Company purchases most of its product components from single suppliers, including needle adhesives and packaging materials. There are multiple sources of these materials. The Company obtained roughly 89.1% and 78.2% of its VanishPoint ® syringes in the first six months of 2017 and 2016, respectively, from its primary Chinese manufacturer. Purchases from this Chinese manufacturer aggregated 90.1% and 91.8% of VanishPoint ® syringes in the three month periods ended June 30, 2017 and 2016, respectively. In the event that the Company becomes unable to purchase products from its Chinese manufacturers, the Company would need to find an alternate manufacturer for its blood collection set, IV catheter, Patient Safe ® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes and would increase domestic production for the 1mL and 3mL syringes. |
Revenue recognition | Revenue recognition Revenue is recognized for sales when title and risk of ownership passes to the customer, generally upon shipment. Under certain contracts, revenue is recorded on the basis of sales price to distributors, less contractual pricing allowances. Contractual pricing allowances consist of: (i) rebates granted to distributors who provide tracking reports which show, among other things, the facility that purchased the products, and (ii) a provision for estimated contractual pricing allowances for products for which the Company has not received tracking reports. Rebates are recorded when issued and are applied against the customer’s receivable balance. Distributors receive a rebate for the difference between the Wholesale Acquisition Cost and the appropriate contract price as reflected on a tracking report provided by the distributor to the Company. If product is sold by a distributor to an entity that has no contract, there is a standard rebate (lower than a contracted rebate) given to the distributor. One of the purposes of the rebate is to encourage distributors to submit tracking reports to the Company. The provision for contractual pricing allowances is reviewed at the end of each quarter and adjusted for changes in levels of products for which there is no tracking report. Additionally, if it becomes clear that tracking reports will not be provided by individual distributors, the provision is further adjusted. The estimated contractual allowance is included in Accounts payable in the Balance Sheets and deducted from revenues in the Statements of Operations. Accounts payable included estimated contractual allowances for $3,479,252 and $3,591,534 as of June 30, 2017 and December 31, 2016, respectively. The terms and conditions of contractual pricing allowances are governed by contracts between the Company and its distributors. Revenue for shipments directly to end-users is recognized when title and risk of ownership pass from the Company. Any product shipped or distributed for evaluation purposes is expensed. The Company’s domestic return policy is set forth in its standard Distribution Agreement. This policy provides that a customer may return incorrect shipments within 10 days following arrival at the distributor’s facility. In all such cases, the distributor must obtain an authorization code from the Company and affix the code to the returned product. The Company will not accept returned goods without a returned goods authorization number. The Company may refund the customer’s money or replace the product. The Company’s domestic return policy also generally provides that a customer may return product that is overstocked. Overstocking returns are limited to two times in each 12-month period up to 1% of distributor’s total purchase of products for the prior 12-month period. All product overstocks and returns are subject to inspection and acceptance by the Company. The Company’s international distribution agreements generally do not provide for any returns. |
Litigation proceeds | Litigation proceeds Proceeds from litigation are recognized when realizable. Generally, realization is not reasonably assured and expected until proceeds are collected and the legal proceeding has concluded. |
Income taxes | Income taxes The Company evaluates tax positions taken or expected to be taken in a tax return for recognition in the financial statements based on whether it is “more-likely-than-not” that a tax position will be sustained based upon the technical merits of the position. Measurement of the tax position is based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company provides for deferred income taxes through utilizing an asset and liability approach for financial accounting and reporting based on the tax effects of differences between the financial statement and tax bases of assets and liabilities, based on enacted rates expected to be in effect when such differences reverse in future periods. Deferred tax assets are periodically reviewed for realizability. The Company has established a valuation allowance for its net deferred tax asset as future taxable income cannot be reasonably assured. Penalties and interest related to income tax are classified as General and administrative expense and Interest expense, respectively, in the Condensed Statements of Operations. Such expenses are not material. |
