Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 24, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Transition Report | false | |
Entity File Number | 001-355669 | |
Entity Registrant Name | Chembio Diagnostics, Inc. | |
Entity Central Index Key | 0001092662 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 88-0425691 | |
Entity Address, Address Line One | 555 Wireless Blvd. | |
Entity Address, City or Town | Hauppauge | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 11788 | |
City Area Code | 631 | |
Local Phone Number | 924-1135 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | CEMI | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 36,708,474 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 21,055,026 | $ 28,772,892 |
Accounts receivable, net of allowance for doubtful accounts of $242,354 and $243,042 at September 30, 2022 and December 31, 2021, respectively | 5,252,573 | 11,441,107 |
Inventories, net | 8,465,210 | 12,920,451 |
Prepaid expenses and other current assets | 12,509,604 | 2,096,399 |
TOTAL CURRENT ASSETS | 47,282,413 | 55,230,849 |
FIXED ASSETS: | ||
Property, plant and equipment, net | 8,813,699 | 8,556,773 |
Finance lease right-of-use assets, net | 154,826 | 191,870 |
OTHER ASSETS: | ||
Operating lease right-of-use assets, net | 5,639,763 | 5,891,906 |
Goodwill | 0 | 3,022,787 |
Deposits and other assets | 289,203 | 358,010 |
TOTAL ASSETS | 62,179,904 | 73,252,195 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued liabilities | 18,645,498 | 13,127,993 |
Current portion of long-term debt | 18,993,535 | 1,200,000 |
Operating lease liabilities | 910,100 | 886,294 |
Finance lease liabilities | 75,279 | 68,176 |
TOTAL CURRENT LIABILITIES | 38,624,412 | 15,282,463 |
OTHER LIABILITIES: | ||
Long-term operating lease liabilities | 5,655,468 | 5,976,151 |
Long-term finance lease liabilities | 96,529 | 139,678 |
Long-term debt, net | 0 | 17,576,635 |
Other long-term liabilities | 10,684 | 12,368 |
TOTAL LIABILITIES | 44,387,093 | 38,987,295 |
STOCKHOLDERS' EQUITY: | ||
Preferred stock - 10,000,000 shares authorized; none outstanding | 0 | 0 |
Common stock - $0.01 par value; 100,000,000 shares authorized; 35,440,553 shares and 30,104,986 shares issued at September 30, 2022 and December 31, 2021, respectively | 354,406 | 301,050 |
Additional paid-in capital | 171,448,870 | 165,772,636 |
Accumulated deficit | (153,445,401) | (131,009,860) |
Treasury Stock, 48,057 shares at cost, at September 30, 2022 and December 31, 2021 | (206,554) | (206,554) |
Accumulated other comprehensive loss | (358,510) | (592,372) |
TOTAL STOCKHOLDERS' EQUITY | 17,792,811 | 34,264,900 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 62,179,904 | $ 73,252,195 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Accounts receivable, allowance for doubtful accounts | $ 242,354 | $ 243,042 |
STOCKHOLDERS' EQUITY: | ||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 35,440,553 | 30,104,986 |
Treasury stock, shares (in shares) | 48,057 | 48,057 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
REVENUES: | ||||
REVENUES | $ 11,200,148 | $ 12,058,444 | $ 39,178,189 | $ 27,244,913 |
COSTS AND EXPENSES: | ||||
Cost of product sales | 9,658,678 | 7,902,819 | 32,969,388 | 15,490,956 |
Research and development expenses | 1,871,113 | 3,442,044 | 5,567,169 | 9,102,363 |
Selling, general and administrative expenses | 5,551,362 | 5,947,327 | 17,747,613 | 18,033,748 |
Impairment, restructuring, severance and related costs | 110,250 | 396,740 | 3,153,429 | 2,440,983 |
TOTAL COSTS AND EXPENSES | 17,191,403 | 17,688,930 | 59,437,599 | 45,068,050 |
LOSS FROM OPERATIONS | (5,991,255) | (5,630,486) | (20,259,410) | (17,823,137) |
OTHER EXPENSE: | ||||
Interest (expense) income, net | (707,549) | (735,336) | (2,169,525) | (2,175,188) |
LOSS BEFORE INCOME TAXES | (6,698,804) | (6,365,822) | (22,428,935) | (19,998,325) |
Income tax (expense)/benefit | 0 | (28) | (6,606) | 67,928 |
NET LOSS | $ (6,698,804) | $ (6,365,850) | $ (22,435,541) | $ (19,930,397) |
Basic loss per share (in dollars per share) | $ (0.21) | $ (0.24) | $ (0.73) | $ (0.89) |
Diluted loss per share (in dollars per share) | $ (0.21) | $ (0.24) | $ (0.73) | $ (0.89) |
Weighted average number of shares outstanding, basic (in shares) | 32,274,664 | 26,701,546 | 30,862,982 | 22,361,899 |
Weighted average number of shares outstanding, diluted (in shares) | 32,274,664 | 26,701,546 | 30,862,982 | 22,361,899 |
Net Product Sales [Member] | ||||
REVENUES: | ||||
REVENUES | $ 10,844,003 | $ 9,371,160 | $ 38,229,605 | $ 17,327,204 |
R&D and Grant Revenue [Member] | ||||
REVENUES: | ||||
REVENUES | 50,000 | 441 | 76,219 | 1,107,808 |
Government Grant Income [Member] | ||||
REVENUES: | ||||
REVENUES | 0 | 2,400,000 | 0 | 8,030,000 |
License and Royalty Revenue [Member] | ||||
REVENUES: | ||||
REVENUES | $ 306,145 | $ 286,843 | $ 872,365 | $ 779,901 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | ||||
Net loss | $ (6,698,804) | $ (6,365,850) | $ (22,435,541) | $ (19,930,397) |
Other comprehensive income/(loss): | ||||
Foreign currency translation adjustments, net of tax | 127,457 | (352,918) | 233,862 | (507,538) |
Comprehensive loss | $ (6,571,347) | $ (6,718,768) | $ (22,201,679) | $ (20,437,935) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-in-Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | AOCL [Member] | Total |
Balance at Dec. 31, 2020 | $ 202,235 | $ 124,961,514 | $ (190,093) | $ (97,106,331) | $ (90,916) | $ 27,776,409 |
Balance (in shares) at Dec. 31, 2020 | 20,223,498 | (41,141) | ||||
Common Stock: | ||||||
Restricted stock issued | $ 622 | 58,909 | $ 0 | 0 | 0 | 59,531 |
Restricted stock issued (in shares) | 62,197 | 0 | ||||
Restricted stock compensation, net | $ 0 | 309,010 | $ 0 | 0 | 0 | 309,010 |
Shares tendered for withholding taxes | $ 0 | (115,059) | $ 0 | 0 | 0 | (115,059) |
Shares tendered for withholding taxes (in shares) | 0 | 0 | ||||
Options: | ||||||
Stock option compensation | $ 0 | 211,140 | $ 0 | 0 | 0 | 211,140 |
Comprehensive income (loss) | 0 | 0 | 0 | 0 | (455,722) | (455,722) |
Net loss | 0 | 0 | 0 | (4,500,163) | 0 | (4,500,163) |
Balance at Mar. 31, 2021 | $ 202,857 | 125,425,514 | $ (190,093) | (101,606,494) | (546,638) | 23,285,146 |
Balance (in shares) at Mar. 31, 2021 | 20,285,695 | (41,141) | ||||
Balance at Dec. 31, 2020 | $ 202,235 | 124,961,514 | $ (190,093) | (97,106,331) | (90,916) | 27,776,409 |
Balance (in shares) at Dec. 31, 2020 | 20,223,498 | (41,141) | ||||
Options: | ||||||
Comprehensive income (loss) | (507,538) | |||||
Net loss | (19,930,397) | |||||
Balance at Sep. 30, 2021 | $ 300,863 | 165,442,942 | $ (190,093) | (117,036,729) | (598,454) | 47,918,529 |
Balance (in shares) at Sep. 30, 2021 | 30,086,283 | (41,141) | ||||
Balance at Mar. 31, 2021 | $ 202,857 | 125,425,514 | $ (190,093) | (101,606,494) | (546,638) | 23,285,146 |
Balance (in shares) at Mar. 31, 2021 | 20,285,695 | (41,141) | ||||
Common Stock: | ||||||
Restricted stock issued | $ 517 | (517) | $ 0 | 0 | 0 | 0 |
Restricted stock issued (in shares) | 51,677 | 0 | ||||
Restricted stock compensation, net | $ 0 | 288,053 | $ 0 | 0 | 0 | 288,053 |
Shares tendered for withholding taxes | $ 0 | (4,454) | $ 0 | 0 | 0 | (4,454) |
Shares tendered for withholding taxes (in shares) | 0 | 0 | ||||
Options: | ||||||
Stock option compensation | $ 0 | 297,791 | $ 0 | 0 | 0 | 297,791 |
Comprehensive income (loss) | 0 | 0 | 0 | 0 | 301,102 | 301,102 |
Net loss | 0 | 0 | 0 | (9,064,385) | 0 | (9,064,385) |
Balance at Jun. 30, 2021 | $ 203,374 | 126,006,387 | $ (190,093) | (110,670,879) | (245,536) | 15,103,253 |
Balance (in shares) at Jun. 30, 2021 | 20,337,372 | (41,141) | ||||
Common Stock: | ||||||
Issuance of stock, net | $ 97,093 | 38,714,867 | $ 0 | 0 | 0 | 38,811,960 |
Issuance of stock, net (in shares) | 9,709,328 | 0 | ||||
Restricted stock issued | $ 33 | 18,385 | $ 0 | 0 | 0 | 18,418 |
Restricted stock issued (in shares) | 3,331 | 0 | ||||
Restricted stock compensation, net | $ 0 | 399,548 | $ 0 | 0 | 0 | 399,548 |
Options: | ||||||
Exercised | $ 363 | 85,192 | $ 0 | 0 | 0 | 85,555 |
Exercised (in shares) | 36,252 | 0 | ||||
Stock option compensation | $ 0 | 218,563 | $ 0 | 0 | 0 | 218,563 |
Comprehensive income (loss) | 0 | 0 | 0 | 0 | (352,918) | (352,918) |
Net loss | 0 | 0 | 0 | (6,365,850) | 0 | (6,365,850) |
Balance at Sep. 30, 2021 | $ 300,863 | 165,442,942 | $ (190,093) | (117,036,729) | (598,454) | 47,918,529 |
Balance (in shares) at Sep. 30, 2021 | 30,086,283 | (41,141) | ||||
Balance at Dec. 31, 2021 | $ 301,050 | 165,772,636 | $ (206,554) | (131,009,860) | (592,372) | 34,264,900 |
Balance (in shares) at Dec. 31, 2021 | 30,104,986 | (48,057) | ||||
Common Stock: | ||||||
Restricted stock issued | $ 1,649 | 264,437 | $ 0 | 0 | 0 | 266,086 |
Restricted stock issued (in shares) | 164,930 | 0 | ||||
Restricted stock compensation, net | $ 0 | 229,563 | $ 0 | 0 | 0 | 229,563 |
Shares tendered for withholding taxes | $ 0 | (38,514) | $ 0 | 0 | 0 | (38,514) |
Shares tendered for withholding taxes (in shares) | 0 | 0 | ||||
Options: | ||||||
Stock option compensation | $ 0 | 255,254 | $ 0 | 0 | 0 | 255,254 |
Comprehensive income (loss) | 0 | 0 | 0 | 0 | 348,151 | 348,151 |
Net loss | 0 | 0 | 0 | (8,790,294) | 0 | (8,790,294) |
Balance at Mar. 31, 2022 | $ 302,699 | 166,483,376 | $ (206,554) | (139,800,154) | (244,221) | 26,535,146 |
Balance (in shares) at Mar. 31, 2022 | 30,269,916 | (48,057) | ||||
Balance at Dec. 31, 2021 | $ 301,050 | 165,772,636 | $ (206,554) | (131,009,860) | (592,372) | 34,264,900 |
Balance (in shares) at Dec. 31, 2021 | 30,104,986 | (48,057) | ||||
Options: | ||||||
Comprehensive income (loss) | 233,862 | |||||
Net loss | (22,435,541) | |||||
Balance at Sep. 30, 2022 | $ 354,406 | 171,448,870 | $ (206,554) | (153,445,401) | (358,510) | 17,792,811 |
Balance (in shares) at Sep. 30, 2022 | 35,440,553 | (48,057) | ||||
Balance at Mar. 31, 2022 | $ 302,699 | 166,483,376 | $ (206,554) | (139,800,154) | (244,221) | 26,535,146 |
Balance (in shares) at Mar. 31, 2022 | 30,269,916 | (48,057) | ||||
Common Stock: | ||||||
Restricted stock issued | $ 28 | (28) | $ 0 | 0 | 0 | 0 |
Restricted stock issued (in shares) | 2,747 | 0 | ||||
Restricted stock compensation, net | $ 0 | 276,024 | $ 0 | 0 | 0 | 276,024 |
Shares tendered for withholding taxes | $ 0 | (1,154) | $ 0 | 0 | 0 | (1,154) |
Shares tendered for withholding taxes (in shares) | 0 | 0 | ||||
Options: | ||||||
Stock option compensation | $ 0 | 282,985 | $ 0 | 0 | 0 | 282,985 |
Comprehensive income (loss) | 0 | 0 | 0 | 0 | (241,746) | (241,746) |
Net loss | 0 | 0 | 0 | (6,946,443) | 0 | (6,946,443) |
Balance at Jun. 30, 2022 | $ 302,727 | 167,041,203 | $ (206,554) | (146,746,597) | (485,967) | 19,904,812 |
Balance (in shares) at Jun. 30, 2022 | 30,272,663 | (48,057) | ||||
Common Stock: | ||||||
Restricted stock issued | $ 176 | (176) | $ 0 | 0 | 0 | 0 |
Restricted stock issued (in shares) | 17,623 | 0 | ||||
Restricted stock compensation, net | $ 0 | 268,751 | $ 0 | 0 | 0 | 268,751 |
Shares tendered for withholding taxes | 0 | (237) | 0 | 0 | 0 | (237) |
Issuance of common stock under ATM agreement | $ 51,503 | 3,871,754 | 3,923,257 | |||
Issuance of common stock under ATM agreement (in shares) | 5,150,267 | |||||
Options: | ||||||
Stock option compensation | $ 0 | 267,575 | 0 | 0 | 0 | 267,575 |
Comprehensive income (loss) | 0 | 0 | 0 | 0 | 127,457 | 127,457 |
Net loss | 0 | 0 | 0 | (6,698,804) | 0 | (6,698,804) |
Balance at Sep. 30, 2022 | $ 354,406 | $ 171,448,870 | $ (206,554) | $ (153,445,401) | $ (358,510) | $ 17,792,811 |
Balance (in shares) at Sep. 30, 2022 | 35,440,553 | (48,057) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Cash received from customers and grants | $ 45,366,035 | $ 22,355,958 |
Cash paid to suppliers and employees | (52,481,928) | (43,732,182) |
Cash paid for operating leases | (1,086,793) | (1,049,198) |
Cash paid for finance leases | (13,278) | (15,358) |
Interest and taxes, net | (1,645,952) | (1,709,704) |
Net cash used in operating activities | (9,861,916) | (24,150,484) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Patent application costs | 0 | (32,648) |
Acquisition of and deposits on fixed assets | (1,480,662) | (1,387,601) |
Net cash used in investing activities | (1,480,662) | (1,420,249) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Issuance of stock, net | 3,923,257 | 38,811,960 |
Payments of tax withholding on stock award | (39,906) | (119,513) |
Principal payments for finance leases | (52,280) | (45,680) |
Principal payments on Note Payable | (300,000) | 0 |
Net cash provided by financing activities | 3,531,071 | 38,646,767 |
Effect of exchange rate changes on cash | 93,641 | (138,335) |
DECREASE IN CASH AND CASH EQUIVALENTS | (7,717,866) | 12,937,699 |
Cash and cash equivalents - beginning of the period | 28,772,892 | 23,066,301 |
Cash and cash equivalents - end of the period | 21,055,026 | 36,004,000 |
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES: | ||
Net loss | (22,435,541) | (19,930,397) |
Adjustments: | ||
Depreciation and amortization | 1,867,325 | 2,186,684 |
Share based compensation | 1,846,238 | 1,802,056 |
Non-cash inventory adjustment | 657,686 | 926,499 |
Benefit from deferred tax liability | 0 | (69,941) |
Provision of (recovery of) doubtful accounts | (688) | (103,258) |
Impairment, restructuring and severance | 3,043,179 | 1,273,945 |
Changes in assets and liabilities: | ||
Accounts receivable | 6,189,222 | (3,302,153) |
Inventories | 3,797,556 | (5,215,766) |
Prepaid expenses and other current assets | (10,413,205) | (412,995) |
Deposits and other assets | 68,807 | 141,946 |
Accounts payable and accrued liabilities | 5,517,505 | 139,698 |
Deferred revenue | 0 | (1,586,802) |
