Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 01, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | RETRACTABLE TECHNOLOGIES INC | |
Entity Central Index Key | 946,563 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
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 | 32,666,454 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 15,094,258 | $ 14,877,899 |
Accounts receivable, net | 3,466,207 | 5,105,556 |
Inventories, net | 6,810,077 | 6,206,161 |
Other current assets | 442,600 | 418,154 |
Total current assets | 25,813,142 | 26,607,770 |
Property, plant, and equipment, net | 11,200,619 | 11,353,202 |
Income taxes receivable | 188,456 | 188,456 |
Other assets | 5,124 | 6,052 |
Total assets | 37,207,341 | 38,155,480 |
Current liabilities: | ||
Accounts payable | 4,259,623 | 4,957,750 |
Current portion of long-term debt | 391,651 | 410,949 |
Accrued compensation | 678,001 | 547,021 |
Dividends payable | 55,113 | 55,113 |
Accrued royalties to shareholder | 632,195 | 793,489 |
Insurance proceeds | 316,501 | 466,293 |
Other accrued liabilities | 933,712 | 657,923 |
Income taxes payable | 11,477 | 11,407 |
Total current liabilities | 7,278,273 | 7,899,945 |
Long-term debt, net of current maturities | 2,989,338 | 3,081,409 |
Total liabilities | 10,267,611 | 10,981,354 |
Commitments and contingencies - See Note 6 | ||
Preferred stock, $1 par value: | ||
Additional paid-in capital | 62,037,094 | 62,092,206 |
Accumulated deficit | (35,878,809) | (35,699,525) |
Total stockholders' equity | 26,939,730 | 27,174,126 |
Total liabilities and stockholders' equity | 37,207,341 | 38,155,480 |
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 | Mar. 31, 2018 | Dec. 31, 2017 |
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 | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Sales, net | $ 7,672,801 | $ 6,923,680 |
Cost of sales | ||
Total cost of sales | 4,813,205 | 4,598,757 |
Gross profit | 2,859,596 | 2,324,923 |
Operating expenses | ||
Sales and marketing | 1,165,461 | 1,027,711 |
Research and development | 144,227 | 148,449 |
General and administrative | 1,706,881 | 2,300,867 |
Total operating expenses | 3,016,569 | 3,477,027 |
Loss from operations | (156,973) | (1,152,104) |
Interest and other income | 28,151 | 10,505 |
Interest expense, net | (50,392) | (48,063) |
Loss before income taxes | (179,214) | (1,189,662) |
Provision for income taxes | 70 | 283 |
Net (loss) | (179,284) | (1,189,945) |
Preferred stock dividend requirements | (176,249) | (176,249) |
Loss applicable to common shareholders | $ (355,533) | $ (1,366,194) |
Basic loss per share (in dollars per share) | $ (0.01) | $ (0.04) |
Diluted loss per share (in dollars per share) | $ (0.01) | $ (0.04) |
Weighted average common shares outstanding: | ||
Basic (in shares) | 32,666,454 | 31,333,121 |
Diluted (in shares) | 32,666,454 | 31,333,121 |
Cost of manufactured product | ||
Cost of sales | ||
Total cost of sales | $ 4,181,010 | $ 4,010,913 |
Royalty expense to shareholder | ||
Cost of sales | ||
Total cost of sales | $ 632,195 | $ 587,844 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (179,284) | $ (1,189,945) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: | ||
Share based compensation | 234,898 | |
Depreciation and amortization | 229,807 | 206,992 |
(Increase) decrease in assets: | ||
Accounts receivable | 1,639,349 | 81,198 |
Inventories | (603,916) | (270,863) |
Other current assets | (24,446) | (251,220) |
Increase (decrease) in liabilities: | ||
Accounts payable | (698,127) | (10,507) |
Other accrued liabilities | 234,068 | 222,279 |
Insurance proceeds | (149,792) | |
Income taxes payable | 11,477 | 258 |
Net cash provided (used) by operating activities | 459,136 | (976,910) |
Cash flows from investing activities | ||
Purchase of property, plant, and equipment | (76,294) | (17,131) |
Net cash used by investing activities | (76,294) | (17,131) |
Cash flows from financing activities | ||
Repayments of long-term debt | (111,370) | (113,696) |
Proceeds from sale of common stock | 1,780,000 | |
Payment of preferred stock dividends | (55,113) | (55,113) |
Net cash provided (used) by financing activities | (166,483) | 1,611,191 |
Net increase in cash and cash equivalents | 216,359 | 617,150 |
Cash and cash equivalents at: | ||
Beginning of period | 14,877,899 | 16,199,043 |
End of period | 15,094,258 | 16,816,193 |
Supplemental schedule of cash flow information: | ||
Interest paid | 50,391 | 48,064 |
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 | 3 Months Ended |
Mar. 31, 2018 | |
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 unaudited 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 April 2, 2018 for the year ended December 31, 2017. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