Loss per share | Loss per share The Company computes basic loss per share by dividing net loss for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. Diluted loss per share includes the determinants of basic loss per share and, in addition, reflects the dilutive effect, if any, of the common stock deliverable pursuant to stock options or common stock issuable upon the conversion of convertible preferred stock. The calculation of diluted loss per share excluded 147,775 and 678,349 shares of Common Stock underlying issued and outstanding stock options at June 30, 2017 and June 30, 2016, respectively, as their effect was antidilutive. The potential dilution, if any, is shown on the following schedule: Three Months Three Months Six Months Six Months Net loss $ ) $ ) $ ) $ ) Preferred dividend requirements ) ) ) ) Loss applicable to common shareholders $ ) $ ) $ ) $ ) Average common shares outstanding Average common and common equivalent shares outstanding - assuming dilution Basic loss per share $ ) $ ) $ ) $ ) Diluted loss per share $ ) $ ) $ ) $ ) |
Shipping and handling costs | Shipping and handling costs The Company classifies shipping and handling costs as part of Cost of sales in the Condensed Statements of Operations. |
Research and development costs | Research and development costs Research and development costs are expensed as incurred. |
Share-based compensation | Share-based compensation The Company’s share-based payments are accounted for using the fair value method. The Company records share-based compensation expense on a straight-line basis over the requisite service period. The Company incurred the following share-based compensation costs: Three Months Three Months Six Months Six Months Cost of sales $ $ — $ $ — Sales and marketing — — Research and development — — General and administrative — — $ $ — $ $ — |
Insurance Proceeds | Insurance Proceeds Receipts from insurance up to the amount of any loss recognized by the Company are considered recoveries. Any such recoveries are recorded when they are received. Insurance recoveries are not recognized as a component of earnings (loss) from operations until all repairs are made. |
Recent pronouncements | Recent pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” which is part of the FASB’s Simplification Initiative. Inventory, including inventory measured at average cost, would be valued at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for the Company’s annual periods and interim periods within those annual periods beginning January 1, 2017. Amendments in this ASU should be applied prospectively with earlier application permitted at the beginning of an interim or annual reporting period. The adoption of this pronouncement had no impact on the Company’s Balance Sheet, Results of Operations, or Cash Flows in the period of adoption. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. These amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The updated guidance is effective for the Company’s quarter ending March 31, 2018, with early adoption permitted. The Company is currently assessing the impact that adoption of this guidance will have on its financial statements and related disclosures. In June 2016, the FASB issued Accounting Standards Update 2016-13, “Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. This ASU is effective for the Company’s quarter ending March 31, 2020 with early application permitted for the Company’s quarter ending March 31, 2019. The Company is currently assessing the impact that adoption of this guidance will have on its financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (topic 842). Under the new ASU, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance lessor accounting is largely unchanged. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. This ASU is effective for the Company’s quarter ending March 31, 2019, with early adoption permitted. The Company is currently evaluating the impact of this standard. In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. This ASU’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB voted to delay the effective date of this ASU by one year. The ASU will now be effective commencing with the Company’s quarter ending March 31, 2018. Early adoption of this ASU is allowed no sooner than the original effective date. The Company is currently assessing the potential impact of this ASU on its financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of estimated useful lives of property, plant and equipment | Production equipment 3 to 13 years Office furniture and equipment 3 to 10 years Buildings 39 years Building improvements 15 years |