Net cash used in operating activities | $ (9,861,916) | $ (24,150,484) |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2022 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1 — DESCRIPTION OF BUSINESS: Chembio Diagnostics, Inc. (“Chembio”) and its subsidiaries (collectively with Chembio, the “Company”) develop and commercialize point-of-care diagnostic tests used for the rapid detection and diagnosis of infectious diseases, including sexually transmitted disease, insect vector and tropical disease, COVID-19 and other viral and bacterial infections, enabling expedited treatment. The Company’s product portfolio is based upon our proprietary DPP technology, a diagnostic platform that provides high-quality, cost-effective results in 15 to 20 minutes using fingertip blood, nasal swabs and other sample types. The DPP technology platform addresses the rapid diagnostic test market, which includes infectious diseases such as sexually transmitted infections and HIV, Gastroenterology and Women’s Health. Compared with traditional lateral flow technology, the DPP technology platform can provide: • Enhanced sensitivity and specificity: This is achieved via the Company’s proprietary approach to separating the sample path from the buffer path, together with patent and other proprietary strategies, which differ significantly from traditional lateral flow test. • Advanced multiplexing capabilities: Through advanced multiplexing, the DPP platform can detect and differentiate up to eight distinct test results from a single patient sample, which can deliver greater clinical value than other rapid tests currently on the market. • Objective results: For some diagnostic applications, the Company’s easy-to-use, highly portable, battery-operated DPP Micro Reader optical analyzers can report accurate results in approximately 15 seconds, making it well-suited for decentralized testing where real-time results enable patients to be clinically assessed while they are still on site. Objective results produced by the DPP Micro Reader can reduce the possibility of the types of human error that can be experienced in the visual interpretations required by many rapid tests. The Company targets the market for rapid diagnostic test solutions for infectious diseases, which is driven by the high prevalence of infectious diseases globally, an increase in the geriatric population, growing demand for rapid test results, and advancements in multiplexing. The Company has a broad portfolio of infectious disease products, which prior to 2020 were focused principally on sexually transmitted disease and fever and tropical disease. In February 2020 the Company began the process of shifting substantially all of its resources to seek to leverage the DPP technology platform to address the acute and escalating need for diagnostic testing for COVID-19. The Company is continuing to pursue: • an emergency use authorization (“EUA”), from the U.S. Food and Drug Administration (the “FDA”), as well as 510(k) clearance from the FDA, for the DPP SARS-CoV-2 Antigen test system; • an EUA from the FDA for the DPP Respiratory Antigen Panel; and • a Clinical Laboratory Improvement Amendment (“CLIA”), waiver from the FDA for the DPP HIV-Syphilis test system. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES: (a) Basis of presentation: The accompanying unaudited condensed consolidated financial statements include the accounts of Chembio and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Certain reclassifications have been made to the unaudited condensed consolidated balance sheet of the prior year to conform to the current year presentation. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC. Going Concern Considerations The Company continued to experience market, clinical trial and regulatory complications in seeking to develop and commercialize a portfolio of COVID-19 test systems during the continuing, but evolving, uncertainty resulting from COVID‑19. For the three and nine months ended September 30, 2022, the Company also continued to incur significant expenses in connection with pending legal matters (see Note 6 – Commitments, Contingencies, and Concentrations: Litigation). The Company performed an assessment to determine whether there were conditions or events that, considered in the aggregate, raised substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited condensed consolidated financial statements are being issued. Initially, this assessment did not consider the potential mitigating effect of management’s plans that had not been fully implemented. Because, as described below, substantial doubt was determined to exist as the result of this initial assessment, management then assessed the mitigating effect of its plans to determine if it is probable that the plans (1) would be effectively implemented within one year after the date the accompanying unaudited condensed consolidated financial statements are issued and (2) when implemented, would mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. The Company achieved significant revenue growth in recent years while profitability has not been at levels as expected. It has taken steps including investments in automation to mitigate headwinds such as labor availability, volatile capacity planning and implementation of operational efficiency targets to proactively monitor production with the overarching goal of profitable growth. The Company undertook measures to increase its total revenues and improve its liquidity position by continuing to develop the Global Competitiveness Program. The main pillars of the Global Competitiveness Program include the following: • Focus on higher margin business in growth markets • Lower manufacturing costs • Reduce infrastructure costs • Strategic review of non-core businesses and assets In addition, the Company will continue to focus on regulatory approvals for its DPP SARS-CoV-2 Antigen test system, DPP Respiratory Antigen Panel, and DPP HIV-Syphilis test system. These measures and other plans and initiatives have been designed to provide the Company with adequate liquidity to meet its obligations for at least the twelve-month period following the date the accompanying unaudited condensed consolidated financial statements are being issued. The Company’s execution of its plans continue to depend, however, on factors and uncertainties that are beyond the Company’s control, or that may not be addressable on terms acceptable to the Company or at all. The Company considered in particular how: • The ongoing healthcare and economic impacts of COVID-19 on the global customer base for the Company’s non‑COVID-19 products continue to negatively affect the timing and rate of recovery of the Company’s revenues from those products. • Although the Company has entered into agreements to distribute third-party COVID-19 products in the United States, its ability to sell those products could be constrained because of staffing and supply chain limitations affecting the suppliers of those products. The Company further considered how these factors and uncertainties could impact its ability over the next year to meet the obligations specified in the Credit Agreement with the Lender (as defined in Note 7 – Long-Term Debt). Those obligations include covenants requiring: i) minimum cash balance of $3.0 million and ii) minimum total revenue amounts for the twelve months preceding each quarter end. For the next three quarters, the minimum total revenue requirements range from $47.4 million for the twelve months ending December 31, 2022 to $50.1 million for the twelve months ending June 30, 2023. Upon an event of default under the Credit Agreement, the Lender could elect to declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable. In such an event, there can be no assurance that the Company would have sufficient liquidity to fund payment of the amounts that would be due under the Credit Agreement or that, if such liquidity were not available, the Company would be successful in raising additional capital on acceptable terms, or at all, or in completing any other endeavor to continue to be financially viable and continue as a going concern. The Company’s inability to raise additional capital on acceptable terms in the near future, whether for purposes of funding payments required under the Credit Agreement or providing additional liquidity needed for its operations, could have a material adverse effect on its business, prospects, results of operations, liquidity and financial condition. Accordingly, management determined the Company could not be certain that the Company’s plans and initiatives would be effectively implemented within one year after the date on which the accompanying unaudited condensed consolidated financial statements are being issued. Without giving effect to the prospect of raising additional capital, increasing product revenue in the near future or executing other mitigating plans, many of which are beyond the Company’s control, it is unlikely that the Company will be able to generate sufficient cash flows to meet its required financial obligations, including its debt service and other obligations due to third parties. The existence of these conditions raises substantial doubt about the Company’s ability to continue as a going concern for the twelve-month period following the date on which the accompanying unaudited condensed consolidated financial statements are being issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date the accompanying unaudited condensed consolidated financial statements are issued. As such, the accompanying unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. (b) Significant Accounting Policies: During the three and nine months ended September 30, 2022, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC. (c) Fair Value of Financial Instruments: The carrying values for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate fair value due to the immediate or short-term maturity of these financial instruments. Included in cash and cash equivalents were $ 17.2 million and $25.0 million as of September 30, 2022 and December 31, 2021, respectively, of money market funds that are Level 1 fair value measurements under the hierarchy. The fair value of the Company’s total debt of $20.0 million (carrying value of $19.0 million) and $20.0 million (carrying value of $18.8 million) as of September 30, 2022 and December 31, 2021 respectively, is a Level 2 fair value measurement under the hierarchy and the Company’s debt face value approximates the recorded value, as the rate is based upon the current rates available to the Company for similar financial instruments. Fair value measurements of all financial assets and liabilities that are measured and reported on a fair value basis are required to be classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and, Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). (d) Cash and Cash Equivalents: Cash and cash equivalents are defined as short-term, highly liquid investments, such as money market funds, with original maturities of three months or less at date of purchase. (e) Loss Per Share: Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period excluding unvested restricted stock. Diluted net loss per share is computed using the treasury stock method if the additional shares are dilutive. For all periods presented, basic and diluted net loss per share are the same as any additional shares would be anti-dilutive. There were 3,674,971 and 1,786,324 options outstanding as of September 30, 2022 and 2021, respectively, that were not included in the calculation of diluted per common share equivalents for the three and nine months ended September 30, 2022 and 2021, respectively, because the effect would have been anti-dilutive. There were 1,723,384 and 811,038 shares of restricted stock outstanding as of September 30, 2022 and 2021, respectively, that were not included in the calculation of diluted per common share equivalents for the three and nine months ended September 30, 2022 and 2021, respectively, because the effect would have been anti-dilutive. (f) Income Taxes: At the end of each interim reporting period, the Company estimates its effective tax rate expected to be applied for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis, and may change in subsequent interim periods. Accordingly, the Company’s effective tax rate for the three months ended September 30, 2022 and 2021 was 0.0% and 0.0% respectively. For the nine months ended September 30, 2022 and 2021 the effective tax rate was (0.03)% and 0.34% respectively. The Company’s effective tax rates for both periods were affected primarily by a full valuation allowance on domestic and foreign net deferred tax assets. (g) Recently Issued Accounting Standards Affecting the Company: Recently Adopted ASU 2021-10 - Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which creates Accounting Standards Codification (“ASC”) 832 and aims to provide increased transparency by requiring business entities to disclose information about certain types of government assistance they receive in the notes to the financial statements. The disclosure requirements in ASC 832 only apply to transactions with a government that are accounted for by analogizing to either a grant model (for example, in International Accounting Standard 20, Accounting for Government Grants and Disclosure of Government Assistance), or a contribution model (for example, in ASC 958-605, Not-for-Profit Entities – Revenue Recognition). The FASB broadly defined “government assistance” in ASC 832 to ensure that assistance received from most types of governmental entities or other related organizations would be disclosed. Entities are required to provide the new disclosures prospectively for all transactions with a government entity that are accounted for under either a grant or a contribution accounting model and are reflected in the financial statements at the date of initially applying the new amendments, and to new transactions entered into after that date. Retrospective application of the guidance is permitted. The Company adopted the standard effective January 1, 2022 and has determined that the adoption did not have an impact on the Company’s consolidated financial statements. Not Yet Adopted ASU 2020-06 - Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity On August 5, 2020, the FASB issued ASU 2020-06, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in GAAP. ASU 2020-06 simplifies the guidance in GAAP on the issuer’s accounting for convertible debt instruments, requires entities to provide expanded disclosures about “the terms and features of convertible instruments” and how the instruments have been reported in the entity’s financial statements. It also removes from ASC 815-40-25-10 certain conditions for equity classification and amends certain guidance in ASC 260 on the computation of EPS for convertible instruments and contracts on an entity’s own equity. An entity can use either a full or modified retrospective approach to adopt the ASU’s guidance. The ASU’s amendments are effective for smaller public business entities fiscal years beginning after December 15, 2023. The Company continues to assess the potential impact of the standard and will disclose the nature and reason for any elections that the Company makes. ASU 2021-08—Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers On October 28, 2021, the FASB issued ASU 2021-08,1 which amends ASC 805 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. ASU 2021-08 amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to “require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.” While primarily related to contract assets and contract liabilities that were accounted for by the acquiree in accordance with ASC 606, “the amendments also apply to contract assets and contract liabilities from other contracts to which the provisions of Topic 606 apply, such as contract liabilities from the sale of nonfinancial assets within the scope of Subtopic 610-20.” The ASU’s amendments are effective for public business entities for the fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company continues to assess the potential impact of the standard and will disclose the nature and reason for any elections that the Company makes. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2022 | |
REVENUE [Abstract] | |
REVENUE | NOTE 3 — REVENUE: Disaggregation of Revenue The following table disaggregates Total Revenues by revenue type: Three Months Ended Three Months Ended September 30, 2022 September 30, 2021 Exchange Transactions Non-Exchange Transactions Total Exchange Transactions Non-Exchange Transactions Total Net product sales $ 10,844,003 $ - $ 10,844,003 $ 9,371,160 $ - $ 9,371,160 R&D and grant revenue 50,000 - 50,000 441 - 441 Government grant income - - - - 2,400,000 2,400,000 License and royalty revenue 306,145 - 306,145 286,843 - 286,843 $ 11,200,148 $ - $ 11,200,148 $ 9,658,444 $ 2,400,000 $ 12,058,444 Nine Months Ended Nine Months Ended September 30, 2022 September 30, 2021 Exchange Transactions Non-Exchange Transactions Total Exchange Transactions Non-Exchange Transactions Total Net product sales $ 38,229,605 $ - $ 38,229,605 $ 17,327,204 $ - $ 17,327,204 R&D and grant revenue 76,219 - 76,219 1,107,808 - 1,107,808 Government grant income - - - - 8,030,000 8,030,000 License and royalty revenue 872,365 - 872,365 779,901 - 779,901 $ 39,178,189 $ - $ 39,178,189 $ 19,214,913 $ 8,030,000 $ 27,244,913 Exchange transactions are recognized in accordance with ASC 606, while non-exchange transactions are recognized in accordance with ASU No. 2018-08. The following table disaggregates Total Revenues by geographic location: For the three months ended For the nine months ended September 30, 2022 September 30, 2021 September 30 2022 September 30 2021 Africa $ 2,730,311 $ 1,293,405 $ 6,642,263 $ 4,104,619 Asia 86,648 208,750 541,867 479,297 Europe & Middle East 1,263,050 1,132,961 3,556,778 4,539,444 Latin America 2,286,121 5,698,920 15,678,200 6,444,456 United States 4,834,018 3,724,408 12,759,081 11,677,097 $ 11,200,148 $ 12,058,444 $ 39,178,189 $ 27,244,913 |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORY [Abstract] | |