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 Allowance for Bad Debt was $102 thousand as of December 31, 2017 and March 31, 2018. 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. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. 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 and improvements, 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 or appraised value 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 quarters of 2018 and 2017: Three Months Three Months Number of significant customers Aggregate dollar amount of net sales to significant customers $4.9 million $3.7 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 obtained roughly 82.7% and 78.4% of its products in the first three months of 2018 and 2017, respectively, from its Chinese manufacturers. 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 VanishPoint ® 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. When title and risk of ownership have passed to the customer, the Company has satisfied all performance obligations to the customer. Payments from customers with approved credit terms are typically due 30 days from the invoice date. 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 Condensed Balance Sheets and deducted from revenues in the Condensed Statements of Operations. Accounts payable included estimated contractual allowances for $3,700,322 and $4,115,628 as of March 31, 2018 and December 31, 2017, 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. End-users do not receive any contractual allowances on their purchases. Any product shipped or distributed for evaluation purposes is expensed. The Company provides product warranties that: i) the products are fit for medical use as generally defined within the boundaries of United States FDA approval; ii) the products are not defective; and iii) the products will conform to the descriptions set forth in their respective labeling, provided that they are used in accordance with such labeling and the Company’s written directions for use. The Company has historically not incurred significant warranty claims. The Company’s domestic return 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’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. Disaggregated information of revenue recognized from contracts with customers are as follows: For the three months ended March 31, 2017: Geographic Segment Syringes Blood EasyPoint ® Needles Other Total U.S. sales $ $ $ — $ $ North and South America sales (excluding U.S.) — Other international sales — Total $ $ $ — $ $ For the three months ended March 31, 2018: Geographic Segment Syringes Blood EasyPoint ® Needles Other Total U.S. sales $ $ $ $ $ North and South America sales (excluding U.S.) Other international sales — Total $ $ $ $ $ Income taxes The Tax Cuts and Job Act (“the Act”) was enacted on December 22, 2017, and the U.S. federal corporate tax rate was reduced from 35% to 21%. U.S. generally accepted accounting principles require companies to account for the effects of changes in income tax rates and laws in the period the change is enacted. Financial results, including provisional amounts, have been calculated for the income tax effects of the change. The U.S. Securities and Exchange Commission issued Staff Accounting Bulletin 118 (SAB 118) allowing companies to use provisional estimates to record the effects of the Act. SAB 118, as codified by FASB ASU 2018-05 “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update),” allows companies to complete accounting for these effects no later than one year from the enactment date of the Act. 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. Earnings per share The Company computes basic earnings per share (“EPS”) by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. Diluted EPS includes the determinants of basic EPS 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 EPS excluded 26 thousand and 148 thousand shares of Common Stock underlying issued and outstanding stock options at March 31, 2018 and March 31, 2017, respectively, as their effect was antidilutive. The potential dilution, if any, is shown on the following schedule: Three Months Ended Three Months Ended Net loss $ ) $ ) Preferred stock dividend requirements ) ) Loss applicable to common shareholders after assumed conversions $ ) $ ) 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 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. Recently Adopted Pronouncements 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 was effective for the Company’s quarter ended March 31, 2018. The adoption of ASU 2016-18 did not have a material effect on the Company’s financial statements as the Company currently holds no restricted cash or restricted cash equivalents. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Payments” (ASU 2016-15), clarifying guidance on the classification of certain cash receipts and payments in the statement of cash flows. This ASU was effective for the Company’s quarter ended March 31, 2018. The adoption of ASU 2016-15 did not have a material impact on the Company’s financial statements. In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, as well as several subsequently issued clarifying amendments, 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. The ASU, as amended, was effective commencing with the Company’s quarter ended March 31, 2018. The Company adopted this amended guidance on a Modified Retrospective basis in the first quarter of 2018. The adoption of this ASU had no impact on the opening balance of retained earnings. The Company applied the guidance of ASU No. 2014-09, as amended, to those contracts that were not completed as of January 1, 2018. In implementing the guidance of ASU 2014-09, as amended, the Company applied the practical expedients of FASB ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” Under ASU 2016-12, the Company applies the guidance of ASU 2014-09, as amended, to a portfolio of contracts with similar characteristics, as opposed to individual contracts, as applying the guidance to the portfolio does not materially differ from applying the guidance to individual contracts. In addition, the Company accounts for shipping and handling as activities to fulfill the promise to transfer goods to a customer as opposed to a performance obligation. Historically, freight and handling activities billed to customers have not been material. Recently Issued Pronouncements 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 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 guidance, lessor accounting is largely unchanged. The 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. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2018 | |
INVENTORIES | |
INVENTORIES | 3. INVENTORIES Inventories consist of the following: March 31, 2018 December 31, 2017 Raw materials $ $ Finished goods Inventory reserve ) ) $ $ |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | 4. INCOME TAXES The Company’s effective tax rate on the net loss before income taxes was 0.0% for the three months ended March 31, 2018 and March 31, 2017. |
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2018 | |
OTHER ACCRUED LIABILITIES | |
OTHER ACCRUED LIABILITIES | 5. OTHER ACCRUED LIABILITIES Other accrued liabilities consist of the following: March 31, 2018 December 31, 2017 Prepayments from customers $ $ Accrued property taxes Accrued professional fees Other accrued expenses $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
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 including, among other things, a requirement to notify certain customers and others regarding misleading disclosures. In connection with BD’s subsequent appeal, on December 2, 2016, the United States Court of Appeals for the Fifth Circuit 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. On August 17, 2017, District Court for the Eastern District of Texas issued the Court’s Final Judgment ordering that the Company take nothing in its suit against BD and dismissing the case. The Company filed a notice of Appeal with the United States Court of Appeals for the Fifth Circuit on November 3, 2017. Briefing for the appeal was completed by the parties on May 2, 2018 and oral argument is expected to occur later this year. 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 | 3 Months Ended |
Mar. 31, 2018 | |
BUSINESS SEGMENT | |
BUSINESS SEGMENT | 7. BUSINESS SEGMENT The Company does not operate in separate reportable segments. The Company has minimal long-lived assets in foreign countries. 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 Ended Three Months Ended 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: March 31, 2018 December 31, 2017 Long-lived assets U.S. $ $ International Total $ $ |
DIVIDENDS
DIVIDENDS | 3 Months Ended |
Mar. 31, 2018 | |
DIVIDENDS | |
DIVIDENDS | 8. DIVIDENDS The Company declared dividends in 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 January 6, 2017, April 24, 2017, July 20, 2017, and October 20, 2017. The Company declared dividends in 2018 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on January 19, 2018 and April 24, 2018. |
PRIVATE PURCHASE
PRIVATE PURCHASE | 3 Months Ended |
Mar. 31, 2018 | |
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 his purchase rights on January 12, 2017, buying two million shares at market price for an aggregate purchase price of $1.78 million, and he exercised the remainder of his purchase rights on August 23, 2017 by purchasing one million shares at market price for aggregate consideration of $570,100. 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 | 3 Months Ended |