Schedule of significant customers | Six Months Six Months Three Months Three Months Number of significant customers Aggregate dollar amount of net sales to significant customers $4.1 million $6.1 million $3.1 million $2.8 million Percentage of net sales to significant customers |
Schedule of loss per share | Three Months Three Months Six Months Six Months Net loss $ ) $ ) $ ) $ ) Preferred dividend requirements ) ) ) ) Loss applicable to common shareholders $ ) $ ) $ ) $ ) Average common shares outstanding Average common and common equivalent shares outstanding - assuming dilution Basic loss per share $ ) $ ) $ ) $ ) Diluted loss per share $ ) $ ) $ ) $ ) |
Schedule of share-based compensation costs | Three Months Three Months Six Months Six Months Cost of sales $ $ — $ $ — Sales and marketing — — Research and development — — General and administrative — — $ $ — $ $ — |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
INVENTORIES | |
Schedule of inventories | June 30, 2017 December 31, 2016 Raw materials $ $ Finished goods Inventory reserve ) ) $ $ |
OTHER ACCRUED LIABILITIES (Tabl
OTHER ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
OTHER ACCRUED LIABILITIES | |
Schedule of other accrued liabilities | June 30, 2017 December 31, 2016 Prepayments from customers $ $ Accrued property taxes — Accrued professional fees Other accrued expenses $ $ |
BUSINESS SEGMENT (Tables)
BUSINESS SEGMENT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
BUSINESS SEGMENT | |
Schedule of sales and long-lived assets by geography | Three Months Three Months Six Months Six Months U.S. sales $ $ $ $ North and South America sales (excluding U.S.) Other international sales Total sales, net $ $ $ $ June 30, 2017 December 31, 2016 Long-lived assets U.S. $ $ International $ $ |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts receivable, Property, plant and equipment and Long-lived assets (Details) | 6 Months Ended |
Jun. 30, 2017item | |
Accounts receivable | |
Number of products consigned to customers | 0 |
Production equipment | Minimum | |
Property, plant, and equipment | |
Useful lives | 3 years |
Production equipment | Maximum | |
Property, plant, and equipment | |
Useful lives | 13 years |
Office furniture and equipment | Minimum | |
Property, plant, and equipment | |
Useful lives | 3 years |
Office furniture and equipment | Maximum | |
Property, plant, and equipment | |
Useful lives | 10 years |
Buildings | |
Property, plant, and equipment | |
Useful lives | 39 years |
Building improvements | |
Property, plant, and equipment | |
Useful lives | 15 years |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration risks, Revenue recognition, Litigation proceeds (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($)customer | Jun. 30, 2016USD ($)customer | Jun. 30, 2017USD ($)customeritem | Jun. 30, 2016USD ($)customer | Dec. 31, 2016USD ($) | |
Concentration risks | |||||
Number of significant customers | customer | 2 | 1 | 1 | 2 | |
Aggregate dollar amount of net sales to significant customers | $ 7,646,117 | $ 7,575,053 | $ 14,569,797 | $ 13,497,035 | |
Revenue recognition | |||||
Estimated contractual allowance | 3,479,252 | $ 3,479,252 | $ 3,591,534 | ||
Period for return of incorrect shipments | 10 days | ||||
Number of times overstocking returns are limited | item | 2 | ||||
Period for return of product due to overstock | 12 months | ||||
Maximum percentage of distributor's total purchase for the prior 12-month period | 1.00% | ||||
Sales | Customer Concentration Risk | |||||
Concentration risks | |||||
Aggregate dollar amount of net sales to significant customers | $ 3,100,000 | $ 2,800,000 | $ 4,100,000 | $ 6,100,000 | |
Percentage of net sales to significant customers (as a percent) | 40.20% | 37.30% | 28.00% | 44.90% | |
Syringes | Supplier Concentration Risk | |||||
Concentration risks | |||||
Percentage of net sales to significant customers (as a percent) | 90.10% | 91.80% | 89.10% | 78.20% |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loss per share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Loss per share | ||||
Stock options excluded from calculation of diluted loss per share | 147,775 | 678,349 | ||
Net loss | $ (1,349,346) | $ (656,694) | $ (2,539,291) | $ (1,595,785) |
Preferred dividend requirements | (176,249) | (176,249) | (352,498) | (352,498) |
Loss applicable to common shareholders | $ (1,525,595) | $ (832,943) | $ (2,891,789) | $ (1,948,283) |
Average common shares outstanding | 31,666,454 | 29,483,207 | 31,499,787 | 29,054,041 |
Average common and common equivalent shares outstanding - assuming dilution | 31,666,454 | 29,483,207 | 31,499,787 | 29,054,041 |