INVENTORY | NOTE 4 — INVENTORY: Inventories are presented net of reserves and consist of the following at: September 30, December 31, 2021 Raw materials $ 5,633,735 $ 7,306,095 Work in process 915,590 3,556,878 Finished goods 1,915,885 2,057,478 $ 8,465,210 $ 12,920,451 During the nine months ended September 30, 2022 and 2021, the Company recognized a $0.7 million and $0.9 million charge, respectively, related to the write-down of inventory. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2022 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 5 — STOCKHOLDERS’ EQUITY: (a) Common Stock During the three and nine months ending September 30, 2022 and 2021, there were 0 and 36,252 options exercised for the purchase of common stock shares. (b) Preferred Stock Chembio has shares of preferred stock authorized and (c) Treasury Stock Chembio has 48,057 shares of treasury stock acquired upon the vesting of restricted stock awards related to the tax withholding requirements paid on behalf of the employees. (d) Options, Restricted Stock, and Restricted Stock Units The Board or its Compensation Committee may make grants of options, restricted stock, and restricted stock units pursuant to equity incentive plans that have been approved by Chembio’s stockholders. |
COMMITMENTS, CONTINGENCIES, AND
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS | 9 Months Ended |
Sep. 30, 2022 | |
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS [Abstract] | |
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS | NOTE 6 — COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS: a) Concentrations: The following table discloses product sales the Company had to each customer that purchased in excess of 10% of the Company’s net product sales for the periods indicated: For the three months ended For the nine months ended Accounts Receivable as of September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 September 30, 2022 December 31, 2021 Product Sales % of Product Sales Product Sales % of Product Sales Product Sales % of Product Sales Product Sales % of Product Sales Customer 1 $ 2,163,414 20 % $ 5,434,186 58 % $ 14,503,058 $ 38 % $ 5,724,171 $ 33 % $ 1,424,614 $ 7,672,845 Customer 2 1,583,453 15 % 1,196,217 13 % 3,812,433 10 % 2,347,832 14 % 125,433 1,433,305 Customer 3 1,886,906 17 % * * 5,318,816 14 % * * 1,553,306 - Customer 4 1,443,480 13 % * * * * * * 195,011 - Revenue includes product sales only, while accounts receivable reflects the total due from the customer, including freight. The following table discloses purchases the Company had to each vendor in excess of 10% of the Company’s net purchases for the periods indicated: For the three months ended For the nine months ended Accounts Payable as of September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 September 30, 2022 December 31, Purchases % of Purchases Purchases % of Purchases Purchases % of Purchases Purchases % of Purchases Vendor 1 $ * * $ 1,678,250 34 % $ * $ * $ 2,339,182 $ 19 % $ * $ 1,107,530 Vendor 2 * * * * 2,200,905 16 % * * 148,255 103,443 Vendor 3 $ 944,460 14 % $ * * $ 4,585,298 $ 33 % $ * $ * $ - $ 149,230 In the tables above, an asterisk (*) indicates that indicates that sales, accounts receivable, purchases or accounts payable, as applicable to the tabular column, did not exceed 10% for the period indicated. The Company purchases materials pursuant to intellectual property rights agreements that are important components in its products. Management believes that other suppliers could provide similar materials on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which could adversely affect operating results. We have capital purchase obligations of $0.3 million related to additional automated manufacturing equipment with payments expected to come due during 2022 based on vendor performance milestones. b) Employment Contracts: The Company has multi-year contracts with three key employees. The contracts call for salaries presently aggregating $1,178,000 per year. The contracts expire in December 2022 The following table is a schedule of future minimum salary commitments: 2022 $ 294,500 2023 383,000 2024 383,000 c) Benefit Plan: Chembio has a 401(k) plan established for the Company’s employees whereby it matches of the first of salary (or up to of salary) that an employee contributes to the plan. Matching contribution expenses totaled approximately $ and $ d) Leases: The Company The Company’s facility leases generally include optional renewal periods. Upon entering into a new facility lease, the Company evaluates the leasehold improvements and regulatory requirements related to its operations in that location. To the extent that the initial lease term of the related facility lease is less than the useful life of the leasehold improvements and potential regulatory costs associated with moving the facility, the Company concludes that it is reasonably certain that a renewal option will be exercised, and thus that renewal period is included in the lease term and the related payments are reflected in the right-of-use asset and lease liability. The Company’s leases generally include fixed rental payments with defined annual increases. While certain of the Company’s leases are gross leases, the majority of the Company’s leases are net leases in which the Company makes separate payments to the lessor based on the lessor’s property and casualty insurance costs, the property taxes assessed on the property, and a portion of the common area maintenance where applicable. The Company has elected the practical expedient not to separate lease and non-lease components for all of the Company’s facility leases. The components of lease expense were as follows: Three Months Ended September 30 Nine Months Ended September 30 2022 2021 2022 2021 Operating lease expense $ 390,204 $ 398,089 $ 1,180,953 $ 1,208,885 Finance lease cost Amortization of right-of-use assets $ 17,850 $ 17,038 53,279 49,834 Interest on lease liabilities 4,112 5,047 13,278 15,358 Total finance lease expense $ 21,962 $ 22,085 $ 66,557 $ 65,192 Supplemental cash flow information related to leases was as follows. Three Months Ended September 30 Nine Months Ended September 30 2022 2021 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 364,590 $ 353,009 $ 1,086,793 $ 1,049,198 Operating cash flows for finance leases 4,112 5,047 13,278 15,358 Financing cash flows for finance leases 17,859 15,859 52,280 45,680 Right-of-use assets obtained in exchange for lease obligations: Finance leases - - 16,234 25,609 Operating leases - - 717,956 616,100 Supplemental balance sheet information related to leases was as follows: September 30, 2022 September 30, 2021 Finance Leases Finance lease right of use asset $ 356,997 $ 340,762 Accumulated depreciation (202,171 ) (131,854 ) Finance lease right of use asset, net $ 154,826 $ 208,908 Weighted Average Remaining Lease Term Operating leases 6.8 years 7.7 Finance leases 2.0 years 3.1 Weighted Average Discount Rate Operating leases 8.38 % 8.41 % Finance leases 9.11 % 8.74 % Maturities of lease liabilities were as follows. September 30, 2022 September 30, 2021 Operating Leases Finance Leases Operating Leases Finance Leases 2022 $ 366,985 $ 21,971 $ 355,335 $ 20,906 2023 1,428,821 87,884 1,447,249 83,624 2024 1,220,150 60,116 1,221,017 83,624 2025 1,049,442 16,731 1,018,875 55,856 2026 1,080,925 5,940 1,049,442 12,471 Thereafter 3,643,521 355 4,724,446 1,679 Total lease payments $ 8,789,844 $ 192,997 $ 9,816,364 $ 258,160 Less: imputed interest 2,224,276 21,189 2,751,749 34,119 Total $ 6,565,568 $ 171,808 $ 7,064,615 $ 224,041 e) Litigation: SEC Investigation The SEC is conducting a non-public, fact-finding investigation relating to the public offering of common stock that Chembio completed in May 2020 (the “May 2020 Offering”) and to the FDA’s revocation in June 2020 of an emergency use authorization for the DPP COVID-19 IgM/IgG system that was issued by the FDA in April 2020. Chembio received subpoenas from the SEC in July 2020 and April 2021 seeking the production of documents in connection with this investigation. In addition, the SEC delivered subpoenas in April 2021 to five of Chembio’s employees (including its three executive officers, who consist of its Chief Executive Officer and President, its former Executive Vice President and Chief Financial Officer, and its Executive Vice President and Chief Scientific and Technology Officer). An additional subpoena was issued in June 2021 to Chembio’s former Interim Chief Executive Officer and Executive Chair. Each subpoena requested the production of documents relating to the same matters as are the subject of the subpoenas Chembio received. One current employee, the Chief Executive Officer, also received a testimonial subpoena from the SEC. Chembio and the six individuals are cooperating fully in the SEC’s investigation and expect to continue to do so. The SEC’s investigation is ongoing, and Chembio has recently engaged in discussions with the SEC regarding a potential resolution that would, among other things, involve the payment of a civil penalty. There can be no assurance that Chembio will be able to agree on a resolution with the SEC or that the terms of any such resolution will be favorable to Chembio. Chembio cannot predict the scope, duration or outcome of the investigation or the impact, if any, of the investigation on its results of operations. Legal Proceedings Stockholder Litigation Putative Stockholder Securities Class-Action Litigation In 2020 four purported securities class-action lawsuits were filed in the United States District Court for the Eastern District of New York by alleged stockholders of Chembio: • Sergey Chernysh v. Chembio Diagnostics, Inc., Richard L. Eberly, and Gail S. Page, filed on June 18, 2020; • James Gowen v. Chembio Diagnostics, Inc., Richard L. Eberly, and Gail S. Page, filed on June 22, 2020; • Anthony Bailey v. Chembio Diagnostics, Inc. Richard J. Eberly, Gail S. Page, and Neil A. Goldman, filed on July 3, 2020; and; • Special Situations Fund III QP, L.P., Special Situations Cayman Fund, L.P., and Special Situations Private Equity Fund, L.P. v. Chembio Diagnostics, Inc., Richard Eberly, Gail S. Page, Robert W. Baird & Co. Inc. and Dougherty & Company LLC, filed August 17, 2020. The plaintiffs in each of the above cases alleged claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), Rule 10b-5 thereunder and Section 20(a) of the Exchange Act. Special Situations Fund III QP, L.P., Special Situations Cayman Fund, L.P. and Special Situations Private Equity Fund, L.P. (collectively, the “Special Situations Funds”) also asserted claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (the “Securities Act”) relating to the May 2020 Offering. Chembio and the plaintiffs entered into Court-approved stipulations relieving Chembio and the other defendants of the obligation to respond to the complaints in these cases pending the designation of a lead plaintiff pursuant to the Private Securities Litigation Reform Act of 1995. Eight motions for appointment as lead plaintiff were filed by various prospective lead plaintiffs. However, all but two of these motions were withdrawn or otherwise abandoned, leaving before the Court two motions for appointment as lead plaintiff - one filed by the Special Situations Funds and one by Municipal Employees’ Retirement System of Michigan. By order entered December 29, 2020, Magistrate Judge Lindsay consolidated the cases and appointed the Special Situations Funds and Municipal Employees’ Retirement System of Michigan (together, the “Lead Plaintiffs”), as co-lead plaintiffs and their respective counsel as co-lead counsel. The consolidated cases are now pending under the caption “In re Chembio Diagnostics, Inc. Securities Litigation.” The Lead Plaintiffs filed their Consolidated Amended Complaint (the “CAC”) on February 12, 2021. In summary, the CAC purported to allege claims based on assertedly false and misleading statements and omissions concerning the performance of the DPP COVID-19 IgM/IgG System, as well as an asserted failure to timely disclose that the emergency use authorization that had been granted by the FDA with respect to the DPP COVID-19 IgM/IgG System “was - or was at an increased risk of - being revoked.” The CAC named as defendants Chembio, Richard L. Eberly, Gail S. Page, Neil A. Goldman, Javan Esfandiari, Katherine L. Davis, Mary Lake Polan, John Potthoff (together, the “Chembio Defendants”) and the underwriters for the May 2020 Offering, Robert W. Baird & Co., Inc. and Dougherty & Company LLC (the “Underwriter Defendants”). The CAC purported to assert five counts under the Securities Act and the Exchange Act. Counts I through III were brought under the Securities Act, allegedly on behalf of a purported class consisting of all persons who purchased Chembio common stock directly in or traceable to the May 2020 Offering pursuant to Chembio’s shelf registration statement on Form S 3 (File No. 333-227398) and the related prospectus, as supplemented by a prospectus supplement dated May 7, 2020 (the “Securities Act Class”). Count I purported to allege a claim for violation of Section 11 of the Securities Act against all defendants other than Messrs. Eberly and Esfandiari. Count II purported to allege a claim for violation of Section 12 of the Securities Act against all defendants other than Messrs. Eberly and Esfandiari. Count III purported to allege a claim under Section 15 of the Securities Act against Ms. Davis, Dr. Polan, Dr. Potthoff, Ms. Page and Mr. Goldman. Counts IV and V alleged claims under the Exchange Act on behalf of a purported class consisting of all persons who purchased Chembio common stock on the open market from March 12, 2020 through June 16, 2020 (the “Exchange Act Class”). Count IV purported to allege a claim for violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder against Chembio, Mr. Eberly, Ms. Page, Mr. Goldman and Mr. Esfandiari. Count V purported to allege a claim under Section 20(a) of the Exchange Act against Mr. Eberly, Ms. Page, Mr. Goldman and Mr. Esfandiari. In their CAC, the Lead Plaintiffs sought, on behalf of the Securities Act Class and the Exchange Act Class, among other things, an award of damages in an amount to be proven at trial, as well as an award of reasonable costs, including attorneys’ fees and expenses, expert fees, pre-judgment and post-judgment interest, and such other relief as the Court deems just and proper. The Lead Plaintiffs also sought rescission “or a rescissory measure of damages” on behalf of the Securities Act Class as to Count II. Pursuant to an order entered by the Court on January 29, 2021, any defendant wishing to move against the amended complaint was required to file, by February 18, 2021, a letter requesting a pre-motion conference. On that date, the defendants submitted letters to the Court requesting a pre-motion conference regarding anticipated motions to dismiss the CAC, and the Lead Plaintiffs responded on February 24, 2021. In its January 29, 2021 order, the