Mar. 31, 2018 | |
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 received his bonus in the fourth quarter of 2017. |
STORM DAMAGE AND INSURANCE PROC
STORM DAMAGE AND INSURANCE PROCEEDS | 3 Months Ended |
Mar. 31, 2018 | |
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, Texas, resulting in damage to the Company’s two buildings. During April 2017, the Company performed an inspection of its facilities and determined that possible roof damage had been sustained. In late April 2017, 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 were also damaged. The Company’s insurance carrier has assessed damages of $1,009,960 and the Company’s deductible is $5,000. The Company received these funds from its carrier in the second quarter of 2017. 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. Repairs commenced during the third quarter of 2017 and should be completed in the first half of 2018. During 2017, the Company incurred and recognized $538,667 in repairs due to the storm damage. Repairs during the quarter ended March 31, 2018 were $149,792. There was $316,501 of remaining insurance proceeds as of March 31, 2018. This repair expense was offset by the insurance proceeds, resulting in no impact to the Statement of Operations. These costs and offsets are included in General and administrative expense in the Statement of Operations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS In the second quarter of 2018, the Company renewed its loan with American First National Bank, which renewal included a ten-year extension of the Company’s promissory note in the original principal amount of approximately $4.21 million and converted the interest rate to an adjustable interest rate equal to the prime rate plus 0.25%. At the time of the renewal, the remaining principal balance was approximately $3.03 million. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 Allowance for Bad Debt was $102 thousand as of December 31, 2017 and March 31, 2018. 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. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. 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 and improvements, 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 or appraised value 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 quarters of 2018 and 2017: Three Months Three Months Number of significant customers Aggregate dollar amount of net sales to significant customers $4.9 million $3.7 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 obtained roughly 82.7% and 78.4% of its products in the first three months of 2018 and 2017, respectively, from its Chinese manufacturers. 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 VanishPoint ® 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. When title and risk of ownership have passed to the customer, the Company has satisfied all performance obligations to the customer. Payments from customers with approved credit terms are typically due 30 days from the invoice date. 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 Condensed Balance Sheets and deducted from revenues in the Condensed Statements of Operations. Accounts payable included estimated contractual allowances for $3,700,322 and $4,115,628 as of March 31, 2018 and December 31, 2017, 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. End-users do not receive any contractual allowances on their purchases. Any product shipped or distributed for evaluation purposes is expensed. The Company provides product warranties that: i) the products are fit for medical use as generally defined within the boundaries of United States FDA approval; ii) the products are not defective; and iii) the products will conform to the descriptions set forth in their respective labeling, provided that they are used in accordance with such labeling and the Company’s written directions for use. The Company has historically not incurred significant warranty claims. The Company’s domestic return 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’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. Disaggregated information of revenue recognized from contracts with customers are as follows: For the three months ended March 31, 2017: Geographic Segment Syringes Blood EasyPoint ® Needles Other Total U.S. sales $ $ $ — $ $ North and South America sales (excluding U.S.) — Other international sales — Total $ $ $ — $ $ For the three months ended March 31, 2018: Geographic Segment Syringes Blood EasyPoint ® Needles Other Total U.S. sales $ $ $ $ $ North and South America sales (excluding U.S.) Other international sales — Total $ $ $ $ $ |