Basic loss per share (in dollars per share) | $ (0.05) | $ (0.03) | $ (0.09) | $ (0.07) |
Diluted loss per share (in dollars per share) | $ (0.05) | $ (0.03) | $ (0.09) | $ (0.07) |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share-based compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Share-based compensation costs: | ||
Share-based compensation expense | $ 235,411 | $ 470,309 |
Cost of sales | ||
Share-based compensation costs: | ||
Share-based compensation expense | 98,356 | 196,117 |
Sales and marketing | ||
Share-based compensation costs: | ||
Share-based compensation expense | 51,993 | 104,677 |
Research and development | ||
Share-based compensation costs: | ||
Share-based compensation expense | 16,407 | 32,715 |
General and administrative | ||
Share-based compensation costs: | ||
Share-based compensation expense | $ 68,655 | $ 136,800 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
INVENTORIES | ||
Raw materials | $ 1,489,305 | $ 1,303,278 |
Finished goods | 7,155,617 | 6,309,469 |
Inventory, gross | 8,644,922 | 7,612,747 |
Inventory reserve | (595,523) | (595,523) |
Inventory, net | $ 8,049,399 | $ 7,017,224 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
INCOME TAXES | ||||
Effective tax rate (as a percent) | 0.00% | (0.10%) | 0.00% | (0.10%) |
OTHER ACCRUED LIABILITIES (Deta
OTHER ACCRUED LIABILITIES (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
OTHER ACCRUED LIABILITIES | ||
Prepayments from customers | $ 457,398 | $ 692,922 |
Accrued property taxes | 242,050 | |
Accrued professional fees | 127,808 | 266,747 |
Other accrued expenses | 66,139 | 59,614 |
Other accrued liabilities | $ 893,395 | $ 1,019,283 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Jan. 15, 2015USD ($) | Sep. 09, 2013USD ($) | Jun. 30, 2017 | Sep. 30, 2007item |
Becton Dickinson and Company Case | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Value of damages awarded | $ 340,524,042 | $ 113,508,014 | ||
Length of time required to post corrected product information on its website | 3 years | |||
Length of time required to modify its advertising messages | 3 years | |||
Attorney fees | 11,722,823 | |||
Litigation costs recoverable | $ 295,000 | |||
BD and MDC Investment Holdings Inc Case | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Number of U.S. patents infringed upon | item | 2 |
BUSINESS SEGMENT (Details)
BUSINESS SEGMENT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Sales by geography | |||||
Total sales, net | $ 7,646,117 | $ 7,575,053 | $ 14,569,797 | $ 13,497,035 | |
U.S. | |||||
Sales by geography | |||||
Total sales, net | 6,055,144 | 6,944,479 | 12,003,000 | 12,447,489 | |
Long-lived assets | |||||
Long-lived assets | 11,669,906 | 11,669,906 | $ 11,930,293 | ||
North and South America sales (excluding U.S.) | |||||
Sales by geography | |||||
Total sales, net | 1,331,029 | 304,210 | 1,827,560 | 651,874 | |
Other international sales | |||||
Sales by geography | |||||
Total sales, net | 259,944 | $ 326,364 | 739,237 | $ 397,672 | |
International | |||||
Long-lived assets | |||||
Long-lived assets | $ 149,682 | $ 149,682 | $ 161,744 |
DIVIDENDS (Details)
DIVIDENDS (Details) - USD ($) | Jul. 20, 2017 | Apr. 27, 2017 | Jul. 28, 2016 | Apr. 21, 2016 | Jun. 30, 2017 | Jun. 30, 2016 |
Dividends | ||||||
Preferred dividends declared | $ 55,113 | $ 55,113 | ||||
Series I, Class B | ||||||
Dividends | ||||||
Preferred dividends declared | $ 12,313 | $ 12,313 | $ 12,313 | $ 12,313 | ||
Series II, Class B | ||||||
Dividends | ||||||
Preferred dividends declared | $ 42,800 | $ 42,800 | $ 42,800 | $ 42,800 |
PRIVATE PURCHASE (Details)
PRIVATE PURCHASE (Details) $ in Thousands | Jan. 12, 2017USD ($)shares | Jun. 30, 2017item | Sep. 09, 2018shares |
PRIVATE PLACEMENT | |||
Number of executive officers | item | 3 | ||
Executive officers | Thomas J. Shaw | Private Placement | |||
PRIVATE PLACEMENT | |||
Issuance of new Common stock (in shares) | 2,000,000 | ||
Issuance of new Common stock | $ | $ 1,780 | ||
Number of shares authorized for purchase | 1,000,000 | ||
Executive officers | Mr. Cowan | Private Placement | |||
PRIVATE PLACEMENT | |||
Number of shares authorized for purchase | 500,000 | ||
Executive officers | Ms. Larios | Private Placement | |||
PRIVATE PLACEMENT | |||
Number of shares authorized for purchase | 500,000 |
BONUSES (Details)
BONUSES (Details) - Executive officers | Feb. 28, 2017USD ($) |
Mr. Cowan | |
Cash bonus granted | $ 250,000 |
Ms. Larios | |
Cash bonus granted | $ 250,000 |
STORM DAMAGE AND INSURANCE PR34
STORM DAMAGE AND INSURANCE PROCEEDS (Details) | Mar. 26, 2017USD ($)building |
Insurance Information | |
Number of buildings damaged due to storm | building | 2 |
Insurance proceeds for assessed damages | $ 1,000,000 |
Maximum | |
Insurance Information | |
Deduction of insurance proceeds for assessed damages | $ 25,000 |