Court indicated that it would consider a briefing schedule on motions to dismiss after it had received and reviewed the parties’ correspondence. On March 5, 2021, the Court entered an order in which it advised the parties that it had determined a pre motion conference was not necessary and established a briefing schedule on the defendants’ anticipated motions to dismiss. However, the defendants subsequently agreed with the Lead Plaintiffs’ counsel to a modification of the schedule, which was then approved by the Court. Pursuant to that schedule, defendants’ motions and supporting papers were filed on March 26, 2021, the Lead Plaintiffs’ opposition papers were filed on April 16, 2021, and the defendants’ reply papers were filed on April 30, 2021. The Court issued its Opinion and Order (the “February 23 Order”) on the defendants’ motions to dismiss on February 23, 2022. In its February 23 Order, the Court: (i) dismissed Counts I and II without prejudice as to all defendants named in those Counts except the Underwriter Defendants as to which Counts I and II were not dismissed; (ii) dismissed Count III without prejudice as to all defendants named in that Count; and (iii) dismissed Counts IV and V with prejudice as to all defendants named in those Counts. The Court gave Lead Plaintiffs fourteen days within which to attempt to replead their claims under the Securities Act against Chembio, Ms. Page, Mr. Goldman, Ms. Davis, Dr. Polan and Dr. Potthoff. On March 4, 2022, Lead Plaintiffs filed a letter motion in which they advised the Court that they intended to file an amended complaint, but that they wished to first seek reconsideration of the Court’s February 23 Order. They accordingly requested, and the Court granted, an adjournment of the deadline for filing an amended complaint until three business days after the Court’s ruling on Lead Plaintiffs’ anticipated motion for reconsideration. The Court also granted a request by the Underwriter Defendants to extend the time for them to file their answer to the CAC, and set May 2, 2022 as the date for the filing of that answer. On March 7, 2022, Magistrate Judge John Wicks entered an order requiring that the parties meet and confer regarding the scheduling of discovery in the case, requiring that the parties submit a Proposed Scheduling Order by March 23, and setting a hearing (via Zoom) on March 30. The Chembio Defendants filed a letter motion requesting that the Court adjourn the initial conference and suspend the other requirements in the March 7, 2022 order. Magistrate Judge Wicks granted the letter motion on March 14, and further ordered that the initial conference would be rescheduled “following the resolution of all preliminary dispositive issues.” On March 9, 2022, Lead Plaintiffs filed a motion for partial reconsideration of the Court’s February 23 Order. In their motion, Lead Plaintiffs requested that the Court reconsider and reverse its dismissal of Counts IV and V with prejudice, and its dismissal of Counts I, II and III without prejudice. The Chembio Defendants filed their memorandum in opposition to this motion on March 23, 2022; Lead Plaintiffs filed their reply memorandum in support of the motion on March 30, 2022. On April 26, 2022, the Court entered an order canceling the previously-set May 2 date by which the Underwriter Defendants were required to file their answer to the CAC, and providing that the Underwriter Defendants’ answer to an amended complaint would be due within three weeks after such amended complaint had been served. On April 28, 2022, Lead Plaintiffs expressed a willingness to participate in a mediation with the Chembio Defendants. Thereafter, on July 14, 2022, all parties in the In re Chembio Diagnostics, Inc. Securities Litigation action participated in a mediation. The mediation was adjourned without an agreement to resolve the action, but the parties continued to discuss a potential negotiated resolution with the mediator's assistance. On July 21, 2022, the Court denied Lead Plaintiffs’ motion for partial reconsideration. Lead Plaintiffs filed their Second Consolidated Amended Complaint (the “SCAC”) on July 26, 2022. The SCAC purports to allege three counts under the Securities Act on behalf of the Securities Act Class. Count I purports to allege a claim for violation of Section 11 of the Securities Act against Chembio, Ms. Page, Mr. Goldman, Ms. Davis, Dr. Polan, Dr. Potthoff and the Underwriter Defendants. Count II purports to allege a claim for violation of Section 12 of the Securities Act against Chembio, Ms. Page, and the Underwriter Defendants. Count III purports to allege a claim under Section 15 of the Securities Act against Ms. Page, Mr. Goldman, Ms. Davis, Dr. Polan and Dr. Potthoff. In their SCAC, Lead Plaintiffs seek, on behalf of the Securities Act Class, an award of damages in an amount to be proven at trial, as well as an award of reasonable costs and expenses, including counsel fees and expert fees, and such other relief as the Court deems just and proper. Lead Plaintiffs also seek rescission “or a rescissory measure of damages as to Count II.” In order to facilitate the parties’ discussions concerning a potential settlement, the parties agreed that the defendants had until August 23, 2022 within which to respond to the SAC. The defendants submitted a letter to the Court requesting that the date by which they are required to respond to the SCAC be moved to August 23, 2022; the Court granted the defendants’ request on August 1, 2022. Thereafter, the defendants requested that the date for their response be extended to September 6, 2022; the Court granted the request on August 19, 2022. On August 26, 2022, the Company and the other parties to the litigation reached an agreement in principle on the financial terms of a proposed settlement of all claims that were asserted, or could have been asserted, on an individual and class-wide basis against all defendants in the case, including under both the Securities Act and the Securities Exchange Act. The agreement in principle to settle contemplates an $8.1 million payment on behalf of the defendants, approximately $209,000 of which is to be paid by us with the remainder being funded by certain of the Company’s insurers. Accordingly, on August 30, 2022, the Chembio Defendants filed a letter motion requesting that the Court stay all proceedings to allow the parties to focus their efforts on negotiating and preparing a stipulation of settlement and other settlement- documents. Lead Plaintiffs and the Underwriter Defendants consented to and joined in the request for relief sought in the letter motion. The Court granted the motion on August 31, 2022 and ordered the parties to file their stipulation of dismissal on or before October 17, 2022. Although the parties’ negotiations on the form and content of documents necessary to effectuate a class-wide settlement of the claims asserted in the litigation have continued, the parties were unable to meet the October 17, 2022 date set by the Court for the submission of a stipulation of dismissal. Consequently, on October 12, 2022, the Company submitted a letter motion to the Court, on behalf of each of the parties, requesting a 30 day extension of time to submit the stipulation and agreement of settlement together with accompanying exhibits (including proposed forms of notice of the settlement to class members and proposed forms of orders granting preliminary and final approval to the settlement). The Court granted the motion on October 13, 2022, and directed the parties to file their proposed settlement papers for the Court’s approval on or before November 14, 2022. Negotiations between the parties concerning the form and substance of documents necessary to implement the proposed settlement continue. There can be no assurance that the parties will reach agreement on the terms of a stipulation of settlement and related documents, or if the parties reach agreement, that the stipulation of settlement will be granted preliminary and final approval by the Court. Putative Stockholder Derivative Litigation On September 11, 2020, a putative stockholder derivative action captioned Karen Wong, derivatively on behalf of Chembio Diagnostics, Inc., Plaintiff v. Richard L. Eberly, Gail S. Page, Neil A. Goldman, Javan Esfandiari, Katherine L. Davis, Mary Lake Polan and John G. Potthoff, Defendants, and Chembio Diagnostics, Inc., Nominal Defendant (the “Wong complaint”) was filed purportedly on Chembio’s behalf in the United States District Court for the Eastern District of New York. The Wong complaint purports to assert a claim for violation of Section 14(a) of the Exchange Act and Rule 14a-9 thereunder based on ostensibly false and misleading statements and omissions concerning the Company’s rapid COVID-19 antibody test in the proxy statement disseminated in advance of Chembio’s Annual Meeting of Stockholders held on July 28, 2020. The Wong complaint also asserts claims against the individual defendants for purported breaches of fiduciary duties owed to Chembio, as well as unjust enrichment. The Wong complaint requests a declaration that the individual defendants have breached or aided and abetted the breach of their fiduciary duties to Chembio, an award of damages to Chembio, restitution, and an award of the plaintiff’s costs and disbursements in the action, including reasonable attorneys’ and experts’ fees, costs and expenses, and improvements to Chembio’s corporate governance and internal procedures regarding compliance with laws. Pursuant to a stipulation by which the individual defendants named in the Wong complaint agreed to waive service of process, the Court ordered that the time for defendants to answer or otherwise respond to the complaint be extended to November 19, 2020. The parties subsequently entered into a stipulation for a stay of proceedings in the action relating to the Wong complaint pending final disposition of motions to dismiss the pending putative class-action litigation, subject to certain conditions. The stipulation provides for a stay that lasts until all motions to dismiss the class action litigation have been finally resolved. Wong can, however, terminate the stipulation on 14 days’ notice if a related derivative action is not stayed for a similar or longer duration. Further, if the defendants in the Wong action agree to engage in a mediation “or other similar formal process” with plaintiffs in any related class action or derivative action during the pendency of the stay or for a one-year period following its termination, they must promptly provide notice of the mediation to Wong, not object to Wong’s participation in the mediation (subject to the consent of the other involved parties), and if consent to Wong’s participation is not provided, they must separately engage in mediation or a similar formal process with Wong. The Court entered an order granting the requested stay on November 3, 2020. On March 31, 2022, a second putative stockholder derivative action captioned Michelle Chen, derivatively on behalf of Chembio Diagnostics, Inc., Plaintiff v. Richard L. Eberly, Gail S. Page, Neil A. Goldman, Javan Esfandiari, Katherine L. Davis, Mary Lake Polan and John G. Potthoff, Defendants, and Chembio Diagnostics, Inc., Nominal Defendant (the “Chen complaint”) was filed purportedly on behalf of Chembio in the Supreme Court for the State of New York, County of Suffolk. The Chen complaint purports to assert a claim for breach of fiduciary duty against the defendants based on ostensibly false and misleading statements and omissions concerning the Company’s rapid COVID-19 antibody test. The Chen complaint goes on to allege that the misconduct asserted in the complaint gave rise to the filing of the consolidated securities litigation described above. The parties in the Chen action agreed to a stipulated stay of the action continuing until a motion to certify a class in the class action has been decided. Chen can, however, terminate the stay on seven days’ notice if a related derivative action is not stayed for the same or a longer duration. The stipulation also provides that if the defendants agree to engage in a formal mediation with the class action plaintiffs or the plaintiff in any other related derivative action, they must notify Chen of the mediation and participate with Chen in a mediation “or other settlement talks,” whether separately or in combination with a mediation involving other related actions. The plaintiffs in the Wong and Chen actions took part in the July 14, 2022 mediation described above, and the parties subsequently reached an agreement in principle on the terms of a proposed settlement of both actions, other than with respect to the maximum amount of attorneys’ fees which plaintiffs may request that the Court approve, and have executed a memorandum of understanding to that effect. The proposed settlement contemplates the adoption of certain corporate governance measures but does not entail any monetary compensation or payment other than the derivative plaintiffs’ attorneys’ fees not exceeding an amount to be negotiated, and subject to Court approval. On October 27, 2022, the parties reached agreement on the amount $595,000 of the derivative plaintiffs’ attorneys’ fees, which the Company believes will be funded by certain of its insurers. There can be no assurance that the parties will reach agreement on the maximum amount of plaintiffs’ attorneys’ fees which plaintiffs may request that the court approve or on the terms of a formal stipulation or settlement, or that the court will approve the terms of a stipulation of settlement. Employee Litigation On March 19, 2021, John J. Sperzel III, Chembio’s former chief executive officer, filed a fifteen-count complaint in the United States District Court for the Eastern District of New York. The complaint was filed following the dismissal of an action previously filed by Mr. Sperzel in the United States District Court in Maine, which was dismissed for lack of personal jurisdiction over Chembio. In summary, the complaint filed in the Eastern District of New York alleges that Chembio wrongfully refused to allow Mr. Sperzel to exercise certain options to purchase, for an aggregate exercise price of $943,126, a total of 266,666 shares of common stock that were allegedly vested as of the date of his separation from Chembio, on January 3, 2020. The complaint alleges that under the terms of the applicable stock incentive plans, Mr. Sperzel had thirty days after the date on which he ceased to qualify as an “Eligible Person” under the plans within which to exercise the options, and asserts that by reason of his alleged continued service to Chembio, he remained an “Eligible Person” and ostensibly retained the right to exercise the options. The Compensation Committee of the Board determined that the options expired on February 3, 2020, thirty days after Mr. Sperzel’s separation from Chembio, and that a purported attempt by Mr. Sperzel to exercise the options after that date was not valid. Count I of the complaint purports to allege that Chembio breached Mr. Sperzel’s separation agreement by refusing to allow him to exercise the stock options. Counts II through XI of the complaint purport to allege claims for breach of each of ten separate stock option agreements, collectively asserting damages of “at least” $3,190,198. Count XII of the complaint alleges a breach of Mr. Sperzel’s separation agreement based on Chembio’s purported failure to pay Mr. Sperzel consulting fees to which he claims to be entitled for consulting services allegedly performed following his separation. Count XIII of the complaint alleges a claim