Income taxes | Income taxes The Tax Cuts and Job Act (“the Act”) was enacted on December 22, 2017, and the U.S. federal corporate tax rate was reduced from 35% to 21%. U.S. generally accepted accounting principles require companies to account for the effects of changes in income tax rates and laws in the period the change is enacted. Financial results, including provisional amounts, have been calculated for the income tax effects of the change. The U.S. Securities and Exchange Commission issued Staff Accounting Bulletin 118 (SAB 118) allowing companies to use provisional estimates to record the effects of the Act. SAB 118, as codified by FASB ASU 2018-05 “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update),” allows companies to complete accounting for these effects no later than one year from the enactment date of the Act. 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. |
Earnings per share | Earnings per share The Company computes basic earnings per share (“EPS”) by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. Diluted EPS includes the determinants of basic EPS 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 EPS excluded 26 thousand and 148 thousand shares of Common Stock underlying issued and outstanding stock options at March 31, 2018 and March 31, 2017, respectively, as their effect was antidilutive. The potential dilution, if any, is shown on the following schedule: Three Months Ended Three Months Ended Net loss $ ) $ ) Preferred stock dividend requirements ) ) Loss applicable to common shareholders after assumed conversions $ ) $ ) 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 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. |
Recently Adopted Pronouncements and Recently Issued Pronouncements | Recently Adopted Pronouncements 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 was effective for the Company’s quarter ended March 31, 2018. The adoption of ASU 2016-18 did not have a material effect on the Company’s financial statements as the Company currently holds no restricted cash or restricted cash equivalents. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Payments” (ASU 2016-15), clarifying guidance on the classification of certain cash receipts and payments in the statement of cash flows. This ASU was effective for the Company’s quarter ended March 31, 2018. The adoption of ASU 2016-15 did not have a material impact on the Company’s financial statements. In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, as well as several subsequently issued clarifying amendments, 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. The ASU, as amended, was effective commencing with the Company’s quarter ended March 31, 2018. The Company adopted this amended guidance on a Modified Retrospective basis in the first quarter of 2018. The adoption of this ASU had no impact on the opening balance of retained earnings. The Company applied the guidance of ASU No. 2014-09, as amended, to those contracts that were not completed as of January 1, 2018. In implementing the guidance of ASU 2014-09, as amended, the Company applied the practical expedients of FASB ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” Under ASU 2016-12, the Company applies the guidance of ASU 2014-09, as amended, to a portfolio of contracts with similar characteristics, as opposed to individual contracts, as applying the guidance to the portfolio does not materially differ from applying the guidance to individual contracts. In addition, the Company accounts for shipping and handling as activities to fulfill the promise to transfer goods to a customer as opposed to a performance obligation. Historically, freight and handling activities billed to customers have not been material. Recently Issued Pronouncements 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 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 guidance, lessor accounting is largely unchanged. The 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. |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 | Three Months Three Months Number of significant customers Aggregate dollar amount of net sales to significant customers $4.9 million $3.7 million Percentage of net sales to significant customers |
Schedule of disaggregated information of revenue recognized from contracts with customers | For the three months ended March 31, 2017: Geographic Segment Syringes Blood EasyPoint ® Needles Other Total U.S. sales $ $ $ — $ $ North and South America sales (excluding U.S.) — Other international sales — Total $ $ $ — $ $ For the three months ended March 31, 2018: Geographic Segment Syringes Blood EasyPoint ® Needles Other Total U.S. sales $ $ $ $ $ North and South America sales (excluding U.S.) Other international sales — Total $ $ $ $ $ |