for breach of an implied covenant of good faith and fair dealing under Nevada common law based on the allegation that Chembio prevented Mr. Sperzel from obtaining the benefits of the stock option agreements and separation agreement. Mr. Sperzel alleges that he suffered damages in excess of $3 million as a result of the purported breach of the covenant of good faith and fair dealing. Count XIV of the complaint purports to assert a claim for quantum meruit, alleging that “it is reasonable for Sperzel to expect payment in exchange for ... services” he allegedly provided to Chembio and, based on allegations that upon his separation Mr. Sperzel was not informed as to the pending expiration of the stock options he later sought to exercise, that Chembio has been unjustly enriched. Finally, Count XV of the complaint seeks a declaratory judgment that Mr. Sperzel is relieved from performance under his separation agreement due to asserted material breaches of the agreement based on the allegations summarized above. The complaint seeks compensatory damages in an unspecified amount, a declaration, as described above, and an award of Mr. Sperzel’s costs and expenses in the litigation, including reasonable attorneys’ fees, expert costs and disbursements. The complaint requests a trial by jury. In his initial disclosures served in discovery, Mr. Sperzel claims entitlement to recover damages in a total amount not less than $10 million, together with prejudgment interest at the rate of 9% per annum. On May 20, 2021, Chembio filed its answer and affirmative defenses denying the material allegations of Mr. Sperzel’s complaint. Chembio and Mr. Sperzel are presently engaged in discovery. All discovery in the case was completed on June 28, 2022. On July 6, 2022, pursuant to local court rules, Chembio filed a formal notice with the District Court stating its intention to file a motion for summary judgment on all of Mr. Sperzel’s claims. Mr. Sperzel’s responsive letter and factual statements were due on July 27, 2022 and were timely filed. On August 16, 2022, the Court held a pre-motion status conference, during which the Court directed the parties to confer regarding the renewal of settlement discussions. The parties subsequently agreed to engage in a formal mediation conference before a neutral, private mediator on October 25, 2022, and the parties must provide a status report to the Court on November 8, 2022. At this stage of the litigation, the Company is not able to predict the probability of a favorable or unfavorable outcome. Other From time to time the Company may become involved in legal proceedings or may be subject to claims arising in the ordinary course of its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. Nasdaq Communications On April 5, 2022, the Company received notif |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2022 | |
LONG-TERM DEBT [Abstract] | |
LONG-TERM DEBT | NOTE 7 — LONG-TERM DEBT: O n September 3, 2019, Chembio entered into a Credit Agreement and Guaranty (the “Credit Agreement”) with Perceptive Credit Holdings II, LP (the “Lender”) Capital Group LLC, Chembio’s Principal outstanding under the Credit Agreement bears interest at a rate per annum equal to the sum of (a) the greater of the one-month London Interbank Offered Rate and 2.5% plus (b) 8.75%. At any time at which an event of default has occurred and is continuing, the interest rate will increase by 4.0%. Accrued interest is payable on a monthly basis. On September 30, 2022 the interest rate was 11.32%. No principal repayments were due under the Credit Agreement prior to September 30, 2022. Chembio did not elect to prepay principal and an event of default identified in the Credit Agreement did not occur that would have accelerated principal payments. Principal installments in the amount of $300,000 are payable on the last day of each of the eleven months from September 2022 through July 2023, and all remaining principal is payable at maturity on September 3, 2023. As of September 30, 2022, Chembio paid the first principal installment in accordance with the Credit Agreement. Chembio’s obligations under the Credit Agreement are secured by a first priority, perfected lien on substantially all of its property and assets, including its equity interests in subsidiaries. As of September 30, 2022, the loan balance, net of unamortized discounts and debt issuance costs, was $19.0 million, and Chembio was in compliance with its loan covenants. |
EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN | 9 Months Ended |
Sep. 30, 2022 | |
EQUITY INCENTIVE PLAN [Abstract] | |
EQUITY INCENTIVE PLAN | NOTE 8 — EQUITY INCENTIVE PLAN: (a) Equity Plans: Effective June 19, 2014, Chembio’s stockholders voted to approve the 2014 Stock Incentive Plan (the “2014 Plan”), with 800,000 shares of common stock available to be issued. Under the terms of the 2014 Plan, the Board or its Compensation Committee has the discretion to select the persons to whom awards are to be granted. Awards can be in the form of Equity Award Units. The awards vest at such times and under such conditions as determined by the Board or its Compensation Committee. Cumulatively through March 31, 2022, there were 732,064 Equity Award Units expired, forfeited or exercised. Units remain available to be issued under the 2014 Plan. Effective , 2019 2019 2019 (b) Stock Compensation Expense: Stock-based compensation expense (net of forfeitures) recognized in the condensed consolidated statements of operations was classified as follows: For the three months ended September 30 For the nine months ended September 30 2022 2021 2022 2021 Cost of product sales $ 54,243 $ 52,819 $ 165,589 $ 124,955 Research and development expenses 113,874 164,560 317,381 388,264 Selling, general and administrative expenses 368,209 419,152 1,363,268 1,288,837 $ 536,326 $ 636,531 $ 1,846,238 $ 1,802,056 The weighted-average assumptions made in calculating the fair values of options are as follows: For the nine months ended September 30 2022 Expected term (in years) 6.0 Expected volatility 91.62 % Expected dividend yield N/A Risk-free interest rate 1.97 % The following table provides stock option activity for the nine months ended September 30, 2022: Stock Options Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contract Term Aggregate Intrinsic Value Outstanding at December 31, 2021 1,600,372 $ 4.18 6.59 years $ - Granted 2,481,968 1.24 - Exercised - - - Forfeited 137,076 2.77 - Expired 270,293 5.01 Outstanding at September 30 2022 3,674,971 $ 2.20 8.30 years $ - Exercisable at September 30 2022 553,360 $ 4.01 5.59 years $ - The following table summarizes information about stock options outstanding at September 30, 2022: Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Number of Shares Average Remaining Contract Term (Year) Weighted Average Exercise Price Aggregate Intrinsic Value Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value 1 2.79999 2,838,509 8.52 $ 1.40 $ - 247,370 $ 2.36 $ - 2.8 4.59999 26,796 8.54 3.06 - 9,237 3.06 - 4.6 6.39999 762,791 7.93 4.81 - 249,878 4.90 - 6.4 8.19999 46,875 0.61 8.15 - 46,875 8.15 - Total 3,674,971 8.30 $ 2.20 $ - 553,360 $ 4.01 $ - As of September 30, 2022, there was $2,389,457 of net unrecognized compensation cost related to stock options that had not vested, which is expected to be recognized over a weighted-average period of approximately 2.85 years. The total fair value of shares vested during the nine months ended September 30, 2022 and 2021 was $917,036 and $335,579, respectively. The following table summarizes information about restricted stock, restricted stock units and performance stock units outstanding as of September 30, 2022 : Number of Shares & Units Weighted Average Grant Date Fair Value Outstanding at December 31, 2021 705,325 $ 3.34 Granted 1,308,547 - Vested 190,064 - Forfeited 100,424 - Outstanding at September 30 2022 1,723,384 $ 1.39 As of September 30, 2022, there was $1,530,896 of net unrecognized compensation cost related to restricted stock and restricted stock units that had not vested, which is expected to be recognized over a weighted average period of approximately 2.03 years. |
GEOGRAPHIC INFORMATION AND ECON
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY | 9 Months Ended |
Sep. 30, 2022 | |
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY [Abstract] | |
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY | NOTE 9 — GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY: The single For the three months ended September 30 For the nine months ended September 30 2022 2021 2022 2021 Africa $ 2,730,311 $ 1,293,405 $ 6,642,263 $ 4,104,619 Asia 86,648 208,750 541,867 479,297 Europe & Middle East 956,905 1,132,520 2,670,529 3,431,736 Latin America 2,286,121 5,698,920 15,665,864 6,444,456 United States 4,784,018 1,037,565 12,709,082 2,867,096 $ 10,844,003 $ 9,371,160 $ 38,229,605 $ 17,327,204 Property, plant and equipment by geographic area were as follows at: September 30, 2022 December 31, 2021 Asia $ 77,398 $ 86,041 Europe & Middle East 79,107 113,883 Latin America 80,255 36,224 United States 8,576,939 8,320,625 $ 8,813,699 $ 8,556,773 |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE 10 — ACCOUNTS PAYABLE AND ACCRUED LIABILITIES: Accounts payable and accrued liabilities consisted of: September 30, 2022 December 31, 2021 Accounts payable – suppliers $ 3,066,133 $ 7,745,592 Accrued commissions and royalties 2,053,261 1,359,691 Accrued payroll 437,757 494,258 Accrued vacation 554,468 421,416 Accrued bonuses 1,523,979 1,378,706 Accrued professional fees 1,593,504 522,935 Accrued expenses – other 9,416,396 1,205,395 TOTAL $ 18,645,498 $ 13,127,993 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2022 | |
GOODWILL AND INTANGIBLE ASSETS [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 11 — GOODWILL AND INTANGIBLE ASSETS: The following table reflects changes in goodwill: Beginning balance at December 31, 2021 $ 3,022,787 Impairment (3,033,565 ) Change in foreign currency exchange rate 10,778 Balance at September 30 2022 $ - Goodwill represents the excess of the purchase price the Company paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s acquisition. Goodwill is not amortized but rather is tested annually as of the first day of the fiscal fourth quarter, or sooner if the Company believes that indicators of impairment exist. The Company makes a qualitative evaluation about the likelihood of goodwill impairment, which is based on a number of applicable factors. If the Company concludes that it is more likely than not that the carrying value of the applicable reporting unit is greater than its fair value, then it would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value, provided the impairment charge does not exceed the total amount of goodwill allocated to the reporting unit. The quantitative goodwill impairment test is performed using a one-step process. The process is to compare the fair value of a reporting unit with its carrying amount. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit is impaired, and an impairment loss is recognized in an amount equal to that excess. The Company operates as a single |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Basis of Presentation | (a) Basis of presentation: The accompanying unaudited condensed consolidated financial statements include the accounts of Chembio and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Certain reclassifications have been made to the unaudited condensed consolidated balance sheet of the prior year to conform to the current year presentation. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC. Going Concern Considerations The Company continued to experience market, clinical trial and regulatory complications in seeking to develop and commercialize a portfolio of COVID-19 test systems during the continuing, but evolving, uncertainty resulting from COVID‑19. For the three and nine months ended September 30, 2022, the Company also continued to incur significant expenses in connection with pending legal matters (see Note 6 – Commitments, Contingencies, and Concentrations: Litigation). The Company performed an assessment to determine whether there were conditions or events that, considered in the aggregate, raised substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited condensed consolidated financial statements are being issued. Initially, this assessment did not consider the potential mitigating effect of management’s plans that had not been fully implemented. Because, as described below, substantial doubt was determined to exist as the result of this initial assessment, management then assessed the mitigating effect of its plans to determine if it is probable that the plans (1) would be effectively implemented within one year after the date the accompanying unaudited condensed consolidated financial statements are issued and (2) when implemented, would mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. The Company achieved significant revenue growth in recent years while profitability has not been at levels as expected. It has taken steps including investments in automation to mitigate headwinds such as labor availability, volatile capacity planning and implementation of operational efficiency targets to proactively monitor production with the overarching goal of profitable growth. The Company undertook measures to increase its total revenues and improve its liquidity position by continuing to develop the Global Competitiveness Program. The main pillars of the Global Competitiveness Program include the following: • Focus on higher margin business in growth markets • Lower manufacturing costs • Reduce infrastructure costs • Strategic review of non-core businesses and assets In addition, the Company will continue to focus on regulatory approvals for its DPP SARS-CoV-2 Antigen test system, DPP Respiratory Antigen Panel, and DPP HIV-Syphilis test system. These measures and other plans and initiatives have been designed to provide the Company with adequate liquidity to meet its obligations for at least the twelve-month period following the date the accompanying unaudited condensed consolidated financial statements are being issued. The Company’s execution of its plans continue to depend, however, on factors and uncertainties that are beyond the Company’s control, or that may not be addressable on terms acceptable to the Company or at all. The Company considered in particular how: • The ongoing healthcare and economic impacts of COVID-19 on the global customer base for the Company’s non‑COVID-19 products continue to negatively affect the timing and rate of recovery of the Company’s revenues from those products. • Although the Company has entered into agreements to distribute third-party COVID-19 products in the United States, its ability to sell those products could be constrained because of staffing and supply chain limitations affecting the suppliers of those products. The Company further considered how these factors and uncertainties could impact its ability over the next year to meet the obligations specified in the Credit Agreement with the Lender (as defined in Note 7 – Long-Term Debt). Those obligations include covenants requiring: i) minimum cash balance of $3.0 million and ii) minimum total revenue amounts for the twelve months preceding each quarter end. For the next three quarters, the minimum total revenue requirements range from $47.4 million for the twelve months ending December 31, 2022 to $50.1 million for the twelve months ending June 30, 2023. Upon an event of default under the Credit Agreement, the Lender could elect to declare all amounts outstanding thereunder, together with accrued interest, to be immediately due and payable. In such an event, there can be no assurance that the Company would have sufficient liquidity to fund payment of the amounts that would be due under the Credit Agreement or that, if such liquidity were not available, the Company would be successful in raising additional capital on acceptable terms, or at all, or in completing any other endeavor to continue to be financially viable and continue as a going concern. The Company’s inability to raise additional capital on acceptable terms in the near future, whether for purposes of funding payments required under the Credit Agreement or providing additional liquidity needed for its operations, could have a material adverse effect on its business, prospects, results of operations, liquidity and financial condition. Accordingly, management determined the Company could not be certain that the Company’s plans and initiatives would be effectively implemented within one year after the date on which the accompanying unaudited condensed consolidated financial statements are being issued. Without giving effect to the prospect of raising additional capital, increasing product revenue in the near future or executing other mitigating plans, many of which are beyond the Company’s control, it is unlikely that the Company will be able to generate sufficient cash flows to meet its required financial obligations, including its debt service and other obligations due to third parties. The existence of these conditions raises substantial doubt about the Company’s ability to continue as a going concern for the twelve-month period following the date on which the accompanying unaudited condensed consolidated financial statements are being issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date the accompanying unaudited condensed consolidated financial statements are issued. As such, the accompanying unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. |
Fair Value of Financial Instruments | (c) Fair Value of Financial Instruments: The carrying values for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate fair value due to the immediate or short-term maturity of these financial instruments. Included in cash and cash equivalents were $ 17.2 million and $25.0 million as of September 30, 2022 and December 31, 2021, respectively, of money market funds that are Level 1 fair value measurements under the hierarchy. The fair value of the Company’s total debt of $20.0 million (carrying value of $19.0 million) and $20.0 million (carrying value of $18.8 million) as of September 30, 2022 and December 31, 2021 respectively, is a Level 2 fair value measurement under the hierarchy and the Company’s debt face value approximates the recorded value, as the rate is based upon the current rates available to the Company for similar financial instruments. Fair value measurements of all financial assets and liabilities that are measured and reported on a fair value basis are required to be classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and, Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). |
Cash and Cash Equivalents | (d) Cash and Cash Equivalents: Cash and cash equivalents are defined as short-term, highly liquid investments, such as money market funds, with original maturities of three months or less at date of purchase. |
Loss Per Share | (e) Loss Per Share: Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period excluding unvested restricted stock. Diluted net loss per share is computed using the treasury stock method if the additional shares are dilutive. For all periods presented, basic and diluted net loss per share are the same as any additional shares would be anti-dilutive. There were 3,674,971 and 1,786,324 options outstanding as of September 30, 2022 and 2021, respectively, that were not included in the calculation of diluted per common share equivalents for the three and nine months ended September 30, 2022 and 2021, respectively, because the effect would have been anti-dilutive. There were 1,723,384 and 811,038 shares of restricted stock outstanding as of September 30, 2022 and 2021, respectively, that were not included in the calculation of diluted per common share equivalents for the three and nine months ended September 30, 2022 and 2021, respectively, because the effect would have been anti-dilutive. |
Income Taxes | (f) Income Taxes: At the end of each interim reporting period, the Company estimates its effective tax rate expected to be applied for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis, and may change in subsequent interim periods. Accordingly, the Company’s effective tax rate for the three months ended September 30, 2022 and 2021 was 0.0% and 0.0% respectively. For the nine months ended September 30, 2022 and 2021 the effective tax rate was (0.03)% and 0.34% respectively. The Company’s effective tax rates for both periods were affected primarily by a full valuation allowance on domestic and foreign net deferred tax assets. |
Recently Issued Accounting Standards Affecting the Company | (g) Recently Issued Accounting Standards Affecting the Company: Recently Adopted ASU 2021-10 - Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which creates Accounting Standards Codification (“ASC”) 832 and aims to provide increased transparency by requiring business entities to disclose information about certain types of government assistance they receive in the notes to the financial statements. The disclosure requirements in ASC 832 only apply to transactions with a government that are accounted for by analogizing to either a grant model (for example, in International Accounting Standard 20, Accounting for Government Grants and Disclosure of Government Assistance), or a contribution model (for example, in ASC 958-605, Not-for-Profit Entities – Revenue Recognition). The FASB broadly defined “government assistance” in ASC 832 to ensure that assistance received from most types of governmental entities or other related organizations would be disclosed. Entities are required to provide the new disclosures prospectively for all transactions with a government entity that are accounted for under either a grant or a contribution accounting model and are reflected in the financial statements at the date of initially applying the new amendments, and to new transactions entered into after that date. Retrospective application of the guidance is permitted. The Company adopted the standard effective January 1, 2022 and has determined that the adoption did not have an impact on the Company’s consolidated financial statements. Not Yet Adopted ASU 2020-06 - Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity On August 5, 2020, the FASB issued ASU 2020-06, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in GAAP. ASU 2020-06 simplifies the guidance in GAAP on the issuer’s accounting for convertible debt instruments, requires entities to provide expanded disclosures about “the terms and features of convertible instruments” and how the instruments have been reported in the entity’s financial statements. It also removes from ASC 815-40-25-10 certain conditions for equity classification and amends certain guidance in ASC 260 on the computation of EPS for convertible instruments and contracts on an entity’s own equity. An entity can use either a full or modified retrospective approach to adopt the ASU’s guidance. The ASU’s amendments are effective for smaller public business entities fiscal years beginning after December 15, 2023. The Company continues to assess the potential impact of the standard and will disclose the nature and reason for any elections that the Company makes. ASU 2021-08—Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers On October 28, 2021, the FASB issued ASU 2021-08,1 which amends ASC 805 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. ASU 2021-08 amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to “require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.” While primarily related to contract assets and contract liabilities that were accounted for by the acquiree in accordance with ASC 606, “the amendments also apply to contract assets and contract liabilities from other contracts to which the provisions of Topic 606 apply, such as contract liabilities from the sale of nonfinancial assets within the scope of Subtopic 610-20.” The ASU’s amendments are effective for public business entities for the fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company continues to assess the potential impact of the standard and will disclose the nature and reason for any elections that the Company makes. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
REVENUE [Abstract] | |
Disaggregation of Revenue | The following table disaggregates Total Revenues by revenue type: Three Months Ended Three Months Ended September 30, 2022 September 30, 2021 Exchange Transactions Non-Exchange Transactions Total Exchange Transactions Non-Exchange Transactions Total Net product sales $ 10,844,003 $ - $ 10,844,003 $ 9,371,160 $ - $ 9,371,160 R&D and grant revenue 50,000 - 50,000 441 - 441 Government grant income - - - - 2,400,000 2,400,000 License and royalty revenue 306,145 - 306,145 286,843 - 286,843 $ 11,200,148 $ - $ 11,200,148 $ 9,658,444 $ 2,400,000 $ 12,058,444 Nine Months Ended Nine Months Ended September 30, 2022 September 30, 2021 Exchange Transactions Non-Exchange Transactions Total Exchange Transactions Non-Exchange Transactions Total Net product sales $ 38,229,605 $ - $ 38,229,605 $ 17,327,204 $ - $ 17,327,204 R&D and grant revenue 76,219 - 76,219 1,107,808 - 1,107,808 Government grant income - - - - 8,030,000 8,030,000 License and royalty revenue 872,365 - 872,365 779,901 - 779,901 $ 39,178,189 $ - $ 39,178,189 $ 19,214,913 $ 8,030,000 $ 27,244,913 The following table disaggregates Total Revenues by geographic location: For the three months ended For the nine months ended September 30, 2022 September 30, 2021 September 30 2022 September 30 2021 Africa $ 2,730,311 $ 1,293,405 $ 6,642,263 $ 4,104,619 Asia 86,648 208,750 541,867 479,297 Europe & Middle East 1,263,050 1,132,961 3,556,778 4,539,444 Latin America 2,286,121 5,698,920 15,678,200 6,444,456 United States 4,834,018 3,724,408 12,759,081 11,677,097 $ 11,200,148 $ 12,058,444 $ 39,178,189 $ 27,244,913 |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORY [Abstract] | |
Inventories | Inventories are presented net of reserves and consist of the following at: September 30, December 31, 2021 Raw materials $ 5,633,735 $ 7,306,095 Work in process 915,590 3,556,878 Finished goods 1,915,885 2,057,478 $ 8,465,210 $ 12,920,451 |
COMMITMENTS, CONTINGENCIES, A_2
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS [Abstract] | |
Customer and Purchase Concentration Risks | The following table discloses product sales the Company had to each customer that purchased in excess of 10% of the Company’s net product sales for the periods indicated: For the three months ended For the nine months ended Accounts Receivable as of September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 September 30, 2022 December 31, 2021 Product Sales % of Product Sales Product Sales % of Product Sales Product Sales % of Product Sales Product Sales % of Product Sales Customer 1 $ 2,163,414 20 % $ 5,434,186 58 % $ 14,503,058 $ 38 % $ 5,724,171 $ 33 % $ 1,424,614 $ 7,672,845 Customer 2 1,583,453 15 % 1,196,217 13 % 3,812,433 10 % 2,347,832 14 % 125,433 1,433,305 Customer 3 1,886,906 17 % * * 5,318,816 14 % * * 1,553,306 - Customer 4 1,443,480 13 % * * * * * * 195,011 - Revenue includes product sales only, while accounts receivable reflects the total due from the customer, including freight. The following table discloses purchases the Company had to each vendor in excess of 10% of the Company’s net purchases for the periods indicated: For the three months ended For the nine months ended Accounts Payable as of September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 September 30, 2022 December 31, Purchases % of Purchases Purchases % of Purchases Purchases % of Purchases Purchases % of Purchases Vendor 1 $ * * $ 1,678,250 34 % $ * $ * $ 2,339,182 $ 19 % $ * $ 1,107,530 Vendor 2 * * * * 2,200,905 16 % * * 148,255 103,443 Vendor 3 $ 944,460 14 % $ * * $ 4,585,298 $ 33 % $ * $ * $ - $ 149,230 In the tables above, an asterisk (*) indicates that indicates that sales, accounts receivable, purchases or accounts payable, as applicable to the tabular column, did not exceed 10% for the period indicated. |
Future Minimum Salary Commitment | The following table is a schedule of future minimum salary commitments: 2022 $ 294,500 2023 383,000 2024 383,000 |
Components of Lease Expense | The components of lease expense were as follows: Three Months Ended September 30 Nine Months Ended September 30 2022 2021 2022 2021 Operating lease expense $ 390,204 $ 398,089 $ 1,180,953 $ 1,208,885 Finance lease cost Amortization of right-of-use assets $ 17,850 $ 17,038 53,279 49,834 Interest on lease liabilities 4,112 5,047 13,278 15,358 Total finance lease expense $ 21,962 $ 22,085 $ 66,557 $ 65,192 |
Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows. Three Months Ended September 30 Nine Months Ended September 30 2022 2021 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 364,590 $ 353,009 $ 1,086,793 $ 1,049,198 Operating cash flows for finance leases 4,112 5,047 13,278 15,358 Financing cash flows for finance leases 17,859 15,859 52,280 45,680 Right-of-use assets obtained in exchange for lease obligations: Finance leases - - 16,234 25,609 Operating leases - - 717,956 616,100 |
Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows: September 30, 2022 September 30, 2021 Finance Leases Finance lease right of use asset $ 356,997 $ 340,762 Accumulated depreciation (202,171 ) (131,854 ) Finance lease right of use asset, net $ 154,826 $ 208,908 Weighted Average Remaining Lease Term Operating leases 6.8 years 7.7 Finance leases 2.0 years 3.1 Weighted Average Discount Rate Operating leases 8.38 % 8.41 % Finance leases 9.11 % 8.74 % |
Maturities of Lease Liabilities | Maturities of lease liabilities were as follows. September 30, 2022 September 30, 2021 Operating Leases Finance Leases Operating Leases Finance Leases 2022 $ 366,985 $ 21,971 $ 355,335 $ 20,906 2023 1,428,821 87,884 1,447,249 83,624 2024 1,220,150 60,116 1,221,017 83,624 2025 1,049,442 16,731 1,018,875 55,856 2026 1,080,925 5,940 1,049,442 12,471 Thereafter 3,643,521 355 4,724,446 1,679 Total lease payments $ 8,789,844 $ 192,997 $ 9,816,364 $ 258,160 Less: imputed interest 2,224,276 21,189 2,751,749 34,119 Total $ 6,565,568 $ 171,808 $ 7,064,615 $ 224,041 |
EQUITY INCENTIVE PLAN (Tables)
EQUITY INCENTIVE PLAN (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
EQUITY INCENTIVE PLAN [Abstract] | |
Stock-Based Compensation Expense (Net of Recovery) Recognized | Stock-based compensation expense (net of forfeitures) recognized in the condensed consolidated statements of operations was classified as follows: For the three months ended September 30 For the nine months ended September 30 2022 2021 2022 2021 Cost of product sales $ 54,243 $ 52,819 $ 165,589 $ 124,955 Research and development expenses 113,874 164,560 317,381 388,264 Selling, general and administrative expenses 368,209 419,152 1,363,268 1,288,837 $ 536,326 $ 636,531 $ 1,846,238 $ 1,802,056 |
Assumptions Made in Calculating Fair Values of Options | The weighted-average assumptions made in calculating the fair values of options are as follows: For the nine months ended September 30 2022 Expected term (in years) 6.0 Expected volatility 91.62 % Expected dividend yield N/A Risk-free interest rate 1.97 % |