Schedule of earnings per share | Three Months Ended Three Months Ended Net loss $ ) $ ) Preferred stock dividend requirements ) ) Loss applicable to common shareholders after assumed conversions $ ) $ ) 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 Cost of sales $ — $ Sales and marketing — Research and development — General and administrative — $ — $ |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
INVENTORIES | |
Schedule of inventories | March 31, 2018 December 31, 2017 Raw materials $ $ Finished goods Inventory reserve ) ) $ $ |
OTHER ACCRUED LIABILITIES (Tabl
OTHER ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
OTHER ACCRUED LIABILITIES | |
Schedule of other accrued liabilities | March 31, 2018 December 31, 2017 Prepayments from customers $ $ Accrued property taxes Accrued professional fees Other accrued expenses $ |
BUSINESS SEGMENT (Tables)
BUSINESS SEGMENT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
BUSINESS SEGMENT | |
Summary of sales and long-lived assets by geography | Three Months Ended Three Months Ended U.S. sales $ $ North and South America sales (excluding U.S.) Other international sales Total sales, net $ $ March 31, 2018 December 31, 2017 Long-lived assets U.S. $ $ International Total $ $ |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts receivable, Property, plant and equipment and Long-lived assets (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Accounts receivable | ||
Number of products consigned to customers | item | 0 | |
Allowance for Bad Debt | $ | $ 102 | $ 102 |
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 ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration risks (Details) | 3 Months Ended | |
Mar. 31, 2018USD ($)customer | Mar. 31, 2017USD ($)customer | |
Concentration risks | ||
Number of significant customers | customer | 4 | 3 |
Aggregate dollar amount of net sales to significant customers | $ 7,672,801 | $ 6,923,680 |
Sales | Customer Concentration Risk | ||
Concentration risks | ||
Aggregate dollar amount of net sales to significant customers | $ 4,900,000 | $ 3,700,000 |
Percentage of net sales to significant customers (as a percent) | 63.30% | 53.20% |
Cost of Goods, Product Line | Supplier Concentration Risk | ||
Concentration risks | ||
Percentage of net sales to significant customers (as a percent) | 82.70% | 78.40% |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue recognition, Income taxes (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018USD ($)item | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Revenue recognition | |||
Collection period of receivables | 30 days | ||
Estimated contractual allowance | $ 3,700,322 | $ 4,115,628 | |
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% | ||
Total Product Sales | $ 7,672,801 | $ 6,923,680 | |
Income taxes | |||
Income tax at the federal statutory rate (as a percent) | 21.00% | 35.00% | |
Syringes | |||
Revenue recognition | |||
Total Product Sales | $ 7,329,693 | 6,521,014 | |
Blood Collection Products | |||
Revenue recognition | |||
Total Product Sales | 243,900 | 187,832 | |
Easy Point Needles | |||
Revenue recognition | |||
Total Product Sales | 83,537 | ||
Other Products | |||
Revenue recognition | |||
Total Product Sales | 15,671 | 214,834 | |
UNITED STATES | |||
Revenue recognition | |||
Total Product Sales | 6,596,980 | 5,947,856 | |
UNITED STATES | Syringes | |||
Revenue recognition | |||
Total Product Sales | 6,264,189 | 5,754,699 | |
UNITED STATES | Blood Collection Products | |||
Revenue recognition | |||
Total Product Sales | 235,085 | 177,907 | |
UNITED STATES | Easy Point Needles | |||
Revenue recognition | |||
Total Product Sales | 83,285 | ||
UNITED STATES | Other Products | |||
Revenue recognition | |||
Total Product Sales | 14,421 | 15,250 | |
North and South America sales (excluding U.S.) | |||
Revenue recognition | |||
Total Product Sales | 1,031,411 | 496,531 | |
North and South America sales (excluding U.S.) | Syringes | |||
Revenue recognition | |||
Total Product Sales | 1,024,204 | 306,772 | |
North and South America sales (excluding U.S.) | Blood Collection Products | |||
Revenue recognition | |||
Total Product Sales | 6,055 | 725 | |
North and South America sales (excluding U.S.) | Easy Point Needles | |||
Revenue recognition | |||
Total Product Sales | 252 | ||
North and South America sales (excluding U.S.) | Other Products | |||
Revenue recognition | |||
Total Product Sales | 900 | 189,034 | |
Other international sales | |||
Revenue recognition | |||
Total Product Sales | 44,410 | 479,293 | |
Other international sales | Syringes | |||
Revenue recognition | |||
Total Product Sales | 41,300 | 459,543 | |
Other international sales | Blood Collection Products | |||
Revenue recognition | |||
Total Product Sales | 2,760 | 9,200 | |
Other international sales | Other Products | |||
Revenue recognition | |||
Total Product Sales | $ 350 | $ 10,550 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings per share | ||
Stock options excluded from calculation of diluted EPS | 26 | 148 |
Net loss | $ (179,284) | $ (1,189,945) |
Preferred stock dividend requirements | (176,249) | (176,249) |
Loss applicable to common shareholders | $ (355,533) | $ (1,366,194) |
Average common shares outstanding | 32,666,454 | 31,333,121 |
Average common and common equivalent shares outstanding - assuming dilution | 32,666,454 | 31,333,121 |
Basic loss per share (in dollars per share) | $ (0.01) | $ (0.04) |
Diluted loss per share (in dollars per share) | $ (0.01) | $ (0.04) |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share based compensation (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Share-based compensation costs: | |
Share-based compensation expense | $ 234,898 |
Cost of Sales | |
Share-based compensation costs: | |
Share-based compensation expense | 97,761 |
Selling and Marketing Expense | |
Share-based compensation costs: | |
Share-based compensation expense | 52,684 |
Research and Development Expense | |
Share-based compensation costs: | |
Share-based compensation expense | 16,308 |
General and Administrative Expense | |
Share-based compensation costs: | |
Share-based compensation expense | $ 68,145 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
INVENTORIES | ||
Raw materials | $ 1,555,837 | $ 1,511,339 |
Finished goods | 5,849,045 | 5,289,761 |
Inventory, gross | 7,404,882 | 6,801,100 |
Inventory reserve | (594,805) | (594,939) |
Inventory, net | $ 6,810,077 | $ 6,206,161 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
INCOME TAXES | ||
Effective tax rate (as a percent) | 0.00% | 0.00% |
OTHER ACCRUED LIABILITIES (Deta
OTHER ACCRUED LIABILITIES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
OTHER ACCRUED LIABILITIES | ||
Prepayments from customers | $ 437,368 | $ 355,742 |
Accrued property taxes | 110,428 | 14,681 |
Accrued professional fees | 341,891 | 231,826 |
Other accrued expenses | 44,025 | 55,674 |
Other accrued liabilities | $ 933,712 | $ 657,923 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Sep. 09, 2013USD ($) | Sep. 30, 2007item |
Becton Dickinson and Company Case | ||
COMMITMENTS AND CONTINGENCIES | ||
Value of damages awarded | $ | $ 113,508,014 | |
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 | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Sales by geography | |||
Total sales | $ 7,672,801 | $ 6,923,680 | |
Long-lived assets | |||
Long-lived assets | 11,200,619 | $ 11,353,202 | |
UNITED STATES | |||
Sales by geography | |||
Total sales | 6,596,980 | 5,947,856 | |
Long-lived assets | |||
Long-lived assets | 11,069,031 | 11,215,583 | |
North and South America sales (excluding U.S.) | |||
Sales by geography | |||
Total sales | 1,031,411 | 496,531 | |
Other international sales | |||
Sales by geography | |||
Total sales | 44,410 | $ 479,293 | |
International | |||
Long-lived assets | |||
Long-lived assets | $ 131,588 | $ 137,619 |
DIVIDENDS (Details)
DIVIDENDS (Details) - USD ($) | Apr. 24, 2018 | Jan. 19, 2018 | Oct. 20, 2017 | Jul. 20, 2017 | Apr. 24, 2017 | Jan. 06, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Dividends | ||||||||
Preferred dividends declared | $ 55,113 | $ 55,113 | ||||||
Series I, Class B | ||||||||
Dividends | ||||||||
Preferred dividends declared | $ 12,313 | $ 12,313 | $ 12,313 | $ 12,313 | $ 12,313 | $ 12,313 | ||
Series II, Class B | ||||||||
Dividends | ||||||||
Preferred dividends declared | $ 42,800 | $ 42,800 | $ 42,800 | $ 42,800 | $ 42,800 | $ 42,800 |
PRIVATE PURCHASE (Details)
PRIVATE PURCHASE (Details) | Aug. 23, 2017USD ($)shares | Jan. 12, 2017USD ($)shares | Mar. 31, 2018item | 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) | 1,000,000 | 2,000,000 | ||
Issuance of new Common stock | $ | $ 570,100 | $ 1,780,000 | ||
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 PR36
STORM DAMAGE AND INSURANCE PROCEEDS (Details) | Mar. 26, 2017USD ($)building | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
STORM DAMAGE AND INSURANCE PROCEEDS | |||
Number of buildings damaged due to storm | building | 2 | ||
Insurance proceeds for assessed damages | $ 1,009,960 | ||
Deduction of insurance proceeds for assessed damages | $ 5,000 | ||
Repair expenses due to the storm damage | $ 149,792 | $ 538,667 | |
Remaining insurance proceeds | $ 316,501 | $ 466,293 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Loans Payable - Subsequent Event $ in Thousands | 3 Months Ended |
Jun. 30, 2018USD ($) | |
SUBSEQUENT EVENTS | |
Renewal term | 10 years |
Original Principal amount | $ 4,210 |
Remaining principal balance | $ 3,030 |
Prime rate | |
SUBSEQUENT EVENTS | |
Interest rate added to reference rate (as a percent) | 0.25% |