Stock Option Activity | The following table provides stock option activity for the nine months ended September 30, 2022: Stock Options Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contract Term Aggregate Intrinsic Value Outstanding at December 31, 2021 1,600,372 $ 4.18 6.59 years $ - Granted 2,481,968 1.24 - Exercised - - - Forfeited 137,076 2.77 - Expired 270,293 5.01 Outstanding at September 30 2022 3,674,971 $ 2.20 8.30 years $ - Exercisable at September 30 2022 553,360 $ 4.01 5.59 years $ - |
Stock Options Outstanding | The following table summarizes information about stock options outstanding at September 30, 2022: Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Number of Shares Average Remaining Contract Term (Year) Weighted Average Exercise Price Aggregate Intrinsic Value Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value 1 2.79999 2,838,509 8.52 $ 1.40 $ - 247,370 $ 2.36 $ - 2.8 4.59999 26,796 8.54 3.06 - 9,237 3.06 - 4.6 6.39999 762,791 7.93 4.81 - 249,878 4.90 - 6.4 8.19999 46,875 0.61 8.15 - 46,875 8.15 - Total 3,674,971 8.30 $ 2.20 $ - 553,360 $ 4.01 $ - |
Summary of Restricted Stock and Restricted Stock Units Outstanding | The following table summarizes information about restricted stock, restricted stock units and performance stock units outstanding as of September 30, 2022 : Number of Shares & Units Weighted Average Grant Date Fair Value Outstanding at December 31, 2021 705,325 $ 3.34 Granted 1,308,547 - Vested 190,064 - Forfeited 100,424 - Outstanding at September 30 2022 1,723,384 $ 1.39 |
GEOGRAPHIC INFORMATION AND EC_2
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY [Abstract] | |
Product Sales by Geographic Area | The single For the three months ended September 30 For the nine months ended September 30 2022 2021 2022 2021 Africa $ 2,730,311 $ 1,293,405 $ 6,642,263 $ 4,104,619 Asia 86,648 208,750 541,867 479,297 Europe & Middle East 956,905 1,132,520 2,670,529 3,431,736 Latin America 2,286,121 5,698,920 15,665,864 6,444,456 United States 4,784,018 1,037,565 12,709,082 2,867,096 $ 10,844,003 $ 9,371,160 $ 38,229,605 $ 17,327,204 |
Long-lived Assets by Geographic Area | Property, plant and equipment by geographic area were as follows at: September 30, 2022 December 31, 2021 Asia $ 77,398 $ 86,041 Europe & Middle East 79,107 113,883 Latin America 80,255 36,224 United States 8,576,939 8,320,625 $ 8,813,699 $ 8,556,773 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES [Abstract] | |
Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of: September 30, 2022 December 31, 2021 Accounts payable – suppliers $ 3,066,133 $ 7,745,592 Accrued commissions and royalties 2,053,261 1,359,691 Accrued payroll 437,757 494,258 Accrued vacation 554,468 421,416 Accrued bonuses 1,523,979 1,378,706 Accrued professional fees 1,593,504 522,935 Accrued expenses – other 9,416,396 1,205,395 TOTAL $ 18,645,498 $ 13,127,993 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
GOODWILL AND INTANGIBLE ASSETS [Abstract] | |
Changes in Goodwill | The following table reflects changes in goodwill: Beginning balance at December 31, 2021 $ 3,022,787 Impairment (3,033,565 ) Change in foreign currency exchange rate 10,778 Balance at September 30 2022 $ - |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES, Going Concern Considerations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | |
Credit Agreement [Abstract] | |||
Covenant amount, cash balance | $ 3 | ||
Forecast [Member] | |||
Credit Agreement [Abstract] | |||
Covenant amount, revenue | $ 50.1 | $ 47.4 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES, Fair Value of Financial Instruments (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value of Financial Instruments [Abstract] | ||
Cash and cash equivalents | $ 21,055,026 | $ 28,772,892 |
Level 2 [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Fair value of total debt | 20,000,000 | 20,000,000 |
Carrying value | 19,000,000 | 18,800,000 |
Money Market Funds [Member] | Level 1 [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Cash and cash equivalents | $ 17,200,000 | $ 25,000,000 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES, Loss Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Options [Member] | ||||
Loss Per Share [Abstract] | ||||
Antidilutive securities excluded from calculation of diluted earnings per share (in shares) | 3,674,971 | 1,786,324 | 3,674,971 | 1,786,324 |
Restricted Stock [Member] | ||||
Loss Per Share [Abstract] | ||||
Antidilutive securities excluded from calculation of diluted earnings per share (in shares) | 1,723,384 | 811,038 | 1,723,384 | 811,038 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES, Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Taxes [Abstract] | ||||
Effective tax rate | 0% | 0% | (0.03%) | 0.34% |
REVENUE, Disaggregation of Tota
REVENUE, Disaggregation of Total Revenues by Revenue Type (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Abstract] | ||||
Revenues | $ 11,200,148 | $ 12,058,444 | $ 39,178,189 | $ 27,244,913 |
Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 11,200,148 | 9,658,444 | 39,178,189 | 19,214,913 |
Non-Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 0 | 2,400,000 | 0 | 8,030,000 |
Net Product Sales [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 10,844,003 | 9,371,160 | 38,229,605 | 17,327,204 |
Net Product Sales [Member] | Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 10,844,003 | 9,371,160 | 38,229,605 | 17,327,204 |
Net Product Sales [Member] | Non-Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 0 | 0 | 0 | 0 |
R&D and Grant Revenue [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 50,000 | 441 | 76,219 | 1,107,808 |
R&D and Grant Revenue [Member] | Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 50,000 | 441 | 76,219 | 1,107,808 |
R&D and Grant Revenue [Member] | Non-Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 0 | 0 | 0 | 0 |
Government Grant Income [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 0 | 2,400,000 | 0 | 8,030,000 |
Government Grant Income [Member] | Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 0 | 0 | 0 | 0 |
Government Grant Income [Member] | Non-Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 0 | 2,400,000 | 0 | 8,030,000 |
License and Royalty Revenue [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 306,145 | 286,843 | 872,365 | 779,901 |
License and Royalty Revenue [Member] | Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 306,145 | 286,843 | 872,365 | 779,901 |
License and Royalty Revenue [Member] | Non-Exchange Transactions [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
REVENUE, Disaggregation of To_2
REVENUE, Disaggregation of Total Revenues by Geographic Location (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Abstract] | ||||
Revenues | $ 11,200,148 | $ 12,058,444 | $ 39,178,189 | $ 27,244,913 |
Africa [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 2,730,311 | 1,293,405 | 6,642,263 | 4,104,619 |
Asia [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 86,648 | 208,750 | 541,867 | 479,297 |
Europe & Middle East [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 1,263,050 | 1,132,961 | 3,556,778 | 4,539,444 |
Latin America [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | 2,286,121 | 5,698,920 | 15,678,200 | 6,444,456 |
United States [Member] | ||||
Disaggregation of Revenue [Abstract] | ||||
Revenues | $ 4,834,018 | $ 3,724,408 | $ 12,759,081 | $ 11,677,097 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
INVENTORY [Abstract] | |||
Raw materials | $ 5,633,735 | $ 7,306,095 | |
Work in process | 915,590 | 3,556,878 | |
Finished goods | 1,915,885 | 2,057,478 | |
Inventories | 8,465,210 | $ 12,920,451 | |
Charge related to write-down of inventory | $ 657,686 | $ 926,499 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Common Stock [Abstract] | |||||
Number of stock options exercised under the plan (in shares) | 0 | 36,252 | 0 | 36,252 | |
Preferred Stock [Abstract] | |||||
Preferred stock - shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | ||
Preferred stock - shares outstanding (in shares) | 0 | 0 | 0 | ||
Treasury Stock [Abstract] | |||||
Treasury stock, shares (in shares) | 48,057 | 48,057 | 48,057 |
COMMITMENTS, CONTINGENCIES, A_3
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS, Concentrations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |||||
Concentrations [Abstract] | |||||||||
Net product revenue | $ 11,200,148 | $ 12,058,444 | $ 39,178,189 | $ 27,244,913 | |||||
Accounts Receivable | 5,252,573 | 5,252,573 | $ 11,441,107 | ||||||
Purchase obligations | 300,000 | 300,000 | |||||||
Customer Concentration Risk [Member] | Customer 1 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Accounts Receivable | 1,424,614 | 1,424,614 | 7,672,845 | ||||||
Customer Concentration Risk [Member] | Customer 2 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Accounts Receivable | 125,433 | 125,433 | 1,433,305 | ||||||
Customer Concentration Risk [Member] | Customer 3 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Accounts Receivable | 1,553,306 | 1,553,306 | 0 | ||||||
Customer Concentration Risk [Member] | Customer4 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Accounts Receivable | 195,011 | 195,011 | 0 | ||||||
Supplier Concentration Risk [Member] | Vendor 1 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Accounts Payable | [1] | [1] | 1,107,530 | ||||||
Supplier Concentration Risk [Member] | Vendor 2 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Accounts Payable | 148,255 | 148,255 | 103,443 | ||||||
Supplier Concentration Risk [Member] | Vendor 3 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Accounts Payable | 0 | 0 | $ 149,230 | ||||||
Sales [Member] | Customer Concentration Risk [Member] | Customer 1 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Net product revenue | $ 2,163,414 | $ 5,434,186 | [1] | $ 14,503,058 | $ 5,724,171 | [1] | |||
Percentage of product sales | 20% | 58% | [1] | 38% | 33% | [1] | |||
Sales [Member] | Customer Concentration Risk [Member] | Customer 2 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Net product revenue | $ 1,583,453 | $ 1,196,217 | $ 3,812,433 | $ 2,347,832 | |||||
Percentage of product sales | 15% | 13% | 10% | 14% | |||||
Sales [Member] | Customer Concentration Risk [Member] | Customer 3 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Net product revenue | $ 1,886,906 | [1] | $ 5,318,816 | [1] | |||||
Percentage of product sales | 17% | [1] | 14% | [1] | |||||
Sales [Member] | Customer Concentration Risk [Member] | Customer4 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Net product revenue | $ 1,443,480 | [1] | [1] | [1] | |||||
Percentage of product sales | 13% | [1] | [1] | ||||||
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor 1 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Percentage of product sales | [1] | 34% | [1] | 19% | |||||
Purchases | [1] | $ 1,678,250 | [1] | $ 2,339,182 | |||||
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor 2 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Percentage of product sales | [1] | 16% | [1] | ||||||
Purchases | [1] | $ 2,200,905 | [1] | ||||||
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor 3 [Member] | |||||||||
Concentrations [Abstract] | |||||||||
Percentage of product sales | 14% | [1] | 33% | [1] | |||||
Purchases | $ 944,460 | [1] | $ 4,585,298 | [1] | |||||
[1]In the tables above, an asterisk (*) indicates that indicates that sales, accounts receivable, purchases or accounts payable, as applicable to the tabular column, did not exceed 10% for the period indicated. |
COMMITMENTS, CONTINGENCIES, A_4
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS, Employment Contracts (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) KeyEmployee | |
Employment Contracts [Abstract] | |
Number of key employees with whom Company has employment contracts | KeyEmployee | 3 |
Aggregate annual salaries of employment contracts | $ 1,178,000 |
Contract one, expiration date | Dec. 31, 2022 |
Contract two expiration date | Dec. 31, 2024 |
Future minimum salary commitments [Abstract] | |
2022 | $ 294,500 |
2023 | 383,000 |
2024 | $ 383,000 |
COMMITMENTS, CONTINGENCIES, A_5
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS, Benefit Plan (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Benefit Plan [Abstract] | ||||
Percentage of employer's matching contribution | 40% | |||
Expenses related to matching contribution | $ 44,103 | $ 35,533 | $ 149,016 | $ 100,922 |
Maximum [Member] | ||||
Benefit Plan [Abstract] | ||||
Employee contribution subject to employer matching contribution | 5% | |||
Employer matching contribution | 2% |
COMMITMENTS, CONTINGENCIES, A_6
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS, Leases (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Components of Lease Expense [Abstract] | |||||
Operating lease expense | $ 390,204 | $ 398,089 | $ 1,180,953 | $ 1,208,885 | |
Finance lease cost [Abstract] | |||||
Amortization of right-of-use assets | 17,850 | 17,038 | 53,279 | 49,834 | |
Interest on lease liabilities | 4,112 | 5,047 | 13,278 | 15,358 | |
Total finance lease expense | 21,962 | 22,085 | 66,557 | 65,192 | |
Cash paid for amounts included in the measurement of lease liabilities [Abstract] | |||||
Operating cash flows for operating leases | 364,590 | 353,009 | 1,086,793 | 1,049,198 | |
Operating cash flows for finance leases | 4,112 | 5,047 | 13,278 | 15,358 | |
Financing cash flows for finance leases | 17,859 | 15,859 | 52,280 | 45,680 | |
Right-of-use assets obtained in exchange for lease obligations [Abstract] | |||||
Finance leases | 0 | 0 | 16,234 | 25,609 | |
Operating leases | 0 | 0 | 717,956 | 616,100 | |
Finance Leases [Abstract] | |||||
Finance lease right of use asset | 356,997 | 340,762 | 356,997 | 340,762 | |
Accumulated depreciation | (202,171) | (131,854) | (202,171) | (131,854) | |
Finance lease right of use asset, net | $ 154,826 | $ 208,908 | $ 154,826 | $ 208,908 | $ 191,870 |
Weighted Average Remaining Lease Term [Abstract] | |||||
Operating leases | 6 years 9 months 18 days | 7 years 8 months 12 days | 6 years 9 months 18 days | 7 years 8 months 12 days | |
Finance leases | 2 years | 3 years 1 month 6 days | 2 years | 3 years 1 month 6 days | |
Weighted Average Discount Rate [Abstract] | |||||
Operating leases | 8.38% | 8.41% | 8.38% | 8.41% | |
Finance leases | 9.11% | 8.74% | 9.11% | 8.74% | |
Maturities of Operating Lease Liabilities [Abstract] | |||||
2022 | $ 366,985 | $ 355,335 | $ 366,985 | $ 355,335 | |
2023 | 1,428,821 | 1,447,249 | 1,428,821 | 1,447,249 | |
2024 | 1,220,150 | 1,221,017 | 1,220,150 | 1,221,017 | |
2025 | 1,049,442 | 1,018,875 | 1,049,442 | 1,018,875 | |
2026 | 1,080,925 | 1,049,442 | 1,080,925 | 1,049,442 | |
Thereafter | 3,643,521 | 4,724,446 | 3,643,521 | 4,724,446 | |
Total lease payments | 8,789,844 | 9,816,364 | 8,789,844 | 9,816,364 | |
Less: imputed interest | 2,224,276 | 2,751,749 | 2,224,276 | 2,751,749 | |
Total | 6,565,568 | 7,064,615 | 6,565,568 | 7,064,615 | |
Maturities of Finance Lease Liabilities [Abstract] | |||||
2022 | 21,971 | 20,906 | 21,971 | 20,906 | |
2023 | 87,884 | 83,624 | 87,884 | 83,624 | |
2024 | 60,116 | 83,624 | 60,116 | 83,624 | |
2025 | 16,731 | 55,856 | 16,731 | 55,856 | |
2026 | 5,940 | 12,471 | 5,940 | 12,471 | |
Thereafter | 355 | 1,679 | 355 | 1,679 | |
Total lease payments | 192,997 | 258,160 | 192,997 | 258,160 | |
Less: imputed interest | 21,189 | 34,119 | 21,189 | 34,119 | |
Total | $ 171,808 | $ 224,041 | $ 171,808 | $ 224,041 |
COMMITMENTS, CONTINGENCIES, A_7
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS, Stockholder Litigation (Details) | 9 Months Ended | 12 Months Ended | |
Aug. 26, 2022 USD ($) | Sep. 30, 2022 USD ($) Applicants | Dec. 31, 2020 Lawsuit | |
Stockholder Litigation [Abstract] | |||
Number of class action lawsuits | Lawsuit | 4 | ||
Number of motions for appointment as lead plaintiff | 8 | ||
Number of motions abandoned | 2 | ||
Number of remaining motions for appointment as lead plaintiff | 2 | ||
Number of motions filed by special situations funds | 1 | ||
Number of motions filed by municipal employees retirement system | 1 | ||
Period within which lead plaintiffs can replead their claims | 14 days | ||
Notice period to terminate the stipulation | 14 days | ||
Pendency period of stay | 1 year | ||
Principle settlement amount | $ | $ 8,100,000 | ||
Litigation amount to be paid | $ | $ 209,000 | ||
Extension period to submit stipulation and agreement of settlement | 30 days | ||
Attorneys' fees | $ | $ 595,000 |
COMMITMENTS, CONTINGENCIES, A_8
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS, Employee Litigation (Details) | 9 Months Ended | ||
Mar. 19, 2021 Claim | Jan. 03, 2020 USD ($) shares | Sep. 30, 2022 USD ($) Claim | |
Employee Litigation [Abstract] | |||
Number of filed complaints | Claim | 15 | ||
Exercise price of stock options | $ 943,126 | ||
Vested shares exercisable (in shares) | shares | 266,666 | ||
Term to exercise stock options | 30 days | ||
Number of complaint purport to allege claims for breach of each of separate stock option agreements | Claim | 10 | ||
Loss contingency, claims entitlement to recover damages amount | $ 595,000 | ||
Prejudgment interest rate | 9% | ||
Minimum [Member] | |||
Employee Litigation [Abstract] | |||
Loss contingency, asserting damages amount | $ 3,190,198 | ||
Loss contingency, asserting damages excess amount | 3,000,000 | ||
Loss contingency, claims entitlement to recover damages amount | $ 10,000,000 |
COMMITMENTS, CONTINGENCIES, A_9
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS, Nasdaq Communications (Details) - $ / shares | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 05, 2022 | Apr. 05, 2022 | |
Nasdaq Communications [Abstract] | |||
Minimum bid price requirement, price per share for listing (in dollars per share) | $ 1 | ||
Minimum bid price requirement, threshold consecutive business days to regain compliance | 180 days | ||
Minimum bid price requirement, threshold consecutive business days | 10 days | ||
Subsequent Event [Member] | |||
Nasdaq Communications [Abstract] | |||
Closing price (in dollars per share) | $ 0.42 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - Senior Secured Term Loan Credit Facility [Member] - USD ($) | 9 Months Ended | |
Sep. 03, 2019 | Sep. 30, 2022 | |
Credit Agreement [Abstract] | ||
Debt instrument, face amount | $ 20,000,000 | |
Lender's closing cost | 550,000 | |
Financing fee | $ 600,000 | |
Percentage of gross proceeds considered as financing fee | 3% | |
Interest rate | 8.75% | 11.32% |
Increase in interest rate in event of default | 4% | |
Principal installment payable | $ 300,000 | |
Debt instrument maturity date | Sep. 03, 2023 | |
Outstanding loan balance, net | $ 19,000,000 | |
LIBOR [Member] | ||
Credit Agreement [Abstract] | ||
Term of variable rate | 1 month | |
Basis spread on variable rate | 2.50% |
EQUITY INCENTIVE PLAN, Summary
EQUITY INCENTIVE PLAN, Summary (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Jun. 25, 2021 | Sep. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jun. 18, 2019 | Jun. 19, 2014 | |
Stock Compensation Expense [Abstract] | |||||||||
Allocated share-based compensation expense | $ 536,326 | $ 636,531 | $ 1,846,238 | $ 1,802,056 | |||||
Stock Options, Additional Disclosure [Abstract] | |||||||||
Outstanding, aggregate intrinsic value, end of period | 0 | 0 | |||||||
Exercisable, aggregate intrinsic value, end of period | 0 | 0 | |||||||
Cost of Product Sales [Member] | |||||||||
Stock Compensation Expense [Abstract] | |||||||||
Allocated share-based compensation expense | 54,243 | 52,819 | 165,589 | 124,955 | |||||
Research and Development Expenses [Member] | |||||||||
Stock Compensation Expense [Abstract] | |||||||||
Allocated share-based compensation expense | 113,874 | 164,560 | 317,381 | 388,264 | |||||
Selling, General and Administrative Expenses [Member] | |||||||||
Stock Compensation Expense [Abstract] | |||||||||
Allocated share-based compensation expense | $ 368,209 | $ 419,152 | $ 1,363,268 | $ 1,288,837 | |||||
Stock Options [Member] | |||||||||
Assumptions Made in Calculating Fair Values of Options [Abstract] | |||||||||
Expected term | 6 years | ||||||||
Expected volatility | 91.62% | ||||||||
Expected dividend yield | |||||||||
Risk-free interest rate | 1.97% | ||||||||
Stock Options, Number of Shares [Roll forward] | |||||||||
Outstanding, beginning of period (in shares) | 1,600,372 | 1,600,372 | |||||||
Granted (in shares) | 2,481,968 | ||||||||
Exercised (in shares) | 0 | ||||||||
Forfeited (in shares) | 137,076 | ||||||||
Expired (in shares) | 270,293 | ||||||||
Outstanding, end of period (in shares) | 3,674,971 | 3,674,971 | 1,600,372 | ||||||
Exercisable, end of period (in shares) | 553,360 | 553,360 | |||||||
Stock Options, Weighted Average Exercise Price per Share [Roll Forward] | |||||||||
Outstanding, beginning of period (in dollars per share) | $ 4.18 | $ 4.18 | |||||||
Granted (in dollars per share) | 1.24 | ||||||||
Exercised (in dollars per share) | 0 | ||||||||
Forfeited (in dollars per share) | 2.77 | ||||||||
Expired (in dollars per share) | 5.01 | ||||||||
Outstanding, end of period (in dollars per share) | $ 2.2 | 2.2 | $ 4.18 | ||||||
Exercisable, end of period (in dollars per share) | $ 4.01 | $ 4.01 | |||||||
Stock Options, Additional Disclosure [Abstract] | |||||||||
Outstanding, weighted average remaining contract term | 8 years 3 months 18 days | 6 years 7 months 2 days | |||||||
Exercisable, weighted average remaining contract term | 5 years 7 months 2 days | ||||||||
Outstanding, aggregate intrinsic value, beginning of period | $ 0 | $ 0 | |||||||
Granted, aggregate intrinsic value | 0 | ||||||||
Exercised, aggregate intrinsic value | 0 | ||||||||
Forfeited, aggregate intrinsic value | 0 | ||||||||
Outstanding, aggregate intrinsic value, end of period | $ 0 | 0 | $ 0 | ||||||
Exercisable, aggregate intrinsic value, end of period | $ 0 | $ 0 | |||||||
2014 Stock Incentive Plan [Member] | Stock Options [Member] | |||||||||
Share-based Arrangements with Employees and Nonemployees [Abstract] | |||||||||
Number of shares authorized under the plan (in shares) | 800,000 | ||||||||
Number of stock options expired, forfeited or exercised under the plan (in shares) | 732,064 | ||||||||
Number of shares not issued (in shares) | 21,061 | ||||||||
Options still available to be issued (in shares) | 0 | 0 | |||||||
Stock Options, Number of Shares [Roll forward] | |||||||||
Outstanding, end of period (in shares) | 46,875 | 46,875 | |||||||
2019 Omnibus Incentive Plan [Member] | Stock Options [Member] | |||||||||
Share-based Arrangements with Employees and Nonemployees [Abstract] | |||||||||
Number of shares authorized under the plan (in shares) | 4,800,000 | 2,400,000 | |||||||
Increase in number of shares authorized (in shares) | 2,400,000 | ||||||||
Number of stock options expired, forfeited or exercised under the plan (in shares) | 1,168,331 | ||||||||
Options still available to be issued (in shares) | 87,672 | 87,672 | |||||||
Stock Options, Number of Shares [Roll forward] | |||||||||
Outstanding, end of period (in shares) | 4,812,903 | 4,812,903 |
EQUITY INCENTIVE PLAN, Stock Op
EQUITY INCENTIVE PLAN, Stock Options (Details) - USD ($) | 9 Months Ended | |||
Jan. 03, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Stock Options Outstanding [Abstract] | ||||
Shares outstanding (in shares) | 3,674,971 | |||
Average remaining contract term | 8 years 3 months 18 days | |||
Weighted average exercise price (in dollars per share) | $ 2.2 | |||
Aggregate intrinsic value | $ 0 | |||
Stock Options Exercisable [Abstract] | ||||
Shares exercisable (in shares) | 553,360 | |||
Weighted average exercise price (in dollars per share) | $ 4.01 | |||
Aggregate intrinsic value | $ 0 | |||
Total fair value of stock options vested during period | $ 943,126 | |||
Stock Options [Member] | ||||
Stock Options Outstanding [Abstract] | ||||
Aggregate intrinsic value | 0 | $ 0 | ||
Stock Options Exercisable [Abstract] | ||||
Aggregate intrinsic value | 0 | |||
Net unrecognized compensation cost | $ 2,389,457 | |||
Weighted average period for recognition of net unrecognized compensation cost | 2 years 10 months 6 days | |||
Total fair value of stock options vested during period | $ 917,036 | $ 335,579 | ||
1 to 2.79999 [Member] | ||||
Range of Exercise Prices [Abstract] | ||||
Range of exercise prices, minimum (in dollars per share) | $ 1 | |||
Range of exercise prices, maximum (in dollars per share) | $ 2.79999 | |||
Stock Options Outstanding [Abstract] | ||||
Shares outstanding (in shares) | 2,838,509 | |||
Average remaining contract term | 8 years 6 months 7 days | |||
Weighted average exercise price (in dollars per share) | $ 1.4 | |||
Aggregate intrinsic value | $ 0 | |||
Stock Options Exercisable [Abstract] | ||||
Shares exercisable (in shares) | 247,370 | |||
Weighted average exercise price (in dollars per share) | $ 2.36 | |||
Aggregate intrinsic value | $ 0 | |||
2.8 to 4.59999 [Member] | ||||
Range of Exercise Prices [Abstract] | ||||
Range of exercise prices, minimum (in dollars per share) | $ 2.8 | |||
Range of exercise prices, maximum (in dollars per share) | $ 4.59999 | |||
Stock Options Outstanding [Abstract] | ||||
Shares outstanding (in shares) | 26,796 | |||
Average remaining contract term | 8 years 6 months 14 days | |||
Weighted average exercise price (in dollars per share) | $ 3.06 | |||
Aggregate intrinsic value | $ 0 | |||
Stock Options Exercisable [Abstract] | ||||
Shares exercisable (in shares) | 9,237 | |||
Weighted average exercise price (in dollars per share) | $ 3.06 | |||
Aggregate intrinsic value | $ 0 | |||
4.6 to 6.39999 [Member] | ||||
Range of Exercise Prices [Abstract] | ||||
Range of exercise prices, minimum (in dollars per share) | $ 4.6 | |||
Range of exercise prices, maximum (in dollars per share) | $ 6.39999 | |||
Stock Options Outstanding [Abstract] | ||||
Shares outstanding (in shares) | 762,791 | |||
Average remaining contract term | 7 years 11 months 4 days | |||
Weighted average exercise price (in dollars per share) | $ 4.81 | |||
Aggregate intrinsic value | $ 0 | |||
Stock Options Exercisable [Abstract] | ||||
Shares exercisable (in shares) | 249,878 | |||
Weighted average exercise price (in dollars per share) | $ 4.9 | |||
Aggregate intrinsic value | $ 0 | |||
6.4 to 8.19999 [Member] | ||||
Range of Exercise Prices [Abstract] | ||||
Range of exercise prices, minimum (in dollars per share) | $ 6.4 | |||
Range of exercise prices, maximum (in dollars per share) | $ 8.19999 | |||
Stock Options Outstanding [Abstract] | ||||
Shares outstanding (in shares) | 46,875 | |||
Average remaining contract term | 7 months 9 days | |||
Weighted average exercise price (in dollars per share) | $ 8.15 | |||
Aggregate intrinsic value | $ 0 | |||
Stock Options Exercisable [Abstract] | ||||
Shares exercisable (in shares) | 46,875 | |||
Weighted average exercise price (in dollars per share) | $ 8.15 | |||
Aggregate intrinsic value | $ 0 |
EQUITY INCENTIVE PLAN, Restrict
EQUITY INCENTIVE PLAN, Restricted Stock and Restricted Stock Units (Details) - Restricted Stock, Restricted Stock Units, and Performance Stock Units [Member] | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Number of Shares & Units [Abstract] | |
Outstanding, beginning of period (in shares) | shares | 705,325 |
Granted (in shares) | shares | 1,308,547 |
Vested (in shares) | shares | 190,064 |
Forfeited (in shares) | shares | 100,424 |
Outstanding, end of period (in shares) | shares | 1,723,384 |
Weighted Average Grant Date Fair Value [Abstract] | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 3.34 |
Granted (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 1.39 |
Net unrecognized compensation cost | $ | $ 1,530,896 |
Weighted average period for recognition of net unrecognized compensation cost | 2 years 10 days |
GEOGRAPHIC INFORMATION AND EC_3
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) Group | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) Segment Group | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
GEOGRAPHIC INFORMATION AND ECONOMIC DEPENDENCY [Abstract] | |||||
Number of groups of similar products | Group | 1 | 1 | |||
Number of operating segments | Segment | 1 | ||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | $ 11,200,148 | $ 12,058,444 | $ 39,178,189 | $ 27,244,913 | |
Geographic Areas, Long-Lived Assets [Abstract] | |||||
Property, plant and equipment, net | 8,813,699 | 8,813,699 | $ 8,556,773 | ||
Net Product Revenue [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 10,844,003 | 9,371,160 | 38,229,605 | 17,327,204 | |
Africa [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 2,730,311 | 1,293,405 | 6,642,263 | 4,104,619 | |
Africa [Member] | Net Product Revenue [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 2,730,311 | 1,293,405 | 6,642,263 | 4,104,619 | |
Asia [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 86,648 | 208,750 | 541,867 | 479,297 | |
Geographic Areas, Long-Lived Assets [Abstract] | |||||
Property, plant and equipment, net | 77,398 | 77,398 | 86,041 | ||
Asia [Member] | Net Product Revenue [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 86,648 | 208,750 | 541,867 | 479,297 | |
Europe & Middle East [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 1,263,050 | 1,132,961 | 3,556,778 | 4,539,444 | |
Geographic Areas, Long-Lived Assets [Abstract] | |||||
Property, plant and equipment, net | 79,107 | 79,107 | 113,883 | ||
Europe & Middle East [Member] | Net Product Revenue [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 956,905 | 1,132,520 | 2,670,529 | 3,431,736 | |
Latin America [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 2,286,121 | 5,698,920 | 15,678,200 | 6,444,456 | |
Geographic Areas, Long-Lived Assets [Abstract] | |||||
Property, plant and equipment, net | 80,255 | 80,255 | 36,224 | ||
Latin America [Member] | Net Product Revenue [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 2,286,121 | 5,698,920 | 15,665,864 | 6,444,456 | |
United States [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | 4,834,018 | 3,724,408 | 12,759,081 | 11,677,097 | |
Geographic Areas, Long-Lived Assets [Abstract] | |||||
Property, plant and equipment, net | 8,576,939 | 8,576,939 | $ 8,320,625 | ||
United States [Member] | Net Product Revenue [Member] | |||||
Geographic Areas, Revenues from External Customers [Abstract] | |||||
Net product revenue | $ 4,784,018 | $ 1,037,565 | $ 12,709,082 | $ 2,867,096 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES [Abstract] | ||
Accounts payable - suppliers | $ 3,066,133 | $ 7,745,592 |
Accrued commissions and royalties | 2,053,261 | 1,359,691 |
Accrued payroll | 437,757 | 494,258 |
Accrued vacation | 554,468 | 421,416 |
Accrued bonuses | 1,523,979 | 1,378,706 |
Accrued professional fees | 1,593,504 | 522,935 |
Accrued expenses - other | 9,416,396 | 1,205,395 |
TOTAL | $ 18,645,498 | $ 13,127,993 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) Unit Segment | |
Goodwill [Roll Forward] | |
Goodwill, Beginning balance | $ 3,022,787 |
Impairment | (3,033,565) |
Changes in foreign currency exchange rate | 10,778 |
Goodwill, Ending balance | $ 0 |
Number of operating segments | Segment | 1 |
Number of reporting units | Unit | 1 |